VALKAN INDUSTRIAL ENGG. CO. LTD v. HITESHBHAI C THAKOR
2018-02-08
K.M.THAKER
body2018
DigiLaw.ai
JUDGMENT : 1. Heard learned advocates for the petitioner and the respondent. 2. By way of this group of petitions, the petitioner company has placed under challenge order dated 18.3.2015 passed by the Payment of Wages Authority in Payment of Wages Application Nos.4/2014 to 42/2014 as well as the order dated 28.8.2015 passed by the learned 3rd Additional District Judge, Anand in Regular Civil Appeal Nos.34/2015 to 70/2015 and Payment of Wages Application Nos.5/2014 to 42/2014. The petitioner has prayed, inter alia, that: “11(A) Your Lordships may kindly be pleased to issue a Writ of Certiorari and/or any other appropriate Writ, direction or order to quash and set aside the impugned Common Judgment dated 18.03.2015 passed by the Payment of Wages Authority, Anand in Payment of Wages Application No.4 of 2014 to 42 of 2014 below Exh.14 and the Order dated 28.08.2015 passed by the 3rd Addl. District Judge, Anand in Regular Civil Appeal No.34 of 2015 at Annexure C & D respectively.” 3. The limited grievance raised by the petitioner is that the Payment of Wages Authority as well as the learned Appellate Authority have committed error in awarding compensation, that too @ Rs.1,000/- per applicant / application. According to the petitioner, there was no base or justification at all for award of compensation at any rate, much less @ Rs.1,000/- per applicant / application. 4. So as to appreciate the said grievance of the petitioner company, it is necessary to take into account relevant facts which are in narrow compass. 4.1 It appears that for certain reported misconduct, the petitioner company had issued chargesheet against 38 workmen and in pursuance of the said chargesheet, departmental proceedings were initiated and during pendency of enquiry, the company placed the said 38 workmen under suspension. 4.2 The said workmen came to be placed under suspension vide separate / individual but similar orders dated 1.11.2013 and 6.11.2013. 4.3 The said suspension continued till the disciplinary proceedings concluded. 4.4 Upon conclusion of the domestic enquiry, the competent authority passed order of penalty whereby services of all 38 workmen came to be terminated. 4.5 At this stage, it is necessary to clarify that undisputedly, the proceedings initiated by the workmen against the judgment of penalty (termination of service) are pending before the learned Labour Court.
4.4 Upon conclusion of the domestic enquiry, the competent authority passed order of penalty whereby services of all 38 workmen came to be terminated. 4.5 At this stage, it is necessary to clarify that undisputedly, the proceedings initiated by the workmen against the judgment of penalty (termination of service) are pending before the learned Labour Court. 4.6 In view of the provisions under the Standing Orders, the petitioner company, as an employer of the said 38 workmen, was under obligation to pay suspension allowance to the workmen during period of suspension. The relevant provisions oblige the company to pay 50% of wages towards suspension allowance for first 90 days and if the proceedings of domestic enquiry continue beyond period of 90 days, then the employer is obliged to pay compensation @ 75% wages. 4.7 In present case, the workmen alleged that though the enquiry proceedings continued beyond period of 90 days, the employer paid suspension allowance @ only 50% wages for entire period (i.e. even for period beyond 90 days), whereas it was obliged to pay suspension allowance of 75% after completion of 90 days. Differently put, the employer short paid compensation by 25% for period beyond 90 days 4.8 With the said allegation, 38 workmen filed applications under Section 13(2) of the Payment of Wages Act before the Payment of Wages Authority. The said applications came to be registered as Payment of Wages Application Nos.4/2014 to 42/2014. 4.9 In respect of the said applications, the petitioner company filed its reply. 4.10 From the stand taken by the petitioner company before the Payment of Wages Authority and so also from the common order passed by the Payment of Wages Authority, it appears that there was no dispute with regard to the fact that (a) the period of suspension continued beyond 90 days; (b) the company had, initially, paid suspension allowance @ 50%. 4.11 However, it appears that from this stage onwards, there was some difference between the claim of the workmen and the case set up by the company. 4.12 From the common order passed by the Payment of Wages Authority, it also comes out that the company claimed that inadvertently and due to bona fide mistake, the company had, initially, paid suspension allowance to the workmen at lesser rate than the prescribed rate, however, the company has corrected its mistake and paid the difference amount to the workmen.
