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A.D. Divekar Vs. Dinesh Mills Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Judge
Reported in(1955)IILLJ501Bom
AppellantA.D. Divekar
RespondentDinesh Mills Ltd. and ors.
Excerpt:
- - the mill has failed to pay this amount, and consequently there was either deduction of wages or delay in payment of wages, upon which he was entitled to make an application to the authority under the payment of wages act under section 15 of that act. an appeal from the unfavourable decision of the court had been filed to the appellate tribunal, and the employees could not, in the same breath, contend in one of that their retrenchment was illegal and they still continued in service and then ask from another court compensation for retrenchment, which must be upon the basis that the termination of the services of the employees was perfectly legal. the mill contended that the authority under the payment of wages act had no jurisdiction to hear the dispute, because section 25f, clause.....bavdekar, j.1. this is an application under articles 226 and 227 of the constitution, which arises out of an application made by the district labour officer and inspector under the payment of wages act to the authority under the payment of wages act at baroda in respect of compensation payable to 450 workmen and 20 clerks of opponent 2, sri dinesh mills, ltd. whose services were terminated by the mill on the ground that the mill was being closed. it was the contention of the inspector that there was payable to the employees of the mill, under the provisions of section 25f, clause (b), of the industrial disputes act, retrenchment compensation was 'wages' within the meaning of that term as defined in the payment of wages act. the mill has failed to pay this amount, and consequently there.....
Judgment:

Bavdekar, J.

1. This is an application under Articles 226 and 227 of the Constitution, which arises out of an application made by the district labour officer and inspector under the Payment of Wages Act to the authority under the Payment of Wages Act at Baroda in respect of compensation payable to 450 workmen and 20 clerks of opponent 2, Sri Dinesh Mills, Ltd. whose services were terminated by the mill on the ground that the mill was being closed. It was the contention of the inspector that there was payable to the employees of the mill, under the provisions of Section 25F, Clause (b), of the Industrial Disputes Act, retrenchment compensation was 'wages' within the meaning of that term as defined in the Payment of Wages Act. The mill has failed to pay this amount, and consequently there was either deduction of wages or delay in payment of wages, upon which he was entitled to make an application to the authority under the Payment of Wages Act under Section 15 of that Act.

2. The application was opposed on behalf of the mill, and the only contentions which it will be necessary to state for the purpose of this application are that the authority under the Payment of Wages Act had no jurisdiction to hear the application of the inspector, and in the second instance the representative union, acting on behalf of the workers, had made an application to the industrial court that the services of the employees were not properly terminated and the employees continued in service. An appeal from the unfavourable decision of the court had been filed to the Appellate Tribunal, and the employees could not, in the same breath, contend in one of that their retrenchment was illegal and they still continued in service and then ask from another court compensation for retrenchment, which must be upon the basis that the termination of the services of the employees was perfectly legal. The mill contended that the authority under the Payment of Wages Act had no jurisdiction to hear the dispute, because Section 25F, Clause (b), was ultra vires the Constitution, because awarding compensation restricts the right of the employer to carry on his business, which included the right to close his business, when he liked. They contended, in the second instance, that even if the Act was not void of the Constitution, there was no compensation payable to the employees, inasmuch as the closure of the mills was obligatory upon the mill, as it could not carry on the business of manufacture profitably and the employees could not be said to be retrenched. The mills said, in the third Instance, that assuming that compensation was payable to the employees under Section 25F, Clause (b), of the Industrial Disputes Act, it could not be said that it was ' wages.' 'Wages' have been defined in the Payment of Wages Act to include, among other things, sums payable upon the termination of services. But this Court has taken the view in Sarin v. Patil 53 Bom. L.R. 674, that damages claimed by a workman upon the wrongful dismissal of his services did not amount to 'wages' within the meaning of that term as defined by the Payment of Wages Act. Compensation payable upon the termination of services would not, therefore, fall within the part of the definition, which includes therein sums payable to any person by reason of the termination of his employment. 'wages' has also been defined to mean

remuneration .which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable whether conditionally upon the regular attendance, good work or conduct or other behaviour of the person employed or otherwise....

But compensation payable upon termination of service would not amount to remuneration, nor could the amount claimed by the employee be said to be payable. The mill contended finally that in any case the contentions which they raised included questions like Section 25P, Clause (b), being void as contravening Article 19(1)(g) of the Constitution, and the authority under the Payment of Wages Act had no jurisdiction to decide such complicated questions. Its jurisdiction (sic) is delay in payment of wages, when it was admitted that wages were due to the employees. When the employer was flatly denying his liability to pay the alleged wages, and as a matter of fact even the constitutionality of the provisions of the Industrial Disputes Act, under which the employees were claiming compensation, the authority constituted under the Payment of Wages Act had no jurisdiction to decide the question.

2. The learned authority under the Payment of Wages Act has decided that he had no jurisdiction to decide the payability of the compensation, because it was not 'wages,' and above he said that inasmuch as it appeared the representative union had made an application to the industrial court, from the decision in which an appeal had been filed to the Labour Appellate Tribunal in which the employees maintained that the termination of their services were wrongful and they still continued in service, they could not, in the same breath, by another application, claim that compensation was payable to them upon termination of their services.

