Work at Home Staffs - Also get Provident Fund - Supreme Court of India

Supreme Court of India

Workers stitching garments from home are covered under the EPF Act. Work at home staffs also get provident fund

The Office In-charge, Sub Regional Provident Fund Office & Anr. vs. M/s. Godavari Garments Limited C.A.J. C.A. No. 5821/2019 (Arising out of SLP (Civil) No. 22243/2015, Dt/–24-7-2019)

Work at Home Staffs also get Provident Fund

1. The present Civil Appeal has been filed to challenge the Order dated 27.04.2012 passed in W.P. No. 1615 of 1993 by the Bombay High Court, Aurangabad Bench. Signature Not Verified Digitally signed by ANITA MALHOTRA Date: 2019.07.24 16:56:21 IST Reason:
2. The background facts in which the present Civil Appeal has been filed are briefly stated as under: 

• 2.1. The Respondent Company is a subsidiary of the Marathwada Development Corporation, which is an undertaking of the Government of Maharashtra. It was covered under the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the EPF Act”) with effect from 01.01.1979.
• 2.2. The main objective of the Respondent Company, as per its Memorandum of Association, was to encourage, promote, develop, set­up or cause to be set­up a ready made garments industry in the Marathwada Region, with a view to provide gainful employment to people possessing skills in stitching, tailoring, and allied activities, especially to women from the economically weaker sections of the Society.
• 2.3. The Respondent Company engaged women workers who were provided with cut fabric, thread, buttons, etc. to be made into garments at their own homes. The sewing machines used by the women workers were owned by them, and not provided by the Respondent Company.
• 2.4. On 12.03.1991, Appellant No. 1 – Officer In­Charge, Sub­Regional Provident Fund Office, issued a Show Cause Notice to the Respondent Company calling upon it to pay the Provident Fund contributions for the women workers. The Balance Sheet of the Respondent Company for the year 1988 – 89, revealed large debits towards salary and wages for direct and indirect workers, but the Respondent Company made a false statement that it had only 41 employees.
• 2.5. On 30.11.1992, Appellant No. 1 issued summons to the Respondent Company for personal hearing under Section 7­A of the EPF Act.
• 2.6. The representative of the Respondent Company appeared before Appellant No. 1, and contended that the women workers who were fabricating garments for the Respondent Company, were not their employees, and hence not covered by Section 2(f) of the EPF Act. Therefore, even though wages were paid to those women workers, the Respondent Company was not liable to pay Provident Fund contribution in respect of them. 
• 2.7. The Provident Fund Officer – Appellant No. 1 vide Order dated 19.04.1993 held that the women workers engaged for stitching garments were covered by the definition of “employee” under Section 2(f) of the EPF Act. An amount of Rs. 15,97,087/­ was assessed towards Provident Fund dues of the Respondent Company for the period from November, 1979 to February, 1991. The Respondent Company was directed to pay the said amount within 7 days.
• 2.8. The Respondent Company challenged the aforesaid Order by filing W.P. No. 1615 of 1993 before the Bombay High Court. The Bombay High Court, Aurangabad bench vide Final Judgment and Order dated 27.04.2012 allowed the Writ Petition filed by the Respondent Company, and set aside the Order dated 19.04.1993 passed by the Appellant No. 1. It was held that the Respondent Company had no direct or indirect control over the women workers. The conversion of cloth into garment could be done by any person on behalf of the women workers. Hence, the Respondent Company did not exercise any supervisory control over the women workers.
• 2.9. Aggrieved by the aforesaid Judgment, the present Civil Appeal has been filed by the Provident Fund Office.

3. We have heard the learned Counsel for the parties, and perused the pleadings and written submissions filed by the parties.

4. Mr. R.R. Rajesh, learned Counsel appearing on behalf of the Appellants, submitted that the women workers employed by the Respondent Company fall within the definition of “employee” under Section 2(f) of the EPF Act. Reliance was placed on this Court’s decision in M/s P.M. Patel & Sons and Ors. v. Union of India and Ors. to contend that the women workers employed by the Respondent Company were covered by the definition of “employee” under Section 2(f) of the EPF Act. Hence, the Respondent Company is liable to pay Provident Fund contribution in respect of those women workers.

5. Mr. Anoop Kandari, learned Counsel appearing on behalf of the Respondent Company, submitted that there was no employer­employee relationship between the Respondent Company and the women workers. The women workers were not employees under Section 2(f) of the EPF Act. They were independent contractors.

It was further submitted that the sewing machines used by the women workers were owned by them, and not provided by the Respondent Company. The women workers worked from their homes, and not at the production centers of the Respondent Company. Hence, the work performed by them, could be done by their relatives, or any other person on their behalf. Furthermore, the women workers were not bound to report to the production centers regularly, nor were they required to work at the production centers. The Respondent Company exercised no supervisory control over the women workers.

