The Dvisional Engineer, G.I.P. Railway, v. Mahadeo Raghoo and Another

Sinha J. claim was inadmissible on the ground that there had -.,·

been no illegal deduction •from the respondent's wages inasmuch as the respondent had been allotted railway quarters of a suitable type and as he· had re-fused to occupy those quarters, he was ·not entitled under the rules to any house rent allowance. Alter-natively, it was further - pleaded by the · a appellant that so much of the· claim ' as related to period precedirig six months immediately· before the date of the application was· time-barred under the first pro-viso to section 15 (2) of the Act. The Authority. con-doned the delay and that parf of the order condoning the delay is not in controversy before us.

On the issues thus joined between the· parties the Authority came ·to the conclusion that the house rent allowance was "wages" as · defined .in the Act, that as a matter of fact, accommodation was -offered to the 1st respondent and he refused. it; but that ·even so, the appellant was not entitled to withhold - the -. house rent allowance. - Accordingly· the claim for · Rs. · 290 was allowed by. the Authority.

The short point to be decided in .this case is whether the ·house rent ·allowance· claimed by . the· 1st·· · respon-dent came within the purview of the definition -of "wages" contained in the· Act There being no diffe-rence on-· questions of ·fact ·between the parties, the answer -to the question raised · must depend upon ·the construction -to· be placed - upon: the· following 1ii:aterial portion of-the· definition of. '.'wages" in· ~ectiori •2(vi) of the Act :~ . , . . - .- . . . . " - "'Wages~ means all ~emunerition, capable-'of -be. ing' •expressed, in· terms :of money,; which--would; if the terms of .the -contract of-employment;•express'.-ot im-plied,- ·,Were .Julfilled;• be payable,• .Whether . conditional-ly. upon . the·, regular ,attendance,_ good-w,ork .or conduct or -,othc;r;: behay~our. rof ·the person employed or .-oth~rc wise, to a person employed in respect· of his employ-1955 ment or of work done in such employment, and in-The -Divisional cludes any bonus or other additional remuneration of Engineer, G.J.P. the nature aforesaid which would be so payable and Railway v. any sum payable to such person by reason of the Mahadeo Raghoo termination of his employment, but does not include-and another 'y ( a) the v:1J:µe of any house-accommodation, ,Sinha J.

supply of light, water, medical attendance or other amenity, or of any service excluded by general or special order of the State Government .......... · "

Shorn of all verbiage, "wages" are remuneration pay-able by an employer to his employee for services rendered according to the terms of the contract bet-ween them. The question then arises, what are the terms of the contract between the parties. When the 1st respondent's employment under the railway ad-ministration represented by the appellant began, admittedly he was not entitled to any such house rent allowance. As already indicated, the scheme for pay-ment of house rent allowance was introduced with effect from the 1st November 1947 when the rules were framed, admittedly under sub-section (2) of section 241 of the Government of India Act, 1935, by the Governor-General. Those rules were amended subse-quently. We are here concerned with the amendment made by the Railway Board by its letter No. E47CPC/ 14 dated the 1st December 1947, particularly rule 3(i) whiCh'is in these terms :-

"The house rent allowance will not be admissible to those .. who occupy accommodation provided by Government. m those to whom -accommodation has been offered by Government but who have refused it".

- It has. been argued .on behalf of the appellant that the terms -of the· contract between the parties -include the rule· quoted above and -that therefore the position in law is that there is no absolute right · in the 1st respondent to claim the house -rent allowance; in other wor.ds, it .is -contended. that _there is a .c~ndition · prece-de.nt, to th~, claim for .house re11t allow~mce being ad-missible,. nawely, ~hat th~ employee~ should. ,~e ~posted at on<: oL ~()se. places,,_(' like .. Boi;nbay,, .Calcutta, 1955 Madras, etc., before the claim for house rent, allowance The .Divisional could arise and. that there is a condition subsequent, ·Engineer, G.J.P. namely, that. the employee posted at any one of those