3. The inspector has come to this Court under Articles 226 and 227 of the Constitution for quashing the order of the authority under the Payment of Wages Act and giving a suitable direction to it; and it is obvious, in the first instance, that inasmuch as the inspector contended that there was compensation payable to the employees upon termination of their services, and such compensation amounted to 'wages' which had not been paid, the authority under the Payment of Wages Act had to decide the question whether what the employees claimed amounted to 'wages' or not. The jurisdiction of the authority depended upon the claim of the employees being for 'wages,' and the authority had jurisdiction to decide every question of fact or law which arose in determining as to whether the claim was in respect of deduction or delay in payment of wages. If the amount which the employees claimed amounted to wages, and they were not paid, it is obvious that there was either deduction or delay in payment of wages, and the authority had jurisdiction consequently to determine as to whether the amount which the employees claimed was 'wages.' The inspector said that the amount was payable to the employee under Section 25F, Clause (b), of the Industrial Disputes Act. The mill challenged that this law was unconstitutional, contending that it offended against Article 19(1)(g) of the Constitution. This question has admittedly now been decided by a Division Bench of this Court in K.N. Joglekar v. Barsi Liqht Railway : (1955)ILLJ371Bom which decision is binding upon all the courts and tribunals subordinate to this Court. The section is held not to offend against Article 19(1)(g), and so far as this part of the contention of the mill is concerned there is nothing for the authority under the Payment of Wages Act to decide hereafter. The second question which was raised by the mill as to whether compensation was payable to the employees upon the termination of their services under Section 25F, Clause (b), has again been decided by this Court in the same case, where it was held that Section 2(oo) defined 'retrenchment' to mean the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and whatever the reason for which the employer may have terminated the service of a workman if it was not by way of punishment, the termination amounted to retrenchment within this definition. In any case, even if this Court had not decided these two questions in K.N. Joglekar v. Barsi Light Railway : (1955)ILLJ371Bom , whether any amount would be payable to the employees or not under the provisions of Section 25P, Clause (b), of the Industrial Disputes Act would depend upon the decision of the question as to the unconstitutionality of that section and whether the amount, which the employee claimed under the provisions of that section could be said to be claimable by him at all, on the ground that he was retrenched when his services were terminated by the employers on the ground that they were closing an unprofitable manufacturing plant. It could be convenient to go into the question whether the authority constituted under the Payment of Wages Act had jurisdiction to decide these questions later. But it had authority to decide the question as to whether, assuming that the employees were entitled to the sum which they claimed under the provisions of Section 25F Clause (b), of the Industrial Disputes Act, it could be said that this amount fell within the term 'sum payable upon the termination of their services.... as used in the definition of 'wages' or it could be said to be 'remuneration payable to the employees' and therefore 'wages'.

4. It is no doubt true that the authority has gone into some of these questions, and it has held, in the first instance, that Section 25F, Clause (b), of the Industrial Disputes Act was not unconstitutional. It had not gone into the question as to whether it could be said that the employees were retrenched, which had to be found before it could be said that they were entitled to compensation under Section 25F, Clause (b), of the Industrial Disputes Act. But it has held that even upon the footing that the employees were entitled to the compensation referred to in Section 25F, Clause (b), of the Act, it did not fall within the definition of 'wages' under the Payment of Wages Act. Following certain observations in Sarin v. Patil 53 Bom. L.R. 674, quoted by it, it had held that the amount which was claimed must be payable under the terms of the contract of service before it could be said to be wages.

5. Now, it is quite true that in the case of Sarin v. Patil, a Division Bench of this Court took the view in the first instance that damages which were claimed for wrongful dismissal did not fall within the meaning of the term, 'the sum payable upon the termination of the services,' and there are observations in the case which would tend to suggest that this conclusion was reached because of the view that the sum which was payable must be payable under the terms of the contract. But another Division Bench in a subsequent case had to consider the question as to whether, when any sum was payable to an employee under the terms of an award made by the industrial court, it could be said that this sum was 'wages' within the meaning of the definition given in the Payment of Wages Act, and the contention that the amount must be payable under the contract of service was replied in that decision. That was the decision in civil revision applications Nos. 1378 and 1379 of 1951, dated 11 March 1952 1953 I L.L.J. 577, This decision is a later decision. It is true that this Court was concerned in that case not with any sum payable under the terms of a statute, but a sum payable to an employee under the terms of an award made by the industrial court; but that does not make difference. If at all the meaning of the word ' payable' in the definition of 'wages ' under the Payment of Wages Act is to be restricted, it must be upon the footing that the meaning is restricted by its context, which requires that the sum which is payable should be payable under a contract; if that contention is repelled, there are no reasons whatsoever for limiting the general word...payable' used to sums payable, for example, under an award made by the industrial court, or payable in any other manner.

6. The learned authority constituted under the Payment of Wages Act was obviously wrong, therefore, in coming to the conclusion that upon the footing that there was any amount payable to the employees under the provisions of Section 25P, Clause (b), of the Industrial Disputes Act, it was not 'wages' because the same was not payable under a contract.

7. Mr. Palkhivala, who appears on behalf of the mill, has tried, however, to support the conclusion of the authority under the Payment of Wages Act that the amount payable under Section 25P, Clause (b), assuming it to be payable, is not 'wages' on other grounds. He says, in the first instance, that even if we prefer to follow the later case of this Court in civil revision applications Nos. 1378 and 1379 of 1951 1953 I L.L.J. 577 the amount payable to the employees under Section 25P, Clause (b) of the Industrial Disputes Act is not compensation payable to the employees upon the termination of their services, because the authority of the case of Sarin v. Patil 53 Bom. L.R. 674, in so far as it decided that damages claimable by an employee upon wrongful dismissal, were not wages, is not shaken by the later decision. It appears to us, however, that compensation payable to an employee upon the termination of a service, if such termination is lawful, as in this case, at any rate, the employees contended that it was, is entirely different from damages which are payable to an employee upon his wrongful dismissal, and there is nothing in the case of 53 Bom. L.R. 674, which prevents us from disposing of the question as to whether what the employee claimed is or is not 'wages' in accordance with the usual rules of interpretation. Now, the definition of 'wages' is in two parts. First of all, it has been defined as remuneration payable to the employees, leaving aside for the moment the various other qualifications. In the second instance, it founded that 'wages' include, among other things, sum payable to the employees on termination of their services, and in this case Section 25F, Clause (b), does provide that sums mentioned in that sub-section should be payable to the employees when their services are terminated. There are no reasons whatsoever for putting any limitation upon the perfectly general term 'payable' which has been used in the first part of the definition of 'wages.' I have already mentioned that a Division Bench of this Court has taken the view that so far as the word 'wages' is concerned, there are no reasons whatsoever for saying that it means 'payable under the contract of service.' But assuming for the purpose of argument that this was not correct, there are no reasons whatsoever for importing any limitation which has been placed in the first part of the definition into the second part, where wages are defined to include, among other things, sums payable to an employee on the termination of his service. Whenever a legislature proceeds to define a particular term and to say later on that term includes some things, the part of the definition which says that the term includes other things is to prevent any agitation of the question as to whether what is included in that part could be included in the first part. It occurs to the legislature that there may be a doubt as to whether certain things, which it proposes to include in the definition, would or would not be included in the definition which it has made. To avoid all disputes upon the point, it then says in effect that whether the things which it wishes to include do or do not fall within the first part of the definition, the term defined would include them. It is impossible to accept that, notwithstanding that, there must be imported into the construction of the words which follow in the subsequent part which follows the words included 'limitation from the first part.' We have no doubt consequently that the words 'sums payable upon termination of the services' must be given their nationwide possible meaning, and giving them that meaning, there can be no doubt that in the first instance retrenchment compensation payable to the employees under Section 25P, Clause (b), of the Industrial Disputes Act will be sum payable to the employees on the termination of their services, and therefore wages.

