Case: Modi Industries Ltd Vs. State Of U.P

ny runs a unit known as Modi Vanaspati Manufacturing Company at Modinagar, District Ghaziabad. At the relevant time, there were about 350 workmen working in this unit. On December 19, 1990, there was a dispute between the management and the trade union leaders which resulted in two cross first information reports being lodged by the management and the trade union leaders against each other and suspension of 30 workmen from service. According to the company, from December 21, 1990 the workmen came to the companys premises but did not discharge their duties. On account of this, there was a complete halt in production. According to theunions, however, the workmen reported for duty regularly but the production could not be carried on as the suspended 30 workmen were technicians and in their absence it was not possible to operate the machines. On December 27, 1990 an agreement was arrived at between the management and the trade unions which provided that except the suspended workmen, the other workmen will join work and discharge their duties. It appears that in spite of this agreement, the work could not be carried on. According to the management, it was theof the workmen which was responsible for the situation whereas according to the trade unions, the management did not permit the workmen to work and hence the said stalemate. While the situation continued thus, the District Administration and the Labour Department of the State Government took initiative by making efforts to enable the workmen to work in the company. On February 8, 1991, a meeting was held in the presence of the Additional District Magistrate and the Deputy Labour Commissioner in which the representatives of the management and the leaders of the trade unions participated. In this meeting, the Additional District Magistrate suggested that out of the suspended workmen, those who had no serious charges against them be reinstated and the inquiry be conducted against all the suspended workmen including those so reinstated so that work could be carried on. The representatives of the management, however, did not agree to the said suggestion and requested for postponement of the meeting to enable them to consult their higher officials. The meeting was, therefore, postponed to February 11, 1991. No positive reply was received from the management with the result that work could not be carried on up to and inclusive of March 3, 1991. The work started and the production commenced only on March 4, 1991. The management did not pay wages to the workmen for the period from December 21, 1990 to March 3, 19913. The Additional Labour Commissioner issued a notice dated February 27, 1991 under Section 3 of the U.P. Industrial Peace (Timely Payment of Wages) Act, 1978 (hereinafter referred to as the Act) whereby thewas called upon to show cause as to why order for payment of wages to the workmen under Section 3 of the Act be not made against it. The hearing of the notice was fixed on March 10, 1991. Thesubmitted its representation including the supplementary representation. The company was given personal hearing. After considering the material placed by the company on record, the Additional Labour Commissioner passed an order on April 29, 1991 directing the recovery of Rs. 3, 67, 474 from the company for payment of wages to the workmen for the month of January 1991 only. This order was challenged by the company on various grounds by a writ petition filed in the High Court. The High Court by the impugned order negatived all the contentions and dismissed the petition. The operative part of the order of the High Court is asorder is passed under Section 3 of the Act for recovery of wages and the aggrieved party approaches the Government to refer the dispute under the Industrial Disputes Act, the Government has hardly any option in view of the reasons given above. The Government if required by any party to refer the dispute to the Industrial Tribunal, it has to pass an appropriate order in connection therewithThe writ petition is accordingly dismissed, . There shall be no order as to costs. In case the petitioner approaches the Government for reference under the Industrial Disputes Act to the Industrial Tribunal, Labour Court, the State Government shall pass appropriate order within six weeks from the date of presentation of the application for reference along with the certified copy of this order. After reference is made, the Industrial Tribunal Labour Court will decide the dispute expeditiously in accordance with law."

Court's reasoning:
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 theof 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 Payment of Wages Act, 1936 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 everybut only of aexceeding Rs. 50, 000 that 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 Payment of Wages Act, 1936 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 theof the entire such establishment and (iii) where suchexceeds 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 them8. The inquiry under Section 3 being thus limited in its scope, the Labour Commissioners 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 are, therefore, entitled to their wages, are not 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, as in the present case, 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 forum9. The powers conferred on the Labour Commissioner under Section 3 of the Act are to prevent apprehended or present breach of industrial peace. That is why the inquiry contemplated is of a summary nature. The exercise of the said powers by the Labour Commissioner does not prevent either party from approaching the regular forum for the redressal of its grievance.As stated earlier, whether the certificate is issued or not, the parties remedy to approach the appropriate forum for the adjudication of their claim is not taken away. They can still approach the regular forum meant for the resolution of the dispute. The provisions of the Act are only of a summary nature meant to deal speedily with situations requiring urgent solution13. On the facts of the present case, we are more than satisfied that there did exist a genuine dispute between the parties as to whose acts of omission or commission were responsible for the halting of the production in the factory for the period in question. This was put into issue before the Labour Commissioner by theThe Labour Commissioner, in the circumstances, could not have proceeded to issue the certificate. He ought to have referred the parties to industrial adjudication which was the proper forum for the purpose. Under the circumstances, we set aside the impugned certificate dated April 29, 1991 issued by the Labour Commissioner14. The record shows that this Court, while granting interim stay of the recovery proceedings, directed theto pay to the workmen, 50 per cent of the wages as per the certificate issue by the Labour Commissioner. The dispute has been pending since 1990.