6. The short issue which arises for consideration is whether the women workers employed by the Respondent Company are covered by the definition of “employee” under Section 2(f) of the EPF Act or not.

Section 2(f) of the EPF Act is set ­out herein below for ready reference:

“(f) “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets, his wages directly or indirectly from the employer, and includes any person,­­
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment;” (emphasis supplied) 6.1. The definition of “employee” under Section 2(f) of the EPF Act is an inclusive definition, and is widely worded to include any person engaged either directly or indirectly in connection with the work of an establishment.

6.2. In the present case, the women workers employed by the Respondent Company were provided all the raw materials, such as the fabric, thread, buttons, etc. from the Respondent – Employer. With this material, the women workers were required to stitch the garments as per the specifications given by the Respondent Company. The women workers could stitch the garments at their homes, and provide them to the Respondent Company. The Respondent Company had the absolute right to reject the finished product i.e. the garments, in case of any defects.

6.3. The mere fact that the women workers stitched the garments at home, would make no difference. It is the admitted position that the women workers were paid wages directly by the Respondent Company on a per­ piece basis for every garment stitched. 

6.4. The issue in the present case is squarely covered by the decision of this Court in Silver Jubilee Tailoring House and Ors. v. Chief Inspector of Shops and Establishments and Ors.2 The appellants therein were engaged in the business of producing garments. They employed workers who were provided with the cloth, and were instructed by the appellants how to stitch it. The workers were paid on piece rate basis. If a worker failed to stitch a garment as per the instructions, the appellants rejected the work, and asked the worker to restitch the garment. This Court held that such workers fell within the definition of “person employed” under Section 2(14) of the Andhra Pradesh (Telangana Area) Shops and Establishments Act, 1956. It was held that:

“35. Quite apart from all these circumstances, as the employer has the right to reject the end product if it does not conform to the instruction of the employer and direct the worker to restitch it, the element of control and supervision as formulated in the decisions of this Court is also present.” 

6.5. On the issue where payment is made by piece­rate to the workers, would they be covered by the definition of “employee”, this Court in Shining Tailors v. Industrial Tribunal II, U.P., Lucknow and Ors., held that:

“5. We have gone through the record and especially the evidence recorded by the Tribunal. The Tribunal has committed a glaring error apparent on record that whenever payment is made by piece rate, there is no relationship of master and the servant and that such relationship can only be as between principal and principal and therefore, the respondents were independent contractors. Frankly, we must say that the Tribunal has not clearly grasped the meaning of what is the piece rate, If every piece rated workmen is an independent contractor, lakhs and lakhs of workmen in various industries where payment is correlated to production would be carved out of the expression ‘workmen’ as defined in the Industrial Disputes Act. In the past the test to determine the relationship of employer and the workmen was the test of control and not the method of payment. Piece rate payment meaning thereby payment correlated to production is a well­ recognised mode of payment to industrial workmen. In fact, wherever possible that method of payment has to be encouraged so that there is utmost sincerity, efficiency and single minded devotion to increase production which would be beneficial both to the employer, the workmen and the nation at large. But the test employed in the past was one of determining the degree of control that the employer wielded over the workmen. However, in the identical situation in Silver Jubilee Tailoring House and Ors. v. Chief Inspector of Shops and Establishments and Anr. (1973) IILLJ 495 SC Methew, J. speaking for the Court observed that the control idea was more suited to the agricultural society prior to Industrial Revolution and during the last two decades the emphasis in the field is shifted from and no longer rests exclusively or strongly upon the question of control. It was further observed that a search for a formula in the nature of a single test will not serve the useful purpose, and all factors that have been referred to in the cases on topics, should be considered to tell a contract of service. Approaching the matter from this angle, the Court observed that the employer's right to reject the end product if it does not conform to the instructions of the employer speaks for the element of control and supervision. So also the right of removal of the workman or not to give the work has the element of control and supervision. If these aspects are considered decisive, they are amply satisfied in the facts of this case. The Tribunal ignored the well laid test in law and completely misdirected itself by showing that piece rate itself indicates a relationship of independent contractor and error apparent on the record disclosing a total lack of knowledge of the method of payment in various occupations in different industries. The right of rejection coupled with the right to refuse work would certainly establish master servant relationship and both these tests are amply satisfied in the facts of this case. Viewed from this angle, the respondents were the workmen of the employer and the preliminary objection therefore, raised on behalf of the appellant­ employer was untenable and ought to have been overruled and we hereby overrule it.” 

