Heard Sri Syed Fahim Ahmed learned counsel for the petitioner, Sri C.K. Rai for the respondent no. 8, Ms. Ghazala Bano Quadri for the respondent no. 9 and learned Standing Counsel on behalf of respondent nos. 1 to 7. No one appeared for the remaining respondent nos. 10 to 102 during the course of hearing.
Heard learned counsels for the parties at length and perused the record.
Two above noted writ petitions are directed against the recovery orders issued by the Additional Labour Commissioner, Ghaziabad/Prescribed Authority under the U.P. Industrial Peace (Timely Payment of Wages) Act, 1978 (hereinafter referred to as "the Timely Payment of Wages Act" or "the Act, 1978"). Main contest is in writ petition filed by M/s Modi Rubber Ltd., the employer, as the connected writ petition is by the workmen who stood in support of the employer/management. The petitioner hereinafter, therefore, refers to the employer/management only.
The recovery orders are challenged on the ground that there was a dispute with regard to entitlement of the workmen to wages for different period mentioned therein. It is contended that on receipt of notice from the Presiding Officer, Timely Payment of Wages Act, 1978, a written statement was filed by the employer/petitioner herein. It was submitted therein that the workmen had resorted to illegal strike in the factory w.e.f 7th August, 2001, which had resulted in stoppage of production. The act of illegal strike of the workmen was communicated to the Deputy Labour Commissioner, Meerut from time to time. With the efforts of management and few workers' representative, a settlement dated 14.1.2002 had been arrived, which was registered by the Assistant Labour Commissioner, Meerut vide registration certificate dated 30th January, 2002.
It was, inter alia, agreed in the settlement in Clause 7 that the management would strive to restart the production after arranging required funds and raw materials and other means w.e.f. 1st February, 2002 and the workers would not demand wages till when the production was not commenced or till the production was restarted. It was submitted that the fact of illegal strike and that the management had not been able to restart the production operations which continued to remain disrupted for the act of the workers was well within the knowledge of the Labour authorities. The settlement dated 14.1.2002 registered under Section 6-B of the U.P. Industrial Disputes Act readwith Rule 27 of the U.P. Industrial Disputes Rules, 1947 was binding upon the workmen having been signed by the office bearers of the then existing registered union. Another settlement had been arrived on 19.11.2003 and the workmen had admitted that they were not entitled to wages on the principle of "no work no pay" for the period of disruption of production in the factory.
It was further contended that the said dispute was beyond the purview of the Assistant Labour Commissioner who was manning the office of the Prescribed Authority, Timely Payment of Wages Act. The claim of the workers was required to be rejected outrightly.
Learned counsel for the petitioner placing the abovenoted averments in the written statement vehemently submits that enquiry under Section 3 of the Timely Payment of Wages Act, 1978 is limited in its scope. The power of the Prescribed Authority under the said Act extends only to find out whether the workmen had put in work for the period of demand of wages as per terms of their employment and they were entitled to wages for no default on their part or it has wrongly been withheld by the employer. The Prescribed Authority has no jurisdiction to act as an adjudicator if entitlement of the workmen to the wages is disputed. In the instant case, the liability of the employers to pay wages to the workmen was seriously disputed, it was, thus, incumbent on the Prescribed Authority to relegate the workmen to the labour court/industrial tribunal. The disposal of claim made under the provisions of Act, 1978 involved complicated questions of law and a decision on the binding effect of the settlement dated 14.1.2002 duly registered under Section 6-B of the U.P. Industrial Disputes Act, 1947 was required to be taken before issuance of the recovery certificates. The Prescribed Authority was also required to see the effect of the settlement dated 19.11.2003 signed between the workmen and management of the employer.
It is contended that out of total 1147 workmen on roll, 1103 workmen had individually signed the settlement. For the claim of remaining handful of workmen, the settlement with the majority workers was binding on them. The adjudication on the question of binding effect of settlement was beyond the jurisdiction of the Prescribed Authority under the Timely Payment of Wages Act, 1978. In its limited jurisdiction, the claim of the workmen could not have been decided in a summary manner.
It was further contended that in view of the complete disruption of activities in Modipuram Plant since August, 2001, the company's network had been eroded. Hence the company had filed a reference with the Board for Industrial and Financial Reconstruction (in short "BIFR") on 4.2.2004 under Section 15(I) of Sick Industrial Companies (Special Provisions) Act, 1985. The reference had been registered as Case No. 153 of 2004. This fact was duly brought to the notice of the Prescribed Authority to assert that no recovery proceedings could not initiated against the company during the pendency of the reference before BIFR and hence the proceedings were required to be dropped.
It was contended that the workmen had not earned a single penny as the production activities in the factory of the employer had completely remained suspended since 7th August, 2001, subsequent to illegal strike by the workmen in the plant, their demand is, therefore, illegal.
As far as the bonus is concerned, it was contended that the workmen could not claim the minimum wages under the provision of Payment of Bonus Act, 1965 as their claim was not based on any existing right. There was, thus, no question of issuance of recovery for bonus for the period from 1st April, 2000 to 31st March, 2004.
It is further contended that during pendency of the present writ petition, another settlement dated 2nd September, 2007 was arrived whereunder remaining workmen had settled their dispute and pursuant thereto only handful of workmen (120 or 74) remained who are contesting their claim in the present writ petition.
It is, thus, vehemently contended that only the admitted wages can be recovered under Section 3 of the Timely Payment of Wages Act, 1978. The Assistant Labour Commissioner had no jurisdiction to adjudicate the issue.
Further, no inspection was done. The Labour authorities were well aware of the factum of strike resorted by the workmen and the intimations sent by the management were lying in their office. The record lying in the office of the labour authorities were required to be examined by the Prescribed Authority/Assistant Labour Commissioner before returning the finding that there was no illegal strike and that the production had commenced and the claimants were actually workmen of the company.
