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New Prajapat Tiles Company and anr. Vs. Derasari Labhshanker Himatlal - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtGujarat High Court
Decided On
Case NumberCivil Revision Application No. 419 of 1961
Judge
Reported in[1964(8)FLR392]; (1964)0GLR265
ActsPayment of Wages Act - Sections 1, 2, 5, 7, 15, 17 and 22; Contract Act - Sections 74
AppellantNew Prajapat Tiles Company and anr.
RespondentDerasari Labhshanker Himatlal
Appellant Advocate A.V. Mody, Adv.
Respondent Advocate H.V. Bakshi, Adv.
Cases ReferredA. R. Sarin v. B. C. Patil
Excerpt:
labour and industrial - jurisdiction - sections 1, 2, 5, 7, 15, 17 and 22 of payment of wages act and section 74 of contract act - whether civil court had jurisdiction to decide matter - plaintiff's claim related only to damages for breach of contract - such damages do not fall within definition of wages - suit not triable only by authority under payment of wages act - held, suit be heard and tried by civil court. - - 15. in that case the following observations were made :therefore the jurisdiction of the authority appointed under this section is clearly limited to (1) all claims arising out of deductions from wages; 15 itself clearly limits the jurisdiction only to the two points to which reference has just been made, and this jurisdiction conferred upon the authority under s. 18...........the period of his actual employment including holidays and leave period, but dose not include the wages payable to a person for the period during which he was not in the employment, although it in the case of the plaintiff that the non-employment of the plaintiff to contrary to the terms of the contract of employment. 9. sub-section (d) of the definition of 'wages' reads as follows : 'any sum which by reason of the termination of employment of the person employed as payable under any law, contract or instrument which provide for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made.' 10. it is the contention of the learned counsel for the applicants that what the plaintiff claims is, according to him a.....
Judgment:

1. This revision application is by the original defendants. The opponent had filed a suit in the Court of the Civil Judge, Junior Division, Morvi, alleging that he was an employee of the applicants, that there was a contract of employment between him and the applicants to employ him for two years and his employment had been terminated after about one month and therefore he was entitled to Rs. 2,160. According to the plaintiff, he was entitled to this sum by way of damages for breach of contract and also because his employment was terminated without hearing him and without notice to him. He also claimed Rs. 180 by way of leave salary to which he was entitled if he had served the applicants for two years.

2. A preliminary issue was raised as to whether the civil Court had jurisdiction to try such a suit and this issue was decided in the affirmative. Hence the revision application. It is contended in revision that such a suit should go to the Authority under the Payment of Wages Act and it is not triable by a civil Court.

3. In answer to this contention, it is contended by the learned counsel for the opponent that this is a case in which the defendants have disputed the fact that the plaintiff is an employee of the defendants and that the Payment of Wages Act is not concerned with cases where there is a dispute regarding the employment. Reliance is placed on Anthony Sabastin Almeda v. R. M. T. Taylor [1957 - I L.L.J. 452], Narayanaswami v. Vasudeva [1958 - II L.L.J. 310], Vishwanath Tukaram v. General Manager, Central Railway [1957 - II L.L.J. 250] and A. R. Sarin v. B. C. Patil [1951 - II L.L.J. 188].

4. In order to decide the question whether the civil Court has jurisdiction and whether the suit is triable only by the Authority under the Payment of Wages Act, we have to consider the relevant provisions of the Payment of Wages Act, which will hereinafter to be referred to as the Act. The Act is enacted to regulate the payment of wages to certain classes of persons employed in industry. Section 1 of the Act applies to the payment of wages to certain classes of persons mentioned in that section. Section 2(vi) of the Act defines 'wages' as follows :

'Wages' means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes -

(a) any remuneration payable under any award or settlement between the parties or order of a Court;

(b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave salary;

(c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);

(d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum whether with or without deductions, but does not provide for the time within which the payment is to be made; and

(e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force ...'

5. Section 22 of the Act reads as follows :

'No Court shall entertain any suit for the recovery of wages or of any deduction from wages in so far as the sum so claimed -

(a) forms the subject of an application under S. 15 which has been presented by the plaintiff and which is pending before the authority appointed under that section or of an appeal under S. 17; or

(b) has formed the subject of a direction under S. 15 in favour of the plaintiff, or

(c) has been adjudged, in any proceedings under S. 15 not to be owed to the plaintiff; or

(d) could have been recovered by an application under S. 15.'

6. We have, therefore, to turn to S. 15 of the Act, which, so far as relevant, reads as follows :

'(1) The State Government may, by notification in the official gazette, appoint any Commissioner for Workmen's Compensation or other officer with experience as a Judge of a civil Court or as a stipendiary Magistrate to be the 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.

