2005 Supreme(MP) 984

2006 (2) JLJ 61
(SUPREME COURT)
Arijit Pasayat and H.K. Serna, JJ.
P.C. Agarwala v. Payment of Wages Inspector, M.P and others
Civil Appeals No. 8300 to 8303 of 2002 and 692 of 2005:
against the judgment of M.P. High Court, passed in LPA No. 55 of 1997
reported in 1998 (2) JLJ 214;
Decided on 26.9.2005.

Headnote:(1) Payment of Wages Act, 1936 -- Ss. 15 and 17 -- Payment of Wages Act, 1936 (as amended in M.P. in 1964) -- Ss. 2, 3 and 15 -- directors of Jiyajirao Cotton Mills Ltd. Company -- are not personally liable to make the payment of wages and penalty.

       By judgments rendered by Division Bench of the Madhya Pradesh High Court, impugned in the appeals, held that directors of Jiyajirao Cotton Mills Ltd. (hereinafter referred to as the "Company") to be personally liable for the payment of wages to the workmen of the Company under the Payment of Wages Act, 1936 (in short the "Act"). However, the authorities under the Act could proceed against the assets of the company in the hands of the directors or the assets acquired from income of the company by the directors. The personal property of the directors, however, could not be proceeded against if it is acquired from the sources other than the income of the company. The letters patent appeals filed against the judgments of the learned Single Judge were dismissed. It is to be noted that learned Single Judge had held that writ petitions were not maintainable as the writ petitioners had an alternative remedy under section 17 of the Act. However, the letters patent Court considered the case on merits and as noted above, came to the conclusion about liability of the directors.

       While the directors, who were writ petitioners, had questioned correctness of the judgments rendered by the Division Bench, the functionaries under the Act have questioned correctness of that part of the High Court‘s judgment which restricted recovery from the assets acquired out of the company‘s income. [Paras1 & 2

       Held: In order to attract the liability under the Act, it has to be seen as to on whom the Act fixer the liability. Section 3 speaks of the responsibility for payment of wages. It speaks of the "employer" which expression is defined in section 2 (ia). Section 15 refers to the claims arising out of deductions from wages or delaying payment of wages and penalty for malicious or vexatious claims. Statutorily no liability has been fixed on the directors.

       Under section 3 of the Act as amended by the M.P. Amendment, the liability is cast on a person who has been named as Manager of the factory and the employer jointly. Therefore, in order to find out whether the director had a responsibility for making payment, two different things have to be established: (i) he was the employer, or (ii) he was a person who has been named as Manager of the factory. In the instant case, there is no such allegation or evidence led. 1998 (2) JLJ 214 overruled. (1996) 6 SCC 665 distinguished. (1998) 6 SCC 288 and (1964) 6 SCR 885 relied on.

       [Paras 18, 19 & 25

       (2) Precedent -- distinction has been made between mere reference or citation of one of the statutes into another and incorporation.

       A distinction has been made between a mere reference or citation of one of the statutes into another and incorporation. A Statute may instead of referring to a particular previous statute or to any specific provision therein, refer to the law on the subject generally. In such cases, a reference is construed to mean that the law is as it reads thereafter including amendments subsequently to the time of adoption. Sutherland‘s Statutory Construction, Vol. 2, 3rd Edn. p. 550, (1998) 3 SCC 276 and (1965) 1 All ER 490 (HL) relied on. [Paras 10 to 13

       (3) Interpretation of Statutes -- doctrine of lifting of veil -- when applies.

       The doctrine of lifting of the veil has been applied, in the words of Palmer, in five categories of cases: where companies are in relationship of holding, subsidiary (or sub-subsidiary) companies; where a shareholder has lost the privilege of limited liability and has become directly liable to certain creditors of the company on the ground that, with his knowledge, the company continued to carryon business six months after the number of its members was reduced below the legal minimum; in certain matters pertaining to the law of taxes, death duty and stamps, particularly where the question of the "controlling interest" is in issue; in the law relating to exchange control, and in the law relating to trading with the enemy where the test of control is adopted. Palmer‘s Company Law, 24th Edn. of 1987, p. 215 relied on.

