*THE HON’BLE SRI JUSTICE N.V. RAMANA + W.P.No. 26534 OF 2008 % Dated 30-12-2008 # M/s. Motor Car Beedi Factory, rep. By its Proprietor, S. Lakshmikantha Reddy, S/o S. Narasimha Reddy, aged about 68 years, Khanamanoor village and post, Narva Mandal, Mahaboobnagar District. … Petitioner Vs. $ The Controlling Authority under Payment of Gratuity Act, 1972 and Assistant Commissioenr of labour, Kurnool and others. …. Respondents ! Counsel for the Petitioner: Sri V. Srinivas ^ Counsel for Respondent No.1: GP for Labour Counsel for Respondents 2 to 64: -- <GIST: > HEAD NOTE: ? Cases referred 1. (2005) 6 SCC 499 2. (1985) 3 SCC 267 = AIR 1985 SC 1147 3. 2006(6) ALD 488 THE HON’BLE SRI JUSTICE N.V. RAMANA W.P. No. 26534 of 2008 O r d e r: The petitioner, namely M/s. Motor Car Beedi Factory, represented by its Proprietor, has filed this writ petition, praying for a writ of certiorari or any other appropriate writ, order or orders or directions quashing the orders dated 18.10.2008, passed by the respondent No.1, namely the Controlling Authority under the Payment of Gratuity Act, 1972, in P.G. Nos. 21 to 27, 29 to 46, 48, 49, 51, 54 to 68, 70 to 75, 77, 79 to 81, 83 to 86, 88, 95 and 97 to 99 of 2007. The petitioner states that the factory is engaged in the manufacture of beedis, and that it came into existence about four decades back. It is registered with the Central Excise Department and is also covered by the Provident Fund Act. The petitioner states that the factory engaged nearly 32 home workers and it was regularly paying central excise duty and contributing to the provident fund. That it maintained the books of accounts to show the purchase of raw materials, expenses and personal ledgers, till it was permanently closed down in the year 2005 under intimation to the Central Excise Department and Provident Fund Department. The petitioner states that respondent Nos. 2 to 64 herein never worked in the factory. However, they along with 78 other persons filed cases before respondent No.1 claiming gratuity on the ground that they were in the employment of the petitioner-factory since many years. The petitioner contested the said cases inter alia taking a stand that the said persons never worked in the factory, and there is no relationship of employer-employee between them. Before respondent No.1, on behalf of the claimants, one witness was examined and Exs. A1 to A3 were filed, while on behalf of the petitioner, the petitioner deposed as M.W.1, and marked Exs. B1 to B15. However, the petitioner states that respondent No.1 without deciding the issue relating to relationship of the said persons with the petitioner, passed order dated 24.04.2008, awarding gratuity to all the 141 claimants. Questioning the said order, the petitioner states that the factory filed writ petitions in W.P. No. 13206 of 2008 and batch, and this Court by order dated 08.07.2008, allowed the writ petitions, and while setting aside the order impugned therein, remanded the matter to respondent No.1, for consideration and disposal of the matter afresh in accordance with law. On remand, the petitioner states that the claimants did not adduce any further evidence before respondent No.1. Exs. A1 and A2, the petitioner states are the legal notice issued by the claimants and the reply notice issued by the petitioner. While Ex. A3, is a letter dated 16.04.2005, alleged to have emanated from the Office of the Assistant Commissioner of Labour, Kurnool, and addressed to the President, Kurnool Beedi Workers Union, wherein it is stated that the Assistant Labour Officer, Kurnool-II Circle visited the factory of the petitioner on 17.09.2004 and found that about 81 persons were on the rolls, and that out of the said 81 persons, 76 were physically present on that day and the remaining five were not present. Relying on Ex. A3, it is the case of the petitioner that respondent No.1, by his orders dated 18.10.2008, allowed the claim of respondent Nos. 2 to 64, while he rejected the claim of the remaining claimants. Questioning the said order, on several grounds, the petitioner filed the present writ petition, praying for the relief, as stated in the introductory paragraph of this order. The learned counsel for the petitioner submitted that the impugned order passed by respondent No.1 is perverse and patently erroneous, in that respondent No.1 relying on Ex. A3, which is an unproved document, has passed the impugned order, allowing the claim of respondent Nos. 2 to 64. Since Ex. A3 is an unproved document, its contents could not have been looked into by respondent No.3, much less passed the impugned order relying on the same. He submitted that even though the petitioner has an alternative remedy by way of appeal under the Payment of Gratuity Act, but the said remedy is available to the