6.6. In M/s P.M. Patel & Sons and Ors. v. Union of India and Ors.,4 the appellants therein were engaged in the manufacture and sale of bidis. The appellants engaged contractors, and the contractors engaged workers who rolled the bidis at their own homes after obtaining the raw materials either directly from the appellants, or through the contractors. The appellants contended that those workers were not covered by the definition of “employee” under Section 2(f) of the EPF Act. This Court 4 (1986) 1 SCC 32. rejected the contentions raised by the appellants therein, and held that:

“8. … Clause (f) of Section 2 of that Act defines an “employee” to mean “any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer, and includes any person employed by or through a contractor in or in connection with the work of the establishment.” It will be noticed that the terms of the definition are wide. They include not only persons employed directly by the employer but also persons employed through a contractor. Moreover, they include not only persons employed in the factory but also persons employed in connection with the work of the factory. It seems to us that a home worker, by virtue of the fact that he rolls beedis, is involved in an activity connected with the work of the factory. We are unable to accept the narrow construction sought by the petitioners that the words “in connection with” in the definition of “employee” must be confined to work performed in the factory itself as a part of the total process of the manufacture. …
10. In the context of the conditions and the circumstances set out earlier in which the home workers of a single manufacturer go about their work, including the receiving of raw material, rolling the beedis at home and delivering them to the manufacturer subject to the right of rejection there is sufficient evidence of the requisite degree of control and supervision for establishing the relationship of master and servant between the manufacturer and the home worker. It must be remembered that the work of rolling beedis is not of a sophisticated nature, requiring control and supervision at the time when the work is done. It is a simple operation which, as practice has shown, has been performed satisfactorily by thousands of illiterate workers. It is a task which can be performed by young and old, men and women, with equal facility and it does not require a high order of skill. In the circumstances, the right of rejection can constitute in itself an effective degree of supervision and control. We may point out that there is evidence to show that the rejection takes place in the presence of the home worker. That factor, however, plays a merely supportive role in determining the existence of the relationship of the master and servant. The petitioners point out that there is no element of personal service in beedi rolling and that it is open to a home worker to get the work done by one or the other member of his family at home. The element of personal service, it seems to us, is of little significance when the test of control and supervision lies in the right of rejection.”

6.7. The aforesaid judgments make it abundantly clear that the women workers employed by the Respondent Company are covered by the definition of “employee” under Section 2(f) of the EPF Act.

6.8. The EPF Act is a beneficial social welfare legislation which was enacted by the Legislature for the benefit of the workmen. This Court in The Daily Partap v. The Regional Provident Fund Commissioner, Punjab, Regional Provident Fund Commissioner v. The Hooghly Mills Company Ltd. and Ors., 2012 (1) SCALE 422. Haryana, Himachal Pradesh and Union Territory, Chandigarh, held that:

“9. … It has to be kept in view that the Act in question, is a beneficial social welfare legislation meant for the protection of weaker sections of society, namely, workmen who had to eke out their livelihood from the meagre wages they receive after toiling hard for the same.” 

Hence, the provisions under the EPF Act have to be interpreted in a manner which is beneficial to the workmen.

6.9. In the present case, the women workers were certainly employed for wages in connection with the work of the Respondent Company. The definition of “employee” under Section 2(f) is an inclusive definition, and includes workers who are engaged either directly or indirectly in connection with the work of the establishment, and are paid wages.

In the present case, the women workers were directly engaged by the Management in connection with the work of the Respondent Company, which was set up as a ready­made garments industry in Marathwada. The women workers were paid wages on per­piece basis for the services rendered. Merely because the women workers were permitted to do the work off site, would not take away their status as employees of the Respondent Company.

7. The Respondent Company placed reliance on this Court’s decision in C.E.S.C. Limited and Ors. v. Subhash Chandra Bose and Ors., wherein it was held that:

“14. … In the textual sense ‘supervision’ of the principal employer or his agent is on ‘work’ at the places envisaged and the word ‘work’ can neither he construed so broadly to be the final act of acceptance or rejection of work, nor so narrowly so as to be supervision at all limes and at each and every step of the work. A harmonious construction alone would help carry out the purpose of the Act, which would mean moderating the two extremes. When the employee is put to work under the eye and gaze of the principal employer, or his agent, where he can be watched secretly, accidentally, or occasionally, while the work is in progress, so as to scrutinise the quality thereof and to detect faults therein, as also put to timely remedial measures by directions given, finally leading to the satisfactory completion and acceptance of the work, that would in our view be supervision for the purposes of Section 2(9) of the Act.”

The decision in C.E.S.C. Limited (supra) however, is not applicable to the facts of the present case. In that case, this Court interpreted the meaning of the term “supervision” as used in the definition of “employee” Section 2(9) of the Employees’ State Insurance Act, 1948. However, the term “supervision” is nowhere used in the definition of “employee” under Section 2(f) of the EPF Act. The decision in P.M. Patel (supra) could not be used to interpret the word “supervision” under the Employees’ State Insurance Act, 1948 because the said word has not been used in Section 2(f) of the EPF Act.

