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High Court Of Calcutta
Dipak Kumar Sen, Ajit K. Sengupta
SAROJ KUMAR MAHESWARI - Appellant
Versus
HINDUSTHAN MOTORS LTD. - Respondent
Matter 7 Of 1984
Decided On : 01/18/1985
TAX DEDUCTION - INDUSTRIAL DISPUTES ACT, 1947 - SECTION 33C(1) - INCOME TAX ACT, 1961 - SECTION 18, 192 - LEGAL PRINCIPLES - TAX DEDUCTION FROM FULL AND FINAL SETTLEMENT AMOUNT - INTEREST ON DELAYED PAYMENT - COSTS AND COMPENSATORY COSTS.
Fact of the Case:
The petitioner, a former employee of the respondent company, was awarded reinstatement with half back wages by the Industrial Tribunal. The respondent company challenged the award in the High Court and Supreme Court but failed. A consent order was passed by the Supreme Court directing the respondent company to pay Rs. 1,50,000 to the petitioner in full and final settlement of all his claims. The respondent company paid Rs. 67,200.40 to the petitioner and deducted the remaining amount as tax at source and license fee for occupation of quarters and electricity charges. The petitioner filed an application under Section 33C(1) of the Industrial Disputes Act for recovery of the balance amount. The respondent company challenged the proceedings in the High Court.
Finding of the Court:
The High Court held that the respondent company was not entitled to deduct any amount from the sum of Rs. 1,50,000 and directed the Income-tax Department to refund the tax deducted at source with interest. The court also directed the respondent company to pay interest on the balance amount.
Issues: 1. Whether the respondent company was entitled to deduct tax at source from the sum of Rs. 1,50,000 paid to the petitioner in full and final settlement of all his claims? 2. Whether the respondent company was entitled to deduct license fee for occupation of quarters and electricity charges from the said sum? 3. Whether the petitioner was entitled to interest on the delayed payment? 4. Whether the petitioner was entitled to costs and compensatory costs?
Ratio Decidendi: 1. The respondent company was not entitled to deduct tax at source from the sum of Rs. 1,50,000 as the entire amount was not taxable as salary. The consent order passed by the Supreme Court clearly indicated that the entire sum was required to be paid without any deduction whatsoever. 2. The respondent company was not entitled to deduct license fee for occupation of quarters and electricity charges from the said sum as the consent order did not provide for any such deduction. 3. The petitioner was entitled to interest on the delayed payment as the respondent company failed to pay the entire amount as directed by the Supreme Court. 4. The petitioner was not entitled to costs or compensatory costs as he had suppressed the fact of obtaining a refund from the Income-tax Department.
Final Decision: The High Court order directing the Income-tax Department to refund the tax deducted at source with interest was set aside. The respondent company was directed to pay the balance amount of Rs. 20,377.60 to the petitioner along with interest at the rate of 12% from August 10, 1983, till the date of payment. The proceedings impugned under Article 226 of the Constitution by the respondent company were stayed for a period of five weeks. In the event the respondent-company makes payment as directed within the time specified above, the petitioner or the respondent-company or the appropriate authority shall make necessary petition before the Metropolitan Magistrate, 16th Court, for filing of the case and upon such petition being made, the Metropolitan Magistrate, 16th Court, Calcutta, shall dispose of the case accordingly. In default of payment of interest on the sum of Rs. 20,377.60 as directed by this order, the Metropolitan Magistrate, 16th Court, Calcutta, shall proceed with the pending proceedings for recovery of the amounts as specified in this order.
( 1 ) THE appellant-petitioner, Saroj Kumar Maheswari, was employed as Assistant Development Engineer in Hindusthan Motors Limited (hereinafter referred to as the "respondent company" ). The services of the petitioner were terminated with effect from June, 1970, under the service rules of the respondent company. The petitioner being aggrieved by the said order of termination made an application under Section 33a of the Industrial Disputes Act, 1947, before the 4th Industrial Tribunal. The Tribunal by an award dated August 17, 1974, set aside the order of termination of the services of the petitioner and directed his reinstatement with half back wages from the date of termination up to the date of the order of the Tribunal.
( 2 ) THE respondent company thereafter filed an application under Article 226 of the Constitution of India for setting aside the said award whereupon rule nisi was issued and operation of the said award was stayed. By judgment and order dated September 16, 1976, Amiya Kumar Mukherjee J. discharged the rule nisi. The respondent company, thereafter, filed an appeal against the said order dated September 16, 1976, and the said appeal was also dismissed by the judgment and order dated November 30, 1979.
( 3 ) THE respondent company, thereafter, filed a special leave petition before the Supreme Court of India in January, 1980. During the pendency of the said petition, the respondent company and the petitioner entered into a compromise on the basis whereof the Supreme Court passed the following order on February 14, 1980. "consent TERMS
( 4 ) SPECIAL Leave granted, Appeal is disposed of in the following terms :1. Respondent No. 2, Shri Saroj Kumar Maheswari, having categorically intimated his resignation from the service of the appellant with effect from today, the appellant do pay to respondent No. 2, Saro] Kumar Maheswari, a sum of Rs. 1,50,000 (Rupees one lakh and fifty thousand only) in full and final settlement of all his claims, in respect of wages, provident fund, gratuity and all other emoluments and dues either under the impugned judgment otherwise from June 9, 1970, up to date within four weeks from today. 2. In addition to the aforesaid sum of Rs. 1,50,000, the appellant will pay to respondent No. 1, Mr. Saroj Kumar Maheswari, any amount which might be due and payable to him in law for the period prior to June 8, 1970, including provident fund lying to his credit. 3. These consent terms will be substituted for the judgment of the High Court of Calcutta dated November 30, 1979, in Original Order No. 56 of 1977. "
( 5 ) THE respondent company instead of making payment of Rs. 1,50,000 to the petitioner in terms of the said consent order paid the following amounts to the petitioner :
Date of payment Amount Rs. 7th March, 1980 61,706. 40 14th March, 1980 5,494. 00
( 6 ) A sum of Rs. 78,279 was deducted as tax on the said sum of Rs. 1,50,000 and paid to the Income-tax Department on account of the petitioner. Thus a sum of Rs. 1,45,479. 40 in the aggregate was paid to the petitioner and/or deemed to have been paid on account of the petitioner. The remaining sum of Rs. 4,520'60 was deducted as alleged licence fee for occupation of quarters and on account of electricity charges for the period June, 1970, to February, 1980.
( 7 ) SINCE the petitioner received from the respondent company only a sum of Rs. 67,200-40 in March, 1980, as against the said sum of Rs. 1,50,000 thus leaving a balance sum of Rs. 82,799. 60, the petitioner demanded the said balance amount from the respondent company. The respondent company did not pay the, said amount and, accordingly, the petitioner filed an application under Section 33 (C) (1) of the Industrial Disputes Act, 1947, to the Secretary, Labour Department, Government of West Bengal, A certificate was issued on June 18, 1983, to the Chief Metropolitan Magistrate, Calcutta, for recovery of the said sum of Rs. 82,799. 60 from the respondent comp
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