IMPORTANT POINT
Expression “is in default of payment of wages” in Section 3 of U.P. Industrial Peace (Timely Payment of Wages) Act is relatable to date on which the claim is lodged.

Headnote:Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act, 1978—Section 3—Certificate for recovery of Rs. 60,810.76 issued by Deputy Labour Commissioner—Respondent employer had contested the show cause before the Authority on a plea that nine employees were absconding and out of 22 employees eight had been paid their wages and amount to be payable was less than Rs. 50,000/—High Court set aside the order in writ holding that at the time of adjudication, amount in default did not exceed Rs. 50,000/- and thus proceedings were not maintainable—Appeal—Act is to secure industrial peace by ensuring timely payment of wages to workmen—Inquiry under the Section is limited in its scope, the authority does not act as an adjudicator if entitlement of workmen to wages was disputed otherwise then on frivolous or prima facie untenable grounds —Assistant Labour Commissioner was however justified in taking the view that determinative date was the date on which claim was lodged—Expression “is in default of payment of wages” was relatable to date on which claim was lodged—Impugned judgment of High Court was liable to be set aside and that of Labour Commissioner to be restored.
       Held : 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 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.(Paras 7 and 8)
       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.(Para 8)
       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, 1994(1) SCC 159 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.(Paras 11 and 12)

JUDGMENT

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’).

2. 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’).

3. 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 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.

4. 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.

5. 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.

6. 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 shoul

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2006 Supreme(SC) 545

IMPORTANT POINTExpression “is in default of payment of wages” in Section 3 of U.P. Industrial Peace (Timely Payment of Wages) Act is relatable to date on which the claim is lodged.

Cases Referred (2)

IMPORTANT POINT
Expression “is in default of payment of wages” in Section 3 of U.P. Industrial Peace (Timely Payment of Wages) Act is relatable to date on which the claim is lodged.