(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 any legal practitioner or any official of a registered trade union authorized in writing to act on his behalf, or any inspector under this Act, or any other person acting with the permission- of the authority appointed under Sub-section (1), may apply to such authority for a direction under Sub-section (3).'

7. It is, therefore, clear from S. 22 of the Act that if a sum claimed in a suit could have been recovered by an application under S. 15 of the Act, no Court shall entertain any suit for the recovery of wages or of any deduction from wages in so far as the sum so claimed could have been recovered by an application under S. 15 of the Act. Section 15 of the Act creates a special authority to hear and decide claims arising out of deduction of wages or delay in payment of wages of persons employed or paid in a particular area. Sub-section (2) of that section provides that where any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, an application may be made to such authority for a direction under Sub-section (3) of S. 15 of the Act.

8. Now the question is whether the plaintiff could have made an application under S. 15 of the Act. In the plaint the plaintiff claims that he is an employee of the industrial establishment of defendant 1. He claims that he had already taken Rs. 201 from his employer and that he is entitled to much larger sum by reason of the fact that his employment has been terminated before The period specified in the contract of employment. From the definition of 'wages' it is clear that 'wages' means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled be payable to a person employed in respect of his employment or of work done in such employment, and includes ... It is true that the words 'if the terms of employment, express or implied, were fulfilled' are used. But, at the same time the succeeding words are 'be payable to a person employed in respect of his employment or of work done in such employment.' It is, therefore, clear that this part of the definition refers to the amount payable to a person who is actually employed and in respect of the period of his actual employment including holidays and leave period, but dose not include the wages payable to a person for the period during which he was not in the employment, although it in the case of the plaintiff that the non-employment of the plaintiff to contrary to the terms of the contract of employment.

9. Sub-section (d) of the definition of 'wages' reads as follows :

'Any sum which by reason of the termination of employment of the person employed as payable under any law, contract or instrument which provide for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made.'

10. It is the contention of the learned counsel for the applicants that what the plaintiff claims is, according to him a certain sum payable to him by reason of the termination of the employment, and the sum would, therefore, amount to 'wages' within this definition. It is true that the words 'any sum which by reason of the termination of employment of the person employed is Payable under any law, contract or instrument which provides for the payment of such sum 'are used. But the sum must be payable under any law, contract or instrument, which should specifically provide for the payment of such sum. For instance, the law may provide that in the case of retrenchment two weeks' salary shall be payable. That would be a law providing for the payment of a sum on the termination of the employment. Similarly, the contract may provide that on the termination of employment a particular sum shall be payable. That would be a contract providing for the payment of a sum on the termination of the employment. But simply because damages may be payable for the breach of contract of employment that would not be an amount payable by reason of the termination of the employment and an amount payable under any law, contract or instrument which provides for the payment of such sum. The law of contract provides that damages shall be payable for the breach of contract. But S. 74 of the Contract Act does not mention any specific sum as being payable. Moreover, that sum is payable not merely by reason of the termination of the employment but by reason of two facts,

11. (1) termination of the employment, and

(2) termination of the employment being contrary to the contract.

12. That sum is payable only if there is a finding of a Court that there is a breach of the contract. I, therefore, hold that damages for breach of contract of employment do not amount to wages as defined in S. 2(vi) of the Act.

13. It is also contended by the learned counsel for the applicant that the jurisdiction of the civil Court is not barred because in this case there is not a dispute between the parties as to the quantum of the employment, and he relies on in Anthony Sabastin Almeda v. R. M. T. Taylor [1957 - I L.L.J. 452]. In that case a Division Bench of the Bombay High court consisting of Chagla, C.J., and Dixit, J., observed as follows (pp. 453-454) :

'Therefore, it could never have been the object of the legislature that the Authority under the Payment of Wages Act should try and decide complicated questions which should ordinarily and normally be heard by a Civil Court. What the authority has to determine is whether there has been an illegal deduction of wages. In order to determine that he has to determine what are the wages to which the employee is entitled and again to determine that, he must decide what the contract between the employer and the employee is which entitles the employee to receive wages ... The jurisdiction of the authority is limited to decide what is contract in the sense of construing the contract in order to determine the liability of the employer to pay Wages. But when the employer and the employee come before him and rely on different contracts it is not within his jurisdiction to decide which of the two contracts holds the field, which of them is subsisting and under which of them the employer is liable to pay wages. It is only when there is no dispute as to the contract that subsists and regulates the rights and liabilities of the parties that the jurisdiction of the authority arises to determine the quantum of wages. But when the very basis of the relationship is in dispute and in controversy, the legislature did not intend that a court of summary jurisdiction should decide that important question.'

