* THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION NOs. 22172 OF 1997, 17268, 17259, 17245 of 1999 % 25.07.2007 W.P. NO. 22172 OF 1997: #P. Manohar Reddy, S/o P. Mohan Reddy, 16-11-781/6/1/4, Moosarambagh, Hyderabad – 500 036. ….. Petitioner Vs. 1. $ The Appellate Authority under Section 53 of the A.P. Shops and Establishments Act & Assistant Commissioner of Labour, Circle I, RTC ‘X’ Roads, Anjaiah Bhavan, Hyderabad. And two others. ….Respondents. ! Counsel for the Petitioner: Sri B.G. Ravinder Reddy ^ Counsel for the Respondents:Sri C.R. Sridharan < Gist: >Head Note ? Citations: [1] AIR 1969 SC 590 2 AIR 1970 SC 1494 3 AIR 1966 MADRAS 201 4 1982(1) APLJ 37 5 AIR 1961 SC 970 6 1990(2) LLJ 39 7 1962(2) LLJ 356 8 1977(2) LLJ 117 (Cal.H.C) 9 1995(1) LLJ 978 RAJ. 10 1998 SUPP (3) LLJ 1272 11 AIR 1955 SC 412 12 AIR 1958 SC 518 13 AIR 1955 SC 295 THE HON'BLE MR JUSTICE RAMESH RANGANATHAN WRIT PETITION Nos.22172 of 1997, 17268, 17259, 17245 of 1999 COMMON ORDER: Aggrieved by the orders of the Assistant Commissioner of Labour, the appellate authority under the A.P. Shops and Establishments Act, these four writ petitions are filed by an employee of the second respondent-company. To decide the questions raised therein it would suffice if the facts in W.P. No.22172 of 1997 are noted. The petitioner was appointed as a veterinary service representative in the respondent-company with effect from 10-12-1989. He met with an accident on 13-04-1992. After undergoing extensive treatment he reported for duty along with a medical fitness certificate. His joining report was accepted, he was permitted to join duty, the period from the date of his accident till he joined duty was treated as leave, he was paid medical expenses and other benefits and he commenced work from 11-01-1993. While matters stood thus the second respondent, vide letter dated 05-06-1993, asked him to “stop work” from 08-06-1993. Petitioner would submit that, as the order to “stop work” was neither an order of suspension nor termination of his services, he was continued to be paid full wages. However, from 01-10-1993, the 2nd respondent stopped paying wages. As several representations, seeking payment of wages, were of no avail the petitioner invoked the jurisdiction of the Authority under Sections 50 & 51 of the A.P. Shops and Establishments Act, 1988 (for short ‘the Act’) claiming wages from 01-10-1993 to 31-05- 1994 and bonus for the year 1992-93. The Authority, after enquiry and by order dated 08-05-1996, held that, since the respondent-company had issued an order to stop work, the petitioner was entitled to wages, that the claim was maintainable under Section 51 of the Act, that the respondent-company had not paid wages wilfully and intentionally and that there were no bona fides in withholding wages for the past several years. The application was allowed and the respondent-company was directed to deposit the claim amount along with one time compensation equal to the amount to be deposited. Aggrieved thereby, the 2nd respondent preferred an appeal to the Assistant Commissioner of Labour, the appellate authority under Section 53 of the Act. The Appellate Authority noted the 2nd respondent’s contention that entitlement of wages was itself in dispute and, unless entitlement was decided, the claim under Section 50 of the Act could not be entertained, that the petitioner had contended that he was prevented from working and that the Authority had held that, when an employee was asked not to work, he was entitled to full wages and on non-payment thereof it became “delayed wages”. The Appellate Authority, placing reliance on Payment of Wages Inspector, Ujjain Vs. The Barnagar Electric Supply and Industrial Co. Ltd.[1], held that the Authority under Section 50 had no jurisdiction as non-payment of compensation was neither an illegal deduction nor did it amount to delay in payment of wages, that the issue was not delayed wages and, since the employee had himself contended that he was prevented from working, entitlement of wages itself was in dispute and the claim could not have been entertained under Section 51 of the Act. The Appellate Authority held that delayed wages should be understood with reference to Section 38 of the Act and, if wages payable and earned were not paid in the manner and time stipulated thereunder, claims arising out of such delay alone fell within the jurisdiction of the Authority under Section 50 of the Act. The Appellate Authority held that the Original Authority had erred in entertaining the claim and had exceeded his jurisdiction. The orders under appeal were set aside by order dated 30.06.1997. Aggrieved thereby, the petitioner-employee has invoked the jurisdiction of this Court. Sri B.G. Ravindra Reddy, learned counsel for the petitioner, would submit that the 2nd respondent had asked the petitioner to stop work, that no enquiry was held, that the services of the employee were neither suspended nor terminated, that the contract of employment continued to subsist and that the Authority had jurisdiction to adjudicate the claim since non-payment of wages, in this factual matrix, amounted to delayed payment of wages. Learned counsel would submit that it is only when subsistence of the contract of employment is itself in dispute that the Authority is divested of jurisdiction as the remedy available in