The submission is that the object of Timely Payment of Wages Act, 1978 is to maintain industrial peace and harmony. This Act is not only for the benefit of workmen. The denial of entitlement of workmen to wages by the employer took away the jurisdiction of the Assistant Labour Commissioner to adjudicate the issue. Even if, the claim of the workmen under Section 3 of the Timely Payment of Wages Act, 1978 was turned down, they were not remedyless as they would have remedy to approach the labour court/industrial tribunal. The binding effect of the settlement had been completely ignored by the Assistant Labour Commissioner.
Lastly, it is contended that Timely Payment of Wages Act, 1978 has been framed for bigger establishment and it could not have been invoked in a small establishment like that of the petitioner. It does not provide remedy for payment of wages, evidence cannot be appreciated to decide the dispute. Enquiry under Section 3 is very limited being a summary enquiry in case of default in timely payment of wages in a case where wages is "admittedly due", the Prescribed Authority could not have issued recovery by conducting a trial to adjudicate on the disputed claim.
Sri C.K. Rai, learned Advocate for respondent no. 8 in rebuttal submits that the management had adopted unfair method and tactics to succumb the workmen to the wishes of the establishment. The act of management in stopping production had adversely affected the interest of the workmen. A false compromise against the interest of the workmen was fraudulently finalized on 3.8.2001 without any discussion with the workmen or their representation in the establishment. The settlement dated 14.1.2002 is an illegal settlement causing serious prejudice to the workmen who were total 1500 in number, without any discussion with their authorized representatives. The workmen and their representatives challenged the very said settlement dated 14.1.2002 by filing Writ Petition No. 7421 of 2002, wherein this Court in the judgment and order dated 20.3.2002 observed that the petitioners workmen therein who were not signatories to the settlement which had been registered under Section 6-B(3) of the U.P. Industrial Disputes Act, 1947, the terms of the settlement will not be binding upon them in accordance with Section 6-B(1) of the Industrial Disputes Act which provides that such a compromise is binding only on the parties to that compromise.
With the said observations, the petitioners therein were turned away to challenge the settlement entered into between the employer and other workmen who had no objection to the said compromise.
The submission is that in view of the aforesaid observations of this Court, it is not open for the petitioner to state that the settlement dated 14.1.2002 was binding on the workmen who had not signed and were agitating their claim of wages through respondent no. 8 namely the Secretary, Lal Hind Rubber Mazdoor Union, a registered union of M/s Modi Rubber Limited, Modipuram, Meerut.
It is contended that the recovery certificates issued by the Deputy Labour Commissioner in the month of April, 2002 could not be executed on account of the ex-parte interim order passed by this Court in a Writ Petition No. 36426 of 2002, wherein the employers in order to avoid the payment of wages to the workmen had set up the bank which had filed the said writ petition without impleading the workmen and their representatives. The impleadment application filed by the workmen was rejected on the ground that the workmen had remedy to approach the appropriate forum. Thereafter, several applications were filed by the workmen before the Prescribed Authority under the Timely Payment of Wages Act, 1978 and recovery certificates had been issued thereafter.
The aforesaid interim order was later on modified to the extent that the same will not come in the way regarding payment of wages to the workmen. The respondent no. 8 filed an application on behalf of the workmen for releasing the wages found due towards the workmen. An amount of Rs. 55,50,000/- deposited before the Deputy Labour Commissioner was released by him and recovery certificates had been issued for the rest of the wages of the workmen who were on the roll of the establishment under the Timely Payment of Wages Act, 1978.
It is contended that the petitioners itself was responsible for the illegal closure of the factory/plant. The workmen or lack of electricity was not the ground of closure of the factory/plant. It was contended that even if a company is declared sick, the wages of its workmen could not be withheld and they are entitled to the wages regularly till employer-employee relationship exist. This is not the case of the employer that they had terminated the services of the agitating workmen or the employer-employee relationship had severed for any other reason.
The assertion that the workmen had resorted to illegal strike was made only to deny wages due to the workmen. The agitating workmen were demanding wages to which they were legally entitled to. The denial on the part of the employer was illegal as there was no illegal strike. The closure or illegal strike as set up by the employer in the written statement to deny wages to the workmen cannot be attributed to the workmen. The decision of the Prescribed Authority to grant wages to the workmen for the period of their entitlement, therefore, cannot be said to suffer from any error of law.
It is pertinent to note that respondent no. 10 namely Modi Rubber Shramik Sangh, Modi Puram, Meerut filed a counter affidavit which had been controverted by the petitioner in rejoinder with the assertion that the said Union had been derecognized by the Registrar, Trade Union, U.P., Kanpur by order dated 29.6.2007 by cancellation of its registration under Section 10 of the Trade Unions Act, if, therefore, has no locus to file counter affidavit.
In the said rejoinder affidavit, it is further contended that during pendency of the proceeding before this Court with the Corporation of the financial institutions, a new Management had come into existence which purchased the entire share holding of the financial institutions and Sri V.K. Modi became the Managing Director being the majority share holder in the company. The new management gave offer to all the workmen of Modi Rubber Ltd. who became jobless from August, 2001 due to halt of the manufacturing activities to regain their job as the factory was to resume its manufacturing activities under in the rehabilitation scheme. Accordingly, a registered settlement dated 2.9.2007 was drawn in the presence of the Deputy Labour Commissioner, Meerut who had signed the same alongwith representatives of the workers. The copy of the settlement has been appended as R.A.-'4' to the rejoinder affidavit dated 27.3.2008.
Under the said settlement the workmen had agreed that from 7.8.2001 till the date manufacturing activities remained suspended, they would not be paid wages and in lieu thereof, the Management had agreed to pay Rs. 1 lakh to each workmen as compensation. The above settlement had been implemented and first installment of Rs. 15,000/- had been paid individually to 1100 workmen.
Out of total 1269 workmen on the roll in August, 2001, 1100 workmen had signed the settlement after receipt of the first installment of Rs. 15,000/- each. The remaining 169 workmen either were not available or had left the unit to their native place or were not interest in the work at all. The management by letter dated 13.9.2007 as also the workers by writing letter dated 28.9.2007 had requested the Deputy Labour Commissioner, Meerut for withdrawal of recovery certificates in view of the aforesaid registered settlement. The Deputy Labour Commissioner, Meerut had, however, replied that the matter was still being proceeded.
