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Manager, Codialabail Press By Rev. Fr. B.S D'Souza, v. K. Monappa And Another,
Factual and Procedural Background
The petitioner, manager of a printing press, challenged a direction made against him under Section 15 of the Payment of Wages Act for the payment of retrenchment compensation to former employees (respondents). The respondents claimed they were retrenched and thus entitled to compensation under Section 25-F of the Industrial Disputes Act, which they argued was recoverable as wages under the Payment of Wages Act. The petitioner denied retrenchment, asserting the respondents were retired upon attaining superannuation age. The District Magistrate ruled in favor of the respondents, and the District Court dismissed the petitioner's appeals under Section 17 of the Payment of Wages Act. The petitioner contested the jurisdiction of Section 15 to entertain claims for retrenchment compensation where retrenchment was denied by the employer.
Legal Issues Presented
- Whether claims for retrenchment compensation under Section 25-F of the Industrial Disputes Act are recoverable as wages under Section 15 of the Payment of Wages Act.
- Whether the authority under Section 15 of the Payment of Wages Act has jurisdiction to adjudicate disputes as to whether termination of employment amounted to retrenchment or retirement.
- The scope and limits of the adjudicatory powers of authorities under Section 15 of the Payment of Wages Act in cases involving disputed termination of employment.
- Whether the revisional jurisdiction of the Court under Section 115 of the Code of Civil Procedure extends to orders made by the District Court under Section 17 of the Payment of Wages Act.
Arguments of the Parties
Petitioner's Arguments
- Section 15 of the Payment of Wages Act only applies to claims for payment of wages that are due but subjected to illegitimate deductions or delayed payments, not to claims for retrenchment compensation.
- The respondents were retired on attaining superannuation, not retrenched, and thus are not entitled to retrenchment compensation under Section 25-F of the Industrial Disputes Act.
- The authority under Section 15 cannot adjudicate on whether the termination was retrenchment or retirement, as it involves complex questions outside the scope of summary adjudication under the Act.
- The revisional powers of the Court under Section 115 of the Code of Civil Procedure extend to orders made by the District Court under Section 17 of the Payment of Wages Act.
Respondents' Arguments
- They were retrenched and entitled to compensation under Section 25-F of the Industrial Disputes Act.
- Retrenchment compensation qualifies as wages under Section 2(vi)(d) of the Payment of Wages Act and thus recoverable under Section 15 of that Act.
- The authority under Section 15 has jurisdiction to decide claims for retrenchment compensation as part of wages due.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| A.R Sarin v. B.C Patil, AIR 1951 Bom 423 | Denial of employment fact does not oust jurisdiction under Section 15; however, jurisdiction does not extend to deciding whether contract terminated or subsisting. | Supported the view that Section 15 jurisdiction is limited and does not cover adjudication on termination legality. |
| K.P Mushran v. B.C Patil, AIR 1952 Bom 235 | Clarification that authority under Section 15 cannot decide on wrongful dismissal claims. | Reinforced limits on jurisdiction of authorities under Section 15 regarding termination disputes. |
| Anthony Sabastin Almeda v. R.M Taylor, AIR 1956 Bom 737 | Authority under Payment of Wages Act should not decide complicated questions like existence and validity of contracts if relationship basis is disputed. | Distinguished cases where contract is admitted but terms disputed from cases involving dispute on contract existence. |
| C.S Lal v. Shaikh Badshah, AIR 1955 Bom 75 | Question of employment status after provisional service choice revocation can be decided under Section 15. | Presented a different view but was later clarified by Full Bench decision. |
| Viswanath Tukaram v. General Manager, AIR 1953 Bom III | Authority under Payment of Wages Act cannot decide lawfulness of termination but can determine wages and existence of employment. | Authoritative statement on the limits of jurisdiction under Section 15. |
| Shri Ambica Mills Co., Ltd. v. S.B Bhatt, AIR 1961 SC 970 | Disputes about construction of admitted contracts fall within Section 15 jurisdiction; however, jurisdiction should not be unreasonably extended. | Clarified scope of incidental questions under Section 15 and cautioned against overextension of jurisdiction. |
| Kannappa v. Hoe and Co., Madras, 1961-2 Lab LJ 510 (Mad) | Validity of retrenchment or dismissal orders cannot be challenged under Section 15 of the Payment of Wages Act. | Agreed with this limitation on Section 15 jurisdiction. |
| A.D Divekar v. Dinesh Mills Ltd., 1955-2 Lab LJ 501 (Bom) | Compensation under Section 25-F of Industrial Disputes Act is wages under Section 2(vi)(d) of Payment of Wages Act. | Accepted that compensation qualifies as wages but did not address jurisdiction when retrenchment is denied. |