       [Para 22

       ¼1½ etnwjh lank; vf/kfu;e] 1936 && /kkjk 15 rFkk 17 && etnwjh lank; vf/kfu;e] 1936 ¼luQ 1964 esa e-iz- esa ;Fkk la‘kksf/kr½ && /kkjk 2] 3 rFkk 15 && ft;kthjko dkVu feYl fy-@daiuh ds funs‘kd && etnwjh rFkk ‘kkfLr dk lank; djus ds fy, O;fDrxr :i ls nk;h ughaA

       

        e/; izns‘k mPp U;k;ky; dh [kaM U;k;ihB }kjk fn, x,] bu vihyksa esa vkf{kIr fu.kZ;ksa }kjk ft;kthjko dkVu feYl fy ¼,rfLeu~i‘pkr~ **daiuh ds :i esa fufnZ"V½ ds funs‘kd etnwjh lank; vf/kfu;e] 1936 ¼la{ksi esa **vf/kfu;e**½ ds v/khu daiuh ds deZdkjksa dks etnwjksa ds lank; ds fy, O;fDrxr :i ls nk;h vfHkfu/kkZfjr fd, x, FksA rFkkfi] vf/kfu;e ds v/khu izkf/kdkjhx.k funs‘kdksa ds gkFkksa esa daiuh dh vkfLr;ksa ;k funs‘kdksa }kjk daiuh dh vk; ls vftZr dh xbZ vkfLr;ksa ds fo#) dk;Zokgh dj ldrs FksA rFkkfi] funs‘kdksa dh O;fDxr laifÙk ds fo#) dk;Zokgh ugha dh tk ldrh ;fn og daiuh dh vk; ls brj óksrksa ls vftZr dh xbZ gSA fo}ku ,dy U;k;k/kh‘k ds fu.kZ;ksa ds fo#) Qkby dh xbZ ySVlZ isVsaV vihysa [kkfjt dj nh xbZA /;krO; gS fd fo}ku ,dy U;k;k/kh‘k us vfHkfu/kkZfjr fd;k Fkk fd fjV ;kfpdk,¡ pykus ;ksX; ugha gS D;ksafd fjV ;kfp;ksa dks vf/kfu;e dh /kkjk ds v/khu vuqdfYid mipkj miyC/k gS % rFkkfi] ySVlZ isVsaV U;k;ky; us ekeys ds xq.kkxq.k ij fopkj fd;k rFkk tSlk Åij mYys[k fd;k x;k gS] funs‘kdksa ds nkf;Ro dk fu"d"kZ fudkykA

       

        tcfd funs‘kdksa us] tks fjV ;kph Fks] [kaM U;k;k/kh‘k }kjk fd, x, fu.kZ;ksa dh ‘kq)rk iz‘uxr dh gS] vf/kfu;e ds v/khu d`R;dkfj;ksa us mPp U;k;ky; ds fu.kZ; dk og Hkkx iz‘uxr fd;k gS ftlesa olwyh daiuh dh vk; ls vftZr vkfLr;ksa rd fucZaf/kr dh xbZ gSA

        ¿ iSjk 1 ,oa 2À

        vfHkfu/kkZfjr % vf/kfu;e ds v/khu nkf;Ro vkd`"V djus ds fy, ns[kk tkuk gksrk gS fd vf/kfu;e ds nkf;Ro fdl ij Mkyk x;k gS /kkjk 3 esa etnwjh ds lank; ds mÙkjnkf;Ro ds ckjs esa crk;k x;k gSA mlesa **fu;kstd** dh ckr dh xbZ gS tks vfHkO;fDr /kkjk 2¼id½ esa ifjHkkf"kr dh xbZ gSA /kkjk 15 esa etnwjh ls dh xbZ dVkSfr;ksa ;k etnwjh ds lank; esa foyac ls mn~Hkwr nkoksa vkSj fo}s‘kiw.kZ ;k rax djus okys nkoksa dk funs‘k gSA dkuwuh :i ls funs‘kdksa ij dksbZ Hkh nkf;Ro ugha Mkyk x;k gSA