4.12 From the common order passed by the Payment of Wages Authority, it also comes out that the company claimed that inadvertently and due to bona fide mistake, the company had, initially, paid suspension allowance to the workmen at lesser rate than the prescribed rate, however, the company has corrected its mistake and paid the difference amount to the workmen. 4.13 It appears that after the company presented said written defence before the Payment of Wages Authority, the workmen also accepted that the company subsequently paid the difference of suspension allowance. 4.14 However, the company seems to have further claimed that at the time when the company rectified the mistake and paid the difference of amount to the workmen, it paid excess amount than what was payable to the workmen. The said claim is disputed and denied by the workmen. 4.15 The Payment of Wages Authority examined the said rival contentions by the contesting parties and rendered common order dated 18.3.2015. The learned Payment of Wages Authority recorded that since the company admitted that inadvertently, mistake in payment of subsistence allowance was committed and for sometime after completion of 90 days, the company paid subsistence allowance only @ 50% rather than @ 75%, the requirement to adjudicate the dispute does not survive in view of the admission by the company. The Payment of Wages Authority also took into account the fact that subsequently the company paid difference amount and that the workmen also admitted that the difference amount is paid. The authority, therefore, held that the delay and default were admitted by the company. 4.16 In this background and in light of the third proviso to subsection (3) of Section 15, the issue which remained before the Payment of Wages Authority was that whether the default or delay on the part of the company in matter of payment of subsistence allowance @ 75% should be considered bona fide mistake or not. 4.17 However, without addressing the said issue and without recording any finding in respect of the issue as to whether the delay in payment of subsistence allowance at less rate than prescribed rate was intentional or it was bona fide and genuine mistake, the Payment of Wages Authority passed the impugned award and awarded compensation of Rs.1,000/per applicant / application.
4.17 However, without addressing the said issue and without recording any finding in respect of the issue as to whether the delay in payment of subsistence allowance at less rate than prescribed rate was intentional or it was bona fide and genuine mistake, the Payment of Wages Authority passed the impugned award and awarded compensation of Rs.1,000/per applicant / application. 4.18 The company felt aggrieved by the said decision and therefore filed separate appeals before the Appellate Court, i.e. District Court at Anand. 4.19 The learned District Court considered the appeals and vide order dated 28.8.2015, the learned District Court rejected the appeals. 5. The interesting part which emerges from the decision by the learned District Court is that the learned District Court has specifically recorded that the company had to establish that the mistake was bona fide. The learned Appellate Court has further observed and recorded that 'the learned Labour Court has come to the conclusion that present appellant was unsuccessful in proving that there was bona fide mistake'. 6. However, if the order of the Payment of Wages Authority is carefully examined in light of the said observation by the learned District Court, then it emerges that actually, the learned District Court has committed material error inasmuch as the Payment of Wages Authority has, in its order, not recorded such observations, much less such conclusion. 6.1 Actually, the Payment of Wages Authority has failed to address the said issue and the learned District Court has assumed things which do not exist and do not emerge from the order of the authority. 7. In this factual background, the petitioner company has challenged the common order passed by the Payment of Wages Authority as well as the judgment by the learned District Court in Regular Civil Appeals. 8. Learned advocate for the petitioner company would contend that the orders passed by the Payment of Wages Authority and by the learned District Court suffer from apparent and manifest error. He submitted that the learned Appellate Court as well as the Authority failed to appreciate that the mistake was bona fide and genuine and that even before the claimants filed the applications, the difference amounts were paid to the claimants.
