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CASE NO.: Appeal (civil)  5371 of 2005

PETITIONER: Hotel and Restaurant Karamchari Sangh            

RESPONDENT: M/s Gulmarg Hotel and Ors.                               

DATE OF JUDGMENT: 08/06/2006

BENCH: ARIJIT PASAYAT & C.K. THAKKER

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J

                Challenge in this appeal is to the order passed by a  learned Single Judge of the Allahabad High Court allowing the  Writ Petition filed by respondent No.1 (hereinafter referred to  as the ’employer’).

       The High Court by the impugned order quashed the order  passed by the Deputy Labour Commissioner, Lucknow Region,  Lucknow. The said authority had issued a certificate for  recovery of Rs.60,810.76 from respondent No.1 in terms of  Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act,  1978 (in short the ’Act’).  

       Background facts filtering out unnecessary details are as  follows:

On the basis of a complaint received from the appellant,  the Assistant Labour Commissioner issued a notice to  respondent No.1 stating that  it had not paid outstanding  wages to the employees/workmen of the establishment  amounting to more than Rs.60,000/-. The authority asked the  respondent No.1-employer to show cause as to why recovery  under the Act shall not be made as arrears of land revenue by  issuance of certificate of recovery. Respondent No.1-employer  submitted a reply stating that nine employees were  absconding  and out of total 22 employees, 8 employees had  been paid their wages and the amount to be payable was less  than Rs.50,000/-. It was, therefore, submitted that the  provisions of the Act cannot be applied. The Assistant Labour  Commissioner considered the plea of the employer and  rejected the same by holding that the claim was instituted on  16.10.2000, notice was issued on 19.10.2000 and the  response was filed on 14.12.2000. At the time of initiation of  the proceedings, the amount was admittedly more than  Rs.50,000/-.  Merely because a part of the amount claimed  had been paid subsequently, that cannot affect the jurisdiction  of concerned authority to issue a certificate for recovery. The  employer filed a Writ Petition before the Allahabad High Court  questioning correctness of the order. The High Court came to  hold that at the time of adjudication, the amount in default  did not exceed Rs.50,000/- and, therefore, proceedings were  not maintainable. Reference was made to a decision of this

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Court in Modi Industries Ltd. v. State of U.P. and Ors. [1994  (1) SCC 159] to hold that the certificate for recovery could not  have been issued. The writ petition was accordingly allowed.  

       In support of the appeal, learned counsel for the  appellant submitted that Modi Industries’ case (supra) has no  bearing on the subject matter of controversy. The Assistant  Labour Commissioner was right in his view that at the time  the claim was lodged, the amount was admittedly more than  Rs.50,000/-. By adopting a subterfuge the employer cannot in  law be permitted to take away the jurisdiction of the authority  to issue certificate for recovery.  

       Learned counsel for the State, respondent No.2 and the  concerned authority-respondent No.3 supported the stand.  There is no appearance on behalf of respondent No.1- employer.

        In order to resolve the controversy between the parties, it  is first necessary to examine the provisions of the Act. As the  title of the Act itself suggests it has been enacted to secure  industrial peace by ensuring timely payment of wages to the  workmen. The preamble of the Act states that it is an Act to  provide "in the interest of maintenance of industrial peace, a  timely payment of wages in bigger industrial establishments  and for matters connected therewith". The statement of objects  and reasons of the Act states that delays in payment of wages  of workmen lead to simmering discontent among them.  Sometimes a grave threat to law and order is also forced on  this account. The provisions of the Payment of Wages Act,  1936 (in short ’Wages Act’) have been found to be inadequate  to ensure timely payment of wages. The incidence of  disturbance of industrial peace being greater in comparatively  bigger establishments, it was considered necessary to provide  that if the wage bill in default exceeds Rs.50,000/-, the  amount should be recoverable as arrears of land revenue.  Further, in order to curb the tendency of the employers to  keep large amounts of wages in arrears, it was also necessary  to make it a penal offence to be in default of a wage-bill  exceeding Rs.1 lakh.         It will thus be clear from the preamble, the statement of  objects and reasons and the provisions of the Act that, firstly  the Act has been placed on the statute book to ensure timely  payment of wages by the bigger establishments, the incidence  of disturbance of industrial peace being greater in such  establishments on account of the default in payment of wages.  Secondly, the Act deals with defaults in payment of the wage- bill of all the workmen in the establishment. It is not meant to  provide a remedy for the default in payment of wages of  individual workmen. That can be taken care of by the  provisions of the Wages Act which provisions are found  inadequate to ensure timely payment of wages of the whole  complement of workmen in an establishment. Thirdly, it is not  in respect of the default in payment of every wage-bill; but  only if a wage-bill exceeds Rs.50,000/- the Labour  Commissioner can be approached under the Act for redressal  of the grievance. Fourthly, the Act is not applicable to all  establishments but only those establishments which produce,  process, adopt or manufacture some articles.  It will, therefore,  be evident that the Act does not supplant or substitute the  Wages Act but supplements the said Act, in the limited area,  viz., where the establishment, as stated above, (i) produces,  processes, adopts or manufactures some articles, (ii) where  there is a default in the wage-bill of the entire such  establishment and   (iii)  where  such wage-bill  exceeds   