8. But we have no difficulty in holding that the sums payable to the employees under Section 25F, Clause (b), of the Industrial Disputes Act are also remuneration payable to the employees, I have already mentioned that these sums are not payable under the contract; but that does not make any difference; they are payable under a statute, and the word payable' in the definition of 'wages' includes all sums payable, whether under a contract under an award of the industrial court, or under the terms of a statute, :like Section 25F, Clause (b), or for the matter of that, in any other manner. It is said that the legislature has provided that this amount should be given to the employees as compensation. Their services are terminated, and compensation is different from remuneration. We notice, however, that this amount depends upon the length of service which has been put in by an employee. It is said that the object of requiring the employer to make such a payment was to enable the employee to tide over any difficulty which he may have in obtaining employment after his services are terminated. Secondly, another object of the legislature in making the amount payable is to deter the employer from terminating the services of his employees. But, in the first instance, the amount is payable to the employee upon the termination of his service, whether he obtains immediately employment or not. It does not follow, merely because the amount is classed as compensation, that it does not come within the term of remuneration, being regarded as deferred pay. It is true that merely because a thing is made to depend upon another, it does not necessarily partake of the nature of the other. But nobody is contending in this case that the compensation which is made to depend upon the length of the service put in by the employees partakes of the nature of the length of the service or the service itself. There are various amounts payable to an employee after the termination of his services. There is, for example, pension, which is always regarded as deferred pay. Similarly, there is gratuity which has been excluded from the definition of 'wages' for certain reasons: but if it had not been so excluded, it could easily have been again regarded as deferred pay or remuneration. Our decision that the amount falls within the latter part of the definition of 'wages' makes it unnecessary to decide as to whether it is also remuneration; but if it was necessary to so decide, we would hold that the amount falls in the first part of the definition of 'wages'.

9. The next point which has been made by Mr. Palkhivala is that the amount is really gratuity, and in support of this contention it has been pointed out that when Section 25F was first enacted in the form of an Ordinance, the Ordinance used the word 'gratuity.' That does not, however, make any difference. Subsequently the Act was amended, and the amendment substituted the word 'compensation.' The amendment was also made re trospective from the date upon which the Ordinance was promulgated. It is obvious, therefore, that the legislature has shown clear intention to distinguish the amount which is payable upon retrenchment from a gratuity. Mr. Palkhivala says that that does not necessarily show that the intention of the legislature was that this amount should fall within the definition of 'wages.' There was another reason, why the legislature might have changed the word 'gratuity' into compensation. There was payable frequently to the employees gratuity under the terms of their contract. When the employees asked for gratuity upon the termination of their services, a dispute was raised by the employers that from the amount which was payable under the contract should be deducted. Now that may be one of the reasons why the legislature changed the word ' gratuity' into compensation. But that does not make any difference. The legislature deliberately chose to change the nomenclature, and there is no particular reason for saying that when it did so, it evinced an intention that the change should be confined, to the question which arises under the Industrial Disputes Act. If that was the intention, it could well have provided that the gratuity which was payable to an employee under the terms of a contract would not be deducted from the gratuity which was payable under the terms of Section 25P, Clause (b).

10. Lastly Mr. Palkhivala argues under this head that the question which arose before the authority under the Payment of Wages Act could not possibly be meant to be a question tried by him, because this was a case in which the employers said that they were not at all liable to pay the amount which the employees claimed under the provisions of Section 25F Clause (b), of the Industrial Disputes Act. It is only in the case of admitted wages, where there is either deduction from the wages, or delay in paying it, that the authority under the Payment of Wages Act had jurisdiction. Mr. Palkhivala concedes that he would not go so far as to say that an employer would be permitted mala fide to deny that wages were due, but he says that if the employer could show that he had really a bona fide contention to raise about his liability to make the payment, then the jurisdiction of the authority under the Payment of Wages Act is ousted. Now, it appears to us that the Payment of Wages Act was enacted in order to enable the employees to obtain quickly the amount due to them. How complicated the questions would be which the Payment of Wages Authority would have to determine would be seen from the definition of payment of wages and the sorts of questions which could be raised as Mr. Palkhivala's argument in this case has demonstrated, by an employer. It may' be, of course, that sometimes very complicated questions may arise in determining as to whether claim of the employees falls within the definition of wages. But there is no authority whatsoever for saying that the jurisdiction of the authority is limited to cases where wages are admitted. There are observations to that effect in 53 Bom. L.R. 674, but there are contrary observations in the same case, where it has been pointed out that if an employer were to deny that he had employed a person, the authority would have jurisdiction to go into that question. Similarly, if there was a dispute between the employer and the employees under the contract where the authority will again have jurisdiction to decide the dispute, one must not, therefore, lay too much stress upon an isolated observation in that case. It is true that when the employees in that case claimed compensation for wrongful dismissal and also went on to claim that they should be paid wages upon the footing that the dismissal was wrongful, it was held that the Payment of Wages Authority had no jurisdiction to decide the question as to whether the employees were dismissed wrongfully, or whether any compensation was payable to them upon that footing, or then on the footing that they continued in service. But that does not alter the fact that the case is no authority for the proposition that the authority under the Payment of Wages Act has jurisdiction merely to decide the question of deduction or delay when wages were due or admitted. As I have already mentioned, in case any sum which is claimable falls within the definition of 'wages' and it is not paid, then there is obviously either delay in payment of the wages or deduction out of them, and the authority under the Payment of Wages Act would have jurisdiction to determine that question. If at all it is necessary to put in any limitations, as was done in the case of 53 Bom. L.R. 674 by holding that the authority had no jurisdiction to determine as to whether there was a wrongful dismissal and consequently wages were still due to the employees and if so, what these limitations are, it is not necessary to go into for the purpose of the present application. In this case the employees claimed compensation under Section 25F, Clause (b), of the Industrial Disputes Act, upon the footing that they were entitled to it, it amounts to wages. The authority under the Payment of Wages Act had, therefore, jurisdiction to decide whether they were so entitled to it.

