Delhi District Court
Wearwell (India) Pvt. Ltd. vs . Dharmender Kumar Tanti on 7 August, 2020
IN THE COURT OF MS. NEENA BANSAL KRISHNA:
DISTRICT & SESSIONS JUDGE
SOUTH - EAST, SAKET COURTS, NEW DELHI
RCA No. 68/2019
Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti
M/s Wearwell (India) Private Limited
B134, Okhla, PhaseI, New Delhi - 110020
Also at:
B43/44, Hosiery Complex, PhaseII, .......... Appellant/
NOIDA (UP) Management
VERSUS
Sh. Dharmender Kumar Tanti, Through
All India General Mazdoor Trade Union
170, Bai Mukund Khand, Giri Nagar, .......... Respondent/
Kalkaji, New Delhi - 110019 Workman
Date of filing of Appeal : 25.04.2019
Order pronounced : 07.08.2020
ORDER:
1. An Appeal under Section 17 of the Payment of Wages Act, 1936 (hereinafter referred to as the "Act") has been filed against the Judgment dated 30.11.2018 vide which the appellant/Management has been directed to pay the arrears of wages in the sum of Rs. 27,406/ alongwith 10 times penalty in the sum of Rs. 2,74,060/, totalling to Rs. 3,01,466/.
2. The facts in brief are that the appellant, a Company incorporated RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 1 of 19 under the Companies Act, was engaged in the business of Export of Readymade Garments. The respondent was working as Tailor along with 21 other workmen in the Company and was drawing salary of Rs. 11,830/ pm. The appellant/Management had to cease its effective factory operations at B134, Okhla Industrial Area, Okhla PhaseI, New Delhi from 28.05.2018 and the workmen had to shift to B43/44, Hosiery Complex PhaseII, NOIDA. The respondent objected that the appellant/ Management failed to provide legal facilities under various labour laws and when he along with other workmen demanded the same, the appellant/Management got annoyed and terminated the service of the workman on 18.12.1017. A dispute of illegal termination was raised and the proceedings were initiated before the Conciliation Officer which culminated in a settlement dated 03.05.2018. Pursuant thereto, the respondent was reinstated w.e.f. 04.05.2018 with continuity of service for the period of suspension. The appellant/Management had paid only 50% of the salary for the period from 18.12.2017 to 03.05.2018 and deducted the remaining 50% of wages for the said period amounting to Rs. 27,406/. Feeling aggrieved by denial of balance 50% of the wages during the suspension period, the respondent/claimant filed a petition under Section 15 (2) of the Payment of Wages Act, 1936.
3. The appellant/Management asserted that all the claims including the claim for wages as per the terms of the Settlement dated 03.05.2018 have already been paid and the appellant/Management was under no RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 2 of 19 liability to pay the claimed amount.
4. The issues on the basis of pleadings were framed by the Ld. Presiding Officer, Labour CourtV, Dwarka Courts, New Delhi vide order dated 04.10.2018 as under:
1. Whether the claimant has settled the matter with the management in full and final on 03.05.2018? OPM
2. Whether the workman is entitled to the amount claimed by him in the application? OPW
5. The claimant/respondent Sh. Dharmender Kumar Tanti appeared as WW1 and denied that the claimed amount had been settled in the settlement dated 03.05.2018.
6. The appellant/Management examined its official Sh. Harpal Singh as MW1 who deposed that all the claims have been settled in terms of the settlement.
7. Ld. Presiding Officer, Labour Court on the basis of evidence, concluded that the settlement did not talk about forgoing of payment of wages for the termination period (suspension having not been proved in terms on the part of the claimant) and therefore, the claimant/respondent was held entitled to 50% of the wages for the period 18.12.2017 to 03.05.2018, in the sum of Rs. 27,406/. However, 10 times penalty in the sum of Rs. 2, 74,060/ was also awarded. The claim of the respondent was thus, allowed for Rs. 3,01,466/.
