Allahabad High Court
M/S Samtel Color Limited vs State Of U.P. And Others on 20 March, 2013
Author: Tarun Agarwala
Bench: Tarun Agarwala
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No.1 Civil Misc. Writ Petition No. 46445 of 2012 M/s Samtel Color Ltd. ........ Petitioner Vs. State of U.P. and others ........ Respondents With Civil Misc. Writ Petition No.48473 of 2012 M/s Samtel Color Ltd. ........ Petitioner Vs. State of U.P. and others ........ Respondents With Civil Misc. Writ Petition No.48475 of 2012 M/s Samtel Color Ltd. ........ Petitioner Vs. State of U.P. and others ........ Respondents ****************** Hon'ble Tarun Agarwala,J.
Heard Sri Chandra Bhan Gupta, the learned counsel for the petitioner, Sri Jamal Khan, the learned counsel for the respondent-workman and the learned Standing Counsel for the State.
The employer took a decision to lay off its workers on 30th August, 2012. This created an industrial unrest. Five representatives of the workers filed an application under Section 3 of the U.P. Industrial Peace (Timely Payment of Wages) Act, 1978 (hereinafter referred to as the Act of 1978) praying that the wage bill for the month of February, March, April and May be realized from the employer as they have not been paid the wages. The Additional Labour Commissioner, who is the authority under the Act of 1978 issued notices requiring the employer to show cause as to why the amount should not be recovered. The employer submitted their reply and contended that they have laid off their workers in accordance with the provisions of the U.P. Industrial Disputes Act. The employer further submitted that lay off was not a wage within the meaning of the word "wages" as defined under the Act of 1978 or under the Payment of Wages Act or under the Industrial Disputes Act and, consequently, no recovery can be made. The Additional Labour Commissioner, after considering the matter, passed the impugned order, directing the Collector to recover a sum of Rs.86,15,436/- towards the wages bill for the month of February 2012. Similar orders were passed for the month of March, April and May 2012. The petitioner, being aggrieved, by the said orders have filed separate writ petitions which have been clubbed and are being decided together.
The learned counsel for the petitioner submitted that the amount sought to be recovered is disputed. The workers were laid off and they have not earned any wages and, therefore, no recovery could be made under Section 3 of the Act of 1978. The learned counsel submitted that where the amount was disputed, no recovery could be made. In support of his submissions, the learned counsel has placed reliance upon various decisions, which will be referred hereinafter.
The learned counsel for the petitioner further submitted that the Additional Labour Commissioner, while deciding the application under the Act of 1978 was only a facilitator and was not an adjudicator and, therefore, was not in a position to decide the validity and legality of the "lay off" done by the employers. The question as to whether the lay off was legal or invalid could only be decided in an appropriate forum by raising an industrial dispute under Section 4K of the U.P. Industrial Disputes Act.
In the end, the learned counsel for the petitioner submitted that even assuming without admitting that the authority could go into such questions, it was contended that lay off was not a wage and, therefore, could not be recovered under the Act of 1978.
On the other hand, the learned counsel for the respondent submitted that a sham stand was taken by the employers that they have laid off their workers. The entire exercise made by the employers was ex facie illegal and against the provisions of Section 25M of the U.P. Industrial Disputes Act. The learned counsel contented that under the Industrial Disputes Act (Central), it is mandatory for the employer in an industry which employs more than 100 workers to seek permission from the State Government for laying off its workers and since no such previous permission was taken, the action of the employers in laying off its workers was wholly illegal and, consequently, the wages became payable to the workers. Since an industrial unrest was erupting, an appropriate application for recovery of the wage bill was moved, which the authority has duly considered and has allowed the claim.
The learned counsel submitted that such claim was valid and that the authority was justified in recovering the wages. The learned counsel submitted that the provisions of the U.P. Industrial Disputes Act would apply in so far as Section 25M is concerned. In this regard, the petitioner has relied upon a decision of the Supreme Court in the Case of Workmen of the Straw Board Manufacturing Company Ltd. Vs. M/s Straw Board Manufacturing Company Ltd., 1974 (28) FLR 357 wherein the Supreme Court held:-
"32. The next crucial question that will than arise for consideration is whether the concerned employees are entitled to relief under Section 25-FFF of the Central Act since there is no similar provisions in the U.P. Act. Mr. Chitaley, as stated earlier at first disputed that the employees can invoke the provisions of Section 25-FFF, although, finally abandoned that position. Since the U.P. Act does not make any provision for compensation in the case of closure and the Central Act has applied the lacuna, there is no repugnancy between the U.P. Act and the Central Act and the beneficient provisions of the latter Act can be availed of by labour even in their absence in the U.P. Act. The Central Act applies to the whole of India, including U.P. Even if there may be slightest doubt in the matter, Section 25-J of the Central Act advisedly leaves no scope for controversy in the matter. We will, therefore, read Section 25-FFF of the Central Act which clearly applies in the present case:
25-FFF (1): "Where an undertaking is closed down for any reason whatsoever every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of Section 25-F, as if the workman had been retrenched;
Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) or Section 25-F shall not exceed his average pay for three months."
In order to appreciate the rival submissions of the parties the Court finds that the statements of Objects and Reasons given under the Act of 1978 indicates that the provisions of the Payment of Wages Act was found to be inadequate to ensure timely payment of wages and that the incidence of disturbance of industrial peace was greater in establishment and, therefore, it was considered necessary to provide that if the wage bill in default exceeded Rs.50,000/-, the amount would be recoverable as arrears of land revenue. This became essential because it was found that there was a tendency of the employers to keep large amount of wages in arrears.