11. So far as the other contention upon which the Authority under the Payment of Wages Act dismissed the application of the inspector is concerned, there is force in it. The employees cannot have it both ways. They cannot both have their wages upon the footing that the termination of their services is wrongful, and the compensation upon the footing that their services have been terminated, which means, terminated lawfully. The learned authority under the Payment of Wages Act was inclined to take the view that the employees had to be put to an election. He does not say, however, in his judgment that he had put them to one. As a matter of fact, we think that there was some difficulty in asking the inspector, who presented the application in the present case, to elect, because even though another application on behalf of the employees had been made to the industrial court, that application was not made by him, but was made by the representative union on behalf of the employees. But the authority under the Payment of Wages Act would have, after determining whether any amounts are payable to the employees or not, jurisdiction in case it holds that the employees are entitled to compensation to say that its order would not be executed till the determination of the appeal before the Appellate Tribunal be subject to the final order to that proceeding.

12. We vacate the order of the authority constituted under the Payment of Wages Act under Article 227 and direct him to dispose of the matter further in accordance with the law. The applicants having succeeded substantially, opponent 2 will pay the applicant's costs of this application.

Shah, J.

13. The district labour officer and inspector under the Payment of Wages Act, Baroda, has filed this application for a writ of certiorari and a writ of mandamus and also for an order under Article 227 of the Constitution of India for quashing the order passed by the authority appointed under the Payment of Wages Act at Baroda in application No. 154 of 1954, and for an order against the authority directing the authority to dispose of the application on its merits.

14. Sri Dinesh Mills, Ltd., is a company registered under the Indian Companies Act having its office at Baroda. The company was running a woollen mill at Baroda for the last several years. The mill used to work in two shifts day and night and used to employ about 450 workmen and 20 clerks. On 30 October 1953 the management of the mill put up a notice declaring its intention to close the entire mill from 1 December 1953. On 19 November 1953 the management put up another notice withdrawing the earlier notice and declaring its intention to close down the second shift with effect from 20 December 1953. Thereafter on 8 December 1953 the management put up a third notice informing the workmen that the second shift would be closed from 20 December 1953 and the first shift would be closed from 8 January 1954. Similar notices in respect clerks were also put up, and the clerks were intimated that their services would be terminated with effect from 19 January 1954. On 27 April 1954 the district labour officer and inspector under the Payment of Wages Act filed an application under Section 15 of the Payment of Wages Act, 1936, before the Payment of Wages Authority for an order for payment of the delayed wages amounting to Rs. 1,67,000 and for payment of compensation of Rs. 10 to every employee retrenched by the mill. It was the case of the district labour officer that the mill was liable to pay every employee as retrenchment compensation wages equivalent to fifteen days' average pay for every completed year of service or any part thereof in excess of six months as required under Section 25P(b) of the Industrial Disputes (Amendment) Act of 1953. The application was resisted by the mill. It was contended inter alia that the Payment of Wages Authority had no jurisdiction to hear the application, that Section 25F(b) of the Industrial Disputes Act was inconsistent with Article 19(1)(g) of the Constitution of India, and that a representative union of the employees of the mill had submitted an application to the labour court at Ahmedabad for a declaration that the discharge of the employees was not valid and that they were still employees of the mill and that application being still pending before the labour officer for payment of retrenchment compensation on the footing that the employment of the employees was terminated was not maintainable. The mill also raised various contentions on the merits of the application.

15. The authority under the Payment of Wages Act raised certain preliminary issues for determination, and held that he had no jurisdiction to hear the application as the same was not maintainable. He also held that the application was maintainable because a representative union of the employees of the mill had submitted an application to the labour court at Ahmedabad pleading that there had been no lawful termination of employment and that application was pending. The authority expressed the view that the question about the constitutionality of Section 25P(b) of the Industrial Disputes Act should be divided into two parts. He observed that if Section 25F(b) was held applicable only to those workmen who were retrenched when the concern was running, then the provision was valid and constitutional; but if it was intended to apply even after the closure of the business of the employer, it was unconstitutional and inoperative. In the view of the authority Section 25F(b) imposed liability to pay compensation equally on all concerns whether profitable or not and equally on all employers who had closed their business on justifiable grounds or otherwise, and imposition of an unconditional liability general in its terms amounted to an unreasonable restriction on a citizen's right to close his business. He further expressed the view that in some cases imposition of such liability would be oppressive and penalizing and amounted to an unreasonable restriction on the right of the employer to close his business at any time when he chose and the law which justified imposition of that liability was ultra vires the Constitution and void. The authority, however, did not record any formal finding on the issue as to the constitutionality of the section. On the view, that he had no jurisdiction to entertain the application, and that the application was not maintainable, the authority dismissed the application. Against the order of dismissal the district labour officer presented an appeal to the district court at Baroda under Section 17 of the Payment of Wages Act. That appeal has not till now been disposed of. It is stated in the affidavit of the manager of the respondent mill that the application filed by the representative union of the employees before the labour court at Ahmedabad under the Bombay Industrial Relations Act of 1946 was disposed of on 16 March 1955 and against that decision the representative union has preferred an appeal before the Labour Appellate Tribunal at Bombay, and that appeal is also pending.

