Authority under the Payment of Wages Act, 1936

The Jurisdictional Contours of the Authority under the Payment of Wages Act, 1936 in India: A Juridical Analysis

Introduction

The Payment of Wages Act, 1936 (hereinafter "PWA, 1936" or "the Act") stands as a cornerstone of labour welfare legislation in India, primarily aimed at ensuring the timely payment of wages to employed persons and protecting them from arbitrary or unauthorized deductions. Central to the enforcement of this Act is the "Authority" appointed under Section 15, vested with the power to hear and decide claims arising out of deductions from wages or delays in wage payments. This article seeks to provide a comprehensive analysis of the scope, powers, and limitations of this Authority. Drawing extensively upon statutory provisions and judicial pronouncements from Indian courts, including the Supreme Court and various High Courts, this paper will delineate the precise jurisdictional boundaries within which the Authority operates, the types of claims it can entertain, and the matters that fall outside its purview. Understanding these contours is crucial for employers, employees, legal practitioners, and adjudicatory bodies to ensure the effective and rightful application of this vital piece of socio-economic legislation.

Statutory Framework: The Payment of Wages Act, 1936

The PWA, 1936 was enacted with the specific objective of regulating the payment of wages to certain classes of employed persons. Its provisions are designed to mitigate the hardship caused by irregular payment or unjustified deductions by employers.

Objectives of the Act

The primary objectives of the PWA, 1936 are twofold: (i) to ensure that wages payable to employees covered by the Act are disbursed by employers within the prescribed time limit, and (ii) to ensure that employees receive their wages in full, without any deductions other than those expressly authorized by the Act.[1]

Definition of "Wages" under Section 2(vi)

The term "wages" is central to the applicability of the Act. Section 2(vi) of the PWA, 1936 defines "wages" as all remuneration (whether by way of salary, allowances, or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment. It includes, inter alia, any remuneration payable under any award or settlement between the parties or order of a court; any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; and any sum payable to such person by reason of the termination of his employment. However, it explicitly excludes certain items such as the value of house accommodation, contribution to pension or provident fund, travelling allowance, or gratuity payable otherwise than under an award or settlement specifically making it payable (except as provided in sub-clause (d) regarding sums due on termination).

The Supreme Court in Divisional Engineer, G.I.P Railway v. Mahadeo Raghoo And Another[2] clarified that House Rent Allowance (HRA) qualifies as "wages" only if the conditions for its admissibility (e.g., not being offered government quarters) are met. If an employee refuses such accommodation, the entitlement ceases, and HRA no longer forms part of wages. Similarly, in Bala Subrahmanya Rajaram v. B.C. Patil And Others,[3] the Supreme Court held that bonus awarded by an Industrial Court is not "wages" under Section 2(vi) unless it is remuneration payable on the fulfilment of the terms of the contract of employment. Conversely, in Purshottam H. Judye And Others v. V.B Potdar,[4] the Apex Court ruled that gratuity payable under an industrial award falls within the definition of "wages" under Section 2(vi)(d) and is recoverable through the Authority.

The principle that in-kind benefits are generally excluded unless specifically notified was reinforced in Manganese Ore (India) Ltd. v. Chandi Lal Saha And Others,[5] which, while dealing with the Minimum Wages Act, 1948, emphasized that benefits like concessional grain supply cannot be deducted from minimum wages unless explicitly authorized, highlighting the cash-centric nature of wage payments under labour laws unless specified otherwise.

Appointment and Powers of the Authority under Section 15

Section 15(1) of the PWA, 1936 empowers the appropriate Government to appoint an Authority to hear and decide all claims arising out of deductions from wages, or delay in payment of wages, of persons employed or paid in a specified area. This Authority is typically a Commissioner for Workmen's Compensation or other officers with judicial experience.[6]

Under Section 15(2), an employed person, or any legal practitioner or official of a registered trade union authorized by him, or an Inspector under the Act, or any other person acting with the permission of the Authority, can apply to the Authority for a direction under sub-section (3) when deductions are made contrary to the Act or when wage payments are delayed.[7]

Section 15(3) empowers the Authority, after hearing the applicant and the employer and conducting such further inquiry as necessary, to direct the refund of the amount deducted, or the payment of the delayed wages, together with such compensation as the Authority may think fit (not exceeding ten times the amount deducted and not exceeding twenty-five rupees in case of delayed wages, though these monetary limits have been subject to amendment).[8]