8. In view of the aforesaid discussion, the judgment passed by the Bombay High Court vide the Impugned Order dated 27.04.2012, being contrary to settled law, is set aside. The Order dated 19.04.1993 passed by the Appellant No. 1 is restored. The Respondent Company is directed to deposit the amount assessed by Appellant No. 1 towards Provident Fund dues of the women workers within 1 month from the date of this Judgment.

The Civil Appeal is allowed in the aforesaid terms. All pending Applications, if any, are accordingly disposed of. 

 Ordered accordingly.

.....................................J. (ABHAY MANOHAR SAPRE) .…...............………………J.

(INDU MALHOTRA) New Delhi, July 24, 2019

Compliance Checklist - The Apprentices Act, 1960 & Rule 1960

Dear Reader,

After publishing  compliance checklist - Maharashtra Shops And Establishments (Regularisation of Employment & Condition of Employment) Act, 2017 & Rules 2018, I had received another compliance checklist requirement on The Apprentices Act, 1960. Please find the below exhibit compliance checklist for your Audit & Inspection Purpose. Kindly write in comment section any further requirement, shall try to present it.

Apprentices Act, 1960 & Rule 1960
Sr. No	Provisions	Section	Rules	Form
1	Number of Apprentices To Hire - Ensure number of apprentices employed is in accordance with the ratio prescribed by the Apprenticeship Adviser.	Section 8
2	Minimum Qualifications for an Apprentice - Not to hire an apprentice unless he meets the minimum standards of education and fitness prescribed in the act	Section 3,	Rule 3 & 4
3	Reservation for SC/ST Apprentices - To reserve places for Scheduled Castes and Tribes in accordance with the Act.	Section 3-A,	Rule 5
4	Apprentices Contract and Registration - To enter into a contract of apprenticeship with each apprentice or his guardian for a specified period and register all such contracts with the Apprenticeship Adviser. within three months	Section 4	Rule 6 & 7	Format 1
5	Period of Apprenticeship - To ensure that all apprentices complete the period of training specified in their contract	Section 6,	Rule 7
6	Termination of Apprentices Contract - To obtain permission in writing from the Apprenticeship Adviser prior to terminating the contract of an apprentice before it expires and pay Compensation to the apprentice if necessary	Section 7	Rule 8
7	Basic and Practical Training Of Apprentices - Make suitable arrangements to impart practical training at the cost of the employer for all apprentices and to pay expenses to the Government for basic training of some apprentices and to provide facilities for a Related Instruction Course.	Section 9,10
8	Location of Apprentice Training - To impart basic training in a separate part of the workshop or a separate building If more than 500 workers and 12 apprentices are employed in the establishment, & to depute apprentices to any government training institute otherwise	9 (4-6)
9	Employers Obligations To Apprentices - To provide an apprentice training in his trade, suitable instructors, a person qualified in the trade to supervise the apprentice and to meet all other terms of the contract of apprenticeship	Section 11	Rule 6
10	Qualifications of Person in charge of Apprentices - To ensure that all people in charge of apprentices in a particular trade are suitably qualified	Section 11(b),	Rule 9,9-A
11	Payment of Stipend to Apprentices - To pay every apprentice the prescribed Stipend at prescribed intervals and to ensure no apprentice is required to participate in any output bonus or incentive scheme	Section 13,	Rule 11
12	Health, Safety and Welfare of Apprentices - To extend the provisions regarding Health, Safety and Welfare in the Factories/Mines Act to apprentices.	Section 14
13	Hours of Work and Overtime for Apprentices - To adhere to prescribed hours of work for all Apprentices	Section 15,	Rule 12
14	Leave Entitlements for Apprentices - If proper leave rules do not exist or permit less than 37 days of total leave in a year, allow apprentices leave entitlement as under the Apprentices Act	Section 15(3),	Rule 13
15	Model Contract of Apprenticeship Training	Section 4	Rule 14	Format 1
16	Intimation of engagement of Apprentices - Joining Report for Apprentices; To submit contracts of apprenticeship training to the appropriate authorities every quarter	Section 5	Rule 14 (3)	Format 1-A
17	Proforma of Work Diary - Work Diary For Each Trade Apprentice; To ensure that each trade apprentice maintains a work diary	Section 10	Rule 14 (4)	Format 2
18	Attendance Register for Trade Apprentices - To maintain an attendance register for trade apprentices employed in the establishment	Section 10	Rule 14 (5)
19	Application Form for Trade Apprentices Tests - To submit application forms every half year regarding trade apprentices eligible to appear in the trade test	Section 21	Rule 14 (6)(a)	Format 3
20	Submission Eligibility Certificate for Trade Test - To submit training and progress reports of trade apprentices to the testing centres on intimation of tests	Section 21	Rule 14 (6)(c)	Format 4
21	Apprentices Half Yearly Return - To submit a return every half year regarding trade apprentices employed to the appropriate authority	Section 19	Rule 14(7)	Form Apprenticeship 1
22	Index Card for Non-Trade Apprentices - To prepare an maintain an Index card for each graduate/ technician/ vocational apprentice and submit a copy to the appropriate authorities	Section 19	Rule 14 (10)
23	Record of Work Done - To maintain a record of the work done and the studies undertaken by each apprentice	Section 19	Rule 14(11)	Form Apprenticeship 2
24	Quarterly Report of work done and studies undertaken - To submit a quarterly return of record of work done by apprentices to the appropriate authority	Section 19	Rule 14 (11)	Form Apprenticeship 3
25	Employer's liability for compensation for injury - If any personal injury is caused to an apprentice, by accident arising out of and in the course of his training as an apprentice, his employer shall be liable to pay compensation which shall be determined and paid, so far as may be, in accordance with the provisions of the Workmen's Compensation Act, 1923,	Section 16