such cases is under Section 47 of the Act. Learned counsel would place reliance on V.P. Gindroniya Vs. State of Madya Pradesh[2], P. Doraikannu Vs. The Proprietor, Hotel Savoy[3] and Neo Mysore Cafe Vs. K.S. Ravichander & others[4]. Sri C.R. Sridharan, learned counsel for the second respondent, on the other hand, would submit that not providing work may fall under several categories, that it may be on account of strike or lockout or any other reason, that merely because work was not provided to an employee it could not be said that non-payment of wages amounted to delay in payment of wages, that the Authority was not entitled to conduct a detailed enquiry to adjudicate disputed questions of fact and it is only when the factum of delay in payment of wages is admitted would the Authority be entitled to compute the amount payable and the compensation to be paid for such delay and not otherwise. Learned counsel would contend that Section 51 of the Act is similar to Section 15(2) of the Payment of Wages Act and that the law laid down, while interpreting Section 15 of the Payment of Wages Act, would also apply to Sections 50 and 51 of the Act. Learned counsel would rely on Payment of Wages Inspector, Ujjain1, Shri Ambica Mills Co. Ltd. Vs. Shri S. B.Bhatt5, Bank of India Vs. T.S. Kelawala & Ors.6, Bhagaband Colliery Vs. Their Workmen7, Algemene Bank, Nederland, N Vs. Central Govt., Labour court, Calcutta8, Mohammed Ayub Vs. M/s. Mohammed & Sons9, Administration Krishi Upaj Mandi Samithi Doongargarh Vs. Gauri Shanker10 and A. V. D. Costa, Divisional Engineer, G. I. P. Railway Vs. B. C. Patel11. The Statutory Scheme. Section 2(23) of the A.P. Shops and Establishments Act defines “Wages”: “Wages” means every remuneration, whether by way of salary, allowance, 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 an employee in respect of his employment or of work done in such employment, and includes - (a) any remuneration payable under any settlement between the parties or order of a tribunal or court; (b) any remuneration to which the employee is entitled in respect of overtime work or holidays or any leave period; (c) any additional remuneration payable under the terms of employment, whether called a bonus or by any other name; (d) any sum which by reason of the termination of employment of the employee 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; (e) any sum to which the employee is entitled under any scheme framed under any law for the time being in force; but does not include - (i) any bonus, whether under a scheme of profit sharing or otherwise, which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of court; (ii) the value of any house accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the Government; (iii) any contribution paid by the employer to any person or provident fund, and the interest which may have accrued thereon; (iv) any travelling allowance or the value of any travelling concession; (v) any sum paid to the employee to defray special expenses entailed on him by the nature of his employment; (vi) any service compensation payable on the termination of employment in cases other than those specified in sub-clause (d); (vii) the subscription paid by the employee to life insurance and contribution paid by the employer to the life insurance of the employee under the provisions of this Act and the bonus which may have accrued thereon; or (viii) house rent allowance payable by the employer;” Chapter VIII relates to Wages, Conditions for Termination of Services, Appeals, Suspension and Terminal Benefits and Section 36, which relates to fixation of the wage period, provides that every employer shall fix periods in respect of which such wages shall be payable and that no wage period shall exceed one month. Section 37 relates to wages for overtime work and thereunder where any employee in any establishment is required to work overtime he shall be entitled, in respect of such overtime work, to wages at twice the ordinary rate of wages. Section 38, which prescribes the time of payment of wages, reads thus: Time of payment of wages: -- (1) The wages of every employee shall be paid before the expiry of the fifth day after the last day of the wage period in respect of which the wages are payable. (2) Where the service of any employee is terminated by or on behalf of the employer the wages earned by such employee shall be paid before the expiration of the second working day from the day on which his employment is terminated. (3) The Government may, by general or special order and for reasons stated therein exempt an employer from the operation of this section in respect of the wages of any employee or class of employees to such extent and subject to such conditions as may be specified in the order.” Section 47 prescribes the conditions for terminating the services of an employee, payment of service compensation for termination, retirement, resignation, disablement, etc., and payment of subsistence allowance for the period of suspension. Section 48 provides for appointment of an Authority to hear and decide appeals arising out of termination of services. Chapter IX relates to Appointment, Powers and Duties etc. of the Authority to hear and decide claims relating to wages etc. of Employees in Establishments. Section 50 relates to appointment of an Authority to hear and