Section 18 of the Act vests the Authority with certain powers of a civil court under the Code of Civil Procedure, 1908, for the purpose of taking evidence, enforcing the attendance of witnesses, and compelling the production of documents.[9]

Bar of Suits (Section 22)

Section 22 of the PWA, 1936 ousts the jurisdiction of civil courts to entertain any suit for the recovery of wages or any deduction from wages if the sum claimed could have been recovered by an application under Section 15, or forms the subject of a pending application or a direction already made under that section. This makes the Authority the exclusive forum for such specific claims, subject to the right of appeal under Section 17.[10]

Jurisdictional Ambit of the Authority

The jurisdiction of the Authority under the PWA, 1936 is special and limited. It is primarily confined to adjudicating claims arising from (a) deductions made from wages contrary to the provisions of the Act, and (b) delay in the payment of wages.[11]

Core Jurisdiction: Adjudicating Claims for Wrongful Deductions and Delayed Wages

The Supreme Court in Payment of Wages Inspector, Ujjain v. Surajmal Mehta, cited in Jharia Fire Bricks & Pottery Works (P) Ltd. v. Sub-Divisional Magistrate, Dhanbad[12] and P. Manohar Reddy v. Appellate Authority,[13] clarified that the Authority's jurisdiction under Section 15(2) is triggered only when "contrary to the provisions of this Act" any deduction has been made or any payment of wages has been delayed. These are the governing words defining the two classes of cases the Authority can entertain.

Incidental Matters

While the core jurisdiction is specific, the Authority is empowered to decide certain matters incidental to the main claims. As outlined in Singh Engineering Works Pvt. Ltd. v. Kandhai,[14] these incidental matters include:

  • Determining the terms of the contract of employment: To ascertain the wages due, the Authority may need to interpret the terms of the contract between the employer and employee. The Supreme Court in Shri Ambica Mills Co. Ltd. v. Shri S.B Bhatt And Another[15] affirmed that the Authority has jurisdiction to decide which contract or award governs the payment of wages when parties set up rival contracts. This involves construing the plain terms of agreements without imposing unnecessary limitations. This principle was also discussed in Maruti Mahipati Mullick v. Polson Limited.[16]
  • Ascertaining actual wages: The Authority can decide what the actual wages of an employee are. However, this does not extend to determining "potential wages" or what an employee *should* have been paid if, for instance, they had been promoted or placed in a higher scale. This distinction was highlighted in Payment Of Wages Inspector M.B. Government v. Bramhodatta Bagrodia,[17] referencing the Supreme Court's view in a case involving an employee claiming entitlement to a higher pay scale (likely referring to the principles in A.V.D'Costa, Divisional Engineer, G.I.P Railway v. B. C. Patel And Another[18]).
  • Existence of employer-employee relationship: The Authority can decide the preliminary question of whether an employer-employee relationship existed between the parties.[19]
  • Limitation: Deciding whether an application under Section 15(2) is time-barred and whether there is sufficient cause for condoning delay.[20]

Limitations on the Authority's Jurisdiction

Despite its powers to decide incidental questions, the jurisdiction of the Payment of Wages Authority is circumscribed and does not extend to adjudicating complex disputes that fall outside the direct scope of illegal deductions or delayed wages.

No Power to Adjudicate on Legality of Termination/Dismissal

A significant limitation is that the Authority cannot decide whether the termination or dismissal of an employee is lawful or unlawful. If the termination itself is disputed, the claim for wages for the period post-termination, which hinges on the validity of the termination, is generally outside its scope. This was clearly held by a Full Bench of the Bombay High Court in Vishwanath Tukaram v. General Manager, Central Railway,[21] and reiterated in Singh Engineering Works Pvt. Ltd. v. Kandhai.[22] Such disputes typically fall under the Industrial Disputes Act, 1947.

