Page 110 - DCOM207_LABOUR_LAWS

Unit 6: Payment of Wages Act, 1936

Notes
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Case Study The Divisional Engineer, G.I.P. Railway v. Mahadeo
Raghoo and Anothers

n case of the Divisional Engineer, G.I.P. Railway v. Mahadeo Raghoo and Anothers,
respondent was a gangman in the employ of the Central Railway Act that time his wages
Iwere ` 18 per month plus dearness allowance. With effect from the 1st November 1947
the Railway Board under Ministry of Railways of the Government of Indian introduced
a scheme of grant of compensatory (city) allowance and house rent allowance at rates
specified in their memorandum. This scheme was modified by the Railway Board’s letter.
As a result of this scheme certain railway employees stationed at specified headquarters
were eligible for the allowance aforesaid at certain specified rates. The 1st respondent
thus became entitled to the allowance of ` 10 per month. Therefore he was offered a rent
allowance by the government which he refused. The question came up for consideration
that whether deduction could be made regarding the house allowance.
The Court held that, 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 reference to “deductions for house accommodation supplied by
the employer”, and section 11 provides that such 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 sections 7 and
11 as aforesaid. The legislature has used the expression “value of any house accommodation”
in the definition of “wages” as denoting something which can be deducted from “wages”.
The one excludes 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 it would not be a legally permissible deduction from wages. It is
equally clear that house rent allowance which may in certain circumstances as aforesaid
be included in “wages” is not the same thing as the value of any house accommodation
referred to in the Act. That being so, there is no validity in the argument advanced on
behalf of the 1st respondent that rule 3(i) aforesaid is inconsistent with the provisions of
sections 7 and 11 of the Act. Therefore the appeal allowed.
Question
Critically analyse the above case.

Source: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1593043
Self Assessment

State whether the following statements are true or false:
12. The fine shall be imposed on any employed person only for acts and omissions which has
received approval of the State Government.
13. No fine shall be imposed on any employed person who is under the age of eighteen years.

14. An advance of money made before employment must be recovered from the first payment
of wages, but advances given for travelling expenses can in no case be recovered.
15. A deduction for damage or loss shall not be made until the employed person has been
given an opportunity of showing cause against the deduction.

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