8. Aggrieved by the said judgment the present appeal has been filed by RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 3 of 19 the Management.
9. Ld. Counsel on behalf of the appellant/Management has challenged the impugned judgment on the ground that the arrears of wages during the termination period cannot be granted unless there is a specific order for payment of arrears of wages at the time of directing the reinstatement of workman. It has been argued that the settlement clearly provided that all the claims, disputes of the claimant stood settled and it nowhere stated about providing the full back wages. Ld. Counsel for the appellant/Management has relied on the Judgments in Codialabail Press vs. Monappa (K) (1963) 1LLJ 638; State of Punjab vs. Jaswinder Singh (2017) 8 SCC 621 & Singh Engineering Works Private Limited vs. Kandhai & Others (Civil Revision No. 1015/1972) decided on 05.01.1975. It has been further argued that though the Authority under the Payment of Wages Act may look at the incidental matters and even record the evidence, but it cannot question whether the employer had bonafidely or wrongly terminated the relationship of employee and employer. The only question that could have been looked into whether the payment of wages has been in terms of the settlement. For this reliance has been placed on Vishwanath Tukaram vs. General Manager, Central Railway, AIR 1958 Bombay 111 (FB) and Kannappan vs. Hoe & Company II LLJ 510. It is thus, argued that the matter had been finally settled between the parties and there was no mention of the payment of full wages for termination period RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 4 of 19 and the same has been wrongly granted by the Ld. Authority under Payment of Wages Act. It has also been argued that though there is a discretion vested in the Authority to impose penalty to the extent of 10 times of the wages amount but such discretion rests in equities and Authority must consider surrounding circumstances including dereliction and misconduct, if any on the part of the Management while imposing the penalty. For this Ld. Counsel for the appellant/Management has relied upon Tops Security Limited vs. Tops Detective & Security Services Limited, Karamchari Union (Registered) LPA No. 407/2013; C. S. Parameswaran vs. The Authority under the Minimum Wages Act, 1948 for Nandgaon MANU/MH/0193/1968; G. S. Dugal & Company Private Limited vs. Labour Inspector (Central) AIR 1968 and Chief Officer, Bhavnagar, Nagarpalika vs. Meghjibhai Ugabhai MANU/GJ/ 0173/1992. It has been thus, argued that arrears of wages as well as penalty have been wrongly imposed by Ld. Authority of Payment of Wages Act and the said order is liable to be setaside.
10.The respondent was served with the appeal, but despite service none appeared on behalf of the respondent.
11. Ld. Counsel on behalf of the appellant has filed application dated 06.11.2019 submitting that all the disputes with the respondent have been settled as per the Settlement Deed annexed alongwith the application and that an amount of Rs. 27,406/ through cheque had already been paid to the workman and the said settlement may be RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 5 of 19 taken on record and the amount of Rs. 27,406/, which was deposited by the appellant as precondition for hearing of the appeal may be allowed to be withdrawn.
12.I have heard the arguments and perused the record. My observations are as under:
PAYMENT OF RS 27,406/ TOWARDS 50% WAGES DURING THE SUSPENSION PERIOD
13.The Payment of Wages Act, 1936 was enacted to regulate payment of wages to certain classes of persons employed in an industry. Section3 makes the employer responsible for the payment of all wages required to be paid under the Act. Section7 enumerates the deductions which can be made by an employer. Section15 provides for the decision of claims arising out of deductions from wages or delay in their payments. Section20 prescribes penalty for offences under the Act.
14.The main purpose of the Act as discernible from its provisions is the prevention of illegitimate deductions from the wages of employee and delay in their payments. Section15 of the Act aims at the accomplishment of this purpose and any adjudication necessary for the fulfillment of that object is permissible. Where the relationship of employer and employee subsists and is admitted, but there is a controversy about the quantum of wages payable by the Management to the employee, an enquiry into that question for the purpose of determination of actual amount payable by way of wages RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 6 of 19 would fall within the orbit of the enquiry. Other similar or incidental questions may also fall within the scope of such enquiry. However, if the application for payment of full wages is resisted by the Management on the plea that the applicant is not a workman or was not its employee at any time then dispute does not come within the domain of Payment of Wages Act.