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Supervisors Not Entitled to Overtime

Supervisors Not Entitled to Overtime

Jitendra Anant Mhatre And Ors vs The Union Of India And Ors on 26 September, 2018

Bombay High Court

Reserved for judgment on: August 30, 2018. Judgment pronounced on : September 26, 2018. JUDGMENT:- (Per M.S. SONAK,J.)
1. Heard learned counsel for the parties.
2. The challenge in this petition is to the judgment and order dated 6th December, 2006 made by the Central Administrative Tribunal (CAT) dismissing Original Application No.446 of 2005 instituted by the petitioners seeking overtime allowance on the basis of revised pay scale made applicable to them.
Priya Soparkar 2 214 wp 4900-07-c
3. The petitioners had pleaded that they were initially appointed as Lower Division Clerks and thereafter, promoted as Upper Division Clerk at the Naval Armament Depot (Respondent No.6). As a part of their duties, the petitioners were posted/ transferred to the time keeping section on rotation basis for fixed tenure of three years. Here, the petitioners were required to work overtime as and when directed by the administration and also observed non-industrial timings. It is the case of the petitioners that while they were posted at the time keeping section, they were invariably required to work in the excess of 48 hours per week or 9 hours per day. As a result, the petitioners had contended that they were entitled to overtime allowance at twice their ordinary rate of wages in terms of Section 59 of the Factories Act 1948, which was clearly applicable.

4. The respondents also do not dispute the entitlement of the petitioners for overtime allowance in terms of Section 59 of the Factories Act. In fact, there is no dispute that such overtime was being paid to the petitioners. However, it is the case of the petitioners that the respondents by misconstruing the office Priya Soparkar 3 214 wp 4900-07-c memorandum dated 1st July, 1998 issued by the Ministry of Defence, Government of India have been computing the overtime allowance, on the basis of "Pre-revised scale", even though there had been a revision in the pay scales of the petitioners and the petitioners were entitled to the overtime allowance on the basis of such revised pay scales.

5. The petitioners aggrieved by the denial of overtime allowance on the basis of the revised pay scales made representations to the respondents, which were, however, turned down by the respondents mainly relying upon the office memorandum dated 1st July, 1998. The petitioners then instituted Original Application No.446 of 2005 seeking directions for payment of overtime allowance on the basis of revised pay scales. By the impugned judgment and order dated 6th December, 2006, the Central Administrative Tribunal dismissed their Original Application No.446 of 2005, again relying almost exclusively on clause (iii) of the O.M. dated 1 st July, 1998. Hence, the present petition.
6. Mr.A.I.Bhatkar, learned counsel for the petitioners contends that the case of the petitioners was squarely governed by clause
(i) of the O.M. dated 1st July, 1998, which had clearly provided that the employees who are "workers" within the meaning of the Factories Act, 1948, are entitled to payment of overtime allowance in terms of Section 59 of the Act on the basis of revised pay scales. Mr.Bhatkar submits that clause (iii) of the O.M. dated 1st July, 1998 applies only to "workers" who came within the scope of Section 64 of the Factories Act and whose basic pay was more than Rs.1,600/- per month in the pre-revised pay scales. Mr. Bhatkar points out that since the petitioners were not at all "workers" who came within the scope of Section 64 of the Factories Act, 1948, the Central Administrative Tribunal was not at all right in applying clause (iii) of the O.M. dated 1 st July, 1998 and on such basis denying relief to the petitioners.