14. The learned Judges did not refer to the wording of S. 15 of the Act, and they referred to an earlier decision of the Bombay High Court in A. R. Sarin v. B. C. Patil [1951 - II L.L.J. 188] where S. 15 was referred.

15. In that case the following observations were made :

'Therefore the jurisdiction of the authority appointed under this section is clearly limited to

(1) all claims arising out of deductions from wages; and

(2) delay in payment of wages.

16. It must be borne in mind that S. 22 ousts the jurisdiction of civil Courts in respect of all claims which can he entertained by the authority under S. 15. Therefore, the scheme of the Act is to set up a special tribunal, confer a special jurisdiction upon that tribunal, and to the extent that special jurisdiction is conferred upon that tribunal to oust the jurisdiction of ordinary civil Courts. Therefore, the jurisdiction conferred upon the special tribunal must be strictly construed, and S. 15 itself clearly limits the jurisdiction only to the two points to which reference has just been made, and this jurisdiction conferred upon the authority under S. 15 must be read in the light of the previous sections of the Act. Jurisdiction with regard to delay in payment of the wages must be read In connexion with S. 5 which lays down the time for Payment of wages. Therefore, it there is delay in reference to the point of time indicated in S. 5. Then an employee to entitled to make a grievance of that fact and the authority is entitled to order payment of wages which have not been paid and which should be paid in accordance with S. 5. Further, there is jurisdiction to adjudicate with regard to deductions from the wages and this must again be read with reference to S. 7 which permits certain deductions and which makes it illegal for the employer to make deductions other than those provided in the Act. Therefore, if an employer makes certain deductions from the wages of an employee he is entitled to go to the authority and complain of unauthorized deductions and get an order from the authority compelling the employer to make good the deductions wrongly made by the employer. There is also a provision for appeal under S. 17, but that right is restricted to cases where the total sum directed to be paid by way of wages and compensation exceeds Rs. 300. In cases where the payment in less than Rs. 300, there is no right of appeal at all and the decision of the authority is final.

17. 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. Sri Seervai wants us to read 'delay in Payment of wages' as if it meant the same thing an refusal to pay wages. In this case there is no 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. If the legislature wanted to confer such a jurisdiction upon the authority, it would certainly have done so by appropriate language. Really Sri Seervai goes to the utmost length by suggesting that all questions arising out of a contract of personal service and all questions arising out of relationship of master and servant, have all been transferred from the civil Courts to this special tribunal. Sri Seervai says that the expression 'any sum payable to such person by reason of the termination of his employment' is wide enough even to cover a claim for damages for wrongful dismissal. If the intention of the legislature was what Sri Seervai says it is, nothing could have been easier than for the legislature to have indicate in clear explicit language that the jurisdiction of civil Courts to adjudicate upon the quantum of wages, to adjudicate upon the question whether a contract of service has terminated or not, the jurisdiction to adjudicate upon the question whether a dismissal by a master of his servant was wrongful or not and the jurisdiction to adjudicate upon the damages which the servant is entitled to on wrongful dismissal all these questions and all these jurisdictions have been tranfored from the civil Courts to the special tribunal set up under the Act. As I said before, one would have expected very different language, to oust the jurisdiction of the civil Courts and to confer that jurisdiction upon the special tribunal. The jurisdiction of a special tribunal cannot be inferred by implication. Jurisdiction must be expressly given and we must find from the language of the statute itself that there is express ouster of the jurisdiction of the civil Courts and an express conferment of such jurisdiction upon the special tribunal set up under, the Act.

18. We would like to make it clear, as the matter is of considerable importance, as to what we think is the jurisdiction of the authority under the statute. It is certainly competent to the authority to construe the terms of the contract of employment in order to determine what wages are to be paid, 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 the termination. It would also be 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 has 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. Therefore, the jurisdiction of the authority really is to determine the terms of the contract in so far as they relate to the payment of wages and in so far as he has to decide the liability of the employer to pay wages under the terms of the contract. But that jurisdiction does not extend to determining the question as to whether the contract has terminated as alleged by the employer or the contract is still subsisting as alleged by the servant.'

