Singh Engineering Works Pvt. Ltd. v. Kandhai — 1975 DIGILAW 13 (ALL)

JUDGMENT G. C. Mathur, J. - These three revisions arise out of two applications filed under Sec. 15 (2) of the Payment of Wages Act. Since common questions of law arise in these cases, it is convenient to dispose them of by one judgment. 2. Messrs. Singh Engineering Works Private Ltd., Kanpur, were running two sections, namely the Steel Foundry Section and the Cast Iron Foundry Section. On May 29, 1970, they put up a notice that the Steel Foundry Section would be closed from May 30, 1970, that the employees working in this section had become surplus and were retrenched and directed them to take their retrenchment compensation. Twelve out of the thirty employees working in the Steel Foundry Section approached the employers and they were engaged in the Cast Iron Foundry Section. Fifteen other employees took their retrenchment compensation and ceased to be in service. The remaining three employees, namely, Kandhai Singh, Musafir Singh and Jagannath did not take their retrenchment compensation. On November 16, 1970, an application was filed on behalf of Kandhai Singh and Jagannath by Sri G. L. Bajpai, President, U. P. Workers Union, under Sec, 15 of the Payment of Wages Act, claiming wages for the period May 16, 1970 to October- 31, 1970 and compensation for the alleged illegal deduction of wages. Another application was filed by Sri G. L. Bajpai on behalf of Musafir Singh, Kandhai Singh and Jagannath claiming wages for the period November 1, 1970 to May 31, 1971 and claiming compensation for the wrongful deduction of wages. The employers admitted that Kandhai Singh, Jagannath and Musafir Singh were their employees but pleaded that on account of closure of the Steel Foundry Section in which they were working they were retrenched from service with effect from June 1, 1970 and were, therefore, not entitled to the wages and compensation claimed. It was, however, admitted that these three persons were entitled to retrenchment compensation and that the employers were still willing to pay the same. The employers further contended that the Payment of Wages Authority had no jurisdiction to decide the question regarding the closure and the retrenchment of the employees. 3. By order dated July 13, 1971, the Payment of Wages Authority directed the employers to pay a sub of Rs. 1,913.16 together with a compensation amounting to Rs 25-00 to Kandhai Singh and to pay a sum of Rs. 3. By order dated July 13, 1971, the Payment of Wages Authority directed the employers to pay a sub of Rs. 1,913.16 together with a compensation amounting to Rs 25-00 to Kandhai Singh and to pay a sum of Rs. 1,318.24 together with a compensation of Rs. 25-00 to Jagannath. In the second application, the Payment of Wages Authority directed the employer to pay a sum of Rs. 1,168.44 to Musafir Singh, Rs. 2,336.88 to Kandhai Singh and Rs. 2,142.14 to Jagannath. It further directed the employers to pay a compensation of Rs. 25-00 to each one of them. The Authority held that there did not seem to be any closure of the Steel Foundry Section from May 30, 1970 and that the story of closure seemed to have been prepared to justify the refusal of work to some workers. In this view, the Authority considered that the three employees continued in service. 4. Against the order of the Payment of Wages Authority in the two cases, the employers filed two appeals before the District Judge. In the appeals, the main quest on raised was that the Payment of Wages Authority had no jurisdiction to go into the question whether the closure was a real and valid one and whether the retrenchment of the employees concerned was justified or not. A third appeal was filed by the employees claiming that compensation should have been awarded at ten times the amount of deducted wages. By a common judgment dated August 4, 1972 the Additional District Judge, Kanpur, dismissed all the three appeals. Hence these three revisions. 5. Sri Jagdish Swarup, learned counsel for the employers, has urged that in the face of the plea raised by the employers that the Steel Foundry Section had been closed and that the employees of that section had been retrenched, the Payment of Wages Authority had no jurisdiction to entertain the claim by the retrenched employees for wages for a period subsequent to the retrenchment. There is considerable force in this argument. Sub-sec. (1) of Sec. 15 empowers the State Government to appoint an authority to hear and decide all claim, arising out of deduction from the wages, or delay in payment of the wages of employees, including all matters incidental to such claim. Sub-sec. There is considerable force in this argument. Sub-sec. (1) of Sec. 15 empowers the State Government to appoint an authority to hear and decide all claim, arising out of deduction from the wages, or delay in payment of the wages of employees, including all matters incidental to such claim. Sub-sec. (2) confers a right on certain persons to make an application to such authority where any deductions have been made contrary to the provisions of the Act or any payment of wages 1 has been delayed and to ask the authority for a direction under sub-sec. (3). Subsec. (3) empowers the authority to direct the employer to refund the amount deducted or to pay the delayed wages and also to pay compensation. 