A perusal of the reply of the Deputy Labour Commissioner dated 15.2.2008 indicates that he opined that the recovery with respect to the workmen who did not agree to the settlement had to be separated from those who had signed the settlement.
The contention of learned Advocate for the petitioner in rejoinder is that the workers cannot demand wages for the period for which the manufacturing activities were put to halt in preparation of rehabilitation scheme by BIFR. Only remedy before the workmen was to lay their claim before BIFR. The recovery orders had become redundant due to subsequent developments narrated in the rejoinder affidavit.
The workmen are bound by the settlement dated 14.1.2002 and another settlement dated 2.9.2007 which was arrived after the recovery orders were passed.
Learned counsel for the petitioner, thus, vehemently argued that the manufacturing activities of the unit was put to halt on account of illegal strike of the workers.
As noted above, the respondent nos. 11 to 102 were impleaded in the present writ petition on an impleadment application filed by them but no one appeared on their behalf to contest the matter.
A supplementary affidavit dated 28.5.2018 had been filed by the petitioner to bring on record the registered settlement dated 2.9.2007 arrived at with 1100 workmen with the details of name and address of the workmen who had signed the same. With reference to the list of 169 workmen who did not sign the settlement, it is contended that their numbers has been reduced to 74 as others had settled and accepted payments in terms of the aforesaid settlement, rest of 717 workmen had either resigned, retired or had died and had settled their full and final account with the company during the period from 2001 to 2008, their list is also appended with the supplementary affidavit. The photo copy of the registration certificate of the settlement dated 2.9.2007 has also been brought on record.
It is stated therein that two unions namely Modi Rubber Shramik Sangh and Modi Tyre Karamchari Union had been de-registered by the Registrar, Trade Unions, U.P., Kanpur in the year 2007 and 2000; respectively.
So far as respondent no. 8 namely Lal Hind Rubber Mazdoor Union is concerned, it is averred that the said union has no concern with the affairs of the company and has wrongly been arrayed as party. As the workers personally are not impleaded and none of them came forward to show any interest to contest the writ petition, their claim cannot be considered.
Counter affidavit to the said supplementary affidavit had been filed on behalf of both respondent nos. 8 and 9.
In the supplementary counter affidavit of respondent no. 8, the registration certificate under the Trade Unions Act issued by the Registrar of Trade Unions, U.P., Kanpur has been appended to assert that the respondent no. 8 is a registered Trade Union and its certificate is still valid. It is contended that the petitioner/M/s Modi Rubber Ltd. with a new name M/s Modi Tyre Company Pvt. Ltd., Modipuram, Meerut had started production activity. The respondent no. 8 on behalf of 121 workmen had submitted an application on 9.9.2009 before the Deputy Labour Commissioner, Meerut Region, Meerut to direct the employer to give joining to the workmen without any condition and pay their balance wages in full. A letter was, accordingly, issued to the employer by the Deputy Labour Commissioner asking them to appear before him on 14.9.2009. The employer, however, did not appear before the Deputy Labour Commissioner.
In rejoinder to the supplementary counter affidavit filed on behalf of respondent no. 8, the assertions in paragraph '3' thereof that Lal Hind Rubber Mazdoor Union, Meerut is a registered union under the Trade Unions Act and its certificate is valid till date, is not denied. Only this much is submitted that respondent no. 8/Union is being managed by handful of workmen for litigating and raising unnecessary demands as the majority of workmen had settled their dispute with the employer. It is further contended that 94% of the workmen had joined their duties and started contributing in the production, rest who did not turn up were asked in writing by sending letters to come and join the duties, but to no avail. Other two Unions set by the employer had caused serious injury to the workmen and were de-registered accordingly, vide order dated 29.6.2007 and 25.1.2000.
In the counter affidavit filed on behalf of respondent no. 9, though it is contended that the management had filed fabricated documents with wrong details of employees but nothing could be said on the stand of the petitioner and respondent no. 8 that respondent no. 9 namely the Modi Tyre Karamchari Union had been de-registered by the Registrar, Trade Union in the year 2007.
Another supplementary counter affidavit has been filed on behalf of respondent no. 9 to assert that respondent no. 8 had no concern with the affairs of the workmen and is not functional. It is then contended that the deponent union itself have no concern with the present case as this matter relates to 93 employees only.
In view of the said stand of the respondent no. 9, other submissions of learned Advocate appearing on its behalf are not required to be considered.
As noted above, learned counsel for the petitioner had insisted on the fact that manufacturing activities of the Union was put to halt on account of illegal strike observed by the workmen w.e.f. 7.8.2001. On the said submission, time was granted to the counsel for the petitioner to bring on record the documents filed by the petitioner before the Prescribed Authority in this proceeding under Section 3 of the Timely Payment of Wages Act, 1978 .
Pursuant thereto, a supplementary affidavit dated 26.2.2019 has been filed, few averments of which are relevant to be noted hereunder:-
Paragraph '6' of the said affidavit states that the tyre industry was passing through a very low phase and demand of tyres had declined from the company due to various competitors, who came up in the market example MRF, JK, Appollo etc. Only way for the petitioner company to survive was to reduce its expenses. The management, therefore, issued an office order dated 4.8.2001 proposing that the employees would get wages/monthly salary (including all allowances) linked to the production of truck tyres actually achived i.e. proportionate to the production. The said decision was put on the notice board of the Union on 7.8.2001 in the first shift (6.00 A.M. to 2.00 P.M.). Since thereafter, the workers had stopped working on the machines and came out and stopped production in the second shift. An appeal was made by the management on the notice board requesting workmen to start production. It is contended that another notice was pasted on 7.8.2001 on the notice board at about 11:45 P.M. The management sent letters to the Deputy Labour Commissioner intimating him about the illegal strike resorted by the workmen on 8.8.2001 and 9.8.2001. On 11.8.2001 and 13.8.2001 letters were written to the District Magistrate informing him about continuation of illegal strike. On 13.8.2001, a meeting was conducted with the workmen and 22 workmen were chosen to represent all the workmen to enter into a settlement with the management. The decision of the workmen to remain on strike was intimated to the Labour Commissioner, Kanpur on 14.8.2001. On 13.8.2001, a settlement was arrived between the company and the workmen which was modified on 15.8.2001. On 16.8.2001, a notice was put on the notice board informing workmen about settlement dated 15.8.2001 and requesting them to join duties. The workmen continued on strike and intimation was given to the district and Labour authorities. Various notices were given to the workmen to resume the work intimating them that if they continue on strike, disciplinary action will be taken against them coupled with deduction of wages on the principle of "no work no pay". With the efforts of BIFR and the promoters manufacturing operations in the unit at Modipuram had commenced on 13.6.2009. Second installment of Rs. 35,000/- under the settlement dated 2.9.2007 was paid to the workers in the year 2009 and third and final installment of Rs. 50,000/- was paid in August, 2001 to all those workers who had signed the aforesaid settlement.