No Power to Decide "Potential Wages" or Claims for Promotion/Upgradation

As discussed earlier, the Authority's role is to ensure payment of wages contractually due, not to determine what wages an employee *ought* to have received based on claims for promotion, upgradation, or re-classification. In Payment Of Wages Inspector M.B. Government v. Bramhodatta Bagrodia,[23] it was noted that the Supreme Court held the Authority has no jurisdiction to direct an employer to pay higher wages after finding an employee should have been placed on a different wage scheme. The grievance that juniors were promoted while the claimant was not, leading to a claim for wages at the higher scale, was deemed outside the PWA's scope in A. Rahim Hajubhai Shaukh v. Shiraj Kasim Nadar.[24]

Complex Questions of Law and Fact

The summary procedure envisaged under the PWA, 1936 may not be suitable for resolving complicated questions of law and fact. In D.P Kelkar v. Ambadas Keshav Bajaj,[25] the Bombay High Court observed that where a dispute involves controversial and complicated questions requiring prolonged inquiry, the Act does not intend for such questions to be tried by the Authority. The Authority has discretion in such cases to leave parties to determine the claim through normal civil procedure. This view received imprimatur from the Supreme Court in Payment of Wages Inspector v. B.E.S & I. Co. (AIR 1969 SC 590).[26] Similarly, in P. Manohar Reddy v. Appellate Authority,[27] it was noted that complex questions regarding applicability of provisos to Section 25-FF of the Industrial Disputes Act, 1947, might be beyond the limited jurisdiction of the Authority.

Claims Barred by Other Legal Principles

The Authority cannot entertain claims that are otherwise barred by established legal principles. For instance, in Union Of India v. Punnilal And Others,[28] the Supreme Court held that where a civil court had granted a declaration for promotion but no relief for back wages was sought, a subsequent claim for back wages before the PWA Authority was barred by Order 2 Rule 2 of the Code of Civil Procedure. The Authority was found to have no inherent jurisdiction in such a matter.

Interference with Disciplinary Proceedings

The PWA Authority does not have jurisdiction to interfere with orders passed in disciplinary proceedings by a competent authority. In Lal Chand Godara v. General Manager, Haryana Roadways, Sirsa,[29] the Punjab & Haryana High Court, following Supreme Court precedent (State of Punjab v. Karam Singh), held that the Authority cannot go into the legality of orders passed by a disciplinary authority, such as withholding increments, unless such orders have been set aside in a proper forum.

Distinction from Jurisdiction under Industrial Disputes Act, 1947

It is important to distinguish the PWA Authority's jurisdiction from that of Labour Courts or Industrial Tribunals under the Industrial Disputes Act, 1947 (ID Act). For example, Section 33-C(2) of the ID Act allows a workman to apply to the Labour Court for computation of money due under an award, settlement, or a pre-existing right. The Supreme Court in State Bank Of India v. Ram Chandra Dubey And Others[30] clarified that Section 33-C(2) is in the nature of an execution proceeding for pre-existing rights and cannot be used to adjudicate the basis of the claim itself if it is disputed, nor can it imply rights (like back wages) not explicitly granted in an award. While both PWA Section 15 and ID Act Section 33-C(2) provide for recovery of dues, their scope and the nature of disputes they can entertain differ significantly.

Procedural Aspects and Nature of the Authority

Summary Procedure

The Authority under the PWA, 1936 is expected to follow a summary procedure to ensure speedy disposal of claims. As observed in D.P Kelkar v. Ambadas Keshav Bajaj,[31] while an opportunity to be heard must be given, a formal hearing or evidence recording akin to civil courts is not always mandated, though this summary nature has limitations when complex issues arise.

Powers of a Civil Court (Section 18)

Section 18 of the PWA, 1936 confers upon the Authority the powers of a civil court under the Code of Civil Procedure, 1908, for specific purposes: taking evidence, enforcing attendance of witnesses, and compelling production of documents. This was noted in the general description of the Act provided in the context of A.V.D' Costa, Divisional Engineer, G.I.P Railway v. B. C. Patel And Another.[32]

Authority as a "Court" for Certain Purposes

The Bombay High Court in Keki Ardeshir Master v. A.G Kotwal[33] and Registrar, High Court, A.S, Bombay v. S.K Irani Advocate And Another[34] held that the Authority under the Payment of Wages Act, exercising judicial powers and subject to the High Court's superintendence under Article 227 of the Constitution, is a "Court" subordinate to the High Court for the purposes of the Contempt of Courts Act.

Locus Standi to File Claims

Section 15(2) broadly defines who can make an application. In Riico v. Authority Under P.W Act, Ajmer & Ors.,[35] the Rajasthan High Court deprecated technical arguments against a Labour Inspector filing a claim, especially in an era of expanding public interest litigation, emphasizing that such officials primarily concerned with labour welfare should not be barred on hyper-technical grounds.

