KICHHA SUGAR COMPANY LIMITED TH. GEN. MANG. versus TARAI CHINI MILL MAJDOOR UNION, UTTARKHAND

Citation: [2014] 1 S.C.R. 157 · Decided: 06-01-2014 · Supreme Court of India · Bench: C.K. PRASAD · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2014] 1 S.C.R. 157 
KICHHA SUGAR COMPANY LIMITED TH. GEN. MANG. 
v. 
TARAI CHINI MILL MAJDOOR UNION, UTIARKHAND 
(Civil Appeal No.77 of 2014) 
JANUARY 06, 2014. 
[CHANDRAMAULI KR. PRASAD AND JAGDISH SINGH 
KHEHAR, JJ]. 
SERVICE LAW: 
A 
B 
c 
'Basic wage' - Connotation of - Reckoning of leave 
encashment and overtime wages in basic wage to grant Hill 
Development Allowance - Held: Those wages which are 
universally, necessarily and ordinarily paid to all the 
employees across the board are basic wage -
Where the 
0 
payment is available to those who avail the opportunity more 
than others, the amount paid for that cannot be included in 
the basic wage .:.. Therefore, amount received as leave 
encashment and overtime wages is not fit to be included for 
calculating Hill Development Allowance. 
INTERPRETATION OF STATUTES: 
Construing of an expression which has not been defined 
E 
-
'Basic wage', not explained in the Order granting Hill 
Development Allowance - Held: When an expression is not 
F 
defined, one can take into account the definition given to such 
expression in a statute as a/so the dictionary meaning -
Employees' Provident Funds and Miscellaneous Provisions 
Act, 1952 - s. 2 (b) 
WORDS AND PHRASES: 
Expressions 'basic wages', 'Hill Development Allowance' 
- 'Compensatory allowance' - Connotation of. 
157 
G 
H 
158 
SUPREME COURT REPORTS 
[2014] 1 S.C.R. 
A 
The instant appeal arose out of the order of the High 
Court, whereby it affirmed the award of the Industrial 
Tribunal directing payment of Hill Development Allowance 
after taking into account the amounts received as "leave 
encashment and overtime wages." The case of the 
B employer was that the workmen would be entitled to 15% 
of the basic wages only as Hill Development Allowance. 
Allowing the appeal, the Court 
HELD: 1.1. Hill Development Allowance is nothing 
C but a compensatory allowance. A compensatory 
allowance broadly falls into three categories; (i) allowance 
to meet the high cost of living in certain, specially costly 
cities and other local areas; (ii) allowance to compensate 
for the hardship of service in certain areas, e.g. areas 
D which have a bad climate and/or difficult to access; and 
(iii) allowances granted in areas, e.g. field service areas, 
where, because of special conditions of living or service, 
an employee cannot, besides other disadvantages, have 
his family with him. In the instant case, it seems that 
E taking into account bad climate and remote and difficult 
access, the decision was taken to grant the Hill 
Development Allowance at the rate of 15% of the basic 
wage. [para 5] [161-F-H; 162-A-B] 
1.2. When an expression is not defined, one can take 
F into account the definition given to such expression in a 
statute as also the dictionary meaning. The expression 
'basic wage' has not been explained by the Government 
in the Order granting Hill Development Allowance. It has 
been defined only u/s 2(b) of the Employees' Provident 
G Funds and Miscellaneous Provisions Act, 1952. The term 
'basic wage' has also been defined in Merriam Webster 
Dictionary. This Court, therefore, holds that those wages 
which are universally, necessarily and ordinarily paid to 
all the employees across the board are basic wage. 
H Where the payment is available to those who avail the 
KICHHA SUGAR c9M. L to. TH. GEN. MANG v. TARAI CHINI MILL 159 
MAJDOOR UNION, UTTARK 
I 
- opportunity more than others, the amount paid for that A 
cannot be included in the basic wage. [para 8-10] [163-
B-C; 164-A-D] 
http://www.merriam-webster.com - referred to. 
1.3 Overtime wages or for that matter, leave s 
encashment may be available to each workman but it . 
may vary from one workman to other. The extra bonus 
depends upon the extra hour of work done by the 
workman whereas leave encashment shall depend upon 
the number of days of leave avai~able to workman. Both c 
are variable and, therefore, are not fit to be included for 
calculating the Hill Development Allowance. [para 10] 
[164-D-F] 
Muir Mills Co. Ltd. v. Workmen, 1960 SCR 488 = AIR 
1960 SC 985; and Manipal Academy of Higher Education v. 
D 
Provident Fund Commr. 2008 (4) SCR 772 = (2008) 5 SCC 
428 - relied on. 
1.4. This Court, therefor.e, holds that overtime 
allowance and leave encashment are not fit to be taken 
E 
into account for calculating the Hill Development 
Allowance. The impugned award and the judgment of the 
High Court are illegal and, as such, are set aside. [para 
12-
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