The stand of respondent no. 8 in counter to the said affidavit is that the workers did not observe strike rather the employer had stopped production in the company w.e.f. 8.8.2001. The alleged notices dated 7.8.2001 are illegal act of employer in order to avoid its liability towards workmen. The documents appended with the supplementary affidavit dated 26.2.2019 with false facts had neither been filed nor pleaded in the proceedings before the Prescribed Authority under the Timely Payment of Wages Act, 1978 and as such cannot be considered.
Sri C.K. Rai, learned counsel, however, has put in appearance on behalf of respondent no. 7/Lal Hind Rubber Mazdoor Union, Delhi, Ms. Ghazala Bano Quadri is representing respondent no. 8/Modi Tyre Karamchari Union, Ghaziabad and Sri Syed Fahim Ahmed, learned Advocate has appeared for the respondent no. 9/Modi Rubber Ltd., in the connected petition.
In this factual background, the following questions arise for consideration:-
(i) whether the Additional Labour Commissioner/Prescribed Authority under the Timely Payment of Wages Act, 1978 had exceeded in its jurisdiction in issuing the recovery certificates while exercising power under Section 3 of the said Act.
(ii) whether there was an illegal strike or valid closure of the factory and the denial on the part of the employer to pay wages to the workmen since 7.8.2001 was "default" on its part of the employer within the meaning of the Act, 1978 or there was a valid dispute with regard to entitlement of the workmen to wages which required adjudication by an industrial adjudicator.
(iii) whether the settlement dated 14.1.2002 was binding on all the workmen or the union.
Answer to these questions take the Court to first examine the scope of the Timely Payment of Wages Act, 1978 itself.
As the title of the Act itself states, it has been enacted to secure industrial peace by ensuring timely payment of wages to the workmen. The preamble of the Act states that it is an Act to provide for "in the interests of maintenance of industrial peace, for timely payment of wages in bigger industrial establishments and for matters connected therein".
The statement of objects and reasons of the Act states that delay in payment of wages to workmen lead to simmering discontent among them. Sometimes a grave threat to law and order is also posed on this account. The provisions of the Payment of wages Act, 1936 have been found to be inadequate to ensure timely payment of wages. The incidence of disturbance of industrial peace being greater in comparatively bigger establishments, it was considered necessary to provide that if the wage bill in default exceeds Rs. 50,000/-, the amount should be recoverable as arrears of land revenue. Further, in order to curb the tendency of the employees to keep large amounts of wages in arrears, it was also necessary to make it a penal offence to be in default of a wage bill exceeding rupees one lakh.
Section 2(a) of the Act defines "Industrial establishment" to mean any factory, workshop or other establishment in which articles are produced, processed, adopted or manufactured with a view to their use, transport or sale.
"Wages bill" is defined by Section 2(d) of the Act to mean "the total amount of wages payable by an industrial establishment to its workmen".
Section 2(g) provides that "default" of payment of wages would be deemed when an occupier of an industrial establishment has not been paid wages within time as provided in Section 5 of the Payment of Wages Act, 1936.
A reading of the provisions of this Section clearly reveals that this Act has been enacted to supplement the Payment of Wages Act in the limited area viz whether the establishment as stated above; (i) produces, processes, adopts or manufactures some article; (ii) whether there is default in the wage bill of the entire establishment; (iii) whether such wage bill exceeds Rs. 50,000/-; (iv) the time period as provided under Section 5 of the Payment of Wages Act has not been adhered to by the occupier of the such establishment.
The object of the Act as stated is to prevent industrial unrest and disturbance of industrial peace on account of the default on the part of the establishment in making payment of wages to their workforce as a whole.
On comparison of the provisions of Timely Payment of Wages Act, 1978 and Payment of Wages Act, 1936, it has been observed by the Apex Court in Modi Industries Ltd. vs. State Of U.P1 that the former does not supplant or substitute the latter but supplements the said Act in the limited area as noted above. It was observed therein that the Timely Payment of Wages Act, 1978 was enacted as many establishments had a tendency to delay the payment of wages to their workmen and were playing with the lives of the workmen with impunity. This led to a widespread disturbance of industrial peace in the State. Hence the legislature felt the need for enacting a statute to ensure timely payment of wages to the workmen of industrial establishment by making summary enquiry by the Labour Commissioner contemplated under Section 3 of the Act, 1978.
As to the scope of enquiry made by the Labour Commissioner under Section 3 of the Timely Payment of Wages Act, 1978, Section 3(1) states that where the Labour Commissioner is satisfied that the occupier of an industrial establishment is in default of payment of wages and that the wage bill in respect of which such occupier is in default exceeds fifty thousand rupees, he may, without prejudice to the provisions of Sections 5 and 6, forward to the Collector, a certificate under his signature specifying the amount of wages due from the industrial establishment concerned.
Section 3(2) of the Act states that upon receipt of the said certificate, the Collector shall proceed to realise, the amount specified therein from the occupier as arrears of land revenue. Section 3(4) of the Act provides where the amount so realised falls short of the wages bill in respect of which the occupier has been in default, the Labour Commissioner may arrange for disbursement of such proportion or respective proportions of the wages due to various categories of workmen as he may think fit.
