K.K. Desai, J.
1. This petition under Art. 227 of the Constitution arises out of the petitioner -- Sangh's original application before the Payment of Wages Authority made on behalf of 176 employees of the 3rd respondent-Co. claiming in the aggregate a sum of about Rs. 1,10,245 in respect of illegal deductions for retrenchment compensation, leave with wages and notice pay.
2. The Authority under the Act ascertained that in all 20 employees had settled the claim made in the application and received payment of their dues under the settlement. Out of the remaining 156 employees, 43 had given to the Company what may for convenience be described as writing of settlement of their claims in the following words.
'I have agreed to receive my dues of compensation, leave with wages, notice pay, bonus, ex-gratia paymentsand all other claims including the claims mentioned in Application No. xx xx xx pending before the Court of the Payment of Wages Court at Bombay from Messrs. Amber Textile Mills directly according to their statement and the same is binding upon me. The payment is to be made by the company when they are able to do so. The statement of account given by the Company in Court is also binding on me.
I have therefore decided to dissociate myself from the above application filed by the Rashtriya Mill Mazdoor Sangh. I hereby withdraw my part of the said application.
The above is interpreted and thoroughly explained to me in my mother-tongue,'
3. On behalf of the Company, the 43 agreements signed by the 43 and 20 employees were produced, and a statement was made that, in view of the above payments and agreement made between the Company and the 43 and 20 employees, the claims made in the application made by the petitioner-Sangh as regards these 43 and 20 employees could not be further proceeded with and the claims made on behalf of these employees should, therefore, be negatived and rejected by a declaration that the claims have been compromised and settled. Submission was accepted as regards 20 employees who have been paid off. The Authority did not accept this submission as regards the other 43 employees and in respect of 156 employees made an order for payment dated May, 31. 1966.
4. In Appeal No. 120 of 1966 before the Judge of the Court of Small Causes at Bombay, the Company contended that, in respect of these 43 employees who had made written agreements of settlement as produced by the Company, the Authority should not have granted any amount in its order. Judge Dhavale of the Court of Small Causes by his judgment and order dated November 18, 1966, held in favour of the Company that the agreements had been duly signed by affixing thumb-marks by the 43 employees. He rejected the argument made on behalf of the Sangh that under Section 23 of the Payment of Wages Act the agreements of the kind produced by the Company could not be permitted, In that connection, he held that there was nothing in these agreements to show that the 43 workers had relinquished any right conferred on them by the Act. He, therefore, held that the Authority should have granted all these 43 applications and allowed the workers to receive their dues as per the statement submitted by the Company. The directions the Court gave were:
'x x x x it is directed that the 43 workers as per their applications marked Ex. 7 colly, be paid their dues as per statement dated 31st May 1965 prepared and filed by the appellants.'
5. These directions are challenged in this petition under Article 227 of the Constitution. The contentions made on behalf of the petitioner-Sangh are as follows:
(1) The original application was filed by the petitioner-Sangh as a representative Union under Section 15(2) of the Act. In the matter of that application a settlement could only be made by the Sangh itself. The employees for whom the application was made by the Sangh had no independent right to settle the amounts claimed on their behalf in the application.
(2) The amounts admitted (on behalf of the Company) to be due to these 43 workers in the statements filed by the company before the Authority were not proved to be the correct wages due to these 43 employees in respect of retrenchment compensation, leave with wages and notice pay. This is so, because both the Tribunals below found that, proof of the correctness of the statements of dues to the 176 employees that the Company had filed, had not been produced by the Company. The statements were, therefore, held to be incorrect. The submission was that the agreements made by the 43 employees at Ex. 7 were for relinquishing the rights arising under the Act and these agreements were null and void under Section 23 of the Act.
6. Now, in connection with these contentions made on behalf the petitioner-Sangh, as we will presently point out, it is not necessary to decide the important question of law raised in the 1st contention mentioned above.
7. The facts necessary to be noticed in connection with the 2nd contention are as follows. In respect of the 43 employees who had given the above written agreements to the Company, the total sum claimed in diverse small amounts aggregated to Rs. 23,994.04. In respect of this total claim, by the statements filed before the Authority, the Company admitted diverse amounts aggregating to Rs. 15,792.49 being due to these employees. The difference between the aggregate claim made on behalf of these 43 employees and the claim admitted to be due by the Company came to Rs. 8,201.55. It is, therefore, clear that, between all of them, the 43 employees relinquished their claim to the extent of Rs. 8,201.55. The contention of the petitioner-Sangh in respect of this small difference is that such relinquish- ment of claim is not permitted under Section 23 of the Act.