15.In Codialabail Press (Supra) it was observed that from Section 2
(vi) (d) of the Payment of Wages Act it is evident that what would be the wages for the purpose of the Act are only those sums of money to which the employee is entitled under the express or implied terms of the engagement or an award or a settlement or an adjudication of a Court or some statutory provisions or scheme. Therefore, any claim in regard to nonpayment of complete remuneration or wages would be covered under Section 15 of the Act. It was further explained that once the employment is admitted, but its terms are challenged, it would be unreasonable to deny power under Section 15 of the Act to make an investigation into incidental and ancillary questions to adjudicate upon which may be inevitable and indispensable. Likewise, when a claim rests upon an award or a settlement or a decision of a Court and same is produced by the employee, it would well within the power of the Authority under Section 15 of the Act to consider the settlement and adjudicate accordingly.
16.The scheme and purpose of the Payment of Wages Act thus makes it clear that claims that may be decided under Section 15 of the Act are RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 7 of 19 only those in which the foundation of the claim is beyond the controversy or is indisputable although there may be some dispute about its measures or magnitude. If the dispute is about the foundational facts underlying the claim which cannot be satisfactorily resolved in a summary enquiry, then it falls beyond the scope of enquiry under the Act.
17.Hon'ble Bombay High Court in A. R. Sarin v. B. C. Patil (1951II LLJ 188) observed that mere denial of the factum of employment did not oust the jurisdiction of the Authority functioning under Section 17 of the Payment of Wages Act, but it did not extend to the determination of question whether the contract had been terminated or was still subsisting, as was claimed by the workman. This principle was further clarified by the Hon'ble Bombay High Court in K. P. Mushran vs. B. C. Patil (1951II LLJ 584) wherein it was observed that in cases where the employer terminated the contract of employee and such dismissal/termination is challenged by the employee as wrong and has claimed damages, such disputes are not within the jurisdiction of the Authority.
18.In Anthony Sabastin Almeda vs. R. M. Taylor (MANU/MH/0350/ 1956), it was again reaffirmed that the complicated questions related to the dispute about the employment cannot be decided under the Payment of Wages Act.
19.In Ambica Mills Company, Ltd. vs. S. B. Bhatt (MANU/SC/0217/ 1960) contract of employment was admitted but there was a dispute RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 8 of 19 as to which of two subsisting contracts governed the employees. The Hon'ble Apex Court observed that the contract was admitted but the dispute was only with regard to interpretation of its terms and it fell within the scope of Section 15 of the Act.
20.From the case law as enunciated above, the scope of enquiry by the Authority under Section 15 of the Act is well established. It has the jurisdiction to determine the disputes in respect of delay or nonpayment of part/ full wages provided the foundational matrix in regard to the employee being in the employment, is not under challenge. This becomes significant in the present case as though the employment till 16.12.2017 and subsequent reinstatement pursuant to the settlement dated 03.05.2018 is admitted but the appellant has claimed that services of the workman was terminated and in the settlement there was no term in regard to payment or balance wages during the termination period.