| Elias and Co., Private Ltd. v. Authority under Payment of Wages Act, AIR 1960 Cal 603 | Where retrenchment is admitted, claim under Section 15 is maintainable. | Distinguished from cases where retrenchment is disputed. |
| Union of India v. Babu Ram, AIR 1962 All 52 | Wrongful removal is not justiciable under Payment of Wages Act; damages claim lies elsewhere. | Held that Section 15 does not confer jurisdiction to decide wrongful removal disputes. |
Court's Reasoning and Analysis
The Court analyzed the scope of Section 15 of the Payment of Wages Act, emphasizing that it is designed to regulate claims relating to illegitimate deductions or delay in payment of wages where the existence of the right to wages is clear or indisputable. The Court recognized that retrenchment compensation under Section 25-F of the Industrial Disputes Act qualifies as wages under Section 2(vi)(d) of the Payment of Wages Act. However, the Court held that Section 15 jurisdiction to order payment of such compensation arises only when retrenchment is admitted or indisputable.
Where the employer denies retrenchment and asserts retirement upon superannuation, the foundational dispute as to whether retrenchment occurred cannot be resolved by the summary adjudication process under Section 15. Such disputes involve complex questions about the legality and validity of termination, which fall outside the limited jurisdiction of authorities under the Payment of Wages Act. The Court reasoned that permitting Section 15 authorities to decide on the legality of retirement or dismissal would extend their jurisdiction beyond the intended scope, which is to ensure speedy enforcement of undisputed wage payments.
The Court reviewed relevant precedents, which consistently held that authorities under Section 15 lack jurisdiction to decide on wrongful dismissal or termination disputes. The Court also rejected the petitioner's contention that the revisional jurisdiction under Section 115 of the Code of Civil Procedure does not extend to orders under Section 17 of the Payment of Wages Act, affirming that such orders are revisable.
Applying these principles, the Court concluded that the District Magistrate and District Court erred in ordering payment of retrenchment compensation where retrenchment was disputed and the employer asserted retirement. The Court set aside the impugned orders and dismissed the respondents' applications.
Holding and Implications
The petitions are allowed.
The Court held that Section 15 of the Payment of Wages Act does not confer jurisdiction to adjudicate claims for retrenchment compensation when the employer disputes retrenchment and asserts retirement instead. The authority under Section 15 can only order payment of wages or compensation when the right to such payment is clear or indisputable. Complex disputes regarding the nature and legality of termination fall outside the summary adjudicatory jurisdiction of the Payment of Wages Act.
Accordingly, the orders of the District Magistrate and the District Court directing payment of retrenchment compensation were set aside, and the respondents' claims dismissed. The decision clarifies the limits of the Payment of Wages Act's jurisdiction and underscores that disputes over the validity of termination must be resolved through appropriate legal forums other than the summary proceedings under Section 15. No new precedent beyond the facts of the case was established.
1. The petitioner who is the manager of a printing press, complains against the direction made against him under Section 15 of the Payment of Wages Act, for the payment of retrenchment compensation to his quondam employees, the respondents. The respondents contended that they had been retrenched and that the retrenchment compensation payable under Section 25-F of the Industrial Disputes Act was claimable as wages under the Payment of Wages Act. The petitioner denied the retrenchment and asserted that the respondents were retired from service after they attained the age of superannuation. Functioning under Section 15 of the Payment of Wages Act, the District Magistrate gave the respondent the order they wanted, and the District Court dismissed the petitioner's appeals preferred under Section 17 of the Payment of Wages Act. The first argument presented is that the applications of the employees were not entertainable under Section 15 of the Payment of Wages Act, since according to the petitioner, the only order which may be sought under its provisions is one for the payment of wages, which, though admittedly due, had been subjected to illegitimate deductions or had not been paid. That section, it was submitted, had no application to a claim for retrenchment compensation, where the employer denies the retrenchment. The foundation of the employees' claim is Section 25-F of the Industrial Disputes Act which directs the payment of the compensation specified in it to a retrenched employee. The compensation so payable, it is contended, being wages, as defined by Section 2(vi)(d) of the Payment of Wages Act, is recoverable under Section 15 of that Act. That definition is:—
“2. Definitions.
