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1974 DIGILAW 218 (ALL)

M/s. R. R. Engineering Co. v. Competent Authority

1974-05-02

G.C.MATHUR, J.M.L.SINHA

body1974
JUDGMENT G.C. Mathur, J. - The appellant firm engaged respondent No. 2, Sri Laxmi Narain Agaiwal, as a stenographer under an agreement dated August 13, 1964. Under the agreement, Agarwal agreed to serve for at least 3 years. The firm reserved to itself the right to terminate the services of Agarwal at any time if hi.s work and conduct was found unsatisfactory by giving him 3 months' notice or 3 months' salary in lieu thereof. The appellant firm terminated the services of Agarwal by notice dated February 5,1965 and paid him 3 months' salary in lieu of notice. According to Agarwal, he protested to the appellant firm against the termination and by letter dated February 18, 1965 the firm agreed to pay him salary for the unexpired period under the agreement, that is to say, to pay salary from May 6, 1965 to August 16. 1967. Agarwal then wrote a letter to the firm on February 25, 1965 demanding the amount under the letter dated February 18, 1965. By its letter dated March 3, 1965, the firm repudiated its liability and denied that it had sent any letter on February 18, 1965 agreeing to pay the salary for the remaining period of the agreement. After about 3 years, on February 16, 1968 Agarwal moved an application under Section 15 (2) of the Payment of Wages Act claiming a sum of Rs. 6.831.51 on account of wages or salary withheld for the period May 6, 1965 to August 16, 1967. By order dated December 3, 1968. the claim of Agarwal was accepted by the Payment of Wages Authority and it ordered that the sum of Rs. 6,831.51 be paid by the appellant firm to Agarwal. 2. The appellant firm received a notice dated July 2, 1969 from the Prescribed Authority directing it to deposit the sum of Rs. 6,831.51 in Court by July 26, 1969. The appellant firm then on July 26, 1969 filed an affidavit before the Prescribed Authority stating that it was not aware of the proceedings under Section 15 (2) of the Act, that no notice or information was received by it of those proceedings and that it came to know about the matter only when the notice dated July 2, 1969 was received by it. The firm then on August 25, 1969 filed a formal application before the Prescribed Authority for setting aside the ex parte order an for restoring the case. In this application also, it was asserted that no service was effected on the appellant and that the appellant came to know for the first time about the case when it received the notice dated July 2, 1969. On September 15, 1969, the appellant filed yet another application alleging that the service on the appellant was fraudulent and false and prayed that the appellant be given an opportunity to produce evidence to establish the fraud. However, by order dated December 16, 1969, the Prescribed Authority rejected the application. The Prescribed Authority did not take any evidence in the matter. The relevant part of its order reads thus: "The O. P. was summoned by my predecessor but the O. P. did not appear before the court and hence my predecessor passed ex parte order considering sufficient service on the O, P. I, therefore, see no reason to interfere with the orders passed on 3-12-68 by my predecessor." The Prescribed Authority did not even examine whether there was any proof of service on the appellant on the record or not. It merely relied upon the observations contained in the order dated December 3, 1968 which are to the following effect: "The O. P. was summoned by the court but the O. P. did not appear before the court and hence my learned predecessor ordered for the ex parte proceedings" 3. The appellant then filed a writ petition in this Court. Before the learned Single Judge, the following two points were urged by the appellant : (i) that the appellant firm had no notice of the proceedings before the Payment of Wages Authority and, as such, the ex parte order dated December 3, 1968 ought to have been set aside, and (ii) that the Payment of Wages Authority had no jurisdiction to entertain the case. The learned Single Judge repelled the first contention on the ground that he could not go into the question of fact whether the notice was really served or not on the appellant and observed that since the authority in its order stated that the appellant was served with the notice but did not appear, it was justified in passing the ex parte order. The second contention was repelled on the ground that on the facts stated by Agarwal in his application under Section 15 (2), it was a clear case of wages withheld. Against the judgment of the learned Single Judge, the appellant firm has filed this appeal. 4. Having heard Shri Shanti Bhushan, learned counsel for the appellant, we are inclined to the view that it was a fit case in which the Prescribed Authority ought to have given the appellant an opportunity of producing evidence and of showing that no service was effected on the appellant and that the service was fraudulent and fictitious. 