Holding

The determinative date for maintainability under the Act is the date on which the claim is lodged; subsequent partial payment does not affect the Labour Commissioner’s jurisdiction.

Summary

The Hotel and Restaurant Karamchari Sangh filed a complaint under the Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act, 1978 seeking recovery of wages exceeding Rs 60,000 from Gulmarg Hotel. The employer later paid part of the amount, reducing the outstanding sum to below Rs 50,000 and argued that the Labour Commissioner lacked jurisdiction to issue a recovery certificate. The Assistant Labour Commissioner held the complaint maintainable because the claim, at the time of filing, exceeded Rs 50,000. The Allahabad High Court reversed this, saying the amount at adjudication was below Rs 50,000 and thus the proceedings were not maintainable. The Supreme Court allowed the appeal, ruling that the determinative date for jurisdiction is the date the claim is lodged, not the date of adjudication, and that partial payment thereafter does not defeat the Act’s purpose. Consequently, the High Court order was set aside and the Assistant Labour Commissioner’s certificate restored.

Issues considered

What is the determinative date for deciding the maintainability of a complaint under the Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act, 1978 – the date of filing or the date of adjudication?
Does a subsequent partial payment that reduces the outstanding amount below Rs 50,000 affect the Labour Commissioner’s jurisdiction to issue a recovery certificate?
Whether the Act is intended to address individual wage disputes or defaults in the wage‑bill of the entire establishment.

Legislation cited

Subjects

industrial peacetimely payment of wageswage billjurisdictionlabour commissionermaintainabilitywage arrearsUttar Pradesh Industrial Peace Actpartial payment

Judgment

HOTEL AND RESTAURANT KARAMCHARI SANGH A
v.
MIS. GULMARG HOTEL AND ORS.

JUNE 8, 2006

[ARJJIT PASAYAT AND C.K. THAKKER, JJ.] B

Labour Laws:

Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act, 1978-
Section 3-Recovery of wages in certain industrial establishments as arrears C
of land revenue-Complaint for recovery of wages amounting to more than
Rs. 60, 000-Subsequent payment of a part of claim by employer leaving the
claimed amount less than Rs. 50,0001-Maintainability of the complaint-
Authority held the complaint as maintainable as at the initiation of the complaint
the claimed amount was more than Rs. 60,000-Jn Writ Petition High Court D
held that the date of adjudication is the determinative date for deciding
maintainability of the complaint-Held: The determinative date for deciding
maintainability of the complaint, is the date on which the claim is lodged-
\. Otherwise, the very purpose of the Act i.e. to give help to the workers, would
be defeated.
E
Appellant filed a complaint under Uttar Pradesh Industrial Peace
(Timely Payment of Wages) Act, 1978 for recovery of more than Rs. 60,000
towards wages. Respondent No. 1 objected to the same on the ground that
the authority had no jurisdiction to entertain_ the complaint, as a part of
the amount claimed had been paid subsequently and the amount payable
was less than Rs. 50,000/-. The authority held that at the time of initiation F
of the proceedings, the amount was admittedly more than Rs.50,000; that
merely because a part of the amount claimed had been paid subsequently,
that cannot affect the jurisdiction of the concerned authority to issue a
certificate of recovery. Respondent-employer filed a writ petition wherein
it was held by High Court that the proceedings were not maintainable as G
at the time of adjudication, the amount in default did not exceed Rs.
50,000/-. Hence the present appeal.

Allowing the appeal, the Court
17
H
18 SUPREME COURf REPORTS [2006] SUPP. 3 S.C.R.

A HELD: 1. Uttar Pradesh Industrial Peace (Timely Payment of
Wages) Act, 1978 is a beneficial one intended to give help to the workers
who are not being paid their wages. The Assistant Labour Commissioner
was justified in taking the view that the determinative date for deciding
maintainability of the complaint under the Act, is the date on which the
B claim is lodged. Otherwise, the very purpose of the enactment would be
defeated. 123-B; 22-Fl

Modi Industries Ltd. v. State uf UP. and Ors., fl994J I SCC 159,
distinguished.

2. The Act does not supplant or substitute the Payment of Wages
C Act, 1936, but supplements the said Act, in the limited area, viz., where
the establishment, (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 is not so much to secure payment of wages to individual
D 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. [21-B-DJ

3. Under the Act, the Labour Commissioner acts to assist the
workmen to recover their wages which are admittedly due to them but
E 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
F adjudicate the same. In sucllI cases, he has to refer the parties to the
appropriate forum. The 1:xercise of the powers by the Labour
Commissioner does not prevent either party from approaching the regular
forum for the redressal of its grievance. (21-G-H; 22-A-BI

State of Ullar Pradesh v. Basti Sugar Mills Co. Ltd, AIR (1961) SC
G 420, relied on.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5371 of2005.

From the Judgment and Order dated 16.01.2004 of the High Court of
Allahabad in W.P. No. 375 (MIS) of2001.
H
HOTEL AND RESTAURANT KARAMCHARI SANGH v. GULMARG HOTEL [PASA YAT, J.] J9

Anuvrat Shanna, Sanjay Kumar Singh and M.P. Shorawala for the A
Appellant.

S. Wasim A. Qadri and Pradeep Misra for the Respondents.

The Judgment of the Court was delivered by
B
ARIJIT PASA YAT, J. Challenge in this appeal is to the order passed
by a learned Single Judge of the Allahabad High Court allowing the Writ
Petition filed by respondent No. I (hereinafter referred to as the 'employer').

The High Court by the impugned order quashed the order passed by the
Deputy Labour Commissioner, Lucknow Region, Lucknow. The said authority C
had issued a certificate for recovery of Rs.60,810.76 from respondent No.I
in term~ of Uttar Pradesh Industrial Peace (Timely Payment of Wages) Act,
1978 (in short the 'Act').