In this Act, unless there is anything repugnant in the subject or context,—
(vi) ‘Wages’ means 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 at person employed in respect of his employment or of work done in such employment, and includes—
(d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions but does not provide for the time within which the payment is to be made;
2. Section 15 of the Payment of Wages Act under which the respondents made their claim reads:—
“15. Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims.
(1) The State Government may, by notification in the Official Gazette, appoint any Commissioner for Workmen's Compensation or other Officer with experience as a Judge of a Civil Court or as a stipendiary Magistrate to be the authority to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid in that area.
(2) Where contrary to the provisions of this Act any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, such person himself, or any legal practitioner or any official of a registered trade union authorized in writing to act on his behalf, or any Inspector under this Act, or any other person acting with the permission of the authority appointed under sub-section (1), may apply to such authority for a direction under sub-section (3):
Provided that every such application shall be presented within six months from the date on which the deduction from the wages was made or from the date on which the payment of the wages due to be made, as the case may be:
Provided further that any application may be admitted after the said period of six months when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.
(3) When any application under sub-section (2) is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under Section 3, or give them an opportunity of being heard, and, after such further inquiry (if any) as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable tinder this Act, direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding ten rupees in the latter:
3. This section makes it clear that what may be decided under its provisions is a claim for wages improperly deducted or withheld in contravention of the Act. Now, in these cases, the employees contend that the termination of their service amounted to retrenchment within the meaning of that expression occurring in Section 2(00) of the Industrial Disputes Act, entitling them to the payment of the compensation specified in Section 25-F of that Act. If Section 15 confers jurisdiction to investigate the truth or otherwise of the assertion that the employees were retrenched, and, if retrenchment compensation is a wage, an order for its payment could properly be made under the Act if there had been a retrenchment. The first question is whether an enquiry into the question whether there was a retrenchment of the respondents was possible under the Act.
4. The Payment of Wages Act was enacted to regulate the payment of wages to certain classes-of persons employed in an industry. Section 2 contains the definitions. Section 3 makes the employer responsible for the payment of all wages required to be paid under the Act. Section 4 fixes the wage periods. Section 5 specifies the time for payment of wages. Section 6 directs the wages to be paid in current coins or currency notes. Section 7 enumerates the deductions which may be made from wages. Section 8 places limitations on the imposition of fine by an employer on an employee. Section 9 provides for deductions for absence from duty and Section 10 for damage or loss caused by the negligence of an employee. Sections 11, 12 and 13 place limitations on the power on an employer to make deductions under Section 7. Section 14 provides for the appointment of inspectors for the purpose of the Act, and then occur. Section 15 which provides for the decision of claims arising out of deductions from wages or delay in their payment. Section 16 prescribes the procedure in respect of claims by unpaid groups of employees.
5. Section 17 provides for an appeal from a decision under Section 15. Sections 17-A and 19 prescribe the machinery for the recovery of wages ordered to be paid. Section 18 clothes the authority appointed under Section 15 with the powers of a Civil Court for the purpose of his enquiry. Section 20 prescribes penalties for offences under the Act and Section 21 the procedure for the trial of those offences. Section 22 bars the jurisdiction of the Civil Courts in respect of matters regulated by the Act. Section 23 prohibits the employee from contracting out of his rights under the Act. These are the relevant provisions of the Act. Sections 5, 9, 11, 12 and 13 demonstrate that in an enquiry into a complaint under Section 15 what may be investigated is whether the wages were not paid within the time specified in Section 5 or whether the deductions if made from those wages exceed those permitted by Sections 9, 11, 12 and 13.