7. Mr.Bhatkar further pointed out that the petitioners in Paragraph Nos.4.8 and 4.9 of their Original Application No.446 of 2005 before the Central Administrative Tribunal had made clear averments that employees, identically placed at the Naval Priya Soparkar 5 214 wp 4900-07-c Dockyard of the Respondent No.4 were being paid overtime allowance in terms of Section 59 of the Factories Act, 1948 on the basis of their revised scales. Mr.Bhatkar points out that since there was absolutely no difference between the petitioners and their counter parts at the Naval Dockyard, the denial of overtime allowance to the petitioners on the basis of revised pay scales, amounted to clear discrimination and violation of the constitutional rights under Articles 14 and 16.
8. Despite service, none appears on behalf of the respondents.
9. We have carefully considered the submissions made by Mr. Bhatkar and we have also perused the impugned judgment and order made by the CAT. According to us, for the reasons which we shall indicate hereafter, the impugned judgment and order made by the CAT warrants interference and the petitioners deserve to be granted the relief of overtime allowance on the basis of their revised pay scales.

10. Since the petitioners were working as clerks at the Naval Priya Soparkar 6 214 wp 4900-07-c Armament Depot, there can be dispute that they were "workers" as defined under Section 2(l) of the Factories Act, 1948. There is also no dispute that the Naval Armament Depot where the petitioners were working, answers the definition of factory under Section 2(m) of the Factories Act, 1948. There is also no dispute that when the petitioners were posted at the time keeping section of the Naval Armament Depot, they were required to work overtime i.e. in excess of 48 hours of the weeks and 9 hours of the day.

11. Section 59 of the Factories Act, 1948 inter alia provides that where workers in a factory for more than 9 hours in any day or for more than 48 hours in any week, they shall in respect of overtime work be entitled to wages at the rate of twice his ordinary rate of wages. Sub-section 2 of Section 59 of the Factories Act, 1948 provides that for the purposes of sub-section (1) "Ordinary rate of wages" means the basic wages plus such allowance, including the cash equivalent of the advert according to the concessional sale to the workers of fit ground and other workers, as the worker is for the time being entitled to but does not include bonus and wages for the overtime work.

12. On a plain reading of the provisions of Section 59 of the Factories Act, 1948, which are admittedly applicable to the case of the petitioners, therefore, the petitioners were entitled to wages at the rate of twice their ordinary rate of wages, in respect of overtime work they discharged at the time keeping section of the Naval Armament Depot. As noted earlier, even the respondents do not dispute this position. The respondents as well as the CAT, however, relying upon Office Memorandum dated 1 st July, 1998 have held that such overtime allowance payable to the petitioners must be computed on the basis of their pre-revised scales, since, the basic pay of the petitioners was more than Rs.1,600/- per month in the pre-revised scales. This is on the basis of their construction of clause (iii) of the O.M. dated 1 st July, 1998. The contention of the petitioners, as noted earlier is that their case is covered by clause (i) and not clause (iii) of the O.M. dated 1 st July, 1998.

13. In order to appreciate the rival contentions, it will be appropriate to quote the O.M. dated 1st July, 1998 issued by the Ministry of Defence, Government of India dealing with payment of overtime allowance to employees of Defence Industrial Establishment. The O.M. dated 1st July, 1998 reads as follows :

F.NO.14(1)97/D(Civ-II) Government of India Ministry of Defence New Delhi the 1st July 1998 OFFICE MEMORANDUM PAYMENT OF OVERTIME ALLOWANCE TO EMPLOYEES OF DEFENCE INDUSTRIAL ESTABLISHMENTS The undersigned is directed to refer to this Ministry's OM Nos.14(1)/86/D(Civ-II) dated 14.01.88 and DO P&T OM No. dated 21/11/97 and to say that the matter regarding payment of OTA to the employees of Defence Industrial Establishments has been reviewed in consultation with DO P&T and Ministry of labour taking into account the provisions of the Factories Act, 1948 and the following clarifications are accordingly being made here:-

• (i) The employees of Industrial establishment who are "Workers" within the meaning of the Factories Act, 1948, are 59 of the Act on one basis of the revises pay scales. As already stated in the Ministry of Defence OM No.14(2)/87/D(Civ.II) dated 11.09.87 and OM No.14(1)/86/D(Civ.II) dated 14.01.88, they are entitled to Overtime Allowance only at the time rate, for the work done between the prescribed working hours and upto Priya Soparkar 9 214 wp 4900-07-c 48 Hours a week.

• (ii) Those categories of "Workers" of Industrial Establishments who come within the scope of Section 64 of the Factories Act covering only those employees who are under the rules framed by the state Govts under section 64(1) of the Factories Act, 1940 or who are declared to be workers by the Inspector of Factories under Section 64(1) of the Factories Act, are entitled to payment of Overtime Allowance under Section 59 of the Act, on the basis of revised pay scales but subject to the conditions that their basic pay in the pre-revised pay scales is not more than Rs.1,600/- p.m. notionally determined. They are entitled to OTA at time rate as explained in sub para (i) above for the work done between the prescribed duty hours and upto 48 hours work in a week.

