Appellate Orders Under S.17 Payment of Wages Act By District Court Amenable to Article 227 Petition, Not Article 226: Allahabad High Court - 2025-04-27

Appellate Orders Under Payment of Wages Act Amenable to Article 227 Petition, Not Article 226, Rules Allahabad High Court

Allahabad High Court - In a significant ruling clarifying the appropriate legal remedy against appellate orders passed under the Payment of Wages Act, 1936, Justice Ashutosh Srivastava of the Allahabad High Court has held that such orders, when rendered by a District Court or Court of Small Causes, are amenable to challenge under Article 227 of the Constitution of India, and not Article 226.

The judgment came in a petition filed under Article 227 by one Jayant Srivastava , challenging the final judgment and order dated 19.9.2023 (formal order 16.11.2023) of the Additional District & Sessions Judge, Kanpur Nagar, which had upheld an award dated 4.6.2022 by the Prescribed Authority/Additional Labour Commissioner in a Payment of Wages Act case. The petitioner also sought the return of the amount deposited in pursuance of the award.

Case Background

The petitioner, identified as the Managing Director of M/s. Bhoomi Shakti Developers Pvt. Ltd., stated that his company had entered into a Builders' Agreement and subsequently subcontracted work to Shyamji Verma (respondent No. 2). An advance of Rs. 30,000/- was allegedly given, but payment was stopped as the work was not completed.

Respondents 2 to 5, claiming to be masons engaged on daily wages, filed a case under the Payment of Wages Act, 1936, alleging non-payment of wages for work done between October 2017 and March 2018. Crucially, the company, M/s. Bhoomi Shakti Developers Pvt. Ltd., was not impleaded, and the case proceeded against the petitioner personally as a 'Builder'.

The Prescribed Authority awarded a sum of Rs. 2,50,500/- to the claimants and directed the petitioner to deposit the amount. The petitioner's appeal under Section 17 of the Payment of Wages Act before the Additional District & Sessions Judge was dismissed.

The Core Legal Question: Maintainability

At the outset, a preliminary objection was raised by the respondents regarding the maintainability of the petition under Article 227. They contended that the order of the Appellate Authority under the Payment of Wages Act should be challenged via a writ petition under Article 226 of the Constitution. The petitioner argued for the maintainability under Article 227, asserting that the Appellate Authority functions as a Court, not a persona designata . The State counsel, assisting the court, suggested that while the Appellate Authority acts as a Civil Court, a civil revision under Section 115 CPC might also be maintainable.

Court's Analysis on Maintainability

The court delved into the nature of the jurisdiction exercised by the District Court or Court of Small Causes under Section 17(1) of the Payment of Wages Act. Citing numerous High Court decisions across the country, including those from Nagpur, Calcutta, Madhya Bharat, Madras, Mysore, Allahabad, Orissa, and Gauhati , the court noted a unanimous judicial opinion: the appellate authority under Section 17 functions as a Civil Court subordinate to the High Court, and not as a persona designata .

The court referenced the Supreme Court's test for persona designata from Central Talkies v. Dwarka Prasad (AIR 1961 SC 606) and Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker (1995 (5) SCC 5) , confirming that an authority appointed by designation alone, as part of a class, acts as a Court.

Furthermore, the court relied on the Supreme Court's ruling in Radhey Shyam v. Chhabi Nath (2015 (5) SCC 423) , which distinguished between judicial acts of Tribunals and judicial orders of Civil Courts. This precedent established that while Article 226 is available against judicial acts of Tribunals and quasi-judicial authorities, judicial orders of Civil Courts are amenable to challenge under Article 227. The court also referred to Life Insurance Corporation of India v. Nandini J. Shah and others (2018 (15) SCC 356) , which reinforced that an authority acting as a pre-existing judicial authority in the district functions as a Court, and its orders are subject to Article 227 jurisdiction.

Ruling on Maintainability

Based on this comprehensive analysis, the High Court concluded that the Additional District and Sessions Judge, while exercising appellate powers under Section 17 of the Payment of Wages Act, acts as a Civil Court. Therefore, the order passed is amenable to challenge before the High Court in a petition under Article 227 of the Constitution. The preliminary objection was overruled.

Prima Facie View on Merits

Turning to the merits, the court took a prima facie view that the Prescribed Authority's award was based merely on surmises and conjectures. The court observed that the Authority seemed to have relied on the petitioner's failure to produce the attendance register rather than demanding the claimants establish their case on their own strength. The absence of a written agreement between the petitioner and the claimants was noted.

Significantly, the court expressed concern that both the Prescribed Authority and the Appellate Authority failed to address the critical issue of whether the claim was maintainable against the petitioner in his individual capacity as Managing Director, especially when the alleged contract was with the company, M/s. Bhoomi Shakti Developers Pvt. Ltd. The court opined that liability for payment of wages under Section 3 of the Act could not be fixed solely on the Director unless they fall within the definition of 'employer', a point seemingly overlooked by the lower authorities.

Interim Directions

Considering the matter requires detailed consideration and noting that the awarded amount has already been deposited by the petitioner, the court issued notice to respondents 3 to 5, returnable within a month. Notice on behalf of respondent No. 2 was accepted.

Crucially, the court restrained respondent No. 1 (presumably the Labour Commissioner where the amount was deposited) from releasing the deposited amount in favour of respondents 2 to 5 without the leave of the High Court, pending further proceedings. The case is listed for hearing after the notice period.

This judgment provides clarity on the procedural path for challenging appellate orders under the Payment of Wages Act, firmly placing them under the supervisory jurisdiction of the High Court via Article 227.