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Petitioner: WOOR MUHAMMAD KHAN and others VS Respondent: Messrs PRINCE GLASS WORKS LTD.,LANDHT INDUSTRIAL AREA, KARACHI
Court Name: Labour Court Judge(s): A. J. Bachani Title:WOOR MUHAMMAD KHAN and others vs Messrs PRINCE GLASS WORKS
LTD.,LANDHT INDUSTRIAL AREA, KARACHI Case No.: Application No, 83 of 1987 Date of Judgment:1988-03-28 Reported As: 1989 PLC 386 Result: Application dismissed Judgment ORDER ' Mr. Noor Muhammad and others, who are referred in the joint petition, in their' brief prayer have sought the Court's indulgence to adjudicate and determine an Industrial Dispute which they term as the common grievance arising out of secured right under the law. 2. The petitioners/applicants, in their application under section 25-A(10), I.R.O. Have given their various designations namely the loaders, coolies, jobbers, machine men and operators with their different card numbers, to claim that the respondent management, is paying less amount of increase in wages to the applicants/petitioners on the following facts explained which is also the question of mixed fact and law. 3. What the petitioners state, that since the cost of living did not form part of wages till May, 1977, when the Employees' Cost of Living (Relief) Amendment Act, 1977 was enacted but vide the said Amendment Act the basic wages plus Cost of Living Allowance became part of wages, the management though acted under subsection (2) of section 3 in respect of 10% of wages but did not give the increase of 13.5% from 1-7-1985 under subsection (6) of section 3 having been made effective from 1-7-1986 as increase in wages by 18%. If 13.5 % increase was calculated, it was on the basis of basic wage only. 4. It is also the contention that the management had made calculation at Rs. 4.5% on the basis of wages only for calculation of 18% increase from 1-7-1986 and the short amount were worked out as the legal dues but those were also set off against the benefit guaranteed under settlement of 25-3-1986.
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5. Respondent has raised the objection that application is time-barred even according to their claim on 1-7-1985 when the notice was served on 22-2-1987 in respect of the grievance. There is no common grievance also for the maintainability of the application. 6. According to the respondent section 7 of the Employees' Cost of Living (Relief) Act the CLA is not to form part of the wages. The word wages includes addition in respect of the Cost of Living for the period preceding August 1973 under the definition Cost of Living if payable was to be treated as part of wages. 7. They have also contended that the Government of Pakistan, Ministry of Finance have clarified that the Cost of Living payable to the employees under the Cost of Living Relief Act, 1973 will not be taken into account for the purpose to calculate increase in wages at the rate of 13.5%. It is, therefore, the management did not treat the Cost of Living, as part of wages. They have further stated that if the amount is added in the wages, then many workers who are receiving benefits under the Employees' Cost of Living (Relief) Act shall stand excluded that their wages inclusive of CLA would exceed Rs.1,500. The management, therefore, calculated 13.5 % increase in wages from 1- 7-1985 on basic wages and not on the amount which includes CLA. They have further stated that subsection (7) of section 3 has been misunderstood with reference to increase in wages of 18% which is liable to be set off against any amount under the settlement, after 1st January, 1984.On 25- 3-1986 the managements entered into settlement where it was provided that in order to give relief due to high cost of living the revision in pay scale was being made. It was also mentioned that to give relief to the workers due to high cost of living the management have agreed to give an additional amount equal to ona increment in the pay scale. Likewisa under clause-3, the management agreed to provide relief by increasing House Rent Allowance from 20 to Rs. 30, Bleat Allowance by Rs. 41- per month, Washing Allowance by Rs.3 per month, Conveyance Allowance by Rs.5 and the Site Allowances, Peon Allowances, Kitchen Allowances, Technical Allowances. In other words the management is giving 13.5% increase from 1-7-1985 and the amount under settlement was more than 4.5% and, therefore, no less amount is paid. REASONS: 1. Mr. Mehmood Ghani, counsel for the employer has raised certain objections, one is the objection of limitation that if the cause of action arose on 1-7-1985, the petition is time-barred with regard to this claim. He has raised the second objection that application is filed by the applicants as the common grievance for seeking the claim, because each worker has a individual case for adjudication and, therefore, the application is also not in proper legal form under section 25-A in the manner the Ordinance has directed for, it is a question of limitation before jurisdiction is assumed to give the relief to the workers. 