• (iii) Those Categories of "Workers" who come within the scope of Section 64 of the Factories Act and whose basic pay is more than Rs.1,600/- p.m. in the pre-revised scales are eligible for OTA in terms of Ministry of Defence OM No. 14(2)/76/D(Civ.II) dated 25.06.1983. Accordingly, OTA will be paid to them on the basis of old pay scales notionally determined. They will also, be paid OTA for overtime work done between the prescribed duty hours and upto 48 hours a week only at time rate calculated on the basis of old pay scales notionally determined. They will be entitled to OTA at double the time rate calculated on the basis of old pay scales, notionally determined, for work beyond 48 hours under the orders dated 25.06.1983 referred to above. This will not entitle anyone who is not covered by 25.06.1983 orders to claim OTA.

2. Overtime allowance may be paid on the basis of instructions contained in sub-para (i), (ii), and (iii) of para 1 above with effect from 01.01.1996 or date from which the pay in revised scale of pay Priya Soparkar 10 214 wp 4900-07-c is drawn and past cases regularised accordingly.
3. This issues with the concurrence of Ministry of Defence (Fin/AG) vide this ID No.547/AG/PB/98 dated 01.07.98 and after consultation with DO P &T vide their U.O.No.15013/1/98-Estt(AL) dated 03.02.98 and Ministry of Labour vide U.O.No.S. 25025/2/97-ISII-II dated 23.06.98.
Sd/x x x (V.A.Chavda) Under Secretary to the Government of India.
(emphasis supplied)

14. The case of the petitioners, according to us, is covered by clause (i) of the O.M. dated 1st July, 1998, which was not even adverted to, by the CAT in the impugned judgment and order. As noted earlier there is absolutely no dispute that the petitioners are "workers" within meaning of the Factories Act, 1948 and are therefore, entitled to payment of overtime allowance in terms of Section 59 of the Factories Act, 1948. Clause (i) of the O.M. dated 1st July, 1998 in terms provides that such overtime in terms of Section 59 of the Factories Act, 1948 has to be paid "On basis of revised pay scales".

15. Clause (iii) of the O.M. dated 1 st July, 1998 relied upon Priya Soparkar 11 214 wp 4900-07-c by the respondents as well as the CAT applies to only those categories of "workers" who come within the scope of Section 64 of the Factories Act and whose basic pay is more than Rs.1,600/- per month in the pre-revised scales. This means that for clause (iii) to be attracted, two conditions have to be satisfied by the category of workers:-

(a) The workers concerned must come within the scope of Section 64 of the Factories Act, 1948; and
(b) The workers concerned must be drawing basic pay of more than Rs.1,600/- per month.

16. Only if the aforesaid two conditions were to be satisfied, can it be said that the workers concerned could be paid the overtime allowance on the basis of old pay scales notionally determined and not on the basis of the revised pay scales. In the present case, both the respondents as well as the CAT have applied clause (iii) of the O.M. dated 1st July, 1998 to the case of the petitioners merely on the basis that the basic pay of the petitioners was more than Rs.1,600/- per month in the pre-revised pay scales. Neither the respondents nor the CAT have gone into the question as to whether the petitioners were workers who came within the scope of Section 64 of the Factories Act, 1948.

17. The record bears out that the petitioners, were not workers who came within the scope of Section 64 of the Factories Act, 1948. Therefore, one of the conditions for applicability of clause (iii) of the O.M. dated 1st July, 1998 was not fulfilled and consequently clause (iii) of the O.M. dated 1 July, 1998 was not at all attracted to the case of the petitioners. Rather, as noted earlier, the case of the petitioners was fully covered by clause (i) of the O.M. dated 1st July, 1998.

18. Section 64(1) of the Factories Act, 1948 empowers the State Government to make rules defining the persons who hold positions of supervision or management or are employed in a confidential position in a factory or empowering the Chief Inspector to declare any person, other than a person defined by such rules, as a person holding position of supervision or management or employed in a confidential position in a factory if, in the opinion of the Chief Inspector, such person holds such Priya Soparkar 13 214 wp 4900-07-c position or is so employed, and the provisions of this Chapter, other than the provisions of clause (b) of sub-section (1) of section 66 and of the proviso to that sub-section, shall not apply to any person so defined or declared. Provided that any person so defined or declared shall, where the ordinary rate of wages of such person does not exceed the wage limit specified in sub-section (6) of section 1 of the Payment of Wages Act, 1936, as amended from time to time, be entitled to extra wages in respect of overtime work under section 59.