Section 4 of the Act specifies the power of Labour Commissioner for the purpose of ascertaining the wage bill of establishment in respect of which default has been committed. It states that the Labour Commissioner shall have the power of a Civil Court while trying a suit under the Court of Civil Procedure, 1908 in respect of enforcing the attendance of witness and examining them on oath compelling production of documents. Penalties for default of a wage bill exceeding rupees one lakh is provided under Section 5 of the Act. The Court therein has been given power to impose a sentence of imprisonment for a term of less than three months which may extend to three years and fine.
As has been held in Modi Industries (supra) looking to the object and purpose of the Act, the nature of enquiry by the Labour Commissioner contemplated under Section 3 of the Act is very limited, the scope of which is to see whether the establishment has made a default in Timely Payment of Wages to all its workmen as a whole and there is no dispute as to the entitlement of the workmen to wages. In its limited power, the Labour Commissioner shall have to find out whether the workmen who have put in the work were paid their wages as per the terms of their employment and within time stipulated by such terms. If the Labour Commissioner is satisfied that the workmen though have worked and are, therefore, entitled to their wages, but are not paid the same within time, he has further to satisfy himself that the arrears of wages so due exceed to Rs. 50,000/-. It is only if he is satisfied on both counts that he can issue the certificate in question. It is held therein that under the Act, the Labour Commissioner acts to assist the workmen to recover their wages which are admittedly due to them but are withheld 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. (emphasis supplied). When the liability to pay the wages is under dispute which involves investigation of the questions of fact and/or law, he has to refer the parties to the appropriate forum as it is not the function of the Labour Commissioner to adjudicate the same.
The power conferred on the Labour Commissioner under Section 3 of the Act is to prevent apprehended or present breach of industrial peace. This is why the enquiry contemplated is of a summary nature. Moreover, the exercise of power by the Labour Commissioner under the Act, 1978 does not prevent either party from approaching the regular forum for the redressal of its grievances.
In Hotel and Restaurant Karamchari Sangh vs. Gulmarg Hotel and others2 the Apex Court has emphasized that the enquiry by the Labour Commissioner contemplated under Section 3 of the Act, 1978 is of a very limited nature to find out whether the workmen have not been paid wages for no default on their part.
Relevant paragraphs '7' and '8' of Modi Industries (supra) are quoted hereunder:-
7. It will thus be clear from the preamble, the statement of objects and reasons and the provisions of the Act that, firstly the Act has been placed on the statute book to ensure timely payment of wages by the bigger establishments, the incidence of disturbance of industrial peace being greater in such establishments on account of the default in payment of wages. Secondly, the Act deals with defaults in payment of the wage- bill of all the workmen in the establishment. It is not meant to provide a remedy for the default in payment of wages of individual workmen. That can be taken care of by the provisions of the Wages Act which provisions are found inadequate to ensure timely payment of wages of the whole complement of workmen in an establishment. Thirdly, it is not in respect of the default in payment of every wage-bill; but only if a wage-bill exceeds Rs.50,000/- the Labour Commissioner can be approached under the Act for redressal of the grievance. Fourthly, the Act is not applicable to all establishments but only those establishments which produce, process, adopt or manufacture some articles. It will, therefore, be evident that the Act does not supplant or substitute the Wages Act but supplements the said Act, in the limited area, viz., where the establishment, as stated above, (i) produces, processes, adopts or manufactures some articles, (ii) where there is a default in the wage-bill of the entire such establishment and (iii) where such wage-bill exceeds Rs.50,000/-. The object of the Act as stated above is not so much to secure payment of wages to individual workmen but to prevent industrial unrest and disturbance of industrial peace on account of the default on the part of the establishment in making payment of wages to their workforce as a whole. It appears that many establishments had a tendency to delay the payment of wages to their workmen and were playing with the lives of the workmen with impunity. This naturally led to a widespread disturbance of industrial peace in the State. Hence the legislature felt the need for enacting the present statute. This being the case, the inquiry by the Labour Commissioner contemplated under Section 3 of the Act is of a very limited nature, viz., whether the establishment has made a default in timely payment of wages to its workmen as a whole when there is no dispute that the workmen are entitled to them.
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 were entitled to their wages, had not been 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 withheld 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 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."
Having gone through the provisions of the Act and the legal position clarified by the Apex Court regarding the scope of enquiry, it is to be noted that the Labour Commissioner acting as a quasi judicial authority while exercising power under Section 3 of the Act, 1978, is required to give hearing to the occupier of the industrial establishment and consider the pleas raised by the occupier in defence to find out whether there is any default within the meaning of the Act. Further, the Labour Commissioner is required to give reasons while issuing the certificate of recovery on the facts of each case. It is, thus, clear that even in its limited scope of summary enquiry, the Labour Commissioner can examine whether the denial of wages to the workmen on the part of the employer is genuine and the dispute raised before him requires adjudication by an industrial adjudicator. It is not so that even when the employer's denial is simply to get away from the rigors of the provisions by taking frivolous plea, the Labour Commissioner will wash his hands off and simply relegate the workmen to approach the industrial adjudicator.
The Labour Court is not a mere Recovery Officer. While Recovery Officer acts on a claim which is already crystallised in some order, the Labour Commissioner has to ascertained himself whether and to what extent, the workmen are entitled to the wages and then issue or refuse to issue the certificate. Only then the enquiry by the Labour Commissioner in its quasi-judicial power is complete.
It is observed in Modi Industries Ltd (supra) that Section 3 itself provides that on receipt of the claim or complaint of the workmen, the Labour Commissioner has to satisfy himself that the occupier of the industrial establishment concerned is in default of payment of wages and that the wage bill in respect of which the default is complained of exceeds Rs 50,000/-. He cannot satisfy himself without hearing the occupier of the industrial establishment on the claim made.
The extent of enquiry as is permitted under Section 4, however, is only for the purpose of ascertaining the wage bill in respect of which default has been committed.