petitioner only subject to the condition of the petitioner depositing the entire amount of Rs.10,00,000/- awarded by respondent No.1, which is very onerous and burdensome. He submitted that since the impugned order is perverse and patently erroneous and goes to the very root of the jurisdiction, the alternative appeal remedy available to the petitioner cannot be said to be an effective and efficacious remedy, and if the petitioner is directed to avail the alternative remedy, it would not only be a case of abuse of process of law, but also a case of causing palpable injustice to the petitioner. In support of his argument that despite availability of alternative remedy under a statute, a writ petition would lie, if the petitioner shows that there is something which goes to the root of the jurisdiction and would cause palpable injustice to him, if he is directed to avail the alternative remedy of appeal provided under the statute, he placed reliance on the judgment of the apex Court in State of H.P. v. Gujarat Ambuja Cement Ltd[1]. Having heard the learned counsel for the petitioner and having perused the impugned order, the only question, in the facts and circumstances of the case, that arises for consideration is – Whether the petitioner can be allowed to maintain the writ petition by bypassing the alternative remedy of appeal available to him under the statute? Generally speaking, every statutory scheme contains a system of/hierarchical remedies by way of appeal, second appeal, revision etc. against an order passed by the lowest public authority in the administrative hierarchy, who under the statute, is invested with the power of passing orders/s affecting the legal rights, duties or liberties of any person. Under the system of hierarchical remedies, the aggrieved party can prefer appeal/revision to a superior public authority against the decision of a lower public authority, and upon such appeal/revision being preferred, the superior public authority shall reconsider the decision appealed/challenged in revision, on its merits, and either alter/modify/set aside/confirm the order passed by the lower public authority. Since the statutory remedies, provide correction/rectification either in part or in whole of the orders passed by the lower public authorities, the writ Court normally refuses to grant any prerogative order, when such statutory remedies are provided under a statute, to an aggrieved person against the order/s passed by a lower public authority. In this context a reference be made to the conclusion arrived at by the Law Commission in its Consultation Paper No.126[2], as quoted by P.P. Craig, in his book titled “Administrative Law”[3], which reads as follows: The Courts have been mindful not to usurp Parliament/Legislature’s choice where it has established a special statutory mechanism to adjudicate on a particular topic. The assumption that litigants must use available statutory machinery has also been influenced by the courts’ desire to control the caseload on judicial review. Specialized statutory appeal mechanisms may, in addition, be better suited to resolving complex issues of fact, and possess expertise in the relevant area. However, as state by the Law Commission, there may well be advantages in determining the effect of alternative remedies at the permission stage. None can dispute the fact that Article 226 of the Constitution of India, confers on all the High Courts very wide power in the matter of issuing prerogative writs. This remedy of writ is absolutely a discretionary remedy, and the High Courts can refuse to exercise their discretion and grant any writ if it is satisfied that the aggrieved party has adequate and suitable remedy by way of hierarchy of appeals provided under the statute. The apex Court has carved out several exceptions for grant of writs by invoking the doctrine of exhaustion of statutory remedies. It held that even if there existed adequate alternative statutory remedies, writ petition can be entertained, if the party invoking the extraordinary jurisdiction, had demonstrated any one or more of these – That there has been a breach of principles of natural justice or procedure required for the decision has not been adopted, seeks enforcement of/complains of infringement of fundamental rights, where the proceedings taken or orders passed are wholly without jurisdiction or ultra vires or the vires of the Act is challenged or where the proceedings itself are an abuse of process of law. The above being the law governing the field relating to entertaining of a writ petition against the order/s of a lower public authority despite availability of alternative remedies under the statute, it may be noticed whether the petitioner, in the facts and circumstances, can be allowed to bypass the remedy