6. The main purpose of the Payment of Wages Act, as revealed from its provisions, is the prevention of illegitimate deductions from the wages of an employee and the delay in their payment. Under Section 15 of the Act which aims at the accomplishment of that purpose every adjudication necessary for the fulfilment of that objective may prima facie appear permissible. Where, for example, an employer admits that the relationship of employer and employee subsists between him and the applicant, but there is a controversy about the quantum of wages payable by him to the applicant, an enquiry into that question for the purpose of determining the actual amount payable by way of wages on the basis of the admitted terms of employment would, it is reasonable to think, fall within the orbit of an enquiry under Section 15. Other similar incidental questions may also fall within the scope of such enquiry although it would be difficult to make an exhaustive enumeration of the questions which may properly form the subject-matter of such adjudication.
7. But, if an application for wages is resisted on the ground that the appellant is not and was at no time an employee, the jurisdiction to enquire into the truth of the employment would be debatable.
8. The other question — and that is the real question arising in these cases — is what are the disputes arising out of the termination of an admitted employment which may be investigated under the Act. The effect of sub-clause (d) of Section 2(vi) of the Act is that a sum payable in consequence of the termination of the employment of the employee under a law, contract or instrument would be wages for the purpose of the Act. The respondents contend that the compensation claimed by them being a sum payable under a law, namely, the Industrial Disputes Act, falls within the category of wages and could be claimed under the Payment of Wages Act.
9. It seems to me that even if retrenchment compensation payable under Section 25-F of the Industrial Disputes Act can be regarded as wages — and I think it has that character — an order for its payment could be made under Section 15 only when the retrenchment is not disputed or is clearly indisputable. But if the employer who admits the termination of the employment disputes that the termination was by the process of retrenchment, there being no provision in the Payment of Wages Act for an adjudication on that matter, the foundation for a complaint under Section 15 that Wages though due were withheld would be unavailable, since the purpose of the Act is to enforce payment of wages in a case where the facts admitted by the employer clearly establish the liability to pay the wages and it is complained that there is non-payment or incomplete payment. The limited purpose of the Payment of Wages Act, in my opinion, is the speedy and summary enforcement of the payment of wages and the whole of those wages when they become due, in cases in which the existence of the right to such wages is reasonably clear.
10. Now, it is clear from Section 2(vi)(d) of the Act that wages claimable under the Payment of Wages Act may fall within five categories. Remuneration claimable under the express or implied terms of the engagement would be the first category; remuneration claimable under any award, settlement or order of a Court would be the next; remuneration to which the employee is entitled when he does additional work or during the holidays or leave periods is the third; additional remuneration claimable under the terms of employment by whatever name it is called is the fourth; compensation payable under a law, contract or instrument when the employment is terminated, is the fifth, into the last category fall moneys payable under a statutory scheme.
11. It will thus be seen from the various sub-clauses of Section 2(vi) that what would be wages for the purpose of the Payment of Wages 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 provision or scheme. So, it becomes plain that in cases in which there is no dispute that remuneration or additional remuneration such as bonus is payable in respect of work done by the employee, it will be within the power of the authority functioning under Section 15 of the Payment of Wages Act, when a complaint is made that such remuneration has not been paid at all or has not been fully paid, to decide that complaint and to direct the payment of unpaid remuneration.
12. Similarly, it has the power to make an order for such payment when there is no dispute that the wages claimed are payable under an award or a decision of a Court or under a scheme framed under an existing statutory provision. Cases in which it is not disputed that the termination of the employment is such as to entitle the employee to compensation under the terms of the engagement or under any statutory provision likewise can present no difficulty. All these cases fall within one or the other of the five sub-clauses of clause (vi) of Section 2 of the Payment of Wages Act.
13. Cases which, however, present difficulty are, firstly, those already discussed in which the employer disputes that the applicant is not an employes or where, as in the present case, the aplication for payment rests on sub-clause (d) of clause (vi) of Section 2 and the employer asserts that though he terminated the services of the employee, the termination was such as not to entitle the employee to any compensation. An equally difficult situation might arise in a case where the employee claims to be continuing in employment and claims wages for that reason, and, the employer asserts that he is no longer an employee and that the employment was terminated either by dismissal or by resignation.