6. The jurisdiction conferred upon the Payment of Wages Authority is a limited and special jurisdiction which should neither be unduly extended nor unduly curtailed. Primarily, the jurisdiction is to decide the question whether there has been any wrongful deduction from the wage, of an employee and the question whether there has been any delay in the payment of wages. Sub-sec. (1) confers on the Authority, power to decide matters which are incidental to these two questions. The incidental matters which generally arise before the Authority and which is has jurisdiction to decide, are: (i) the determination of the question as to what the wages of the employee are; (ii) finding out the terms of the contract between the employer and the employee; (iii) deciding the question whether initially there was any relationship of employer and employee between the parties ; and (iv) deciding the question whether the application under sub-sec. (2) is time-barred and whether there is sufficient cause for the delay in filing it. In respect of these incidental matters, the Payment of Wages Authority is entitled to take evidence and to record its findings. But the jurisdiction of the Payment of Wages Authority does not extend to deciding the question whether the employer has bona fide or lawfully terminated the relationship of employer and employee. In Vishwanath Tukaram v. General Manager, Central Railway, A.I.R. 1958 Bombay 111 (F.B.), a Full Bench of the Bombay High Court has held that the Payment of Wages Authority has no jurisdiction to decide whether the services of an employee have been rightly or wrongly terminated or whether the dismissal is lawful or unlawful. In Vishwanath Tukaram v. General Manager, Central Railway, A.I.R. 1958 Bombay 111 (F.B.), a Full Bench of the Bombay High Court has held that the Payment of Wages Authority has no jurisdiction to decide whether the services of an employee have been rightly or wrongly terminated or whether the dismissal is lawful or unlawful. A Single Judge of the Madras High Court in A.C. Arumukham v. Manager, Jawahar Mills Ltd., Salem Junction, A.I.R. 1956 Madras 79, observed as follows: "This Act furnishes a summary remedy for wages earned in an office and not paid, but it does not provide a remedy for investigation of quarrels which concern the office itself, in other words, whether a man should foe retained in one job or should be reverted to another job... .Cases of unjustifiable reversion cannot be decided by the authority appointed under the Act exercising jurisdiction under sub-sec. (3) of this Section..................... 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 still subsists as alleged by the servant." A Division Bench of the Madras High Court has, in Kannappan (M) v. Hoe and Company, Madras : 1961 II L.L.J. 510, held that under Sec. 15 of the Payment of Wages Act, the Authority has no jurisdiction to make an order at the instance of an employee who has been dismissed or retrenched, and that it is not within the province of the authority to decide the question whether the dismissal or retrenchment of a workman was lawful. 7. Where it is admitted that the relationship of employer and employee did initially exist between the parties, but it is pleaded that the employer has put an end to that relationship either by dismissal, removal, termination of service or by retrenchment, then the validity of such action cannot be questioned before the Payment of Wages Authority. 