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Rs.50,000/-. The object of the Act as stated above is not so  much to secure payment of wages to individual workmen but  to prevent industrial unrest and disturbance of industrial  peace on account of the default on the part of the  establishment in making payment of wages to their workforce  as a whole. It appears that many establishments had a  tendency to delay the payment of wages to their workmen and  were playing with the lives of the workmen with impunity. This  naturally led to a widespread disturbance of industrial peace  in the State. Hence the legislature felt the need for enacting  the present statute. This being the case, the inquiry by the  Labour Commissioner contemplated under Section 3 of the Act  is of a very limited nature, viz., whether the establishment has  made a default in timely payment of wages to its workmen as a  whole when there is no dispute that the workmen are entitled  to them.         The inquiry under Section 3 being thus limited in its  scope, the Labour Commissioner’s powers extend only to  finding out whether the workmen who have put in the work  were paid their wages as per the terms of their employment  and within the time stipulated by such terms. If the Labour  Commissioner is satisfied that the workmen, though they have  worked and were entitled to their wages, had not been paid the  same within time, he has further to satisfy himself that the  arrears of wages so due exceed Rs.50,000/-. It is only if he is  satisfied on both counts that he can issue the certificate in  question. Under the Act, the Labour Commissioner acts to  assist the workmen to recover their wages which are  admittedly due to them but are withheld for no fault on their  behalf. He does not act as an adjudicator if the entitlement of  the workmen to the wages is disputed otherwise than on  frivolous or prima facie untenable grounds. When the liability  to pay the wages is under dispute which involves investigation  of the questions of fact and/or law, it is not the function of the  Labour Commissioner to adjudicate the same. In such cases,  he has to refer the parties to the appropriate forum.         The powers conferred on the Labour Commissioner under  Section 3 of the Act are to prevent apprehended or present  breach of industrial peace. That is why the inquiry  contemplated is of a summary nature. The exercise of the said  powers by the Labour Commissioner does not prevent either  party from approaching the regular forum for the redressal of  its grievance. Construing a more or less similar provision of  Section 3 (b) of the U.P. Industrial Disputes Act, 1947 in State  of Uttar Pradesh v. Basti Sugar Mills Co. Ltd. (AIR 1961 SC  420), this Court had taken the same view. The provisions of  the said Section 3(b) read as follows: "3. Power to prevent strikes, lockouts, etc. -- If,  in the opinion of the State Government, it is  necessary or expedient so to do for securing  the public safety or convenience or the  maintenance of public order or supplies and  services essential to the life of the community,  or for maintaining employment, it may, by  general or special order, make provision - (a)   x         x       x       x       x       x (b) for requiring employers, workmen or both  to observe for such period, as may be specified  in the order, such terms and conditions of  employment as may be determined in  accordance with the order; x   x      x            x       x       x"

       The above position was highlighted in Modi’s case  (supra).

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The Assistant Labour Commissioner was justified in  taking the view that the determinative date is the date on  which the claim is lodged. Otherwise, the very purpose of the  enactment would be defeated. The relevant provisions i.e. sub- section (1) of Section 3 of the Act reads as follows:

"3-      Recovery of wages in certain Industrial  establishments as arrear of land revenue:(1)  Where the Labour Commissioner is satisfied  that the occupier of an industrial  establishment is in default of payment of  wages and that the wage-bill in respect  of  which such occupier is in default exceeds fifty  thousand rupees, he may, without prejudice to  the provisions of Sections 5 and 6, forward to  the Collector, a certificate under his signature  specifying the amount of wages due from the  industrial establishment concerned."       

Though the expression used is "is in default of payment of  wages" it is relatable to the date on which the claim is lodged.  Otherwise, to overcome action contemplated under Section 3(1)  of the Act i.e. issuance of certificate for recovery by making a  part payment to see that the amount comes below Rs.50,000/-,  a crafty and unscrupulous employer can defeat the legislative  intent. The act as noted above is a beneficial one intended to  give help to the workers who are not being paid their wages. The  High Court completely lost sight of the relevant factors and  relied on the decision in Modi’s case (supra) which had not  decided the issue under consideration.

       Therefore, the order passed by the Assistant Labour  Commissioner is restored and the impugned order of the High  Court is quashed. The appeal is allowed but in the  circumstances there will be no order as to costs.