14. There may be cases in which although the employer might repudiate on other grounds the claim of the employee for wages, it would be unreasonable to deny power under Section 15 to make an investigation into incidental and ancillary questions an adjudication upon which may be inevitable and indispensable. Such cases are, for example, those in which the employment is admitted but its terms are not. In such cases, it may be possible to contend that it is the plain duty of the authority to ascertain those terms and that it would be unreasonable for the employer to insist that such ascertainment should be made only in a suit. Likewise, when a claim rests upon an award or a settlement or a decision of a Court, and the award or settlement or the Court's decision is produced by the employee and if the decision of the Court or the award is on its face conclusive of the matter and binding on the employer, the employer can have no answer to that claim.
15. The scheme and purpose of the Payment of Wages Act to my mind make it clear that claims which may be decided under S. 15 of that are only those in which the foundation of the claim is beyond controversy or is indisputable or reasonably clear although there may be a dispute about its measure or magnitude. But if the basis of the claim as distinguished from its amplitude is itself impugned, and the dispute is about the foundational facts constituting such basis which cannot be satisfactorily resolved in a summary enquiry, the controversy falls outside the orbit of the enquiry authorised by the Act. The formulation of a general rule defining the ambit of the jurisdiction which may be exercised under the Act being impracticable, each case, in my view, must be decided on its own facts and the nature of the controversy between the parties.
16. This view which I take on the construction of Section 15 has the support of judicial authority. In A.R Sarin v. B.C Patil, AIR 1951 Bom 423 the High Court of Bombay was inclined to take the view that the mere denial of the factum of employment did not oust the jurisdiction of the authority functioning under S. 15 of the Payment of Wages Act, and, that, if the employer denied or disputed the fact that the applicant was employed by him, it would be for the authority to decide that question, and to proceed to decide the further question as to what are the terms of the contract. But, their Lordships of that High Court proceeded to observe that the jurisdiction conferred by Section 15, did not extend to the determination of the question whether the contract had terminated as alleged by the employer or was still subsisting as alleged by the applicant. A clarification of this enunciation was made by that High Court in K.P Mushran v. B.C Patil, AIR 1952 Bom 235; Referring to the earlier decision, this is what their Lordships observed;
“It is true that we pointed out in 53 Bom LR 674 at p. 677 : (AIR 1951 Bom 423 at p. 425) that delay in payment of wages can duly mean delay in payment of wages which are admitted. But we have explained later on in the judgment as to what is the meaning of “wages which are admitted”. When an employer refuses to pay wages rightly or wrongly, contending that the respondent is not his employee and that he had dismissed him and therefore nothing is due to him then according to that decision, the Authority has no jurisdiction to determine whether the refusal of the petitioner to pay wages was justified or was valid in law. Therefore, it is only in a case where the employer has put an end to the contract of employment, has dismissed his employee, and the employee is complaining of a wrongful dismissal and claiming damages from his master for wrongful dismissal, that, according to us in that decision, the jurisdiction of the Authority was ousted to determine questions with regard to the wrongful dismissal.”
17. The interpretation of Section 15 of the Payment of Wages Act came up again before that Court in Anthony Sabastin Almeda v. R.M Taylor, AIR 1956 Bom 737, and it was pointed out on that occasion that it could never have been the object of the legislature that the authority under the Payment of Wages Act should try and decide complicated questions which should normally be decided by a Civil Court. Although their Lordships were of the view that the construction of the contract creating the engagement was within the competence of the authority, they proceeded to observe:
“But when the very basis of the relationship is in dispute and in controversy, the legislature did not intend that a Court of summary jurisdiction should decide that important question * * It should also be borne in mind that in this case the employee challenges the factum of the subsequent contract. He also challenges the validity of that contract, assuming that contract v?as arrived at. Therefore, the Authority has been called upon to decide not only the factum of the subsequent contract but also its validity. These are questions which, according to us do not fall within the ambit of the jurisdiction of the Authority.”