7. Where it is admitted that the relationship of employer and employee did initially exist between the parties, but it is pleaded that the employer has put an end to that relationship either by dismissal, removal, termination of service or by retrenchment, then the validity of such action cannot be questioned before the Payment of Wages Authority. Of course, if no such action has really been taken but a plea is raised mala fide before the Payment of Wages Authority merely to oust its jurisdiction, the Authority has jurisdiction to examine the plea to see whether it has been raised bon afide or not. If the plea has been raised bona fide the Authority cannot examine the plea on merits. If there has been a real or factual termination of service, the Payment of Wages Authority cannot examine the validity of the reason given by the employer for the termination. Where there has been actual termination of service by retrenchment, the ground or reason given by the employers for the action, cannot be scrutinised by the Payment of Wages Authority. Therefore, in the present case, if there was a real and factual retrenchment, the Payment of Wages Authority could neither consider whether the retrenchment was good or ad nor go into the question whether the ground for the retrenchment, namely, the closure of the Steel Foundry Section, was a valid and good ground for retrenchment. 8. In the present case, the employers had put up a notice that the Steel Foundry Section was to be closed and that the employees working in that section were to be retrenched. The closure of a portion of an undertaking is permissible, (see Radio and Electricals Ltd., Madras v. Industrial Tribunal, Madras, 1970 II L.L.J. 206. The Payment of Wages Authority has not found that, in spite of the closure notice, the Steel Foundry Section was still working. It is not a case where the closure was a mere pretence or the plea of closure was unreal in the sense that having purported to close the section, the same had been functioning all the time. The retrenchment had also factually taken place. It is not a case where the closure was a mere pretence or the plea of closure was unreal in the sense that having purported to close the section, the same had been functioning all the time. The retrenchment had also factually taken place. A notice of retrenchment was put up by the employers, half the employees accepted the retrenchment relief and went out, some of the retrenched employees were taken back and some did not accept the retrenchment relief but I were not permitted to work. Whether I the retrenchment was or was not bona fide or lawuful, there was factually a retrenchment of some of the employees including those concerned in these cases. Since there was a factual closure and a factual consequential retrenchment, the Payment of Wages Authority had no jurisdiction to examine the bona fides or the legality of the closure and the retrenchment. 9. The real impediment in the way of the employees getting relief is the retrenchment order. Even if the Payment of Wages Authority were entitled to go into the question and to hold that there was no real closure of the Steel Foundry Section and that it was still functioning, the retrenchment order would not fall automatically. Such a finding would only mean that the reason given by the employers for the retrenchment was not a valid one. But it would not entitle the Payment of Wages Authority either to ignore the retrenchment order or to set it aside. The jurisdiction to set aside a retrenchment order and to order reinstatement of the retrenched employees, vests in a Labour Court or in an Industrial Tribunal, and not in the Payment of Wages Authority. Until the retrenchment order is set aside toy a competent tribunal, the Payment of Wages Authority has no jurisdiction to entertain a claim for wages for a period subsequent to the retrenchment. Therefore, in the present case, the Payment of Wages Authority had no jurisdiction to entertain the claims filed on behalf of the retrenched employees. The two revisions filed by the employers must succeed. 10. In the view that I have taken that the Payment of Wages Authority had no jurisdiction to entertain the claims filed before it, the demand of the retrenched employees for compensation at a higher rate, which is the subject-matter of revision No. 1157 of 1972, also cannot be entertained. The two revisions filed by the employers must succeed. 10. In the view that I have taken that the Payment of Wages Authority had no jurisdiction to entertain the claims filed before it, the demand of the retrenched employees for compensation at a higher rate, which is the subject-matter of revision No. 1157 of 1972, also cannot be entertained. This revision has to be dismissed. 11. Civil Revision Nos. 1015 and 1016 of 1972 are allowed and the orders of the Additional District Judge and of the Payment of Wages Authority, are set aside and the two applications filed under Sec. 15 (2) of the Payment of Wages Act, are dismissed. Civil Revision No. 1157 of 1972 is dismissed. The parties will bear their own costs in all the revisions. 12. C. R. Nos. 1015 and 1016 of 1972 allowed.C. R. No. 1157 of 1972 dismissed.