Case Note & Summary
The dispute arose when the Madhya Pradesh Electricity Board revoked the licence of the Barnagar Electric Supply and Industrial Company and took over its undertaking. The first respondent, who was the managing director of the company, served notices on the employees that their services would no longer be required effective October 1, 1962. The appellant, the Payment of Wages Inspector, filed an application under Section 15(2) of the Payment of Wages Act, 1936 on behalf of 20 employees to recover from the first respondent wages for the notice month and retrenchment compensation amounting to Rs. 12,853.60 payable under Section 25FF of the Industrial Disputes Act, 1947. The first respondent contested the claim and challenged the jurisdiction of the Authority under the Payment of Wages Act, contending that he was not the person responsible for payment of compensation and that the right of the workmen was defeated by the proviso to Section 25FF because there was no interruption in their employment and the Electricity Board as the new employer was liable after transfer for compensation in the event of retrenchment. The Authority raised preliminary issues and by order dated May 21, 1963 held against the first respondent on the question of jurisdiction. The first respondent then filed a writ petition in the High Court of Madhya Pradesh, and a Division Bench held that Section 15 of the Payment of Wages Act did not apply and that the proper forum was the Labour Court under Section 33C(2) of the Industrial Disputes Act. The Payment of Wages Inspector appealed to the Supreme Court, contending that after the amendment of the definition of ‘wages’ in the Payment of Wages Act by Act 68 of 1957, which included sums payable on termination of employment under any law, compensation under Section 25FF fell within that definition and the Authority had jurisdiction. The respondent argued that the Authority was a special tribunal with limited jurisdiction strictly confined to deductions and delay in payment, and that claims under the Industrial Disputes Act could not be adjudicated by a tribunal set up under a different Act. The Supreme Court first examined whether compensation under Section 25FF can be considered ‘wages’. It noted that Sections 25FF and 25FFF use the words ‘in accordance with the provisions of Section 25F’ only as a measure of compensation and not to lay down a time for payment; since transfer and closure can validly take place without notice or payment of a month’s wages, those sections do not provide any time within which compensation must be paid. Therefore, such compensation falls squarely within clause (d) of Section 2(vi) of the Payment of Wages Act. On the question of jurisdiction, the Court scrutinized the language of Section 15(2) which is governed by the opening words ‘where contrary to the provisions of the Act’. The Court held that the Authority’s jurisdiction is limited to two specific classes of cases: unauthorised deductions or fines under Sections 7 to 13, and delay in payment of wages beyond the wage periods fixed under Section 4 and the time of payment fixed under Section 5. The present claim was not a simple case of deduction or delay; it involved disputed questions of fact and law, including whether the proviso to Section 25FF applied and whether the employer was liable. Such matters could not be treated as incidental to a claim for wages under the Act. The Court distinguished earlier decisions and concluded that the proper forum for such disputed compensation claims is the Labour Court under Section 33C(2), which has the power to decide these issues comprehensively and expeditiously. The Supreme Court therefore dismissed the appeal and upheld the High Court’s order.
Headnote
A) Labour Law - Definition of Wages - Retrenchment Compensation under Section 25FF - Payment of Wages Act, 1936 (Section 2(vi)(d)), Industrial Disputes Act, 1947 (Sections 25F, 25FF, 25FFF) - Compensation payable under Section 25FF read with Section 25F of the Industrial Disputes Act is wages within the meaning of Section 2(vi)(d) of the Payment of Wages Act, because it is a sum payable on termination of employment and Sections 25FF and 25FFF do not prescribe any time within which such compensation is to be paid; the words 'in accordance with the provisions of Section 25F' in those sections are used only as a measure of compensation and not to lay down a time for payment. (Paras Not mentioned) B) Labour Law - Jurisdiction of Payment of Wages Authority - Scope of Section 15 - Payment of Wages Act, 1936 (Section 15), Industrial Disputes Act, 1947 (Section 33C(2)) - Section 15(2) of the Payment of Wages Act confers jurisdiction on the Authority to entertain claims only in two classes of cases: unauthorised deductions or fines, and delay in payment of wages beyond the fixed wage periods; where the claim is for retrenchment compensation under Section 25FF and the employer disputes liability on grounds that the new employer is liable under the proviso or that there was no interruption in employment, such disputed claim does not fall under Sections 4 and 5 of the Act and cannot be decided by the Authority. The proper forum is the Labour Court under Section 33C(2) of the Industrial Disputes Act, which can adjudicate such questions fully, expeditiously, and without expense. Held, the High Court correctly held that Section 15 did not apply. (Paras Not mentioned)
Issue of Consideration
(1) Whether compensation payable under Section 25FF of the Industrial Disputes Act can fall under the amended definition of wages in Section 2(vi)(d) of the Payment of Wages Act. (2) Whether the Authority under Section 15 of the Payment of Wages Act had jurisdiction to entertain the application.
Final Decision
The Supreme Court held that while compensation payable under Section 25FF read with Section 25F of the Industrial Disputes Act fell within the definition of 'wages' under Section 2(vi)(d) of the Payment of Wages Act, the Authority under Section 15 of that Act had jurisdiction only in two limited classes of cases: unauthorised deductions or fines, and delay in payment of wages beyond the fixed wage periods. The claim in question involved disputed questions of fact and law, including the applicability of the proviso to Section 25FF, and did not fall within the scope of Section 15(2). The proper forum for such a claim was the Labour Court under Section 33C(2) of the Industrial Disputes Act. The appeal was accordingly dismissed, and the High Court's order was upheld.
Law Points
- Legal points not extracted
- retrenchment compensation under Section 25FF of Industrial Disputes Act falls within definition of wages under Section 2(vi)(d) of Payment of Wages Act
- 1936
- jurisdiction of Authority under Section 15 of Payment of Wages Act is limited to unauthorised deductions
- fines
- and delay in payment of wages beyond wage periods
- disputed claims for compensation not falling within Sections 4 and 5 of Payment of Wages Act cannot be entertained by Authority
- proper forum for such disputed claims is Labour Court under Section 33C(2) of Industrial Disputes Act
- phrase 'in accordance with the provisions of Section 25F' in Sections 25FF and 25FFF serves only as a measure of compensation
- not to impose a time limit for payment