He submitted that the learned Appellate Court as well as the Authority failed to appreciate that the mistake was bona fide and genuine and that even before the claimants filed the applications, the difference amounts were paid to the claimants. He submitted that even if the case of the workmen that payment was made when the applications were filed, then also the fact that before the Payment of Wages Authority took cognizance of the case and commenced the proceedings the payment was made and that the fact that the company paid the difference amount, would demonstrate that the mistake was bona fide. He would also submit that not only the Payment of Wages Authority and the learned Court failed to appreciate the fact but the Payment of Wages Authority also failed to even address and decide the said issue, on the other hand, the learned Appellate Court proceeded to record observation and finding, contrary to the order of the Payment of Wages Authority, that the authority recorded finding that the company failed to prove that it is was bona fide mistake. 9. Mr.Mankad, learned advocate for the claimants vehemently opposed the submissions by learned advocate for the petitioner company. While he could not dispute the fact that the Payment of Wages Authority has not addressed the issue i.e. as to whether the mistake was genuine and bona fide or not and that the learned Appellate Court has erroneously recorded that the learned Labour Court has recorded such findings, he, however, emphasised the fact that undisputedly, the company had not paid the amount until the claimants filed the applications before the authority. He also disputed the claim that the company had paid more / excess amount than what was payable. Mr.Mankad, learned advocate for the claimants fairly accepted that so far as the claim for 75% for subsistence allowance is concerned (for the period after completion of 90 days of suspension), does not survive. He would, however, submit that in view of default and delay in payment of allowance of prescribed rate it cannot be said that the Payment of Wages Authority or the learned Court committed mistake in awarding compensation to the workmen. He submitted that the decision by the Payment of Wages Authority and the Appellate Court is in consonance with the provisions under the Act. 10. I have considered rival submissions.
He submitted that the decision by the Payment of Wages Authority and the Appellate Court is in consonance with the provisions under the Act. 10. I have considered rival submissions. I have also examined common order passed by the learned Payment of Wages Authority as well as the judgment by the learned District Court. I have also examined the material available on record and other relevant aspects, including provision under Section 15 of the Payment of Wages Act, 1936. 11. So as to consider and appreciate rival contentions, it is appropriate to take into account relevant provisions. The provision which is attracted and applicable in present case is subsection (3) of Section 15. The relevant provision reads thus: “15. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims.
11. So as to consider and appreciate rival contentions, it is appropriate to take into account relevant provisions. The provision which is attracted and applicable in present case is subsection (3) of Section 15. The relevant provision reads thus: “15. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims. (1) … … … … … (a) … … … … … (b) … … … … … (c) … … … … … (2) … … … … … (3) When any application under subsection (2) is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under section 3, or give them an opportunity of being heard, and, after such further inquiry, if any, as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable under this Act, direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding three thousand but not less than one thousand five hundred rupees in the latter, and even if the amount deducted or delayed wages are paid before the disposal of the application, direct the payment of such compensation, as the authority may think fit, not exceeding two thousand rupees: Provided that a claim under this Act shall be disposed of as far as practicable within a period of three months from the date of registration of the claim by the authority: Provided further that the period of three months may be extended if both parties to the dispute agree for any bona fide reason to be recorded by the authority that the said period of three months may be extended to such period as may be necessary to dispose of the application in a just manner: Provided also that no direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to – (a) a bona fide error or bona fide dispute as to the amount payable to the employed person, or (b) the occurrence of an emergency, or the existence of exceptional circumstances, the person responsible for the payment of the wages was unable, in spite of exercising reasonable diligence; or (c) the failure of the employed person to apply for or accept payment.” 11.1 From said provision it comes out that in case of delay – when delay is established – in payment of wages, the authority is obliged to recover compensation.
However, the proviso to subsection (3) caves out or provides an exception – in the event bona fide mistake is proved. 12. At this stage, it will also not be out of place to take into account the provision under Section 2(vi) which defines the term 'wages'.
However, the proviso to subsection (3) caves out or provides an exception – in the event bona fide mistake is proved. 12. At this stage, it will also not be out of place to take into account the provision under Section 2(vi) which defines the term 'wages'. The relevant provision reads thus: “2(vi) “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 period; (c) any additional remuneration payable under the term of employment (whether called a bonus or by any other name); (d) any sum which by reason of the termination of employ of the person employed is payable under any law, contract o instrument which provides for the payment of such s whether with or without deductions, but does not provide for the time within which the payment is to be made; (e) any sum to which the person employed is entitled under an scheme framed under any law for the time being in force, but does not include (1) any bonus (whether under a scheme of profit otherwise) which does not form part of the remuneration payable under the terms of employment or which is not order of under any award or settlement between the parties or Court; (2) the value of any house accommodation, or of the supply of light, medical attendance or other any service excluded from the computation of a general wages by or special order of the appropriate Government; (3) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; (4) any travelling allowance or the value of any traveling concession; (5) any sum paid to the employed person to defray expenses entailed on him by the nature of his employment; or (6) any gratuity payable on the termination of employment in cases other than those specified in sub-clause (d).” 12.1 Even on plain reading of subsection (vi) of Section 2, it comes that clear that the amount payable towards 'suspension allowance' would fall within purview of term 'wages'.