of appeal provided to him against the impugned order and maintain this writ petition. Admittedly, as against the order impugned in the writ petition, passed by the Controlling Authority under Section 7(4) of the Payment of Gratuity Act, 1972, the petitioner has a remedy of appeal under Section 7(7) to the appropriate Government. The reasons, which according to the petitioner, justify him to bypass the remedy of appeal against the impugned order passed by the Controlling Authority and prefer the writ petition, are that the Controlling Authority for passing the impugned order, which directed him to pay gratuity of Rs. 10,00,000/- to respondent Nos. 2 to 64, has merely relied on Ex. A3, which is an unproved document, and therefore, the order passed by the Controlling Authority, on the face of it, is illegal and perverse and goes to the very root of the jurisdiction of the Controlling Authority, resulting in abuse of process of law. He submitted that if the petitioner desires to prefer statutory appeal against the impugned order passed by the Controlling Authority, he has to invariably deposit Rs.10,00,000/-, which is onerous and burdensome, and the impugned order passed by the Controlling Authority, being a perverse order, and deposit of amount directed to be paid by the Controlling Authority, being a pre-condition for preferring statutory appeal before the appropriate Government, would cause him palpable injustice. In support of this argument, as stated above, has relied on the judgment of the apex Court in State of H.P. v. Gujarat Ambuja Cement Ltd. In the said case, the apex Court, has considered the twin line of cases in detail – one governing the entertaining of writ petitions despite existence of alternative remedy and the other refusing to entertain writ petitions because of availability of alternative remedy. The apex Court, while refusing to consider the plea raised by State of Himachal Pradesh, that when there was alternative remedy available, the High Court should not have entertained the writ petition, has referred to its earlier decision in Ram and Shyam Co. v. State of Haryana[4], wherein it was held that appeal is from “Ceasar to Ceasar’s wife”, the existence of alternative remedy would be a mirage and an exercise in futility. In fact, relying on the said judgment, it held as follows: In the instant case, the writ petitioners had indicated the reasons as to why they thought that the alternative remedy would not be efficacious. Though the High Court did not go into that plea relating to bias in detail, yet it felt that alternative remedy would not be a bar to entertain the writ petition. Since the High Court has elaborately dealt with the question as to why the statutory remedy available was not efficacious, it would not be proper for this Court to consider the question again. When the High Court had entertained a writ petition notwithstanding existence of an alternative remedy this Court while dealing with the matter in an appeal should not permit the question to be raised unless the High Court’s reasoning for entertaining the writ petition is found to be palpably unsound and irrational. The apex Court, did not in detail referred to reasons, which weighed with the High Court in entertaining the writ petition, despite availability of alternative remedy, and in fact, it refused to consider the said question because the High Court had already considered the same elaborately and entertained the writ petition. However, the respondents, who were the writ petitioners before the High Court, have taken a stand, justifying their invoking the writ jurisdiction despite availability of alternative remedy, and it would be appropriate to notice the stand taken by them, which reads: … It was clearly indicated in the writ petitions as to why the availability statutory remedies would have been an exercise in futility. It was clearly mentioned and substantiated by materials as to why the writ petitioners had become victims of a political vendetta. The political parties and persons who had let loose a smear campaign against the writ petitioners were in power and the subordinate authorities would have been in no position to give justice to the writ petitioners contrary to their dictates. The authorities recorded conclusions which clearly show bias and preconceived notions. The conclusions were predetermined. In that background, the writ petitioners were filed and were entertained… From the above, it is clear that the respondents-writ petitioners were victims of political vendetta, that the political parties and persons, who were inimical to them, were in power and that the subordinate would not have been in a position to do justice contrary to their dictates. Perhaps, considering this situation, the High Court of Punjab and