2. Besides his contention of limitation, his argument proceeds on the merits, that in terms of section 7 of the Employees' Cost of Living (Relief) Act, 1973, the Cost of Living-Allowance is not to form part of wages. He has referred to the definition of wages by giving reference to section 2(e) of the Cost of Living (Relief) Act, 1973 and contended that any addition in respect of the Cost of Living payable or paid for the period preceding first day. Of August 1973, only is covered in the definition of the term "wages". He has brought the distinction, that if Cost of Living Allowance was payable before 1st August, 1973, it was to be treated as part of wages. But after August, 1973 it was not to be treated as wages for the purpose of definition of term wages in section 2(e). To support his. Contention he has referred the notification of the Finance Division, from the Ministry of Law and stated that 13.5% increase cannot be taken into account for the calculation of increase under sections I to V. 3. Mr. Mehmood Ghani has also contended that subsection (7) of section 3 of the Employees' Cost of Living (Relief) Act, referring to the increase of wages of 18% is liable to be set' off against any amount which is given by the management, under the settlement, agreement or award after 1st January, 1984. According to Mr. Mehmood Ghani, the management has entered into settlement with CBA on 25-3-1986, by which the pay scales were revised and in order to give relief to the
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workers against high cost of living, management gave the increase of annual increment, house rent allowance, heat allowance, washing allowance, kitchen allowance and technical allowance. 4. What Mr. Lodhi has contended in paragraph 2 is that since the Cost of Living Allowance did not form part of wages till May 1977, when the Employees Cost of Living (Relief) Amendment Act by the amendment provided that the basic wages plus the Cost of Living Allowance became part of wages what Mr. Lodhi has grievance that the management acted according to the amended law in respect of 10% of the wages under subsection (2) of section 3 but did not follow 13.5% increase in wages from 1-7-1985, under subsection 6 of section 3 and under subsection (7) of section 3 from 1- 7-1986 for giving increase in wages by 18%. In other words it is contended that the calculation at 13.5% was made from 1-7-1985 on the basis of basic wages only. He has been further explanatory that the management has made calculation at 4.5% on the basis of basic wages only for calculation of l82 increase in wages from 1-7-1986. 5. The Court further refers the clarification regarding Employees' Cost of Living (Relief) Amendment Act, 1985 issued by the Government of Pakistan Finance Division where the issue was examined in consultation with the Justice Division. ' It clarifies as follows: (i)"The cost of Living Allowance payable to an employee under subsections (1) to (5) of section 3 of the Employees Cost of Living (Relief) Act, 1973 will not be taken into account for the purpose of calculating increase in his wages at rate of 13.5%. (ii) The set off has been allowed in respect of those amounts which were granted under agreement announced and effective on or after 1-1-1984. The amounts due under agreement effective from date prior to 1-1-1984 are not to be set off and in such cases the increase in wages under section 3(6) of the Act 1973 shall remain intact irrespective of the fact that agreement was signed after 1-11 984. 6. Employees' Cost of Living (Relief) Act 1973 came in December 31, 1973. In this Act of 1973 the word "wages" has been defined as remuneration for services other than Cost of Living Allowance payable in cash to employees without taking into account the deduction for any purpose under contract of service or apprenticeship and includes any Dearness Allowance or other addition in respect of the Cost of Living allowance payable or paid for the period preceding the 1st day of August 1973. 7. Section 3 further provides that every employee whose wages do not exceed Rs.735 shall in respect of his employment on or after August 1973 be paid by his employer Cost of Living Allowance in the manner directed under clauses (a) and (b). Subsection (2) further reads that in addition to the Cost of Living in respect of the employees whose wages do not exceed 1,100 rupees shall in respect of the employment after 8th June 1974 be paid by the employer in the manner directed under clauses (a) and (b). Subsection (3) provides that in addition to the Cost of Living every employee in respect of his employment after 7th day of April, 1975 be paid in the manner as directed. Section 5" further reads that the Cost of Living Allowance shall be paid with wages in accordance with the custom, the usage, practice or law applicable to the undertaking and then in the manner it has been suggested by qualifying the provision. Then there are sections 8 and 7. Section 7 is very clear that notwithstanding anything contained in this Act or any other law, the Cost of Living Allowance shall not form part of wages of the workers for the purpose of any other law including the contribution to Provident Fund, Gratuity, Bonus or wages for overtime work. 8. Section 8 has saved the rights and privileges by emphasizing that nothing in this Act shall affect any right or privilege to which employee was entitled in respect of the Cost of Living Allowance payable before the Ordinance of 1973 before the Amendment Act, 1974 or in cases before the commencement of the Amended Ordinance 1975, under any law for the time being in force or under any award, decision, agreement, settlement, contract, custom or usage immediately before