decide claims relating to wages and Section 51 relates to claims arising out of deductions from wages or delay in payment of wages etc., and penalty for malicious or vexatious claims. Section 53 provides for an appeal against an order dismissing, either wholly or in part, an application made under sub-section (1) of Section 51. Section 55 relates to the power of the authority and, thereunder, every authority appointed under Section 50 shall have all the powers of a Civil Court under the Code of Civil Procedure, 1908 for the purpose of taking evidence and of enforcing attendance of witnesses, compelling production of documents, and every such authority shall be deemed to be a Civil Court for the purposes of Section 195 and of Chapter XXVI of the Code of Criminal Procedure, 1973. Now the provisions of the Payment of Wages Act. Section 2(vi) of the Payment of Wages Act defines ‘Wages’. Under Section 3, every employer shall be responsible for the payment, to the person employed by him, of all wages required to be paid under the Act. Section 4 relates to fixation of wage-periods and, thereunder, every person responsible for the payment of wages under Section 3 shall fix periods in respect of which such wages shall be payable and no wage period shall exceed one month. Section 5 relates to the time of payment of wages. Section 15 relates to claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims. Section 17 relates to appeals and Section 18 to the powers of authorities appointed under Section 15. Thereunder every authority, appointed under sub-section (1) of Section 15, shall have all the powers of a Civil Court under the Code of Civil Procedure, 1908 for the purpose of taking evidence, enforcing the attendance of witnesses and compelling the production of documents. Section 22 provides that no Court shall entertain any suit for the recovery of wages or of any deduction from wages in so far as the sum so claimed forms the subject of an application under Section 15 and which is pending before the authority appointed under that Section or of an appeal under Section 17. Sections 3, 4 and 5 of the Payment of Wages Act are similar to Sections 35, 36 and 38 of the A.P. Shops and Establishments Act. Section 15 (1) is similar to Section 50 and Section 15(2) is similar to Section 51. It is useful to extract Section 15 of the Payment of Wages Act in juxtaposition to Sections 50 and 51 of the A.P. Shops and Establishments Act. Payment of Wages Act A.P. Shops & Establishments Act Sec.15(1): The State Government may, by notification in the official Gazette, appoint a presiding officer of a n y Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947 (14 of 1947, or under any corresponding law relating to the investigation and settlement of industrial disputes in force in the State or] 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], including all matters incidental to such claims : Provided that where the State Government considers it necessary so to do, i t may appoint more than one authority for any specified area and may, by general or special order, provide for the distribution or allocation of work to be performed by them under this Act. Sec.50: The Government may, by notification, appoint an 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 or service compensation payable under this Act to employees in any establishment in that area. Section 15: (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 Section 51: Claims arising out of deductions from wages or delay in payment of wages etc., and penalty for malicious or vexations claims: ( 1 ) Where, contrary to the provisions of this Act, any deduction has been made from the wages of an employee in an establishment or any payment of wages or service compensation to him has been delayed, such employee himself, or if he is dead 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 twelve months from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made, as the case may be: Prov ided further that any application may be admitted after the said period of [twelve 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 persons responsible f o r the payment of wages under Section 3, or give them an opportunity of being heard, and, after such further enquiry, if any, as may be necessary, m ay, without prejudice to any other penalty to which such employer or other person is liable under 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 twenty five rupees in the latter, and even if the amount deducted or the delayed wages are paid before the disposal of the application, direct the payment of such any of his dependants or any legal practioner, or any official of a registered Trade Union authorised in writing to act on behalf of such employee or dependant, or any Inspector under this Act or any other person acting with the permission of the authority appointed under Section 50 may apply to such authority for a direction under sub- section (2): Provided that every such application shall be presented within one year from the date on which the deduction from the wages was made or from the date on which the payment of the wages or service compensation was due to be made, as the case may be: Provided further that any application may be admitted after the said period of one year when the applicant satisfies the authority that he had sufficient cause