16. Mr. Palkhivala who appears on behalf of the mill has raised two preliminary contentions as to the maintainability of this application. He contended that the district labour officer having preferred an appeal against the order of the authority to the district court at Baroda under Section 17 of the Payment of Wages Act and which is pending, this application invoking jurisdiction under Articles 226 and 227 of the Constitution of India is not maintainable. Counsel further urged that the employees have made contradictory claims before the Payment of Wages Authority and the labour court. He submits that whereas before the Payment of Wages Authority it was contended that the employees were retrenched and ceased to be employees of the mill, a claim has been made before the labour court that the employees were still in the employment of the mill and entitled to relief on that basis. Counsel contends that the employees are not entitled to proceed in two different tribunals for relief on two contradictory claims. Mr. Palkhivala also points out that in the petition filed to this Court there is no reference to any proceedings before the labour court, and he has submitted that the district labour officer having failed to bring to the notice of the court the pendency of the application under the Industrial Relations Act, this Court should decline to exercise its jurisdiction in favour of the employees.

17. It is true that an appeal has been filed against the judgment of the Payment of Wages Authority, and that appeal is pending in the district court at Baroda. Section 17 of the Payment of Wages Act of 1936 provides for an appeal against a direction made under Sub-section (3) or Sub-section (4) of Section 15. Now the direction contemplated to be made under Sub-section (3) of Section 15 is a direction for payment of the amount deducted from the wages or for payment of delayed wages. Sub-section (4) of Section 15 contemplates a direction to be made for payment of penalty where the application made under the section is found to be malicious or vexatious. It appears that no appeal is provided for by the legislature against an order of dismissal for application upholding a plea that the authority has no jurisdiction to entertain the same. This Court has held in C.S. Lal v. Shaikh Badshah : (1956)IILLJ457Bom that in order that an employee should have a right of appeal under Section 17 of the Payment of Wages Act, 1936, not only must the petition be entertained, but there must be a refusal to give a direction on the merits of the application. Therefore, where the authority under the Payment of Wages Act holds that the employee is not entitled to any relief, not on the ground that he has no case on the merits, but on the ground that he has no jurisdiction to entertain the application, this does not amount to a refusal to give a direction which is subject to appeal under Section 17 of the Act: it is clear from the decision in Lal case that the appeal filed against the authority to the district court at Ahmedabad is incompetent. It appears that at the time when the appeal was presented by the district labour officer to the district labour court, he was not properly advised as to the competence of the appeal. The maintainability of the present application cannot therefore be affected by the pendency of an appeal in another court which is plainly incompetent. It is also true that proceedings were taken by the representative union of the employees in the labour court at Ahmedabad for relief under the Industrial Relations Act. But the application has been filed in the tribunal by the representative union of the employees, and not by the district labour officer. The district labour officer is an inspector appointed under the Payment of Wages Act, and he is entitled . under Section 15(2) of the Act to apply for a direction under Sub-section (3) of Section 15 to make a claim arising out of deduction in wages of or delay in payment of the wages to, the employees. He is a public servant upon whom is conferred authority to make claims on behalf of the employees on what he regards as the proper view to take of the action of the employer in a given case. This is not a case in which the same person has taken two different proceedings in two different tribunals for reliefs on inconsistent claims. The representative union of the labour court has taken action(?) on the footing that the services of the employees were not terminated, and they have not been retrenched. The district labour officer has taken the proceedings before the Payment of Wages Authority on the footing that the services of the employees have been terminated, and they are entitled to retrenchment compensation. We do not think that we would be justified in rejecting the application filed by the district labour officer if it is otherwise maintainable on the ground only that another application has been made by the representative union of the employees for relief on an inconsistent claim.

18. Two out of the questions which were canvassed before the authority under the Payment of Wages Act have been answered by a recent judgment of a Division Bench of this Court, and we are bound by that judgment. It has been held that Section 25F(b) of the Industrial Disputes Act of 1947 does not place an unreasonable restriction upon the right of a citizen to carry on business. It has also been held that retrenchment referred to in Section 25F(b) need not be of workmen employed in a running business. Even if retrenchment of workmen has been made with a view to close down a business, retrenchment compensation is payable by the employer. In K.N. Joglekar v. Barsi Light Railway Company, Ltd. : (1955)ILLJ371Bom , the question arose whether the workmen whose services were terminated when the employer decided to close down his business were to be regarded as 'retrenched' within the meaning of the Industrial Disputes Act of 1947; and it was held that termination of the services of the workmen by the employer for enabling him to close his business amounts to 'retrenchment' under Section 2(oo) of the Industrial Disputes Act, 1947, the company was liable to pay compensation for retrenchment under Section 25F of the Act. It was observed in the course of the judgment by the learned Chief Justice that Section 25F of the Industrial Disputes Act, 1947, imposes a statutory liability upon the employer to pay compensation when he terminates the services of an employee, and that liability is not affected by the fact that the termination of services is effected with the object of a business in which the employer was suffering losses. It was also held in that case that imposition of an obligation to pay retrenchment compensation to an employee whose services were terminated with a view to facilitate closing of the business did not amount to placing an unreasonable restriction upon the right of the employer to carry on business. In view of this decision, it is not open to Mr. Palkhivala to contend that Section 25F(b) of the Act is injuring any fundamental rights of the employer under the Constitution. Mr. Palkhiwala has stated before us that even though he does concede the correctness of the propositions laid down in the Barsi Light Railway case, no useful purpose would be served by his arguing the same questions over again in this Court.

19. The question which then survives is whether the Payment of Wages Authority had jurisdiction to entertain an application for non-payment of retrenchment compensation under Section 25F(b) of the Industrial Disputes Act, 1947. Section 15 of the Payment of Wages Act, 1936, authorizes the State Government to appoint an authority

to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid in that area.

Sub-section (3) of Section 15 requires the authority appointed under Sub-section (1) to entertain the application under Sub-section (2) and to hear the applicant and the employer or other person responsible for the payment of wages or to give them an opportunity of being heard, and, after such further enquiry, if any, as may be necessary, he is authorized to direct refund to the employed person of the amount deducted, or the payment of delayed wages, together with such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding ten purposes in the latter. The proviso to Sub-section (3) of Section 15 restricts the jurisdiction of the authority in the matter of payment of compensation in the case of delayed wages. If the authority is satisfied that the delay was due to a bona fide error or a bona fide dispute as to the amount payable to the employed person or the occurrence of an emergency or the existence of exceptional circumstances such that the person responsible for the payment of wages was unable, though exercising reasonable diligence, to make prompt payment, or in the case of failure of the employed person to apply for or accept payment. Section 2(vi) of the Act defines the expression 'wages' as meaning

all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable, whether conditionally upon the regular attendance, good work or conduct, or other behaviour of the person employed, or otherwise to a person employed in respect of his employment or work done in such employment, and includes any bonus or other additional remuneration of the nature aforesaid which would be payable and any sum payable to such person by reason of the termination of his employment.