8. This section runs as follows:
'Any contract or agreement, whether made before or after the commencement of this Act, whereby an employed person relinquishes any right conferred by this Act shall be null and void in so far as it purports to deprive him of such right.'
The contention on behalf of the Company is that the only right that is conferred by the Act on an employed person is to be found in Section 15 which creates a new right in an employed person in the following language:--
'(2) Where contrary to the provisions of this Act any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, such person himself, or x x x x may apply to such authority for a direction under Sub-section (3) x x x x'
Sub-section (3) provides:
'(3) When any application under Sub-section (2) is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under Section 3, x x x x x x and, after such further inquiry if any as may be necessary may x x x x direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit xxxx.'
The submission of the Company is that the provision in Section 23 has not the 'effect of providing that, in the matter of applications (made before the Authority) for recovery of deduction illegally made an employed person has no right to make any compromise with his employer for receiving in complete settlement the amount agreed between the parties as illegally deducted. Conversely, on behalf of the petitioner-Sangh it is argued that liberty is not reserved to an employed person to make any such compromises. The submission was that the object of the legislation contained in Section 23 was to protect employed persons against their employers who would always be in a position to take undue advantage of the employees' difficulties of diverse kinds. A valid compromise could not be made because of Section 23.
9. Now, it is difficult for us to accept the above submission made on behalf of the petitioner-Sangh. Genuine and valid compromises made between an em employee and an employer in connection with disputes between them as regards the true and correct amounts of Illegal deductions payable to the em-employee cannot be held to be relinquishment of rights. Apparently, there can be genuine disputes in respect of amounts claimed by employed persons in applications made under the Act. In innumerable cases, an employer may be able to prove that though the claims were for very large amounts, the illegal deductions were really for small amounts which were payable by them. The question is whether, in connection with such genuine disputes between an employed person and an employer, Section 23 provides that settlements cannot be made and compromises cannot be effected. What is null and void under the section is relinquishment of rights conferred under the Act. When by consent of parties and compromises an agreed amount is held to be due and payable to an employed person, the agreement cannot be described as an agreement for relinquishment of rights conferred by the, Act.
10. In this connection reference may be made to the case of F.W. Heilgers & Co. v. Nagesh Chandra Chakravarty which was relied upon on behalf of the petitioner-Sangh. In that case, a settlement made in industrial disputes in respect of claims for bonus payable by an employer by an award made by the Industrial Tribunal by consent of parties, was challenged as being in violation of the provisions in Section 23 of the Act. The Federal Court negatived the contention and held;
'The scheme of the Payment of Wages Act, read along with the Industrial Disputes Act, showed that there was nothing to prevent such an agreement being made between an employer and em employee and much less to make such agreement illegal and prohibited by the Payment of Wages Act.'
Mr. Buch also relied upon the observations of the Allahabad High Court in Union of India v. Kundan Lal, : AIR1957All363 to the effect that Section 23 of the Payment of Wages Act lays down that any contract or agreement whereby an employed person relinquishes any right conferred by the Act shall be null and void in so far as it purports to deprive him of such right. A right to file an application under Section 15 of the Payment of Wages Act could not be taken away by any agreement or compromise of the kind made by the 1st respondent in this case. (See also Swadeshi Cotton Mills Co. Ltd. v. Rajeshwar Prasad, : (1960)IILLJ707SC which was not cited at the Bar).
11. It appears to us that there is nothing in the two authorities relied upon on behalf of the petitioner-Sanghwhich is contrary to what we have observed above as regards the true construction and effect of the provisions in Section 23 of the Act. As genuine compromise was permissible to be made by the 43 employees who gave the written agreements of the kind mentioned above, we are unable to accept the 2nd contention made on behalf of the petitioner-Sangh.
12. In this connection, it requires to be recorded that the amount due to these 43 employees as admitted on behalf of the Company in the statement filed by it before the Authority was deposited by the Company in the office of the Authority. That amount has been recovered by the petitioner-Sangh without prejudice to its contentions made in this petition. The amount as agreed to be due by the Company has now been received by these 43 employees. The agreements made by these 43 employees, so far as the Company is concerned, have now been completely performed and the Company has discharged its obligation for payment of illegal deductions claimed by these employees before the Authority in the application that was made by the petitioner-Sangh. We must add that it was permissible for these 43 employees by way of agreement to admit that the amounts mentioned by the Company as payable to them in the statement filed (before the Authority) were the only amounts payable to them and to accept those amounts in full settlement of the claims made on their behalf in the application filed by the petitioner-Sangh. Having regard to this finding the second contention fails. As the second contention fails, we do not deem it necessary to consider and decide the first contention of law made on behalf of the petitioner-Sangh before us.
13. The petition is accordingly dismissed. Rule discharged. No order as to costs.
14. Petition dismissed.