21.First and foremost the sanctity and effect of settlement may be understood. In Barauni Refinery Pragatisheel Shramik Parishad & Others vs. Indian Oil Corporation Limited, AIR 1993 SC 1801 Hon'ble Apex Court observed the role of the Conciliation Officer and the sanctity of the settlement arrived before him. It was observed that the settlement may be effected in two categories, namely, (i) those arrived at outside the conciliation proceedings and
(ii) those arrived at in the course of conciliation proceedings. A settlement which belongs to the first category has limited application RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 9 of 19 as it merely binds the parties to the agreement but the settlement in the second category has extended application since it is binding on all parties to the dispute, but to all others who were employed in the Establishment to which the dispute relates. The object is to uphold the sanctity of the settlement arrived at with the active assistance of the Conciliation Officer and to discourage an individual employee from scuttling the settlement. There is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can therefore safely be made binding not only on the workmen belonging to the Union signing the settlement but also on others. That is why a settlement arrived at in the course of conciliation proceedings is put on par with the award made by an adjudicatory Authority. The conciliation settlement before the ALC is therefore, having the sanctity by an award and is not subject to challenge by the workman or the Management. The dispute now being raised has to be resolved within the confines of the settlement.
22.The settlement before the ALC was in the following terms:
1. Accordingly, the Court deems it fit to reproduce the relevant terms of the said settlement dated 03.05.2018:
(a) The management will reinstate the entire complainant XXXX with continuity of service w.e.f. 04.05.2018.
(b) XXXX
(c) It has also been agreed XX all the disputes/claim/ complaints of bonus and contract labour raised/filed shall be deemed to RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 10 of 19 have been withdrawn after settlement. The management has also agreed to withdraw all the case i.e. chargesheet, suspension order/police complaint against the workman.
23.The settlement dated 03.05.2018 is accepted by both the parties and its contents have not been assailed. The entire controversy rests on the interpretation of this settlement. The workman had claimed that by virtue of settlement he was entitled to remaining 50% of the wages with continuity of service w.e.f. 04.05.2018. The Management refuted this claim and asserted that the workman was terminated on 16.12.2017 and since there was no mention of back wages for the termination period and workman specifically stated to have settled all claims and disputes, he is not entitled to the 50% of wages during the termination period. Ld. Counsel for the appellant/ Management has relied upon the judgment of Hindustan Times Limited vs. Aita Ram & Others, LPA No. 06/2015 decided on 23.02.2015 wherein similar issue was considered wherein a settlement was arrived at under Section 18 (1) of Industrial Disputes Act whereby the workmen were treated in continuity of service under the terms and conditions of the service as before their illegitimate termination w.e.f. 03.10.2004. The Hon'ble Apex Court observed that the terms for payment of back wages is not implicit simply because reinstatement on same terms and conditions with continuity in service has been awarded; to be entitled to the back wages there has to be a specific order and there can be no presumption of payment of back wages by implication.
RCA No. 68/2019Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 11 of 19
24.The core question is whether the respondent was terminated or suspended. It is admitted by the parties that during the period from 16.12.2017 to 03.05.2018 the workman was given 50% of the wages, which is Suspension Allowance. There was no question of payment of sustenance allowance if the workman had been terminated; it is clearly evident from the submissions of the Appellant that it was a case of suspension and not termination. This is further reinforced from the documents filed by the appellant in the appeal which are the statement of payment of 50% of the wages as Sustenance Allowance and the copy of chargesheet dated 29.12.2017. The appellant/Management company may not have proved the documents of suspension before the Ld. Authority, but they can be read against them without formal proof. These documents establish it to be a case of suspension and not termination which makes all the difference to the interpretation of the terms of settlement.
25.In Mushran vs. Patil, MANU/MH/0074/1952 : AIR 1952 Bombay 235 the employee was under suspension and contention was put forth by the employer/Railway Authority that in view of suspension, no claim could be made for payment of wages during the period of suspension. Hon'ble Bombay High Court held that if the relationship of master and servant subsisted between the parties, then notwithstanding the suspension, the employer is liable to pay the charges for that period.