18. A somewhat different view had been expressed by the same High Court in C.S Lal v. Shaikh Badshah, (S) AIR 1955 Bom 75 in which the employees of the Railway Department who had provisionally opted for service in Pakistan subsequently revoked their choice and the question was whether they had ceased to be employees and whether they were re-employed after they had made their final decision. The High Court thought that question could be decided under S. 15 of the Act. But a clear pronouncement on the construction of that section was made by a Full Bench of the High Court of Bombay in Viswanath Tukaram v. General Manager, Central Railway, AIR 1953 Bom III, in which it was observed:
“* * the law as to the jurisdiction of the authority under the Payment of Wages Act is fairly well settled. If it is necessary at all, we will reiterate it as briefly as possible. The leading case on the subject is 53 Bom LR 674 : (AIR 1931 Bom 423), where a Division Bench was for the first time called upon to consider the scheme of the Act and the jurisdiction of the Authority under the Act, and in that decision we laid down that the Authority had no jurisdiction to decide whether the services of an employee had been rightly or wrongly terminated or whether the dismissal was lawful or unlawful. We said that such a question would not come within the purview of the special tribunal set up under the Act. Although that was the question that arose for our determination we also made it clear as to what was the nature and ambit of the jurisdiction of the Authority, and in brief what we said was that the primary function of the authority was to determine what the wages of the employee were and whether there had been a delay in payment of those wages or a deduction from those wages, and in order to determine the wages it may be necessary to determine what the terms of the contract were under which the employee was employed and under which he was claiming his wages. It may also be necessary, we pointed out, to decide whether the employee was employed by the employer or not because the question of a contract can only arise provided there was employment. Therefore, in order to determine what the contract was, what the terms of he contract were, what were the wages due under the contract, it might become necessary for the Authority to determine whether in the first place there was an employment or not.”
19. The declaration of the law on the jurisdiction conferred by Section 15 was authoritatively made in the year 1960 by the Supreme Court in Shri Ambica Mills Co., Ltd. v. S.B Bhatt, 1961-1 SCJ 643 : (AIR 1961 SC 970). The employees in that case made an application under the Payment of Wages Act for a direction for the payment of delayed wages. The contract of employment was admitted but there was a dispute as to which of two subsisting contracts governed the employees. The Supreme Court expressed the view that the case was similar to the one in which a contract of employment was admitted but there was a dispute about the construction of its terms. It was pointed out that since a dispute about the construction of an admitted contract was plainly within S. 15 of the Act, a case in which the dispute is as to the applicability of two subsisting contracts, fell equally within that section. The decision of the High Court of Bombay in AIR 1956 Bom 737 was distinguished on the ground that, in that case, the existence of two subsisting contracts was not acquitted. On page 648 (of SCJ): (at pp. 974-975 of AIR), it was observed:
“In dealing with claims arising out of deductions or delay made in payment of wages the authority inevitably would have to consider questions incidental to the said matters. In determining the scope of these incidental questions care must be taken to see that under the guise of deciding incidental matters the limited jurisdiction is not unreasonably or unduly extended. Care must also be taken to see that the scope of these incidental questions is not unduly limited so as to affect or impair the limited jurisdiction conferred on the authority. While considering the question as to what could be reasonably regarded as incidental questions let us revert to the definition of wages prescribed by S. 2(vi). Section 2(vi) as it then stood provided, inter alia that ‘wages’ means all remuneration capable of being expressed in terms of money which would, if the terms of the contract 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, and it includes any bonus or other additional remuneration of the nature aforesaid which would be so payable and any sum payable to such person by reason of the termination of his employment.
It also provided that the word ‘wages’ did not include five kinds of payment specified in clauses (a) to (e). Now, if a claim is made by an employee on the ground of alleged illegal deduction or alleged delay in payment of wages several relevant facts would fall to be considered. Is the applicant an employee of the opponent; and that refers to the subsistence of the relation between the employer and the employee. If the said fact is admitted, then the next question would be: what are the terms of employment? Is there any contract of employment in writing or is the contract oral? If that is not a point of dispute between the parties then it would be necessary to enquire what are the terms of the admitted contract. In some cases a question may arise whether the contract which was subsisting at one time had ceased to subsist and the relationship of employer and employee had come to an end at the relevant period.
In regard to an illegal deduction a question may arise whether the lockout declared by the employer is legal or illegal. In regard to contracts of service sometimes parties may be at variance and may set up rival contracts, and in such a case it may be necessary to enquire which contract was in existence at the relevant time. Some of these questions have in fact been the subject-matter of judicial decisions. (Vide: 53 Bom LR 674 : (AIR 1951 Bom 423); 59 Bom LR 892 : (AIR 1958 Bom III) (FB) and Maharaja Sri Umaid Mills, Ltd. v. Collector of Pali, (1960) 2 Lab LJ 364 (Raj); but we do not propose to consider these possible questions in the present appeal, because, in our opinion, it would be inexpedient to lay down any hard and fast or general rule which would afford a determining test to demarcate the field of incidental facts which can be legitimately considered by the authority and those which cannot be so considered. We propose to confine but decision to the facts in the present case.”