Haryana, entertained the writ petition despite availability of alternative remedy, as relegating them to alternative remedy would be futile. In such circumstances, the apex Court, had refused to consider the question relating to availability of alternative remedy, inter alia stating that High Court can entertain writ petition where the proceedings itself are an abuse of process of law, something going to the root of the jurisdiction, resulting in palpable injustice to the party. But that is not the case on hand. The facts and circumstances, in the instant case are entirely different. In the instant case, the petitioner, as stated above, has sought to bypass the remedy of appeal and sought to invoke the jurisdiction of the Court, on the ground that the Controlling Authority has passed the impugned order, based on Ex. A3, an unproved document and that for preferring appeal, he has to deposit the entire amount of Rs.10,00,000/- determined and awarded by the Controlling Authority to respondent Nos. 2 to 64. May be, the Controlling Authority, has passed the impugned order, based on Ex. A1, alleged to be an unproved document, but that by itself cannot be a ground for the petitioner to bypass the remedy of appeal and maintain the writ petition. Whether Ex. A1 is a proved or unproved document, and whether the Controlling Authority was unjustified in placing reliance on it, are questions, decisions on which, go to the root of the merit of the matter. The said questions cannot be decided in a writ petition, for there is fundamental difference in the scope of appeal and writ petition – in the former, the statutory authority/court is concerned with the merits of the decision under appeal, while in the latter, the Court is concerned with the legality of the matter. In an appeal, the question is “right or wrong”, while in writ petition, the question is “lawful or unlawful”. Therefore, mere reliance by the Controlling Authority on Ex. A1, rightly or wrongly, to base his decision, cannot be said to be abuse of process of law, going to the root of the jurisdiction, resulting in palpable injustice to the petitioner, particularly when it is not the case of the petitioner that the Controlling Authority, had no jurisdiction to deal with the matter/adjudicate the claims made by respondent Nos. 2 to 64 and others. If according to the petitioner, the Controlling Authority, has passed the impugned order, based on Ex. A3, an unproved document, the remedy of the petitioner is to question the same on merits by preferring the remedy of appeal available to him under law, and certainly, he cannot maintain the writ petition. The next contention raised by the petitioner is that if he is directed to avail the remedy of appeal under Section 7(7) of the Provident Fund Act, against the impugned order, he has to deposit the entire amount of Rs.10,00,000/- determined and awarded by the Controlling Authority to respondent Nos. 2 to 64, which is onerous, and therefore, appeal remedy is not an effective remedy, and as such, he can file writ petition. To consider this question, it is appropriate to refer to the provisions of Section 7(7) of the Payment of Gratuity Act, 1972, which reads: Any person aggrieved by an order under sub-section (4) may, within sixty days from the date of the receipt of the order, prefer an appeal to the appropriate Government or such other authority as may be specified by the appropriate Government in this behalf: Provided that the appropriate Government or the appellate authority, as the case may be, may if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the said period of sixty days, extend the said period by a further period of sixty days. Provided further that no appeal by an employer shall be admitted unless at the time of preferring the appeal, the appellant either produces a certificate of the controlling authority to the effect that the appellant has deposited with him an amount equal to the amount of gratuity required to be deposited under sub-section (4), or deposits with the appellate authority such amount. From the above, it is clear that any person aggrieved by an order passed under sub-section (4) can prefer appeal to appropriate Government within sixty days, which can be extended by the appellate authority by a further period of sixty days if he is satisfied by the cause show for the delay in preferring the appeal, but the same shall be admitted only if a certificate is produced in token of having paid the entire amount as ordered to be paid under sub-section (4). In fact, this Court considered the self-same question, as is raised by the petitioner, involving deposit of the entire amount ordered by a lower authority, for preferring appeal, in M/s. Vissa Television Network Ltd. v. V.V. Ramana Kumar[5], which arose under the provisions