Therefore, the decision of the Payment of Wages Authority and the learned District Court, holding that the claim for unpaid / short paid 'suspension allowance' would fall within purview of Payment of Wages Act, 1936, more particularly under Section 2(vi) read with Section 15 cannot be faulted. 12.2 In view of subsection (3) of Section 15, it becomes clear that subsection (3) makes provision for payment of fine / penalty or compensation in case where the authority is satisfied about the fact that there has been nonpayment / short payment of wages or delay in payment of wages. In such case, the Payment of Wages Authority is not only authorised but obliged to recover – award compensation. 13. In light of the facts of present case, what is relevant is third proviso of subsection (3) which provides, inter alia, that 'the authority shall not pass any direction for payment of compensation if the authority is satisfied that the delay was due to a bona fide or bona fide dispute as to the amount payable to the employed person or that some emergency had occurred or the employee caused delay in submitting the application'. (Emphasis supplied) 14. In present case, the company seeks to take recourse under the said clause (a) of third proviso of subsection (3). 14.1 Undisputedly, that was a specific plea which was raised by the company before the Payment of Wages Authority. 15. In view of the specific plea taken by the company and otherwise also in light of the clear provision under third proviso of subsection (3) it was obligatory for the Payment of Wages Authority to frame the issue viz. whether the delay occurred on account of bona fide error or bona fide dispute as to the amount payable, or the delay was intentional or without justification. 16. In present case, it has emerged that the Payment of Wages Authority failed to frame said issue. 16.1 Besides this, the Payment of Wages Authority also failed to address the said issue and has not recorded any conclusion with regard to the said vital aspect. 16.2 There is no observation or finding or conclusion recorded by the Payment of Wages Authority in the common order dated 18.3.2015 which would indicate that after examining relevant material, the Payment of Wages Authority was not satisfied as to the claim of the company that mistake was bona fide.
16.2 There is no observation or finding or conclusion recorded by the Payment of Wages Authority in the common order dated 18.3.2015 which would indicate that after examining relevant material, the Payment of Wages Authority was not satisfied as to the claim of the company that mistake was bona fide. 16.3 There is no observation in the order, holding that the said explanation or defence by the company is not accepted. There is no observation or conclusion in the order by the Payment of Wages Authority, declaring that delay was or was not on account bona fide mistake. 17. Despite such fact-situation which clearly and apparently emerges from the decision by the Payment of Wages Authority, the learned District Court, in the judgment dated 28.8.2015, has observed and held, inter alia, that: “13. In the present case, it has so happened that there was delay on the part of the employer Appellant in making 75% amount of salary to the respondent being subsistence allowance which is a part of a salary or wages and therefore, there was no alternative for the respondent to prefer an application u/s. 15(2)(3) of the Payment of Wages Act, 1936. Therefore, application was preferred. The appellant was required to prove that it was a bonafide mistake and therefore, payment was delayed. But the appellant failed to establish before the Trial Court regarding the delay factor and bonafide mistake so that Labour Court can come to the conclusion that the appellant had committed bonafide mistake. Therefore, at the time of judgment, the Labour Court has come to the conclusion that the present appellant was unsuccessful in proving that there was a bonafide mistake. Other defences produced by the appellant were also not proved. It was also not proved that the amount of subsistence allowance is not a part of wages or salary and therefore, application under the Act is not tenable. Therefore, mainly on two grounds, the appellant was unsuccessful (1) delay in payment on bonafide ground and (2) application of the respondent is not tenable. Both these grounds were not established by the appellant before the Trial Court. Therefore, Trial Court has rightly passed the order in favour of the respondent.” (Emphasis supplied) 18.