The definition then proceeds to exclude the value of any house accommodation and other amenities, the contribution paid by the employer to any pension fund or provident fund, travelling allowance or the value of any travelling concession sums paid to the persons employed to defray special expenses entailed upon him by reason of the nature of the employment, and any gratuity payable on discharge. It is clear from the terms of Section 15 that the jurisdiction of the Payment of Wages Authority is limited to hear or decide claims arising out of deductions in wages or delay in payment of wages. Section 22 of the Act excludes the jurisdiction of the civil courts to entertain suits for recovery of wagas or any deduction from wages, in so far as the same claim forms the subject-matter of an application under Section 15 or forms the subject-matter of a direction under Section 15 or which would have been recovered by an application under Section 15; by Section 15 of the Payment of Wages Act special jurisdiction has been conferred upon the authority, and the jurisdiction of the civil courts to entertain proceedings in respect of the same matters which have been or could have been brought before the authority, is included. Section 15 seeks to limit the jurisdiction of the ordinary civil courts, and must be strictly construed. A claim which does not arise out of deduction from wages or delay in payment of 'wages' as defined in the Act cannot be tried by the Payment of Wages Authority under Section 15.

20. Section 25F of the Industrial Disputes Act, 1947, provides, in so far as that section if material, that no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by the employer until the workman has been given one month's notice in writing indicating the reasons for retrenchment and the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days 'average pay for every completed year of service or any part thereof in excess of six months and notice in the prescribed manner is served on the appropriate Government. Section 25F evidently restricts the right of an employer to terminate the employment of workman. The employer is required to serve a notice upon the employee of one month's duration setting out the reasons for retrenchment. The employer is also required to pay to the employee wage for the period of notice and also to pay at the time of retrenchment compensation which should be equivalent to fifteen days' average pay for every completed year of service or any part thereof in excess of six months. This is a statutory liability imposed upon the employer by the legislature. By the terms of Section 25F the employer is required at the time of retrenchment to make payment of the compensation for a period which is to be equivalent to fifteen days' average pay for every completed year of service or any part thereof in excess of six months. The liability to pay compensation having been imposed by the statute, the initial question which must be answered is whether the compensation payable under Section 25F to a workman on account of retrenchment from service is 'wages' within the meaning of the Payment of Wages Act. If compensation payable under Section 25F is not wages within the meaning of the Payment of Wages Act, the liability to-pay the same cannot be enforced under the Payment of Wages Act.

21. Now, 'wages' under the Payment of Wages Act mean all remuneration which becomes payable to a workman if the terms of the contract of employment are fulfilled; and include any bonus or other additional remuneration to be payable to the employee. Wages also include any sum payable to the employee by reason of termination of his employment. Mr. Palkhiwala contended that retrenchment compensation cannot be called 'remuneration' within the meaning of the definition of 'wages' and that in any event not being 'payable' under the terms of any contract of employment it could not be regarded as 'wages.' (We are unable to accept that contention. The legislature has (sic.) a special definition of the expression 'wages'.

22. According to the definition, wages include remuneration which is payable if the terms of contract of employment, express or implied, are satisfied, and include any sum payable to an employee by reason of termination of his employment. The sum payable to an employee by reason of termination of his employment is not required by the terms of the definition to be 'remuneration.' Even if, therefore, retrenchment compensation is not 'remuneration ' within the first part of the definition, it is still a sum payable to the employee by reason of the termination of his employment and clearly falls within the definition. It also appears that the legislature has related the amount of retrenchment compensation to the length of service which the employee puts in; and that may indicate that the legislature regarded 'retrenchment compensation' as deferred payment of salary or wages payable on termination of the employment.

23. It was strenuously urged by Mr. Palkhiwala that the legislature enacted Section 25F of the (Industrial Disputes Act, 1947, with a view to put a restraint upon the arbitrary exercise of the right of employers to retrench workmen. It was urged that the employer from retrenching workmen from employment compensation payable there under could not be regarded as 'wages' within the meaning of the definition of that expression as given in the Payment of Wages Act, 1936. We are, however, not concerned with the reason why the legislature made the provision. We are concerned with the question whether the artificial definition which the legislature has evolved of the expression 'wages' would include 'retrenchment compensation' and we see no ground for holding that it does not. When the employer is required to pay to the employee an amount, which depends upon the length of service which the employee had put in, at the time of his retirement from service, the amount may be regarded as a sum payable to an employee on termination of employment, or as deferred salary. It was urged that a workman who had not put in one year's service is not entitled to any compensation under Section 25F and that indicated, argued Mr. Palkhiwala, that the legislation did not regard retrenchment compensation as deferred salary or wages. It was, however, open to the legislature to regard an employee as having qualified for deferred salary or wages, if he has put in service for a certain period, and not otherwise. The fact that the employees whose services are comparatively short may not qualify for receiving retrenchment compensation does not alter the essential nature of the compensation payable to the employees who have qualified for the same.

24. It was urged that the retrenchment compensation was in the nature of gratuity and gratuity having been excluded from the definition of 'wages,' no claim under the Payment of Wages Act can be made in respect thereof before the authority. Reliance in support of that argument was sought to be placed upon the fact that the ordinance which was promulgated by the President for imposing retrenchment compensation on 24 October 1953 called that compensation 'gratuity.' Now Section 25P which falls in Chap. VA of the Industrial Disputes Act, 1947 was added by Act XLIII of 1953, which came into force on 23 December 1953. Act XLVII of 1953 was preceded by the Industrial Disputes Amendment Ordinance of 1953, and the Ordinance provided for payment of gratuity to employees in case of retrenchment. The Ordinance was repealed by the Industrial Disputes (Amendment) Act XLIII of 1953 ; and the Act was given retrospective operation as from 24 October 1953. Even though the Ordinance of 1953 called the retrenchment compensation 'gratuity,' under the Act it is called ' compensation,' and not ' gratuity.' The legislature having given the amending Act of 1953 retrospective operation as from 24 October 1953, the nature of the payment to be made to retrenched employees will have to be judged by reference to the provisions of the Act of 1953, and not by reference to the Ordinance of 1953. Gratuity is an ex gratia payment made by the employer to an employee on termination of his employment. The liability to pay retrenchment compensation is imposed upon the employer by the State, and it is not an ex gratia payment. It would, therefore, be difficult to regard compensation, which the statute says shall be made at the time of retrenchment as 'gratuity.'