The Supreme Court analysed the provisions of the Act of 1978 in Modi Industries Ltd. Vs. State of U.P. and others, 1994 SCC (L & S) 286 in which the Supreme Court held :
"8. 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. If the Labour Commissioner is satisfied that the workmen, though they have worked and are, therefore, entitled to their wages, are not paid the same within time, he has further to satisfy himself that the arrears of wages so due exceed Rs.50,000/-. It is only if he is satisfied on both counts that he can issue the certificate in question. Under the Act, the Labour Commissioner acts to assist the workmen to recover their wages which are admittedly due to them but are whithheld for no fault on their behalf. 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, as in the present case, 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."
The Supreme Court found that the inquiry under the Act was limited only to find out whether the workman had earned their wages as per the terms of their employment or not and if the authority was satisfied that the workers had worked and was entitled to their wages and if the authority further found that the arrears of wages exceeded Rs.50,000/-, in that case he was obligated to issue a recovery certificate. The Supreme Court held that the authority was required to act as the facilitator and not as an adjudicator, namely, that if the claim of the workers was disputed, the authority could not adjudicate upon the dispute unless frivolous or prima facie untenable grounds were taken by the employers. The Supreme Court further observed that where the dispute involved investigation of questions of fact and of law, it was not the function of the authority to adjudicate the same and, in such matters, the parties were required to approach the appropriate forum.
In the light of the aforesaid decisions, various Courts have passed orders from time to time. In Occupier/Director, M/s Hindustan Lever Ltd. and another Vs. State of U.P. and others, 2008 (116) FLR 1152 the Court held that the claim of the union which was disputed and required adjudication could not adjudicated by the authority under the Act of 1978 and no recovery certificate could be issued under the said Act.
Similarly in M/s Rahman Exports Pvt. Ltd., Kanpur Vs. State of U.P. and others, 2011 (129) FLR 213 the Court held that the Deputy Labour Commissioner does not have any power or jurisdiction to settle the dispute of the nature involved in the instant case under the Act of 1978. The Court held that the authority was not entitled to adjudicate upon the entitlement of the wages and could only issue orders for recovery of the admitted wages to be paid to the workers.
In the light of the aforesaid decisions and from the material available on the record, the Court finds that in the instant case there is a valid dispute as to whether the action of the employers in laying off its workers was valid or not. The validity and legality of the lay off cannot be adjudicated by an authority under the Act of 1978, inasmuch as the Court is of the opinion that such dispute which involves questions both of facts and of law cannot be appreciated nor can be adjudicated in proceedings under Section 3 of the Act of 1978. The Supreme Court in the case of Modi Industries (supra) has clearly held so.
The question whether permission is required under the Industrial Disputes Act (Central) or whether permission is not required under the U.P. Industrial Disputes Act or whether the Central Act would prevail or whether the State Act would prevail are questions of law which are required to be adjudicated. It is not sufficient for the respondents to contend that the action of the respondents was ex facie illegal and, therefore, they are entitled for full wages. Quite apart from the aforesaid, a strong plea had been raised by the learned counsel for the petitioner that lay off does not amount to wages and, therefore, could not be recovered under the Act of 1978. In this regard, the learned counsel placed reliance upon a decision of this Court in M/s Kwality Moters and Components P. Ltd. Vs. Dy. Labour Commissioner, Meerut and another, 2003 (96) FLR 923 in which lay off compensation was sought to be recovered under Section 3 of the Act of 1978. The Court after considering the decisions of the Supreme Court came to the conclusion that lay off compensation was not "wages" within the meaning of Payment of Wages Act and, therefore, could not be recovered under the Act of 1978.
The contention of the petitioner that the decision of the Supreme Court in case of Straw Board Manufacturing (supra) the Industrial Disputes Act (Central) would prevail over the provisions of the U.P. Industrial Disputes Act cannot be accepted in the light of the decision of the Supreme Court in the case of Engineering Kamgar Union Vs. M/s Electro Steels Castings Ltd., AIR 2004 SC 2401 wherein the Supreme Court held that if there is a conflict between the Central Act and the State Act and in view of the Presidential assent given to the State Act, the U.P. Industrial Disputes Act would prevail over the Central Act.
In view of the aforesaid, the Court is of the opinion that the authority under the Act of 1978 travelled beyond its jurisdiction in adjudicating the dispute with regard to the validity of the lay off in proceedings under Section 3 of the Act of 1978. Such disputed questions could not be adjudicated in these proceedings. Consequently, the order for recovery of wages under Section 3 of the Act of 1978 cannot be sustained and are quashed.
All the writ petitions are allowed.
The learned counsel for the workers contended that they have not been paid the lay off compensation nor has the dispute being referred by the State Government for adjudication under Section 4K of the U.P. Industrial Disputes Act. In this regard, the Court finds that relevant details are lacking. Consequently, no specific directions can be issued. The Court however, observes that in the event, the workers apply for lay off compensation before the appropriate authority, the same shall be considered and adjudicated by the said authority at the earliest. In so far as the validity of the lay off is concerned, it would be open to the workers to move an appropriate application before the Conciliation Officer for conciliation of their dispute and in the alternative for reference of that dispute to an appropriate Labour Court or Tribunal for adjudication.
Date:20.3.2013 Bhaskar (Tarun Agarwala, J.)