20. It is by the application of these principles that the question arising in these cases should be decided. While the employer in those cases pleads that the terms of the engagement provided for the retirement of the employees on their attaining the age of superannuation, and that they were so retired, the employees, on the contrary, assert that they were not and could not be retired hut were only retrenched. It is thus clear that the issue between the parties is what goes to the root of the matter. If it is true that the employees were retrenched, it follows that they were entitled to compensation under S. 25-F of the Industrial Disputes Act, which, falling as it does, within sub-clause (d) of Section 2(vi) of the Payment of Wages Act, becomes wages, the claim to the payment of which could be decided under S. 15 of that Act. If the employees were not retrenched but were retired, no compensation being claimable under Section 25-F of the Industrial Disputes Act or under any other law, it could not be claimed as wages under the Act.
21. The controversy, therefore, is whether in fact the employees were retrenched. It is admitted that there is no order of retrenchment as such, and that what the employer purported to do, was not to retrench them but to retire them. The employer claims the right to do so and the source of that right, according to him, is the contract creating the engagement. If that claim is well founded, it is obvious that the employees cannot establish retrenchment. The process by which the employees deduced retrenchment was to repudiate the power of the employer to retire them and to urge that in the absence of such power, the termination of their employment amounted in law to retrenchment. But the notice of termination served on the employees was ex facie a notice giving intimation to them that they had been retired and not that they had been retrenched.
22. The foundation of the claim of the employees was that the employer did not have the power to retire them and that they had the right to continue in their posts as long as they wished to remain there. The employer claimed the power to retire them under the terms of engagement. In that situation, it was not possible for the District Magistrate to make an order for the payment of retrenchment compensation unless he found in the first instance that the terms of engagement between the employer and the employee did not clothe the employer with the power to retire his employees at any stage.
23. The impugned orders in these cases also reveal that the question whether the employer had the power to retire the employees on their attaining the age of superannuation was a serious question which could not be satisfactorily decided by a summary adjudication. The employer relied upon two documents. Exhibits R-3 and R-6 which, according to him, incorporate the terms of the engagement between him and the employees. If the employment in, these cases was governed by those terms, it is indisputable that the retirement of the employees when they attained the age of superannuation was permissible and within the power of the employer. The employer contended that the employees made a, declaration in the year 1924 that they would abide by the ‘rules and regulations’ incorporated in Exhibits R-3 and R-6. But the plea of the employees was that the declaration made by them did not relate to those ‘rules and regulations’. The employer's contention was repelled on various grounds: one of them was that the originals of Exhibits R-3 and R-6 were not produced; the other was that the provisions in those rules which did not relate to the age of retirement, were vague; the third was that there were some other rules inconsistent with those appearing in Exhibits R-3 and R-6; the next was that the employer had allowed some of his employees to continue in service even after they reached the age of superannuation. That the employer had also waived his right to retire the employees on their attaining the age of superannuation and that the terms of the engagement on which the employer depended, were by agreement, treated as ineffective, were the other grounds on which the employees succeeded.
24. In my opinion, that kind of difficult enquiry involved in these cases was really outside the scope of the summary adjudication permitted by the Act. In effect, what the employees did when they presented their claim was to question the legality and validity of the order of retirement made by the employer. That challenge was in no manner different from the challenge made by a dismissed employee to the order by which he is dismissed. If it is permissible for an authority functioning under Section 15 of the Payment of Wages Act to adjudicate upon the legality of the retirement of an employee, it should be equally permissible for it to decide under that section the legality of an order of dismissal. It seems to me that neither of the two adjudications is within the domain of that authority whose limited jurisdiction is to direct the payment of wages, the obligation to pay which is reasonably clear.
25. In Kannappa v. Hoe and Co., Madras 1961-2 Lab LJ 510 (Mad) the High Court of Madras found no difficulty in coming to the conclusion that the validity of an order of retrenchment or dismissal cannot be assailed in proceedings under S. 15 of the Payment of Wages Act. With that view, I respectfully agree.