Judicial Review and Appeals

Appeal under Section 17

Section 17 of the PWA, 1936 provides for a limited right of appeal against a direction made by the Authority under Section 15(3) or 15(4). The appeal lies to the District Court. The Supreme Court in Krishan Prasad Gupta v. Controller, Printing & Stationery[36] dealt with the issue of whether appeals pending before the District Judge under Section 17 were liable to be transferred to Administrative Tribunals under Section 29 of the Administrative Tribunals Act, 1985, concluding that the jurisdiction of the District Judge under Section 17 remained undisturbed for employees not covered by the Administrative Tribunals Act, but for those covered, the Tribunal would have jurisdiction.

Writ Jurisdiction of High Courts

Despite the finality attached to the Authority's orders (subject to appeal) and the bar of suits under Section 22, the High Courts can exercise their writ jurisdiction under Articles 226 and 227 of the Constitution of India. This power can be invoked, for instance, if the Authority acts without jurisdiction, exceeds its jurisdiction, or commits an error of law apparent on the face of the record.[37] In S. Jaipal Singh Others v. Authority Under Payment Of Wages Act Others,[38] the Jammu and Kashmir High Court noted that an alternative remedy of appeal is not an absolute bar to invoking writ jurisdiction if the Authority has exceeded its jurisdiction. However, the general principle, as also noted in another judgment involving S. Jaipal Singh Others,[39] is that a writ would not normally lie where an efficacious alternative remedy is available, unless exceptional circumstances exist.

Conclusion

The Authority under the Payment of Wages Act, 1936, plays a crucial role in providing a swift and inexpensive remedy to employees for the recovery of illegally deducted or delayed wages. Its jurisdiction, though special and exclusive for the claims it covers, is carefully circumscribed by the statute and judicial interpretations. The Authority is empowered to decide all matters incidental to such claims, including the interpretation of employment contracts to determine actual wages due. However, it cannot delve into complex adjudications regarding the legality of termination, claims for potential wages or promotions, or interfere with disciplinary proceedings, as these matters are typically reserved for other adjudicatory bodies like Labour Courts or civil courts.

The judicial pronouncements over the decades have consistently sought to maintain a balance, ensuring that the Authority effectively serves its purpose of providing speedy relief for undisputed or easily ascertainable wage claims, while preventing it from overstepping its limited jurisdiction into areas requiring more elaborate adjudication. This delineation ensures that while workers' rights to timely and correct wages are protected, the procedural safeguards and jurisdictional divisions established by the broader legal framework are respected.