It is, thus, clear that on receipt of complaint of the workmen, (i) the Labour Commissioner shall issue notice to the occupier to know whether there is a default on his part, (ii) he will then proceed to examine the plea/defence of the employer and deal with them giving reasons for accepting or not accepting them, (iii) in case, he is satisfied that the occupier is in default and the denial on its part is frivolous, he will proceed to make an enquiry into the extent of default for the purpose of ascertaining the wage bill in respect of which default has been committed, and (iv) the power of Labour Commissioner to enforce attendance of the witness, to examine them on oath or compelling production of documents can be invoked at the second stage.
The Labour Commissioner is not empowered to invoke Section 4 of the Act, 1978 to examine the plea of denial of default on the part of employer as an industrial adjudicator by enforcing attendance of witnesses or production of documents. He, however, is empowered to examine the plea of the employer on the face of it and give reason whether the said plea is frivolous or genuine. In case, it reaches at a conclusion for the reasoning recorded in the order itself that the dispute is genuine and the denial on the part of the employer is not frivolous, he shall relegate the parties to avail remedy before the industrial adjudicator.
The enquiry by the Labour Commissioner in its quasi judicial power to issue certificate of recovery would depend upon the facts of each case.
It is well settled by a series of decision beginning with A.K. Kraipak & Ors. Vs. Union of India & Ors.3 that even administrative decisions must bear reasons for some of them had more wide consequences on the rights of the parties than even the judicial decision. It, therefore, cannot be said that the Labour Commissioner is not required to make any enquiry to give reasons for his orders wherever employer raises a dispute regarding their liability to wages.
A Division Bench of this Court in Silk and Kapda Karmchari Union, Varanasi vs. Deputy Labour Commissioner, Varanasi and others4 has held that looking to the nature of jurisdiction and power exercised by the Labour Commissioner under the 1978, Act, particularly Section 3 thereof, it is clear that it has been entrusted with inherent judicial power of the State to deal with the questions/disputes between the parties, to the extent indicated in the provisions of the said Act and that the Labour Commissioner has to act judiciously whenever this power is invoked.
It would not be out of place to note here that whether the certificate under the Act, 1978 is issued or not, the remedy available to the parties to approach the appropriate forum for the adjudication of their claim is not taken away. They can still approach the regular forum established for the resolution of the dispute.
In the instant case, applications seeking recovery of wages were moved by the then Union M/s Modi Tyre Karmchari Union and few individual workmen for the wages due for the period ranging from November, 2001 to March, 2004. The Act, 1978 has been defined as an emergency provision for exercise of power in a situation where all pre-conditions for invoking such jurisdiction exist. The Court is, therefore, required to look at first as to whether there was such emergent situation which had warranted invocation of the provisions of the statute by the Labour Commissioner.
The answer to this question lies in the facts of the case itself which can be culled out at the risk of repetition to the following pertinent points:-
(i) The employer put notice of the order dated 4.8.2007 on the notice board of the Union in the first shift on 7.8.2001, altering the wage conditions of the workmen unilaterally providing therein that monthly wages shall be linked to the production of truck tyres actually achieved.
(ii) Aggrieved by the alteration of conditions of their employment, agreed by the employer at the time of their engagement, all the workmen had stopped working in the second shift on 7.8.2001 opposing the condition of linking wages to actual production.
(iii) The factory was closed. Both employer and employees started making rival allegations on each other, shifting burden for closure of the factory.
Looking to this emergent situation, the argument of learned counsel for the petitioner that the workmen should have individually availed their remedy under the Payment of Wages Act and their applications could not have entertained by the Labour Commissioner under the Timely Payment of Wages Act, 1978, is not acceptable.
In view of the admitted incidence of disturbance of industrial peace in the establishment and non-payment of wages to all the workmen since 7.8.2001, the Labour Commissioner could not have closed its door to the workmen, relegating them to approach the competent authority under the Payment of Wages Act. The act of entertaining applications under the Timely Payment of Wages Act, 1978 by the Labour Commissioner cannot be said to be wrong invocation of power.
The question is now about the validity of the order passed by the Labour Commissioner. The defence of the employer was that the production was put to halt w.e.f. 7th August, 2001 on account of illegal strike of the workmen in the plant and could not be re-started despite best efforts made by the employer for a long time. One more defence was taken by the employer that the settlement dated 14th January, 2002 had been entered between the management and the workers at large and was registered under Section 6-B of the U.P. Industrial Disputes Act, 1947. The said settlement having been signed by the representatives of the workmen accepting the condition that for the period of strike the workmen will not entitled for wages on the principle of "no work no pay" and that they will demand wages only from the date when production would restart, was binding on all other workmen and the order of recovery is, therefore, illegal.
As noted above, the trigger of the dispute was the notice put by the employer intimating their decision to alter wage conditions of the workmen unilaterally without any consultation with the representatives of the workmen or intervention of the Labour Authorities or Industrial adjudictor. The reason given for the said decision in the order dated 4th August, 2001 is that the company was facing huge losses due to shortage of working capital funds and unable to procure raw materials and other required inputs to manufacture at full capacity and the decision to alter wage conditions of the workmen was taken to reduce their expenses. When this notice was put on the notice board of the Union in the first shift on 7.8.2001, the workmen had came out to raise their demand against such oppression. The factory was closed. The plea of the employer that the workmen were resorting to illegal strike as such the employer was forced to stop production is, thus, not borne out from the record. There is nothing on record which would even indicate that the employer had taken steps to resolve the situation. The terms of settlement dated 14.1.2002 also indicate that there was persistent denial on the part of the employer to pay wages to the workmen for the period of closure of factory on the plea of "no work no pay". The workers were, thus, forced to forgo their claim before joining their duties.
It was not a case of valid "lay off" complying the conditions of the U.P. Industrial Disputes Act, 1947. No material had been brought before the Labour Commissioner to substantiate that the workmen had resorted to illegal strike. The unilateral act of the employer in denying wages to the workmen shifting the burden of closure of factory on them was illegal. As there was no "legal lockout" or "illegal strike", the principle of "no work no pay" would not be applicable.