25. It was also urged that the expression 'payable' as used in the definition of the expression 'wages' must mean 'payable' under a contract express or implied, and if the obligation to pay arises, not by the terms of a contract, but as a result of a statutory imposition, the definition would not cover such amounts. We are unable to accept that contention also. There is nothing in the definition of 'wages' which supports the assumption that the amount payable must be 'payable' under the terms of a contract express or implied. It in terms means all remuneration or other sums which become payable if the terms of the contract of employment, express or implied, are fulfilled by the employee. That an employee must fulfil the terms of his employment, express or implied, for being entitled to claim wages cannot be disputed. But if an employee fulfils the terms of his employment, the extent of the right to receive payment of wages does not depend upon the terms of the contract of employment. Even if by an award payment is directed to be made by an employer, such award not forming part of the contract of employment, that payment would have to be made by the employer to the employee, and would fall within the definition of 'wages.' Similarly, if liability for payment of any amount to an employee is imposed upon an employer by statute that liability has also to be satisfied by the employer, even though the contract between the parties of employment did not contemplate the same. In this view we are supported by a judgment of this Court reported in Prabha Mills, Ltd. v. R. H. Naik 1953--I L.L.J. 577. It was held in that case that if an employee has served his master and carried out the terms of the contract of service and fulfilled his obligations, any amount payable by the employer to the employee would be 'wages' within the meaning of the definition. Therefore, 'wages ' do not only include remuneration payable by the employer under the terms of the contract, express or implied; it also included any amount which the employer legally becomes liable to pay to the employee on the fulfilment of the contract. It was held in Prabha Mills case that an award of the industrial court fixing higher wages and dearness allowance can be enforced under the Payment of Wages Act, the employer becomes liable to pay the additional wages and dear ness allowance to the employees; and such additional wages and dearness allowance are 'wages' within the meaning of Section 2(vi) of the Payment of Wages Act. The Court in that case negatived the contention raised by the employer that the expression 'wages' only means to payments which was imposed upon the employer by the terms of the contract of employment to make and held that all amounts which the employer is legally liable to pay to the employee on fulfilment of the contract of employment are 'wages' within the meaning of the definition of that expression.

Mr. Palkhiwala relied upon the judgment of this Court reported in A.R. Sarin v. B.C. Patil (1951-53) Bom. L.R. 674,in support of his contention that a liability which arises otherwise than under the terms of the con tract of employment cannot be enforced by an application under Section 15 of the Payment of Wages Act. In that case an employee of the B. B. & C. I. Railway was suspended from service for misconduct, and was ultimately removed from service. The employee filed an application to the authority under the Payment of Wages Act for recovery of wages due to him during the period of suspension. The Payment of Wages Authority awarded to the employee the amount claimed by him, as in his view the order of removal of the employee from service was not a valid order, and the employee should be deemed to be in service of the employer. Against that order the employer applied to the High Court for a writ under Article 226 of the Constitution. This Court held that it was not open to the Payment of Wages Authority to decide whether the contract of service between the parties had been properly and validly terminated, nor was it open to the authority to decide whether the dismissal of an employee was wrongful. It was pointed out in that case that the Payment of Wages Authority being a special tribunal created under the Act, his jurisdiction could not be inferred by implication; it had to be expressly conferred and if the jurisdiction of the civil courts in matters which are entrusted to the special tribunal is ousted, it can only be regarded as ousted to the extent of the jurisdiction expressly conferred upon the special tribunal.

26. Now the point which expressly fell to be decided in Sarin case can have no bearing on the question to be decided in this case. But strong reliance was sought to be placed upon the observations made at p. 676 of the report:

Looking to the whole scheme of the Act (the Payment of Wages Act, 1936) and looking to the earlier part of the definition (the definition of the expression 'wages,') in my opinion, the sum payable by reason of the termination of his employment is not any damages or compensation to which a servant would be entitled on a wrongful termination of the service. The sum payable here referred to is only a sum payable under the terms of the contract.

Relying upon these observations it was urged by Mr. Palkhiwala that any sum which is payable otherwise than under the terms of the contract of service, express or implied, cannot be included within the definition of 'wages.'

27. We are unable to accept that contention. As I have pointed out earlier, the Court in that case was concerned to decide the question, whether the Payment of Wages Authority had jurisdiction to decide that there had been a wrongful termination of service of the employee; and it was held that the Payment of Wages Authority had no such jurisdiction. It was not necessary in that case to decide, whether payment which becomes due under a statute to an employee on termination of his employment can be regarded as wages within the meaning of the definition of that expression. Nor was the Court called upon in that case expressly to consider the question, whether payment due to an employee for the period of notice would, when there was no express agreement of notice pay, be regarded as wages. In that case the amount which was claimed could have become payable to the employee only if his dismissal was wrongful, and not otherwise. It was held that it, was not within the jurisdiction of the authority under the Payment of Wages Act to decide the question whether the termination of employment was wrongful. On that view, evidently the authority could not decide that any amount was due to the employees on the footing that there had been a wrongful termination of employment. In the present case, however, the liability to pay retrenchment compensation is imposed by a statute. The source of the liability is not in dispute. The fact that the amount has become payable is also not in dispute. The only dispute that survives is, whether the Payment of Wages Authority is the proper forum for enforcement of that liability. We are unable to hold that observations made by the Court in discussing a question relating to a disputed liability, which might arise only on proof of facts, which the Court held were not within the competence of the authority to decide, can have any application to the present case where the liability is not in dispute; it must also be pointed out that the apparently wide observations which were made in the case of A.R. Sarin v. B.C. Patil : AIR1951Bom423 , were explained in a subsequent judgment in K.P. Mushran v. B.P. Patil : AIR1952Bom235 ]. The learned Chief Justice who delivered the judgment in that case pointed out at p. 1017 of the report that what was intended 'to he decided in Sarin case was that' it is only when the contract of employment is put an end to and the liability to pay damages for wrongful dismissal is disputed that the authority has no jurisdiction to consider the question with regard to wrongful dismissal,' Therefore, we are unable to hold that there is anything in A.R. Sarin v. B.C. Patil case which compels us to take the view that an amount which is directed by statute to be paid to an employee in certain circumstances is not an amount which is payable within the meaning of the definition of 'wages' as given in Section 2(vi) of the Payment of Wages Act.