References

  1. Payment of Wages Act, 1936, Statement of Objects and Reasons.
  2. Divisional Engineer, G.I.P Railway v. Mahadeo Raghoo And Another (1955 SCC 0 295, Supreme Court Of India, 1955).
  3. Bala Subrahmanya Rajaram v. B.C. Patil And Others (1958 SCC 0 518, Supreme Court Of India, 1958).
  4. Purshottam H. Judye And Others v. V.B Potdar The Authority Appointed Under The Payment Of Wages Act And Another (1966 AIR SC 856, Supreme Court Of India, 1965).
  5. Manganese Ore (India) Ltd. v. Chandi Lal Saha And Others (1991 SCC SUPP 2 465, Supreme Court Of India, 1990).
  6. Payment of Wages Act, 1936, Section 15(1).
  7. Payment of Wages Act, 1936, Section 15(2). See also A.V.D' Costa, Divisional Engineer, G.I.P Railway v. B. C. Patel And Another (Supreme Court Of India, 1955) (Reference Material 8).
  8. Payment of Wages Act, 1936, Section 15(3).
  9. Payment of Wages Act, 1936, Section 18. See also A.V.D' Costa, Divisional Engineer, G.I.P Railway v. B. C. Patel And Another (Supreme Court Of India, 1955) (Reference Material 8).
  10. Payment of Wages Act, 1936, Section 22. See also A.V.D' Costa, Divisional Engineer, G.I.P Railway v. B. C. Patel And Another (Supreme Court Of India, 1955) (Reference Material 8).
  11. Singh Engineering Works Pvt. Ltd. v. Kandhai (Allahabad High Court, 1975) (Reference Material 7).
  12. Jharia Fire Bricks & Pottery Works (P) Ltd. And Another v. Sub-Divisional Magistrate, Dhanbad And Others (Patna High Court, 1989) (Reference Material 13).
  13. P. Manohar Reddy v. Appellate Authority Under Section 53 Of The A.P. Shops And Establishments Act And Assistant Commissioner Of Labour And Others (Andhra Pradesh High Court, 2007) (Reference Material 15).
  14. Singh Engineering Works Pvt. Ltd. v. Kandhai (Allahabad High Court, 1975) (Reference Material 7).
  15. Shri Ambica Mills Co. Ltd. v. Shri S.B Bhatt And Another (1961 AIR SC 0 970, Supreme Court Of India, 1960) (Reference Material 5).
  16. Maruti Mahipati Mullick v. Polson Limited (Bombay High Court, 1969) (Reference Material 14).
  17. Payment Of Wages Inspector M.B. Government v. Bramhodatta Bagrodia (Madhya Pradesh High Court, 1955) (Reference Material 9).
  18. A.V.D'Costa, Divisional Engineer, G.I.P Railway v. B. C. Patel And Another (1955 SCC 0 295, Supreme Court Of India, 1955) – Note: This is the same case as ref 2, but the principle regarding potential wages is often associated with the D'Costa line of cases. The snippet for Bramhodatta Bagrodia refers to a Supreme Court decision clarifying the Authority's limits on determining potential wages.
  19. Singh Engineering Works Pvt. Ltd. v. Kandhai (Allahabad High Court, 1975) (Reference Material 7).
  20. Ibid.
  21. Viswanath Tukaram v. General Manager, Central Railway And Others (1957 SCC ONLINE BOM 88, Bombay High Court, 1957) (Reference Material 17).
  22. Singh Engineering Works Pvt. Ltd. v. Kandhai (Allahabad High Court, 1975) (Reference Material 7).
  23. Payment Of Wages Inspector M.B. Government v. Bramhodatta Bagrodia (Madhya Pradesh High Court, 1955) (Reference Material 9).
  24. A. Rahim Hajubhai Shaukh v. Shiraj Kasim Nadar (Bombay High Court, 1968) (Reference Material 11).
  25. D.P Kelkar v. Ambadas Keshav Bajaj (Bombay High Court, 1970) (Reference Material 10).
  26. Ibid., citing Payment of Wages Inspector v. B.E.S & I. Co. [1969] A.I.R S.C 590.
  27. P. Manohar Reddy v. Appellate Authority Under Section 53 Of The A.P. Shops And Establishments Act And Assistant Commissioner Of Labour And Others (Andhra Pradesh High Court, 2007) (Reference Material 15).
  28. Union Of India v. Punnilal And Others (1996 SCC 11 112, Supreme Court Of India, 1996) (Reference Material 16).
  29. Lal Chand Godara v. General Manager, Haryana Roadways, Sirsa, And Others (Punjab & Haryana High Court, 2006) (Reference Material 22).
  30. State Bank Of India v. Ram Chandra Dubey And Others (2001 SCC 1 73, Supreme Court Of India, 2000) (Reference Material 2).
  31. D.P Kelkar v. Ambadas Keshav Bajaj (Bombay High Court, 1970) (Reference Material 10).
  32. A.V.D' Costa, Divisional Engineer, G.I.P Railway v. B. C. Patel And Another (Supreme Court Of India, 1955) (Reference Material 8, general description of PWA sections).
  33. Keki Ardeshir Master v. A.G Kotwal (Bombay High Court, 1962) (Reference Material 24).
  34. Registrar, High Court, A.S, Bombay v. S.K Irani Advocate And Another (1962 SCC ONLINE BOM 1, Bombay High Court, 1962) (Reference Material 19).
  35. Riico v. Authority Under P.W Act, Ajmer & Ors. (Rajasthan High Court, 1988) (Reference Material 12).
  36. Krishan Prasad Gupta v. Controller, Printing & Stationery (1996 SCC 1 69, Supreme Court Of India, 1995) (Reference Material 18).
  37. Shri Ambica Mills Co. Ltd. v. Shri S.B Bhatt And Another (1961 AIR SC 0 970, Supreme Court Of India, 1960) (Reference Material 5), discussing Nagendra Nath Bora v. Commissioner of Hills Division on correction of errors of law.
  38. S. Jaipal Singh Others v. Authority Under Payment Of Wages Act Others (Jammu and Kashmir High Court, 2010) (Reference Material 21).
  39. S. Jaipal Singh Others v. Authority Under Payment Of Wages Act Others (Jammu and Kashmir High Court, 2010) (Reference Material 23, citing authorities on alternative remedy).