26.In Viswanath Tukaram vs. General Manager, Central Railway & RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 12 of 19 Company, Bombay (1958) 111 similar facts arose whether the petitioner (workman) alleging that he was in the employment during the suspension period is entitled to wages for such period. Since, the employee failed to report for duty after period of three months, he was treated as absconding and a temporary employee was engaged in his vacant seat. His name was automatically struck off but later after four years, he was reemployed. It was held that even though he was directed to have been reemployed, but there was nothing to show that his services were ever terminated. Only his name was struck off from the attendance register because he was absconding. The employee continued to be in service and in fact was reinstated under the original contract. It was observed that the employee in the given circumstances could be deemed to have been suspended and so be the case he was entitled to avail salary as he was reinstated and has no obloquy attached to his conduct; he indeed had obtained an honourable discharge. The workman was deemed to be in the employment and on the construction of the contract, held to be entitled to full wages.
27.It is thus, settled that in the case of suspension the payment of wages for the period of suspension is a necessary corollary in case of revocation of suspension with continuity of service but in the case of termination the workman does not become entitled to back wages unless specifically granted as held in Hindustan Times Limited (Supra). Furthermore, settlement of all disputes and claims as mentioned in the settlement did not imply that they gave up their RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 13 of 19 claim to arrears of wages. Rather, when they have been granted continuity of service on same terms and conditions and there was no misconduct found on the part of workmen, their reinstatement from 16.12.2017 amounted to resumption amounted to being in service during this period of suspension and he was entitled to the arrears of wages by virtue of his employment.
28.It is established that the workman had been put under suspension and there was no termination of his service and has been reinstated and given continuity of service, which implies that his service was continued under the original contract of employment. The workmen was thus, entitled to full wages for the period of suspension and has been rightly allowed the 50% arrears of salary for the period of suspension in the sum of Rs. 2,74,060/.
29.Ld. Authority/Presiding Officer Labour Court has rightly granted the arrears of wages to the workman.
IMPOSITION OF TEN TIMES PENALTY
30.The other contention raised on behalf of the appellant/Management is that 10 times penalty on the arrears has been imposed without any reason and without any basis.
31.The Dictionary Meaning of word "compensation" inter alia connotes the Act of compensating and something especially money or to make a recompense and counterbalance. The term "recompense" inter alia makes amend to a person for a loss or requisite reward or punish a person on an action. It is clear that RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 14 of 19 compensation is offered to a person to make amends for some injury or loss caused to him. The person responsible for causing such injury or loss is made liable to pay the compensation.
32.Section 15 (B) of Payment of Wages Act empowers the Authority to refund the amount deducted or the payment of delayed wages together with payment of such compensation, which the Authority may think fit, not exceeding 10 times the deducted amount. The Authority therefore had the discretion to award compensation to the extent of 10 times the due amount. However, the discretion had to be exercised judiciously and the surrounding circumstances should have been highly, while imposing the penalty.
33.The Division Bench of Bombay High Court in C.S. Parameswaran vs. The Authority Manu/MH/0193/1968in regard to similar provision under Minimum Wages Act held that the Act vests a discretion in the Authority whether to impose penalty or not; this discretion has to be exercised judicially and in all circumstances must be connected with the matter i.e. nonpayment or delayed payment must be taken into account; each case must depend on the equities of the case; there may be cases where the employer is not at fault, there may be some difficulties in his way or there may be some cause which prevented him from implementing the provisions of the Act; all these factors may be considered before awarding the compensation.
34.In G.S.Duggal & Co. (Private) Ltd. (supra) the Division Bench of RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 15 of 19 Patna High Court held that although no criteria is indicated for fixing the amount of compensation which has to be directed to be paid along with the wages, the outer limit of the compensation is ten times such amount; however that can never mean that without any rhyme or reason and in all cases it must be ten times the said amount. Finding that the employer had been misled by the wrong meaning given by the Labour Officer and further that the employees had not made any grievance, grant of ten times compensation was held to be arbitrary and capricious and reduced to an amount equal to wages.