28. It was then urged by Mr. Palkhiwala that in any event the refusal to pay retrenchment compensation did not involve delay in payment of wages; and the payment of wages authority had therefore no jurisdiction to decide the application filed before him. Mr. Palkhiwala contended that it is only in the case of an admitted liability that an application can lie to the authority under the Payment of Wages Act for enforcement thereof. According to Mr. Palkhiwala the Payment of Wages Authority is a tribunal constituted merely to provide a machinery for enforcement of an admitted liability, and is not a tribunal which is entitled to decide disputed questions as to liability. In support of that contention also counsel relied upon the judgment in A.R. Sarin v. B.C. Patil : AIR1951Bom423 and the following observations made by the learned Chief Justice at p. 67 of the report:

Delay in payment of wages can only mean delay in payment of wages which are admitted. Wages are due but for some reason or other those wages have not been paid at the time when they should have been paid under the law. Mr. Seervai wants us to read 'delay in payment of wages' as if it meant the same thing as refusal to pay wages. In this case there is not delay on the part of the petitioner to pay wages. He has refused to pay wages, rightly or wrongly, contending that respondent 2 is not his employee; he has dismissed him and therefore nothing is due to him. Therefore, the issue which really arises and which the authority has assumed jurisdiction to decide is whether the refusal of the petitioner to pay wages is justified or is valid in law.

The observations relied upon by Mr. Palkhiwala are not susceptible of the interpretation suggested by him. It does appear from the observations made in the judgment that the Payment of Wages Authority is concerned merely to direct payment of admitted wages. It has been decided in that case that it is competent to the authority under the Payment of Wages Act to construe the terms of employment in order to determine what wages are payable, and even if the contract of employment has been terminated, it is open to him to construe its terms in order to determine whether any sums are payable by reason of termination. It is also

open to him to determine whether a person has been employed or not, because the question of contract of employment and the terms of the contract can only arise provided the person seeking relief was employed. The mere denial of the factum of employment cannot oust the jurisdiction of the authority. If the employer denies or disputes the fact that the servant was employed by him, it will be for the authority to decide that question; and it is only after the question of employment had been decided that the question would arise as to what are the terms of the contract and what is the liability of the master under the terms with regard to wages.

29. It is evident from these observations that it was not held in Sarin case that the Payment of Wages Authority was concerned merely to direct payment of admitted wages. It was observed in that case that the authority has jurisdiction to decide, whether the liability had arisen and whether the liability can be enforced under the Payment of Wages Act.

30. Section 15 of the Payment of Wages Act confers jurisdiction upon the authority to entertain claims arising out of deductions or delay in payment of wages. The section does not limit the jurisdiction of the authority to . entertain admitted claims arising out deductions from wages or delay in payment of wages There is also nothing in Section 15 which justified that restriction upon the jurisdiction of the authority; and Sub-section (3) of that section indicates that the authority is entitled to hold an enquiry, to hear the parties to give them an opportunity of leading evidence and to decide the claim made by the employees to deduction or delay in payment of wages, If admitted wages can only be directed to be paid by the authority, it is difficult to appreciate what enquiry could be made under Sub-section (3) by the authority. Again, if the contention raised by counsel has force it would always be open to the employer in an application made under Section 15 of the Payment of Wages Act to oust the jurisdiction of the authority by denying the claim made by the employee. Once a claim is denied, if the argument of Mr. Palkhiwala is accepted, there would be no jurisdiction left in the authority to decide the claim. However, the enquiry which is contemplated to be made by the authority can only be in respect of disputed claims. Again, inherent in the proviso to Sub-section (3) is clear indication that the authority is entitled to make an enquiry into a dispute raised by the employer. Sub-section (3) of Section 15 invests the authority with jurisdiction to pass an order for payment of compensation for delay in payment of wages, but that jurisdiction of the authority is restricted, when there is bona fide error or bona fide dispute as to the amount payable, or occurrence of an emergency or existence of exceptional circumstances mentioned in Clauses (b) and (c) to the proviso. The existence of bona fide error or a bona fide dispute or of circumstances mentioned in the proviso can only be ascertained if the authority is entitled to hear and decide disputed questions and not otherwise.

31. Mr. Palkhiwala concedes that a mala fide denial of liability does not exclude the jurisdiction of the authority, but he contends that where a bona fide dispute is raised as to liability, the authority would have no jurisdiction to decide the dispute, and the employee must have recourse to another tribunal which can give him relief. But if it is within the jurisdiction of the authority to decide whether the denial is bona fide or mala fide, there is nothing in Section 15 which disables the authority from deciding other questions which have to be determined for adjudicating upon a claim arising out of deduction or delay in payment of wages. We are unable to hold that the legislature intended to restrict the jurisdiction of the authority to hear only in cases of admitted liability claims arising out of deduction from wages or delay in payment of wages.

32. In the present case by Section 25P(b) of the Industrial Disputes Act, 1947, the employer is bound to pay, at the time of retrenchment compensation to the employee. The mill having declined to pay the retrenchment compensation, it is evident that there has been delay in payment of wages of the employees. The refusal of payment of the retrenchment compensation, therefore, necessarily involves delay in payment of wages due to the employees and the application clearly falls within the terms of Section 15 of the Payment of Wages Act. In our view the Payment of Wages Authority had jurisdiction to entertain and decide the claim made by the district labour officer and that the authority was bound to entertain and decide the application to him. In refusing to entertain the application the authority has, in our judgment, failed to exercise the jurisdiction vested in him by law; and in exercise of our powers under Article 227 of the Constitution, we must set aside the order passed by him.


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