of the A.P. Shops and Establishments Act, 1988, and refused to accede to the plea of the petitioner to file writ petition instead of availing the alternative remedy of appeal, on the ground, as has been raised by the petitioner, holding as follows: I am unable to accept this contention of the petitioner. Merely because the petitioner for preferring the second appeal will be required to deposit the entire back wages, as order by the 2nd respondent, it does not mean that he is entitled to file the writ petition assailing the impugned order, against which, remedy of second appeal is available to him under Section 48(3) of the Act. The proviso to Section 48(3) of the Act specifically requires the person preferring second appeal against the decision of the authority under sub-section (2), to deposit the back wages, order by the authority. The deposit of the back wages for preferring the second appeal being mandatory, the petitioner to avoid deposit of the back wages, cannot be allowed to file writ petition by passing the remedy of second appeal. Though the proviso to Section 48(3) of the Act specifically requires the person preferring the second appeal to deposit the back wages, as ordered by the authority under sub-section (2), it does not speak of withdrawal of the said back wages by the workman. In such circumstances, it should be considered whether the second appellate authority, in whom the power to hear and decide the second appeal is vested, can restrain the workman from withdrawing the back wages to be deposited by the petitioner for preferring the second appeal. In fact, this Court has considered the incidental power of the appellate authority, to pass orders protecting the interests of the parties, and held as follows: Where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means as are essentially necessary to its execution. The power to hear and decide the appeal is a substantive power, with which power flows incidental power of taking actions, pending appeal, else the very purpose of preferring the appeal would be frustrated. Therefore, it can be concluded that the authority in whom the power of deciding the second appeal is vested, is also vested with the power of granting stay of the operation of the decision sought to be appealed, which is essential for the proper exercise of the substantive power to decide the second appeal. But having regard to the fact that the proviso to Section 48(3) of the Act, for preferring the second appeal, mandatorily requires deposit of back wages, as ordered by the authority, the second appellate authority, shall having regard to the incidental power vested in it, decide whether the back wages to be deposited by the petitioner for preferring the second appeal, can be permitted to be withdrawn by the workman or not, and more so when Section 48 of the Act, does not speak of withdrawal of the back wages by the workman. Since the facts situation raised by the petitioner in this writ petition i.e. for preferring appeal, deposit of the entire amount as ordered under the order to be appealed, is a pre-condition, is similar to the facts situation that arose in M/s. Vissa Television Network Ltd. v. V.V. Ramana Kumar, I am of the considered opinion that the petitioner cannot be allowed to bypass the remedy of appeal and file writ petition, and more so on the grounds raised by him. Hence, I deem it appropriate to dispose of the writ petition with the following directions: The petitioner is at liberty to avail the remedy of appeal available to him against the impugned order under Section 7(7) of the Payment of Gratuity Act, 1972 before the appropriate Government.. Since the petitioner contends that the impugned order is an illegal order, he is at liberty to file an application along with the appeal requesting the appellate authority to restrain respondent Nos. 2 to 64 from withdrawing the amounts to be deposited by him, for preferring the appeal. If any such application is filed, the appellate authority, in whom the substantive power of hearing and deciding the appeal is vested, may in exercise of its incidental power to grant stay of the order appealed, shall consider and pass appropriate orders thereon, restraining respondent Nos. 2 to 64 from withdrawing the amounts to be deposited by the petitioner, pending disposal of the appeal, keeping in view the fact that in the event the monies to be deposited by the petitioner, are allowed to be withdrawn, then the petitioner would be left with no remedy to recover the same from respondent Nos. 2 to 64 in the event the petitioner succeeds in the appeal. Accordingly, the writ petition is disposed of. No costs. _________________ N.V. RAMANA, J. Dated: 30th December, 2008. Note: Mark LR copy. (B/o) KSR [1] (2005) 6 SCC 499 [2] See para 14.14 of Law