The facts as borne out from the record are that the industrial peace was disturbed, the then Union of workmen approached the Labour Commissioner, the employer contested denying default on their part on the plea of illegal strike and having reached at the settlement dated 14.1.1992 with the representatives of the workmen. Crucial is the fact that the said settlement had been entered with a handful of workmen who had signed and settled with the employer. Since this settlement was not entered in a conciliation proceeding and was registered under Section 6-B of the Act, 1947, it cannot be said to be binding on those who refused to sign the same. The stand of the employer that the said settlement was signed by the representatives of the then Union is found false from the reading of the settlement itself.
For these reasons, the Labour Commissioner had turned down the defence of the employer and concluded that they were in default.
For ready reference, the reasons assigned in some of the orders of recovery are extracted hereunder:-
"1.i{kksa }kjk nkf[ky fd;s x;s fyf[kr dFku] vkifRr;ksa] mRrj] izfrmRrj ,oa fn;s x;s fooj.kksa ds voyksdu ds mijkUr ;g Li"V gS fd lsok;kstdksa }kjk ekg uoEcj 2001 esa :i;k 1066438 dh /kujkf'k okLrfod :i ls Hkqxrku gsrq n'kkZ;h gSA lsok;kstdksa dk ;g dFku Lohdkj fd;s tkus ;ksX; gS fd fnukad 18-12-2001 ls dkj[kkus esa mRiknu cUn dj fn;s tkus ds dkj.k Jfed osru ikus ds vf/kdkjh ugha gSa D;ksafd lsok;kstdksa }kjk Jfedksa ls dke ysus vFkok u ysus dk iwjk vf/kdkj gS ijUrq ;fn Jfed fcuk fdlh oS/kkfud jksd ds dk;Z ij mifLFkr gksrk gS rks og osru ikus dk vf/kdkjh gksrk gSA vr% Jfedksa ds ekg uoEcj ,oa fnlEcj 2001 ds vftZr osru dh /kujkf'k :i;k 2395296 gksrh gS ftlls eSa lUrq"V gWwA"
"2. mijksDr ls Li"V gqvk fd lsok;kstdksa }kjk vius fyf[kr dFku esa mBkbZ xbZ vkifRr;ksa ds laca/k esa dksbZ fof/kd] ekU; [email protected][k izLrqr ugha fy;s x;s gSa vkSj eSa muds }kjk mBkbZ xbZ vkifRr;ksa esa dksbZ cy ugha ikrk gwWA Jfedx.k nkok izkFkZuk i= es vafdr ekg viSzy 02 ls vxLr 02 rd ds osru ikus ds vf/kdkjh gSA Dyse dh xbZ /kujkf'k ds laca/k esa lsok;kstd i{k }kjk fnukad 03-09-03 dks lquokbZ ds nkSjku :0 1]02]58][email protected]&¼:i;k ,d djksM+ nks yk[k vV~Bkou gtkj ikap lkS vMrhl ek=½ dks mDr vof/k ds fy;s lacaf/kr Jfedks dks ns; /kujkf'k Hkqxrku ;ksX; Lohdkj dh xbZ ftls [email protected] i{k }kjk Hkh Lohdkj fd;k x;k] ftlls eSa larq"V gwWA lkFk gh lkFk ;g Hkh mYys[kuh; gS fd ekg uoEcj 01 ls fnlEcj 01 ds osru ,oa tuojh 02 ls ekpZ 02 rd ds osru ds laca/k esa Jfedksa ls iwoZ esa izkIr izkFkZuk i=ksa ij vko';d lquokbZ ds mijkUr dze'k% :0 23-95 yk[k ,oa 88-90 yk[k ds olwyh izek.k i= iwoZ esa gh fuxZr gks pqds gSA vr,o dksbZ dkj.k ugha gS fd vkxkeh eklksa ds vo'ks"k osru ds laaca/k esa olwyh izek.k i= fuxZr u fd;k tk;ssA lsok;kstdksa }kjk tks Hkh dFku izLrqr fd;s x;s gSa os fof/kd :i ls vuqj{k.hk; ugha gSA"
"3. eSaus bl laca/k esa izLrqr lHkh rF;ksa ij xEHkhjrkiwoZd fopkj fd;kA lsok;kstdkas }kjk eq[;:i ls ;g dgk x;k gS fd izfr"Bku esa vkyksP; vof/k esa dksbZ mRiknu dk;Z ugha gqvk gS vkSj QyLo:i Jfed vkyksP; vof/k ds osru ikus ds vf/kdkjh ugha gSA mudh vksj ls ;g Hkh dgk x;k gS fd izfr"Bku esa 18-12-2001 ds mijkUr dksbZ mRiknu dk;Z ugha gqvk gS vkSj Jfedks ds lkFk ,d le>kSrk 5] 6 o 10 tuojh 2004 dks lEiUu gqvk gS ftlds vuqlkj Jfedksa us Lo;a ;g lgefr nh gS fd mRiknu rFkk vU; izfdz;kvksa ds fu;eu dh frfFk ls dk;Z iqu% izkjEHk gksus dh frfFk rd ds vo'ks"k osru dh ekax ugha dh tk;sxh vkSj blds ,ot esa ,deq'r :0 iPphl gtkj dk Hkqxrku mRiknu izkjEHk gksus ds mijkUr Jfedksa dks fd;k tk;sxkA le>kSrs esa iwoZ ls fuxZr olwyh izek.k i=ksa dks okil fy;s tkus dk Hkh mYys[k gSA ijUrq tks rF; esjs le{k izLrqr gq, gSa mudss voyksdu ls ;g Hkh Li"V gS fd bl le>[email protected] ds vuqlkj u rks :0 iPphl gtkj izfr Jfed dks Hkqxrku gqvk gS vkSj u gh iwoZ ls fuxZr olwyh izek.k i=ksa dks Jfedksa }kjk okil fy;k x;k gSA oLrqr% fLFkfr ;g gS fd fcuk vf/kfu;e ds izkfo/kkuksa dk vuqlj.k fd;s gq, mRiknu izfdz;k dks lsok;kstdksa }kjk cUn dj fn;k x;k] u rks cUnh dh vuqefr yh xbZ gS] u gh NqVuh dh vkSj u gh cSBdh dhA viuh lsok 'krksZ ds vuq:i Jfed vius dk;Z ij mifLFkr gksrs jgs gS vkSj lsok;kstdksa }kjk viuh LosPNk ls mUgsa dk;Z miyC/k ugh adjk;k tk jgk gSA vr% Jfed Li"Vr% vkyksP; vof/k ds osru ikus ds vf/kdkjh ugha gS D;ksafd mfYyf[kr fLFkfr;ksa esa mudk osru Li"Vr;k ns; gSA"
In the light of the aforesaid, in the opinion of the Court, the enquiry conducted by the Labour Commissioner to record reasons while arriving at the conclusion of default on the part of the employer was well within the limited exercise of jurisdiction conferred on him under Section 3 of the Act, 1978. It cannot be said that the Labour Commissioner had acted beyond its jurisdiction in making enquiry to reach at the conclusion of genuineness of denial on the part of the workmen. In absence of legal lockout or illegal strike, the orders of recovery cannot be said to be wrongful exercise of power on the part of the Labour Commissioner.