19. The learned Judges of the Bombay High Court themselves recognized that the mere denial of the factum of employment cannot oust the jurisdiction of the authority. In other words, if the plaintiff says that there is a contract of employment and the defendant says that there is no contract of employment that does not oust the jurisdiction of the authority. But it is open to the Authority under the Payment of Wages Act to determine whether the plaintiff is employed by the defendant or not. If it comes to the conclusion that the plaintiff is not employed, then it ceases to have jurisdiction and must dismiss the application. It is only if the plaintiff is employed by the defendant that the Authority under the Payment of Wages Act can pass suitable orders. If on proper inquiry it comes to the conclusion that the plaintiff is not employed by the defendant, then the application must be dismissed. But it has jurisdiction, to decide whether the plaintiff is employed or not and whether there is a contract between the plaintiff and the defendant. As observed by the learned Judges of the Madras High Court in 1958 - II L.L.J. 310, the determination of the question whether the suit as framed is maintainable in a civil Court is to be made with reference only to the averments in the plaint. If the plaintiff alleges that he was employed by the defendant and if what the plaintiff is claiming is wages as defined in the Payment of Wages Act and the amount claimed could be recovered by an application under S. 15 of the Act, then the civil Court's jurisdiction would be barred whatever be the written statement. No Court and no authority can call for a written statement if it has no jurisdiction. Of course, all Courts and all tribunals can decide the question of their jurisdiction on a preliminary issue. If the question of jurisdiction to challenged, they must frame a preliminary issue before calling for a written statement. Under S. 22 of the Act, no civil Court should entertain a suit of the nature mentioned therein. If the suit is of such a nature, it should not be entertained and the court should not call for a written statement. Of course, what happens in some cases is that the Court forgets to consider the question of jurisdiction, and if it does so, a written Statement may raise the question of jurisdiction. An employee may make an application for wages under the Payment of Wages Act and in the written statement the factum of employment may be disputed. If on that ground the Authority under the Payment of Wages Act dismisses the application, and the employee goes to the civil Court the employer may admit the relationship of employee and employer so as to oust the jurisdiction of the civil Court in that case, if the relationship of the employee and the employer is admitted and the claim is otherwise for wages the civil Court would have no jurisdiction. This would load to an anomaly because both the authority and the civil Court would decide that they have no jurisdiction. It is true that this results from a change in the attitude of the employer, but a change in the attitude of the employer should not affect the question of jurisdiction.

20. It is always open to any Court or tribunal to investigate jurisdictional facts, and to decide whether the Court or tribunal has jurisdiction or not. If the jurisdictional fact is proved in affirmative. The Court or tribunal would have Jurisdiction. If it is proved that the plaintiff is employed by the defendant, notwithstanding the denial then the Authority under the Payment of Wages Act would have jurisdiction. It can decide whether the plaintiff is employed or not by the defendant. It can always decide the question which is a jurisdictional fact. But if it decides the fact in the negative and holds that the plaintiff is not employed by the defendant, then the application of the plaintiff would have to be dismissed by the authority on the ground that he is not the employee of the defendant. The observations in 1957 - I L.L.J. 452 that it is only when there is no dispute as to the contract that subsists and regulates the rights and liabilities of the parties that the jurisdiction of the authority arises to determine the quantum of wages is inconsistent with the observation by the same Judge in the earlier decision in 1951 - II L.L.J. 188 that the mere denial of the factum of employment cannot oust the jurisdiction of the authority.

21. The learned counsel for the opponent also relies on a Full Bench case in 1957 - II L.L.J. 250. In the Full Bench case it was observed that the Authority under the Payment of Wages Act might determine whether in the first place there was an employment or not. It is, therefore, clear that even if there are certain disputes, they can be decided by the Authority under the Payment of Wages Act. But the dispute must relate to a point which can be decided under S. 15 of the Act. The disputes should not be as to the quantum of damages payable under S. 74 of the Contract Act and as to whether damages are payable under that section.

22. But as already observed, the plaintiff's claim is only for damages for breach of contract and such damages would not fall within the definition of 'wages.' It is true that he has claimed Rs. 180 by way of leave salary for two months on the supposition that he would be entitled to leave for two months if he had continued to be employed for two years in pursuance of the alleged contract made by the two defendants. But this amount would not amount to leave salary. If it amounts to a salary, it would be 'wages.' But what is claimed is not leave salary for the period of leave already earned, but what is claimed by way of leave salary that would have been earned, if the plaintiff had continued to be employed for two years by the defendants, it being an admitted position that he was not employed by the defendants for two years. It is clear from the plaint that the amount of Pa. 180 is one of the items claimed by the Plaintiff to make up an amount of Rs. 2,160 claimed by way of damages. It is, therefore, clear that the Authority under the Payment of Wages Act cannot decide such a question.

23. It is, therefore, not necessary to decide in this case whether if a suit is of a composite nature and consists of two claims :

(1) triable by the authority under the Payment of Wages Act, and

(2) not triable by such authority,

24. such a suit can be heard and tried by a civil Court. The learned counsel for the opponent, however, relies on 1958 - II L.L.J. 310 (vide supra) in support of his contention that even a composite suit can be tried by a civil Court. But it is unnecessary to decide that contention now in view of my finding that the whole claim made by the plaintiff is by way of damages. The suit is, therefore, triable by the civil Court and the lower Court was right in deciding the preliminary issue in the affirmative.

25. The revision application is, therefore, dismissed, but there will be no order as to costs.


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