Background facts filtering out unnecessary details are as follows:
D
On the basis of a complaint received from the appellant, the Assistant
Labour Commissioner issued a notice to respondent No. I stating that it had
not paid outstanding wages to the employees/workmen of the establishment
amounting to more than Rs.60,000/-. The authority asked the respondent
No.I-employer to show cause as to why recovery under the Act shall not be E
tnade as arrears of land revenue by issuance of certificate of recovery.
Respondent No. I-employer submitted a reply stating that nine employees
were absconding and out of total 22 employees, 8 employees had been paid
their wages and the amount to be payable was less than Rs.50,000/-. It was,
therefore, submitted that the provisions of the Act cannot be applied. The
Assistant Labour Commissioner considered the plea of the employer and F
rejected the same by holding that the claim was instituted on 16.10.2000,
notice was issued on 19.10.2000 and the response was filed on 14.12.2000.
At the time of initiation of the proceedings, the amount was admittedly more
than Rs.50,000/-. Merely because a part of the amount claimed had been paid
subsequently, that cannot affect the jurisdiction of concerned authority to
issue a certificate for recovery. The employer filed a Writ Petition before the G
Allahabad High Court questioning correctness of the order. The High Court
came to hold that at the time of adjudication, the amount in default did not
exceed Rs.50,000/- and, therefore, proceedings were not maintainable.
Reference was made to a decision of this Court in Modi Industries Ltd. v.
State of U.P. and Ors., [ 1994] I sec 159 to hold that the certificate for H
20 SUPREME COURT REPORTS (20061 SUPP. 3 S.C.R.

A recovery could not have been issued. The writ petition was accordingly
allowed.

In support of the appeal, learned counsel for the appellant submitted
that Modi Industries· case (supra) has no bearing on the subject matter of
controversy. The Assistant Labour Commissioner was right in his view that
B at the time the claim was lodged, the amount was admittedly more than
Rs.50,000/-. By adopting a subterfuge the employer cannot in law be permitted
to take away the jurisdiction of the authority to issue certificate for recovery.

Learned counsel for the State, respondent No.2 and the concerned
C authority-respondent No.3 supported the stand. There is no appearance on
behalf of respondent No. I-employer.

In order to resolve the controversy between the parties, it is first
necessary to examine the provisions of the Act. As the title of the Act itself
suggests it has been enacted to secure industrial peace by ensuring timely
D payment of wages to the workmen. The preamble of the Act states that it is
an Act to provide "in the interest of maintenance of industrial peace, a timely
payment of wages in bigger industrial establishments and for matters connected
therewith". The statement of objects and reasons of the Act states that delays
in payment of wages of workmen lead to simmering discontent among them.
Sometimes a grave threat to law and order is also forced on this account. The
E provisions of the Payment of Wages Act, 1936 (in short 'Wages Act') 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
F of land revenue. Further, in order to curb the tendency of the employers 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 Rs. I lakh.

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
G 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
H
HOTEL AND RESTAURANT KARAMCHARI SANGH v. GULMARG HOTEL [PASAYAT, J] 21

of by the provisions of the Wages Act which provisions are found inadequate A
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 B
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 C
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 who le. 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 D
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 E
no dispute that the workmen are entitled to them.

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 F
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 G
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 H
22 SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R.

A the same. In such cases, he has to refer the parties to the appropriate forum.
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
B from approaching the regular forum for the redressal of its grievance.
Construing a more or less similar provision of Section 3(b) of the U.P.
Industrial Disputes Act, 1947 in State of Uttar Pradesh v. Basti Sugar Mills
Co. Ltd., AIR (I 961) SC(. 420, this Court had taken the same view. The
provisions of the said Settiop 3(b) read as follows:
c "3. Power to prevent strikes, lockouts, etc. - If, in the opinion of th,.
State Government, it is necessary or expedient so to do for securing
the public safety or convenience or the maintenance of public order
or supplies and services essential to the life of the community, or for
maintaining employment, it may, by general or special order, make
D provision -

(a) x xx xxx

(b) for requiring employers, workmen or both to observe for such
period, as may be specified in the order, such terms and conditions
of employment as may be determined in accordance with the order;
E
xxx xxx"

The above position was highlighted in Modi's case (supra).

The Assistant Labour Commissioner was justified in taking the view
F that the determinative date is the date on which the claim is lodged. Otherwise,
the very purpose of the enactment would be defeated. The relevant provisions
i.e. sub-section (I) of Section 3 of the Act reads as follows:

"3. Recovery of wages in certain Industrial establishments as arrear
of land revenue. (I) Where the Labour Commissioner is satisfied that
G 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."
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HOTEL AND RESTAURANT KARAMCHARI SANGH v. GULMARG HOTEL [PASA YAT,.LJ 23

Though the expression used is "is in default of payment of wages" it is A
relatable to the date on which the claim is lodged. Otherwise, to overcome
action contemplated under Section 3(1) of the Act i.e. issuance of certificate
for recovery by making a part payment to see that the amount comes below
Rs.50,000/-, a crafty and unscrupulous employer can defeat the legislative
intent. The act as noted above is a beneficial one intended to give help to the B
workers who are not being paid their wages. The High Court completely lost
sight of the relevant factors and relied on the decision in Modi's case (supra)
which had not decided the issue under consideration.

Therefore, the order passed by the Assistant Labour Commissioner is
restored and the impugned order of the High Court is quashed. The appeal C
is allowed but in the circumstances there will be no order as to costs.

K.K.T. Appeal allowed.

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