for not making the application within such period. (2) When any application under sub-section (1) is entertained the authority shall, hear the applicant and the employer or give them an opportunity of making representation either in person or through an authorised representative, and after such further inquiry, if any, as may be necessary, may, without prejudice to any other penalty to which such employer is liable under this Act, direct the refund to the employee of the amount deducted, or the payment of the delayed wages or the service compensation together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted or the amount of delayed wages and not exceeding ten rupees in case of service compensation, as the authority may think fit, not exceeding twenty five rupees; Provided that no direction for the payment of compensation shall be made in the case of delayed wages if the authority is satisfied that the delay was due to:- (a) a bona fide error or bona fide dispute as to the amount payable to the employed person; or (b) the occurrence of an emergency, or the existence of exceptional circumstances, such that the person responsible for the payment of the wages was unable, though exercising reasonable diligence, to make prompt payment, or (c) the failure of the employed person to apply for or accept payment. (4). If the authority hearing an application under this section is satisfied- ( a ) that the application was either malicious, or vexatious, the authority may direct that a penalty "not fifty rupees" be paid to the employer or other person responsible for the payment of wages by the person presenting the application; or (b) that in any case in which compensation is directed to be paid under sub- section (3), the applicant ought not to have been compelled to seek redress under this section, the authority may direct that a penalty not exceeding fifty rupees be paid to the State Government by the employer or other person responsible for the compensation: Provided that, no direction for the payment of compensation shall be made in the case of delayed wages or service compensation if the authority is satisfied that the delay was due to – (a) a bonafide error or a bonafide dispute as to the amount payable to the employee; or (b) the existence of exceptional circumstances, such that the employer was unable though exercising reasonable diligence, to make prompt payment; or (c) the failure of the employee to accept payment. (3) If the authority hearing any application under this section is satisfied that it was either malicious or vexatious, the authority may direct that a penalty not exceeding five rupees be paid to the employer by the person presenting the application. (4) Any amount directed to be paid under this section may be recovered - (a) if the authority is a Magistrate, by the authority as if it were a fine imposed by him as Magistrate; and (b) if the authority is not a Magistrate, by any Magistrate to whom the authority makes an application in this behalf, as if it were a fine imposed by such Magistrate.” payment of wages. (4-A) Where there is any dispute as to the person or persons being the legal representative or representatives of the employer or of the employed person, the decision of the authority on such dispute shall be final. (4-B) Any inquiry under this section shall be deemed to be a judicial proceeding within the meaning of Sections 193, 219 and 228 of the Indian Penal Code (45 of 1860). (5). Any amount directed to be paid under this section may be recovered- (a) if the authority is a Magistrate, by the authority as if it were a fine imposed by him as Magistrate, and (b) if the authority is not a Magistrate, by any Magistrate to whom the authority makes application in this behalf, as if it were a fine imposed by such Magistrate. Before examining the contentions raised in these batch of writ petitions, it is useful to refer to the judgments relied upon, and the factual context in which they came to be passed. I n A.V.D Costa11, the 2nd respondent was employed as a carpenter on daily wages. The Railway administration introduced a scheme creating a cadre of skilled labourers on monthly rated pay. Admitted to it were only those who had passed the test. The 2nd respondent did not pass the test and continued to serve on daily wages. He filed an application under Section 15(2) of the Payment of Wages Act to recover the additional amount of wages that would have become payable to him had he been taken in the cadre of monthly rated employees. The Supreme Court, after considering the scheme of the Payment of Wages Act, observed: “……If the parties entered into the contract of service, sway by correspondence and the contract is to be determined with reference to the letters that passed between them, it may be open to the Authority to decide the controversy and find-out what the terms of contract with reference to these letters were. But if an employee were to say that his wages were Rs.100/- per month, which he actually received as and when they fall due, but that he would be entitled to higher wages, if his claims to be placed on the higher wages scheme had been recognized and given effect to, that would not in our opinion, be a matter within the ambit of jurisdiction……. …….The Authority had the jurisdiction to decide what actually the terms of the contract between the