Learned counsel for the petitioner vehemently argued that another settlement was entered with the workmen in the year 2007 and majority of the workers had accepted the terms of the said settlement over the period of years and their dues had been settled. Only few are left and, therefore, they cannot be allowed to agitate their claim. In view of the said subsequent developments, the recovery certificates cannot be pressed against the employer, even for those workmen, who are still agitating their claim.
This submission is found misconceived.
The reason being that the settlement dated 2.9.2007, which was registered on 27.9.2007 under Section 6-B of the Act, 1947 was signed by only one worker, which is evident from the copy of the settlement appended with the rejoinder affidavit filed on behalf of the respondent nos. 11 to 102.
The copy appended with the rejoinder affidavit of the petitioners dated 27th March, 2008 is not the copy of the settlement rather it is a copy of registration of the same.
It appears that after the said settlement was signed on 2.9.2007, few other workers had also signed the same before presentation of it for registration. The settlement being entered with the individual workmen and registered under Section 6-B(1) of the Act, 1947, is not binding on those who refused to sign the same and as such has no bearing on the claim of the agitating workmen.
For the facts noted above, it is evident that the employer resorted to illegal and unfair means to deny wages to the workmen. The situation had turned so explosive that the State Government had to intervene by issuing notification dated 18.1.2002 for prohibiting strike/lockout in the factory for a period of 180 days. The employer filed a writ petition challenging the said notification with the plea that they had entered into a settlement with the workmen to resolve the situation. While staying the operation and enforcement of the notification dated 18.1.2002, the petitioner employer was directed to run the factory so that the employees who were in service may not suffer.
Despite this direction issued by this Court in the order dated 8.2.2002, admittedly, the factory remained closed. There is not even a whisper that the employer took steps to re-start the factory.
The contention of the employer that the factory could not be re-started due to non-availability of workers is absolutely false and contemptuous.
The proceedings before BIFR has no relevance to the claim of the workmen as they were entitled to wages for the period of wrongful closure of the factory. The employer-employee relationship had not been severed, neither the workmen were retrenched nor terminated. The denial for entitlement of wages to the workmen by the employer is, thus, found a frivolous plea.
Reference to the judgment of the Apex Court in National Engineering Industries Ltd. vs. State of Rajasthan and others5 is, therefore, misplaced. The ratio of paragraph '25' of the said judgment is not attracted in the facts of the present case, inasmuch as, here both the settlements dated 14.1.2002 and 2.9.2007 were entered with a handful of workers and not with the members of unions or majority of workers.
As the petitioner had not been able to establish before the Labour Commissioner that there was a genuine dispute pertaining to strike or validity of settlement, which required adjudication by an industrial adjudicator, there was no question of relegating the workmen to approach the industrial adjudicator.
Moreover, it was open for the Labour Commissioner to examine the reasons for denial and form his opinion with regard to the genuineness of dispute raised and denial of entitlement of the workmen made, by the employer.
At this stage, it would be relevant to note that in Hawkins Cookers Mazdoor Union vs. Conciliation Officer6, it has been held by this Court that the settlement arrived at outside the conciliation proceedings between the management and its workers who may not be members of the union does not curtail the collective bargaining power of the trade union and shall be binding only on those workers who were signatories to the same. The existence of the recognized union in the establishment would not take away the right of a workman or a group of workers enter into any settlement with the management. However, such a settlement would not be binding on those who are not signatories to the same.
This view is settled by a catena of decisions in National Engineering Industries Limited vs. State of Rajasthan and others7(supra), ANZ Grindlays Bank Ltd. vs. Union of India8 and Tata Consulting Engineers and Associates Staff Union Vs. Tata Consulting Engineers and Another9.
In Posysha Industries Company Limited vs. Collector10, it has been held by this Court that where no case has been made out of a valid lay off or lockout or retrenchment or closure, so long as relationship of master and servant between the company and its workmen continues, the employer is bound to pay wages to the workmen. Even if, the employer for some reason does not feel inclined to get actually the work done by the workmen. The employer cannot dispute its liability because of the sickness of the unit or pendency of the scheme for rehabilitation before BIFR. The proceeding for recovery of wages under the Timely Payment of Wages Act, 1978 cannot be interfered on the plea of sickness of the unit.
For the above discussion, it is held that the recovery certificates cannot be held illegal on the aforesaid pleas of the employer. The claim of the workmen in respect of wages was not a disputed claim. The relationship of master and servant continues till employee is retrenched or terminated. The workers who are not signatories to the two settlements dated 14.1.2002 and 2.9.2007 are entitled to pursue the recovery certificates issued in their favour, subject matter of challenge in the present petition. However, those who had signed the aforesaid settlements and settled their dues with the employer have survived with no further claim.
In view of the above, no interference is warranted in the impugned orders of issuance of recovery passed by the Labour Commissioner under Section 3(1) of the U.P. Industrial Peace (Timely Payment of Wages) Act, 1978.
Both the writ petitions are, accordingly, dismissed. There will be no order as to costs.