Therefore, mainly on two grounds, the appellant was unsuccessful (1) delay in payment on bonafide ground and (2) application of the respondent is not tenable. Both these grounds were not established by the appellant before the Trial Court. Therefore, Trial Court has rightly passed the order in favour of the respondent.” (Emphasis supplied) 18. For the said observation by the learned District Court, the learned District Court proceeded on the premise that the authority came to the conclusion that the company was unsuccessful in proving that the delay was on account of bona fide mistake. 18.1 Actually, even a glance at the decision by the Payment of Wages Authority reflects that the Payment of Wages Authority has not recorded such observation or conclusion and that actually the Payment of Wages Authority has not even framed the issue, not discussed the aspect and not recorded finding or conclusion in that regard and the order is completely silent in this regard. 18.2 Meaning thereby, the learned District Court proceeded on sheen assumption or impression and on wrong and erroneous reading of the order by the Payment of Wages Authority and it also proceeded on erroneous premise, in absence of finding of fact by the authority, that the company failed, before the Payment of Wages Authority, to establish that delay was on account of bona fide mistake. 19. In such circumstances, ordinarily, a proper course of action in such case would be to remand the proceedings to Payment of Wages Authority with a direction to frame and address and decide the issue viz. 'whether delay occurred on account of bona fide mistake or not'. 20. However, having regard to mainly two aspects, viz. (i) the fact that almost 4 years have passed since the dispute arose between the parties; and (ii) the fact that difference amount was, undisputedly, paid by the company on 29.4.2014, thus, the delay is, undisputedly, established, the Court is of the view that said course of action would not be just and proper. 21. In this context, it is relevant to note that subsistence allowance becomes payable, in light of the provisions under Standing Orders, every month on the date when the salary / wages would be payable. 21.1 In present case, the claimants were placed under suspension with effect from 1.5.2013 and 6.11.2013. 21.2 Therefore, period of 90 days would expire on 1.2.2014 and 6.2.2014.
21.1 In present case, the claimants were placed under suspension with effect from 1.5.2013 and 6.11.2013. 21.2 Therefore, period of 90 days would expire on 1.2.2014 and 6.2.2014. 21.3 From the said date onwards, the company was under obligation to pay suspension allowance @ 75%. 21.4 However, the company continued to pay subsistence allowance to the workmen even after 1.2.2014 and 6.2.2014 @ 50%, instead of 75%. 21.5 The difference / balance 25% came to be paid to the workmen on 29.4.2014. 21.6 The company had opportunity to rectify the payment, on 7th or 10th March and 7th or 10th April, i.e. the date of payment of salary to the workmen, however, till 29.4.2014, the company did not take any corrective measures. 22. It is true that the Payment of Wages Authority has failed to address the issue with regard to the absence or otherwise of company's intention and any satisfaction as to whether delay was on account of bona fide mistake, is not recorded by the authority. 22.1 However, in view of the fact that the delay continued for period of more than two months would persuade this Court, at this stage, to accept the submissions by learned advocate for the petitioner that the said delay may not be condoned on the ground that it was bona fide or genuine mistake because the company paid the amount only when the claimants initiated action before the authority. 23. In this background, the Court is also of the view that instead of remanding the proceedings to the Payment of Wages Authority for reconsideration of the decision, it would be appropriate to balance the equity at this stage, with a view to ensuring that the litigation comes to an end at this stage, more particularly in view of the fact that all 38 workmen are out of employment and the proceedings against the termination of their services are pending. 24.
24. In this view of the matter and on overall consideration of the facts of the case and also having regard to the aspects discussed above as well as in light of the issues which emerge from the order of the Payment of Wages Authority, this Court is of the view that if the amount of compensation awarded by the Payment of Wages Authority is reduced, then it would balance the equity and meet the ends of justice and further proceedings, as a consequence of remand, can be avoided. 25. Therefore, in exercise of power under Article 226 read with Article 227 of the Constitution, this Court is of considered view that following order shall be passed: The common order passed by the Payment of Wages Authority and the decision by the Appellate Court, for the above mentioned reasons and in light of the foregoing discussion, are partly set aside and modified by reducing the amount of compensation awarded by the Payment of Wages Authority fro Rs.1,000/per applicant / application to Rs.250/- per applicant / application. 26. At this stage, learned advocate for the workmen submitted that the amount is deposited with the Payment of Wages Authority which is required to be disbursed. 27. In this view of the matter, it is clarified that the workmen may approach the Payment of Wages Authority with certified copy of this judgment and request for disbursement of the amount in accordance with this decision. The Payment of Wages Authority will take necessary steps accordingly. The balance amount, i.e. Rs.750/- per applicant / application shall be returned to the company after disbursement @ Rs.250/- per applicant / application to the workmen, upon due verification of proof of identity. With the aforesaid directions and observations, the petitions are partly allowanced. Rule is made absolute to the aforesaid extent.