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such commencement. In other words before these Ordinances or Amendment Acts the right which has accrued before the commencement shall not be affected. It is further explained by qualifying clause that if at any time commencing after 1st day of August 1973 but preceding the commencement of the said Ordinance or as the case may be, commencing after the Ordinance but preceding the commencement of the Cost of Living (Relief) Amendment Act 1974, any employer has paid or become liable to pay by virtue of award, decision, agreement, settlement, contract, custom, or usage to any employee in respect of any period, any sum of money which is intended to provide relief due to rise in the Cost of Living such employer shall not be required to pay to such employee any amount in excess of difference, if any, between the amount so paid by him or the amount which he has become so liable to pay, and the Cost of Living Allowance payable to such employee. 9. It has further been explained for the purpose of this proviso that any increase in the wages by virtue of annual increment or promotion to higher grade or an allowance not given to provide relief due to cost of living which has arisen, shall not he deemed to be an increase intended to provide relief due to rise in the Cost of Living. 10. The case has presented very interesting questions of law. Mr. Lodhi, counsel for the workers, firstly has raised the preliminary objection has contended that copy of the clarification, from the Ministry of Finance cannot be treated as an evidence, unless the man concerned has been examined in the Court of law. His next submission is that this clarification can only be decided by the Court of law. 11. The objection of Mr. Lodhi with great respect to his legal view, cannot he disputed, that only the Court of law is to decide what the notification provides the meaning under the Cost of Living (Relief) Act known as the Amendment Act of 1985. But what is necessary to he pointed whether Court can take notice of the notification, which is issued under the Amendment Act. Article 51 of the Law of Evidence which is known now as Oanoon-e-Shahadat Order, clearly provides that the Court if forms the opinion, as to the existence of any fact of public nature, any statement of it in the 'Government Notification is a relevant fact. The objection, therefore, that notification cannot he read or the clarification following, if it is a relevant fact can be read. In this context of the reference the Government of Pakistan, Finance Division, under the legal opinion sought from the Justice Division made the clarification of which the Labour Court which is the Court of law can take judicial notice, for any notification passed through Justice Division under the particular enactment. Therefore, the Court of law cannot overlook what was the clarification which again the Court of law is to decide in the nature of the language of what the enactment provides. Indeed the scope of the Labour Court regarding interpretation as to what was the intention of the law-maker, as Mr. Lodhi has contended the Labour Court has limited jurisdiction to question vires of particular notification. This can only be done in the exercise of the constitutional jurisdiction before the highest Court, in dealing with the construction of statute, so what is to he seen by the Labour Court, is the Amendment Act, and its ordinary and natural meaning. So the legal opinion or clarification of the Finance Department from the Justice Division, assists the Court of law namely the Labour Court to know what is the relief provided to the workers in view of the Amendment Act, 1985, that is clarified that the Cost of Living Allowance payable to an employee under subsections 1 to 5 of section 3 of the Employees' Cost of Living (Relief) Act, 1973 will not he taken into account, for the purpose of calculating, the increase in his wages C 13.5% and the set off, is allowed in respect of those amounts which were granted under agreement after 1-1-1984. The amounts due under the agreement from date prior to 1-1-1984 arc not to be set off and in such cases the increase in wages under section 3(6) of the Cost of Living (Relief) Act, 1973 shall remain intact irrespective of the fact that agreement was signed after 1-1-1984. The clarification, therefore, needs no further clarification.