35.In Chief Officer, Bhavnagar Nagarpalika vs. Meghjibhai Ugabhai & Others, in Special Civil Application No. 184/1980 (MANU/GJ/ 0173/1992) decided on 20.01.1992 by Hon'ble High Court of Gujarat a similar issued was considered in regard to the payment of compensation/penalty under the Minimum Wages Act, 1948, which was similar to Section 15 of Payment of Wages Act. It was observed that the powers must be exercised under Section 20 of the Act judiciously and the discretion conferred upon the Authority is not unbridled or unguided. It was again held that ten times penalty is neither mandatory nor compulsory and would depend on factors like nature of employment, the status of employer, the nature of defaults, the number of defaults, the frequency thereof, the amount involved, the delay and such like factors. The Authority is required to carefully look into the matter and decide in accordance with sound RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 16 of 19 judicious principles and apply its mind to the question whether or not the claim is false, frivolous or vexations and this should be sufficient guidelines for the purpose of exercise of discretionary powers.
36.The Ld. Authority while granting 10 times compensation of the due amount has not given any reasons for granting 10 times compensation and no reasons are also discernable from the factual matrix or the judicial record. This is a case where the workman had been put under suspension for a period of four months, but pursuant to settlement arrived at before the ALC on 03.05.2018, the charge sheet initiated by the appellant/ Management against the workman were dropped and matter was amicably settled and service of the workman was resumed with continuity of service from the date of suspension. There is no delay as 50% of Suspension Allowance for this period of suspension was duly paid. The Management was forthcoming for early settlement and there was no conduct of the administration showing any kind of arbitrary or caprice conduct. It was an amicably settlement where both the parties had showed their goodwill by putting a closure to the dispute. Also, the denial in paying balance 50% of the wages during the suspension period was due to incorrect interpretation of the settlement by the Management. It cannot be overlooked that pursuant to the settlement, the respondent has joined back the services of the Appellant (amicably settled the matter vide Settlement Deed dated 03.07.2019) and imposition of any penalty would only create acrimony and RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 17 of 19 disharmony in the work place which would not be in the interest of either party.
37.Considering the conduct of the Management and the workman and also the settlement, it is not a case for imposition of any penalty and imposition of 10 times penalty on due wages in the sum of Rs. 27,406/, amounting to Rs. 2,74,060/ is without any basis and is hereby setaside.
38.It is submitted on behalf of the appellant that since the matter has already been amicably settled with the workman vide Settlement Deed dated 03.07.2019 and a sum 9of Rs. 27,406/ have already been paid to him by way of cheque towards full and final settlement of his all the claims, the sum of Rs. 27,406/ which has been deposited in this Court as precondition for hearing of the appeal may be refunded to the appellant. Copy of the Settlement Deed dated 03.07.2019 has already been filed on record, but the respondent has not appeared in the Court despite service and there is no affirmation of this settlement by the respondent. The Court should have taken note of the settlement only if it had been acknowledged and accepted by the respondent before the Court. In the circumstances, the appellant cannot be allowed to refund a sum of Rs. 27,406/ by the order of the Court in this appeal, but the appellant is at liberty to get No Objection Certificate from the workman and seek refund as per law.
39.In view of the above discussion, it is held that the RCA No. 68/2019 Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 18 of 19 appellant/Management is liable to pay a sum of Rs. 27,406/ as arrears of salary during the period of suspension from 16.12.2017 to 31.04.2018. However, the compensation/ penalty amount in the sum of Rs. 2, 74,060/ is hereby setaside. In view of above, the appeal is partly allowed.
40.A copy of the order be sent to the Ld. Trial Court Record for reference. Digitally signed by NEENA
41.File be consigned to Record Room.
NEENA BANSAL
BANSAL KRISHNA
Date:
KRISHNA 2020.08.10
10:19:28 +0530
Announced in the open Court (Neena Bansal Krishna)
on 07.08.2020 District & Sessions Judge
(KSR) South East, Saket Courts,
New Delhi
RCA No. 68/2019
Wearwell (India) Pvt. Ltd. vs. Dharmender Kumar Tanti Page No. 19 of 19