Rililway v. places will cease to be entitled to the allowance if Mahadeo Raghao either the Government provides accommodation to

and another the employee in question or the employee refuses to Sinha J. occupy the accommodation so offered to him. On the

other hand, it has been argued on behalf' of the 1st respondent that the employee's right to the allow-ance accrues as soon as he has fulfilled the terms of the contract of employment including regular attend-ance, good work. or conduct and his other behaviour in terms of the definition of "wages" as contained . in the. Act. It was also argued on. beha)f of the 1st res~ pondent that the terms of the definition have to be construed consistently. with the provisions of sections 7 and 11 of the Act; that rule 3(i) quoted above is inconsistent with some of tl1e terms of the definition of "wages" and the provisions · of sections 7 and 11 and that in any event, if rule 3(i) aforesaid .were to be ·considered as a part of the terms of the contract between the. parties, section 23 of· the · Act prohibits an employee from entering into . such a .contract. , as has the effect of. depriving him of his vested rights. ·

· . It should be noted at the outset that · the learned Attorney-General appearing on behalf of the appel-lant has not pressed ·the argument which appears to have been raised in the written statement· of the ap:- pellant and also before the -Authority ·as would appear from the orders passed by him, that clause (a) exclud-ing "the value of any house accommodation" clearly showed that house rent allowance ·was . not included in "wages"· as· defined· in section 2(vi) of the Act. As will presently appear, this . argument proceeds on the unwarranted assumption that house . rent allowance is synonymous with the value of any .house.·accommoda• tion. referred . to in the definition of. "wages" and in section 7 (2) (b) and section 11 of the Act.

The answer · to the question whether ·house rent allowance is "wages" may be· 'in the· affirmative if the rules .framed by the department relating . to the grant of. house rent allowance make it compulsory for the employer to grant house rent allowance without any-1955 thing more : in other words, if the house rent allow-The. Divisional ance had been granted without any conditions or with Engineer, G.I.P.

if any, which were unenforceable in law. Railway conditions~ v. But the statutory rules framed by the Government Mahadeo Ragho1> governing the . grant of house rent allowance do not and another make it unconditional and absolute · in terms. The Sinha J. house rent allowance in the first instance is not ad-missible to all the employees of a particular dass. It is admissible only to such railway employees . as are posted at specified places in order "to compensate railway servants in certain costlier cities for excessive rents paid by them over and above what they might normally be expected to pay"; nor is such an allow-ance "intended to be a source of profit" or to ·be "an allowance in lieu of free quarters", as specifically stated in the preamble to the letter No. E47CPC/14, dated 1st December 1947, issued by the Railway Board.

The argument on behalf of the 1st respondent would have been valid if the rules in terms contemplated the grant of house rent allowance to every employee of a particular category but the rules do not make the grant in such absolute terms. The house rent allow-ance is admissible only so long as an employee is stationed at one of the· specified places and has not been offered Government quarters. The rules . dis-tinctly provide that the allowance will not be ad"

missible · to those who occupy Government quarters or to those to whom such quarters have been offered but who have refused to take advantage of the offer. Once an employee of the description given above has been offered · suitable house accommodation and · he has refused it, he ceases to . be entitled to the house rent allowance and ' that allowance thus ceases· to be "wages" within the meaning of the definition in· the Act, because it is no more payable under the terms of the contract.

Iii 'our opinion, it is clear beyond all reasonable doubt that the rule5 which must be included in the terms Of contract b~tween the employer and the em-ploy_ee contemplate that an ,. employee posted at · one

1352 SUPREME COURT REl1QRTS [1955]

1955 of the. specmed places would be entitled to horu;e rent The D'iuisir:mal allowance; but that as , soon as he. is <>ffered.. Govern-Engineer, G.J.P. ment quarters .for. his .accommodation, .he .. ceases.. to be

Railway so entitled, whether he ·,actually, occupies .,or dqes not

v.