        e-iz la‘kks/ku }kjk ;Fkk la‘kksf/kr vf/kfu;e dh /kkjk 3 ds v/khu nkf;Ro la;qDr :i ls fu;kstd vkSj ml O;fDr ij Mkyk x;k gS ftls dkj[kkus dk izca/kd dgk x;k gS vr% ;g irk yxkus ds fy, fd D;k lank; djus dk mÙkjnkf;Ro funs‘kd dk Fkk] nks fHké ckrs LFkkfir dh tkuk gksaxh% (i) og fu;kstd Fkk] ;k (ii) og ,slk O;fDr Fkk ftls dkj[kkus dk izca/kd dgk x;k gSA izLrqr ekeys esa ,slk dksbZ vfHkdFku ugha gS] u ,slk lk{; is‘k fd;k x;k gSA 1998 ¼2½ ts ,y ts 214 myVk x;kA ¼1996½ 6 ,l lh lh 665 izHksfnrA ¼1998½ 6 ,l lh lh 288 rFkk 1964 ¼6½ ,l lh vkj voyafcrA ¿ iSjk 18] 19 ,oa 25À

        ¼2½ iwoZ fu.kZ; && ,d dkuwu esa nwljs dkuwu dk funs‘k ;k izks)j.k ek= fd, tkus vkSj mls lfEefyr fd, tkus esa lqHksn fd;k x;k gSA

        ,d dkuwu esa nwljs dkuwu dk funs‘k ;k izks}j.k ek= fd, tkus vkSj mls lfEefyr fd, tkus esa lqHksn fd;k x;k gSA dkuwu es] fdlh fof‘k‘V iwoZrj dkuwu dk ;k mlds fdlh fofufnZ"V mica/k dk funsZ‘k djus ds LFkku ij ml fo"k; ij fo|eku fof/k dk O;kid :i ls funsZ‘k gks ldrk gSA ,sls ekeyksa esa funsZ‘k dk vFkkZUo;u bl vFkZ esa fd;k tkrk gS fd fof/k og gS tks rRi‘pkr~ vaxhdkj fd, tkus ds le; ds i‘pkr~ la‘kks/ku lfEefyr djrs gq, gSA lnjySaM d`r LVSV~îwVjh dULVªD‘ku] [kaM 2] r`rh; laLdj.k] i`"B 550] ¼1998½ 3 ,l lh lh 276 rFkk ¼1965½ 1 vky bZ vkj 490 ¼,p ,y½ voyafcrA ¿ iSjk 10 ls 13À

        ¼3½ fof/k dk fuoZpu && inkZ mBk, tkus dk fl)kar && dc ykxw gksrk gSA

       

        inkZ mBk, tkus dk fl)kar] ikej ds ‘‘kCnksa esa] ik¡p oxZ ds ekeyksa esa ykxw fd;k x;k gS% tgk¡ daifu;ksa dk leuq‘kaxh ¼;k mi&leuq‘kaxh½ daifu;ksa /kkj.k djus dk laca/k gS( tgk¡ va‘k/kkjd us lhfer nkf;Ro dk fo‘ks"kkf/kdkj [kks fn;k gS rFkk daiuh ds dfri; ysunkjksa dks bl vk/kkj ij lh/ks nk;h gks x;k gS fd mldh tkudkjh ls daiuh mlds lnL;ksa dh la[;k oS/k U;wure ls de gks tkus ds i‘pkr~ Ng ekl rd dkjckj fujarj pykrh jgh( djksa] e`R;q ‘kqYd rFkk LVkai fof/k ds laca/k esa dfri; ekeyksa esa] fof‘k‘Vr% tgk¡ fu;a=d fgr dk iz‘u fooknxzLr gks( fofue; fu;a=.k ls lacaf/kr fof/k esa] rFkk tgk¡ fu;a=.k dk ijh{k.k vaxhdkj fd;k x;k gks ogk¡ ‘k=q ls O;kikj djus ls lacaf/kr fof/k es ikej d`r daiuh yk] pkSchlok¡ laLdj.k lu~ 1987] i`"B 215 voyafcrA ¿ iSjk 22À