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12. The shorter question of the workers is that the management has acted according to the amended law in respect of 10% of wages vide subsection (2) of section 3 but did not comply with the same for 13.5% increase in wages granted w,e,f, 1-7-1985 under subsection (6) of section 3 as well as under subsection 7 of section 3 effective from 1-7-1986 for giving increase in wages by 18% of wages. Their grievance is that management has calculated 13.5% from 1-7-1985 on the basis of basic wages only and further not acted in accordance with law in respect of calculation on the basis of basic wages plus Cost of Living Allowance according to procedure in subsection (7) of section 3. The calculation of 4.5% is made on the basis of basic wages for calculation of 18!'4.. Increase from 1-7-1986. 13. Mr. Lodhi has referred the amended law for the purpose of reference that the management acted in respect of 1(1% but not complied with 13.5% from 1-7-1985, obviously he refers to the preceding paragraph 2 of which he has made the reference of the Amending Act of 1977, which Mr. Mehmood Ghani unfortunately did not refer and the Court pointed to Mr. Lodhi. Mr. Lodhi has referred with clarity in his note of arguments, what was the position in 1973 and in 1977. 14. He refers section 7 of 1973 Enactment that the Cost of Living Allowance was not to form wages. The language of the Enactment referred by Mr. Lodhi is as under:-- "Notwithstanding anything contained in this Act or any other law for the time being in force, the Cost of Living Allowance shall not form part of wages of a worker for the purpose of any other law including Contribution to Provident Fund, Gratuity, Bonus, Social Security------------ 15. But when the Amendment of 1977 came the position was in this manner, that the Cost of Living Allowance to form part of wages notwithstanding anything contained in this Act or any other law. For the time being in force the Cost of Living Allowance shall form part of wages of the workers for the purpose of any other law. 16. Mr. Lodhi also referred to the Amendment Act of 1977 by reference to section 7 in the context of indexation of wages. What Mr. Lodhi has said, that in section 7 the Amendment speaks that after the words Social Security Scheme, the words indexation of wages should be read. This is with reference to the Gazette of Pakistan of June 1987 with reference to Act No, VI of 1987, section 9. 17. Mr. Lodhi has further clarified the context of the argument that the percentage of 13.5 is to be accounted on basic pay scale plus Cost of Living Allowance and further stretched the definition of wages that wages previously under the Enactment of 1973 referred the remuneration for services other than Cost of Living Allowance. But after amendment, the words, "other than Cost of Living" were deleted. In other words, what Mr. Lodhi interprets, that by omitting the Cost of Living the meaning is that previously the remuneration of services minus Cost of Living was considered in the concept of the definition of wages. But after deletion of the words Cost of Living the wages means remuneration and Cost of Living. Mr. Lodhi has also gone further to draw the distinction that previously the Cost of Living was not to form part of wages but after Amendment it became the part of wages for the purpose of other laws. According to Mr. Lodhi, this section 7 has no concern with section 2(e) regarding definition of wages, which is an independent section, consequently he states that provisions of section 3(6) and (7) are clear that increase of 13.5% was to be given from 1-1-1985 and 18% from 1-1-1986. So far as the set off is concerned Mr. Lodhi is" very clear that set off is not disputed if any financial benefit additionally is received. Mr. Mehmood Ghani has not referred the Amending Act, of 1977 but C only taking this position that addition of the Cost of Living paid or payable for the period preceding 1st August 1973 was covered in the definition of term wages and therefore Cost of Living paid was treated as part of wages. But Cost of Living after 1st August 1973 is not to be treated as wages, for the purpose of definition of term, wages. He, therefore, contends that the Cost of Living payable to the employees cannot, be taken into account for the purpose of calculating increase 13.5% and relies on the notification of the Government, taking this argument that if the addition is made in the wages many workers who at present receive the benefit shall be