26. Mr. Raghunathan, however, contended that in A.D Divekar v. Dinesh Mills Ltd. 1955-2 Lab LJ 501 (Bom), their Lordships of the High Court of Bombay expressed the view that compensation claimable under S. 25-F of the Industrial Disputes Act was a wage, as defined by sub-clause (d) of Section 2(vi) of that Act. That proposition may be above criticism. But the question really is whether the Tribunal can direct the payment of such compensation even if the employer does not admit that he retrenched his employee but claims to have properly retired or dismissed him.
27. Elias and Co., Private Ltd. v. Authority Appointed under the Payment of Wages Act, AIR 1960 Cal 603, on which Mr. Raghunathan next depended, was a case in which the retrenchment of the employee was admitted and is, therefore, distinguishable.
28. In Union of India v. Babu Ram, AIR 1962 All 52, the employee when he made an application under Section 15 of the Payment of Wages Act had obtained a decree in a suit brought by him for a declaration that his removal from his post was illegal. A Second appeal from that decree was then pending before the High Court. The question requiring investigation was whether the applicant was, when he made his application, still an employee or whether his employment had terminated. Dhavan, J., was of the view that if an employee was removed from service by an order of a competent authority after observing the prescribed procedure, the removal was effective though wrongful and the employee could only claim damages, the Authority having no power to hear the dispute under Section 15 of the Act. Although in one part of his decision, his Lordship thought it immaterial whether the employer alleged that the applicant was never his employee or had ceased to be one as a result of his removal, it is clear that he had no doubt in his mind that a wrongful removal from service was not justiciable under the Payment of Wages Act. It is, however, plain that the decision in that case rested on its own peculiar features. But, I must say, if I may say so with great respect, that I hesitate to subscribe to the proposition enunciated in it that Section 15 of that Act confers jurisdiction to decide whether the relationship of master and servant was created between the employer and the applicant or was subsisting at the relevant point of time.
29. In my opinion, the adjudication into the competence of the employer to retire his employees was, in the cases before me, wholly outside the bounds of the jurisdiction created by Section 15 of the Payment of Wages Act.
30. In the view that I have taken, the impugned orders of the District Court and the Authority from which the appeal was preferred to it are both liable to be set aside.
31. But, Mr. Raghunathan has contended that the revisional power of this Court under Section 115 of the Code of Civil Procedure does not extend to the order made by the District Court in those cases. In support of this argument, reliance was placed on the provisions of S. 17(2) of the Payment of Wages Act which directs that an order made under Section 15 shall be final, Subject to the result of an appeal preferred under S. 17(1).
32. In my opinion, this argument is unacceptable. Since the District Court hearing an appeal under Section 17 from an order under S. 15 is a Court subordinate to this Court, the revisional power of this Court under Section 115 of the Code of Civil Procedure, clearly extends to its decisions and to the proceedings before it. The District Court functioning under Section 17 is not a persona designata, but a Court, and, so long as that Court is subordinate to this Court, the proceedings before it are clearly revisable under S. 115 of the Code of Civil Procedure. Nor is there anything in sub-section (2) of S. 17 which precludes the exercise of such revisional jurisdiction. All that sub-section in effect states is that the order made by the appellate Court specified in Section 17 shall not be subjected to any further appeal, and does not place the orders of the appellate Court beyond the ambit of the jurisdiction of this Court. The finality provided for by that sub-section does not make the order of the appellate Court impervious to such revisional jurisdiction.
33. If the orders of the appellate Court in these cases are revisable by this Court, it follows that the correctness of the orders complained against in the appeals, is equally open to scrutiny. That being so, if I can come to the conclusion that the District Court which functioned as an appellate Court in these cases should have set aside the orders against which the appeals were preferred, it is manifest that the appellate Court could not have confirmed the orders appealed against, but, should have vacated them. Those orders, which the appellate Court should have made are what I can and should now make. These revision petitions are, therefore, allowed; the orders of the District Court and of the authority from which the appeals were preferred to it are both set aside. The applications presented by the respondents are dismissed.
34. In the circumstances, there will be no order as to costs.
LF/V.B.B
Petitions allowed.
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