Mahadeo Raghoo occupy · the quarters offered to· him. . Hence the grant

and anotMr of house rent ·allowance .does not .create an indefeasi-Binha J. ble right in the . employee at all , places wherever he

may be posted. and in all circumstances, irrespectivs: of whether or not he . has . been .. offered Government quarters.. . . . . But it has been argued on behalf of the respondent that such a conclusion would be inconsistent with the provisions of sections 7 and 11 of .the Act.. .We . do not« see any such inconsistency. Section 7 of the Act deals with such:· deductions. as may be made from the wages . as defined in the Act, of .an employee .. Sub-section. (2) of section 7 . categorically specifies the heads under which deductions may lawfully be made from wages. Clause ( d) of this sub-section. has ref-erence to "deductions for . house accommodation sup-plied by the employer", and section .. 11 provides that stich a :deduction shall not be made unless .. the. house accommodation has . been accepted by the. employee and shall not exceed the amount equivalent to the value of ·such · . accommodation. The definition · of "wages" ·in the Act also excludes . from -.its. operation the value of house ·accommodation · referred. to, in. sec-tions ·"! ·and 11. as aforesaid.· The· legislarnre,, has ,used the expression "value of any . house. accommodation" in· .the ·definition· of '.'wages"-. •as denoting· something which ·can .be: deducted from. ,'.'wages''., The •. c9ne ex, dudes· the. other. .It .is ... thus clear-. that: the.,, definition of "wages" under the:·Act cannot .include :the"value ·of any house accommodation •:supplied: by . the employer to·the employee;. otherwise .jc ... would.· not.be a".legally ·permissible'· deduction'· .from wages. , . It: isc equally! clea:r that house rent allowance which may . •in:::certain cir'.~umstances .. as "aforesaic\ be includ~d., ,in, "w.~ge,~' is m,>t ,)"he, .. ;~\l;J;I}~; thing. i'S the;; .valu~;,of apy .Ji~¥s~.-.ac, coinm<;>Patipn. ref~w;d to ,in th~ J\qt., Th.at,., h!;ing,,,s9, there i~ n,q : . rcaiidify., .ii),, ,tjie .a,rgup;ient , ftd,vancer.l . on.,.h~-. half of the 1st respondent that rule 3(i) aforesaid is inconsistent . witli . the provisions of sections . 7. and 11 1955 of the Act. '. .. . . . . . . . . . " .. ,, The Divisional

·It remains to consider the last argument advanced Engineer, G./.P. on behalf ·of the lst · respondent that section. 23 of the. Railway v. Act prohibits an employee from relinquishing such a Mahadeo Raghoo right as is the subject matter of rule 3(i) · quoted and another above. This argument proceeds on the . assumpti9n Sinha J. that house rent allowance which is a right. con-ferred on the employee is an absolute right. It has already been held above that the Act read along with the rules which constitute the terms of the contract between the employer and the employee does not create any absolute right in the employee to the house rent allowance. That being so, there is no question of the employee relinquishing any such · right as is contemplated by section 23.

For the reasons aforesaid, the appeal succeeds.

The orders passed by the Authority are set aside. Jn the special circumstances of this case there will be no order as to costs.

Appeal allowed: .

A. V. D'COSTA 1955

v. March 4

B. C. PATEL AND ANOTHER.

[VIVIAN BosE, ]AGANNADHADAS, VENKATARAMA

.... AYYAR and SINHA JJ.]

Payment of Wages Act, 1936, (IV of 1936), Ss. 5, 7, 15(1)(2)- Claim for wages due on account of the introduction of upgrading of persons-Claimant's right to be placed on monthly wages ignored-No delay in payment of wages or deduction of wages alleged-Autho-rity under the Act-Whether had jurisdiction to decide the complaint of the applicant.

The second respondent had been an employee of the Central Railway as a daily rated casual labourer on specified daily wages since 1941. He continued to receive his wages at the specified rate until October 1949. In October 1949 he made an application through an official of the Registered Trade Union-a person permitted by the authority under sub-section (2) of s. 15 of the Payment of Wages Act, 1936-claiming his wages due in respect of six months from May to October 1949. The respondent did not allege delay in the