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excluded from the purview of the Act on exceeding the limit of 1,500. He has further taken this approach that the object to promulgate the Act of 1973 was to give financial relief and not to deprive them of the benefits by incorporating the definition in the term wages. In short the management admits that they calculated 13.5% from 1-7-1985 on the basic wages and not on CLA. He further refers that while subsection (7) of section 3 has been misunderstood, this provision refers to increase in wages of 18% and liable to be set off. Mr. Lodhi has further explained that CLA of 1981 was adjusted through settlement in 1981. 13.5% increase in wages was to be given from 1-1-1985. Since there was no settlement aft,A. 1-1.1984 13.5' was to be paid, but the respondent calculated 13.5% on the basic wages. Thirdly he states, that the rate of increase in wages from 1-1-1986 was made 18% instead of 13.5%. The legislature did not mention 4.5% increase but 18% to be adjusted against 13.5% but the respondent calculated only 4.5% of basic wages instead of calculating increase on 18%. 18. With these submissions and the reference to the Amending Act of 1977, which Mr. Lodhi has referred that Cost of Living Allowance forms part of wages further referred to the Amending Act of 1977 that the word indexation of the wages also includes, the complicated question of law arises in view of further clarification made by the Finance Department which Mr. Lodhi is not able to reconcile, whether the Cost of Living Allowance includes in the wages. Both the counsel have contended by giving their own interpretation of the intention of the law. 19. In such case, what the Court arrives at this finding that the scope of the Labour Court to give the interpretation will be beyond the scope of its jurisdiction. But as the matter stands, what the clarification of the Ministry of Justice is on the basis of notification, the Court follows as a relevant fact, and, what is the legal position of the highest legal opinion, apart from the Court of law. 20. This is a question of the interpretation of the statute to be taken, in the exercise of the constitutional jurisdiction, but what is necessary also to be pointed that this clarification is in respect of the Amendment Act of 1985 where the issue was whether the Cost of Living Allowance totaling to Rs. 150 as allowed under sections 3(1) to 3(5) is to be taken into account for determining wages while indexing wages 13.5% to determine the Cost of Living Allowance. The second issue was that which agreements will have the force? 21. In this context it has been said that the agreements which are signed after 1-1-1984, but provision regarding increase in the wages have been made effective from the date prior to 1-1- 1984. 22. In this clarification reference of the Amending Act, 1977 has not been found on the subject, and therefore, the difficulty of the question of law arises regarding the position of the indexation, though the clarification refers to the indexation of wages in that issue, under reference. The wider interpretation as argued by Mr. Lodhi in the context of that Amending Act VI of 1987 presents the difficulty. 22-A. However reference to the Act of 1973 known as the Employees Cost of Living (Relief) Act, was read with both the distinguished lawyers Mr. Mahmood Ghani and Mr. Lodhi with all the amendments made from time to time to know the intention and the clarification and further to take support from the highest opinion also from the Ministry of Justice. 23. To be precise, it is said that prior to August 1973 by reference to section 3, it shows that firstly the definition of the wages in clause (a) of section 2 means remuneration for services payable in cash without taking into account of deductions and includes any Dearness Allowance or other additions in respect of the Cost of Living Allowance or paid for the period preceding the 1st day of August 1973--------but does not include over time gratuity etc. The purport of this definition appears to be clear that in those days Cost of Living and also Dearness Allowance was the supposed inclusion. Then came the clarification in section 3 that every employee whose wages do not exceed 735 rupees will be paid after 1st August 1973 an allowance equal to 35 rupees per month or if the wages
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exceed at such rate as, together with his wages. The words are at such rate and with the wages together. This was the position after August 1973 regarding the Cost of Living Allowance to come out prominently. In other words, it was an additional relief only, what the Labour Court thinks. Then subsection (2) says that if the wages do not exceed 1,100 rupees, then after June 1974, there will be another additional relief on the relief already granted previously on this formula that he will be paid 50 rupees equal per month of 10% of monthly wages whichever is more and if it exceeds rupees 1,100 at such rate, as together with his wages. What this Court follows, that this was additional relief looking to the wages and the peculiar conditions of the cost of prices rising. The difference between 1973 and 1974 appears to be that at that time the first category of wages is shown 700 rupees in 1974 it is of 1,100 or more. The word 50 rupees or 10% of monthly wages is quite indicative that this particular allowance was an additional relief of a particular amount and not to be merged in the wages only as a relief. For, the Labour Court feels that the…
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