19. In pursuance of powers vested in the State Government under section 64(1) of the Factories Act, 1948, the State Government has framed Rule 100 in the Maharashtra Factories Rules, 1963, which reads thus:-

"Rule - 100: PERSONS DEFINED TO HOLD POSITION OF SUPERVISION OR EMPLOYED IN A CONFIDENTIAL POSITION.

(1) In a factory the following persons shall be deemed to hold position of supervision or management within the meaning of sub-section (1) of section 64, provided they are not required to perform manual labour or clerical work as a regular part of their duties namely:
(i) The Manager, Deputy Manger, Assistant Manager, Production Manager, Works Manager and the General Manager;
(ii) Departmental Head, Assistant Departmental Head, Departmental in-charge or Assistant Departmental in-charge;
(iii) Chief Engineer, Deputy Chief Engineer and Assistant Engineer;
(iv) Chief Chemist, Laboratory incharge;
(v) Personnel Manager, Personnel Officer;
(vi) Labour Officer, Assistant Labour Officer;
(vii) Welfare Officer, Additional Welfare Officer or Assistant Welfare Officer;
(viii) Safety Officer;
(ix) Security Officer;
(x) Foreman, Chargeman, Overseer and Supervisor;
(xi) Jobber in Textile Factories;
(xii) Head Store Keeper and Assistant Store Keeper;
(xiii) Boiler Sarang or such Boiler Attendants who are in-charge of a battery of boilers and are only required to do supervisory work;
(xiv) Any other person who in the opinion of the Chief Inspector, holds a position of supervision or Management and is so declared in writing by him."

20. Now it is not the case of the respondents that the petitioners were ever holding position of supervision or management or that they were employed in a confidential position in a factory. It is also not the case of the respondents that the petitioners were included in any of the categories set out under Rule 100 (ii) of the Maharashtra Factories Rules, 1963. The petitioners were thus not "workers" who came within the scope of Section 64 of the Factories Act, 1948. Since this was one of the conditions for clause (iii) of the O.M. dated 1st July, 1998 to apply, clearly, both the respondents as well as the CAT, seriously erred in applying clause (iii) of the O.M. dated 1st July, 1998 to the case of the petitioners and on that basis denying the petitioners overtime allowance on the basis of the revised pay scales.

21. There was no contention raised that Rule 100 of the Maharashtra Factories Rules does not apply to the industrial establishment of the respondents. However, even if we were to proceed on the basis that Rule 100 is inapplicable, there is not the slightest material on record to suggests that the petitioners were workers covered under Section 64 of the Factories Act, 1948. In the absence of any such material, both the respondents as well as the CAT were obviously not right in treating the petitioners as workers covered under the scope of Section 64 of the Factories Act, 1948 and on such basis applying clause (iii) of the O.M. dated 1st July 1998. That apart in Paragraph Nos.4.8 and 4.9 of the original application instituted by the petitioners before the CAT, they have clearly pleaded that clerks like them who have been posted in the time keeping section of the Naval Dockyard or at the office of General Manager, Naval Armament Depot, Mumbai have all been receiving overtime allowance on the basis of their revised pay scales. In the written statement filed on behalf of the respondents on 27th February, 2006 before the CAT there is no denial on this aspect.

In fact, in Paragraph Nos.17 and 19 of such written statement, it is expressly admitted that the clerks at the time keeping section in the Naval Dockyard, Mumbai are receiving overtime allowance on the basis of revised pay scales. There is no basis for distinguishing the cases of the petitioners and the cases of their counterparts at the Naval Dockyard or the Naval Armament Depots, all of which are establishments of the Ministry of Defence, Government of India. This aspect has really not being considered by the CAT in the proper perspective. Award of Overtime allowance to similarly placed clerks in other defence industrial establishment on the basis of their revised pay scale but denial of the same to the petitioners clearly amounts to infringement of the petitioners' right guaranteed by Article 14 of the Constitution of India.

23. For all the aforesaid reasons, we dispose of this petition by following order:-

ORDER

(a) The impugned judgment and order dated 6 th December, 2006 made by the Central Administrative Tribunal in Original Application No.446 of 2005 is hereby set aside.
(b) The respondents are directed to pay to the petitioners overtime allowance on the basis of their revised pay scales for the period they were posted at the time keeping section of the Naval Armament Depot, Karanja, Uran within a period of three months from today
(c) If such dues are not paid within three months from today, then the respondent will have to pay interest thereon at the rate of 6% p.a. from the date such amounts became due and payable to the petitioners, till the date of actual payment.

The Rule is accordingly made absolute in the aforesaid terms.

However, there shall be no order as to costs.

(M.S.SONAK, J.)

(A.S.OKA, J.)

Keywords - Overtime, Supervisors Not Entitled to Overtime, Confidential Position, Factories Act 1948, Maharashtra Factories Rules 1963