5. Sub-section (3) of Section 15 provides that, when any application under sub-section (2) is entertained, the authority shall hear the applicant and the employer. It is, therefore, incumbent upon the authority to give notice to the employer and to hear him. If an order is made or a direction is given without giving due and proper notice to the employer and without affording it an opportunity of being heard, the order or direction would be in contravention of the mandatory provisions of sub-section (3), and would be illegal. Therefore, when an employer makes an application that it has received no notice of the proceedings, it is incumbent upon the authority to examine the correctness of the assertion and to find out whether, in fact due notice was or was not served on the employer. In the present case, the employer asserted in the clearest terms that no notice was served upon it and that the service was fraudulent and fictitious. The employer also prayed for an opportunity to produce evidence to establish the correctness of its assertion. The authority did not even examine the notices which were alleged to have been issued to the employer and the reports of service. The authority erroneously thought that the observation in the earlier order that notice had been sent to the employer and it had failed to appear was final and could not be re-examined. We are of opinion that the Prescribed Authority was bound to examine whether there had or had not been proper and due service on the employer and, in this regard, to give an opportunity to the employer to establish its assertion by producing evidence. 6. We are of opinion that the Prescribed Authority was bound to examine whether there had or had not been proper and due service on the employer and, in this regard, to give an opportunity to the employer to establish its assertion by producing evidence. 6. It was then contended by learned counsel for the employee that the application of the employer for setting aside the ex parte order was not maintainable. There is no provision in the Act in this regard. In the U. P. Payment of Wages (Procedure) Rules, 1958, a provision has been made for deciding the application under Section 15 (2) ex parte and also for setting aside an ex parte order. Rule 8 reads thus: "8 (1) If the application is entertained, the authority shall call upon the employer by a notice in Form E to appear before him on a specified date together with all relevant documents and witnesses, if any, and shall inform the applicant of the date so specified. (2) If the employer or his representative fails to appear on the specified date, the authority may proceed to hear and determine the application ex parte. (3) If the applicant fails to appear on the specified date, the authority may dismiss the application:- Provided that an order passed under sub-rule (2) or sub-rule (3) may be set aside and the application re-heard on good cause being shown within one month of the date of the said order, notice being served on the opposite party of the date fixed for re-hearing." It was urged by learned counsel for the employee that an application under the proviso to Rule 8 could only be filed within one month of the date of the ex parte order and, since the application in the present case was filed beyond that period, it could not be entertained by the authority. We find no force in this contention. The proviso does fix a limitation of one month from the date of the ex parte order for making an application for setting it aside but, in our opinion, the provisions of the Limitation Act apply to an application under the proviso and it is open to the authority tinder Section 5 of the Limitation Act, if sufficient cause is shown, to condone the delay in making the application. Whether there was or was not sufficient cause for the delay in making the application will have to be decided by the authority and not by us. It was also urged that sub-rules (2) and (3) contemplate cases where either the employer or the employees does not appear after due service and does not contemplate a case like the present one where the employer is alleged not to have been served at all. There is no warrant for this contention. The language of sub-rules (2) and (3) is clear and contemplates the passing of an ex parte order where either the employer or the employee fails to appear. These sub-rules cannot be confined to cases where the parties fail to appear after due notice. In fact, no question of notice can arise in the case of an employee because he is the applicant and is bound to know about the proceedings and the date of hearing. 7. In our opinion, the application for setting aside the ex parte order was maintainable. We may mention that no objection was raised about the maintainability of the application either before the authority or before the learned Single Judge. We may briefly notice a contention raised by learned counsel for the employer that, even if the rule was not applicable, the authority had inherent power to set aside its ex parte order if it found that such an order had been passed without any notice to the employer. In this connection we may refer to the observations of the Supreme Court in the Sub-Divisional Officer (Compensation Officer), Mirzapur v. Raja Srinivasa Prasad Singh, AIR 1966 SC 1164 : "Every Court and Tribunal is entitled to reopen a proceeding which has proceeded ex-parte not because a party has failed to appear but because a notice has not been sent to a necessary party. A decision reached behind the back of a necessary party to whom notice must be sent is not binding upon such a party and the Court may, in such a case, reopen the proceeding to give the party a chance to state its case." This is ample authority for holding that the Payment of Wages Authority has inherent jurisdiction to set aside an ex parte order passed without due service of notice on the employer even if there is no such specific provision in the Act or rules empowering it to do so. 8. The appeal is accordingly allowed and the judgment of the learned Single Judge is set aside. The writ petition is allowed, the order of the Payment of Wages Authority dated December 16, 1969, rejecting the employer's application for setting aside the ex parte order is quashed and the authority is directed, after giving the parties an opportunity of being heard, to decide that application for setting aside the ex parte order afresh in accordance with law and in accordance with the observations made in this judgment. Parties will bear their own costs of this appeal as well as of the writ petition.