Holding

The Labour Commissioner may issue a certificate under Section 3 only when there is no genuine dispute over the workers’ entitlement to wages; where such a dispute exists, the matter must be referred to the appropriate industrial adjudication forum.

Summary

Modi Industries Ltd. (the appellant) operated a manufacturing unit where a dispute between management and trade unions led to a halt in production from 21 December 1990 to 3 March 1991. The company refused to pay wages for this period, prompting the Additional Labour Commissioner to issue a notice under Section 3 of the U.P. Industrial Peace (Temporary Payment of Wages) Act, 1978 and later order the recovery of Rs. 3,67,474 for January 1991 wages. The company challenged the order, arguing that a genuine dispute existed over entitlement to wages and that the Labour Commissioner lacked jurisdiction to decide it without referring the matter to an industrial tribunal, and also that the Commissioner should have given a reasoned order. The Supreme Court held that the Act is intended to address defaults affecting the whole establishment, not individual disputes, and that the Labour Commissioner’s inquiry is limited to confirming a default on the wage‑bill exceeding Rs. 50,000; where a genuine dispute exists, the Commissioner must refer the matter to the appropriate industrial adjudication forum. Consequently, the Court set aside the Commissioner’s certificate, directed the State to refer the dispute to an industrial tribunal, and allowed the appeal, modifying the High Court’s order.

Issues considered

The scope of Section 3 of the U.P. Industrial Peace (Temporary Payment of Wages) Act, 1978 – whether it empowers the Labour Commissioner to adjudicate disputes over individual wage entitlement.
Whether the Labour Commissioner must give a reasoned order when issuing or refusing a certificate under the Act.
Whether the Labour Commissioner can issue a certificate when a genuine dispute exists, or must refer the matter to an industrial tribunal.
The relationship between the 1978 Act and the Payment of Wages Act, 1936.

Legislation cited

Code of Civil Procedure, 1908
Code of Criminal Procedure, 1973
Industrial Disputes Act, 1947
Payment of Wages Act, 1936
U.P. Industrial Peace (Temporary Payment of Wages) Act, 1978s. 2(a), s. 2(d), s. 3, s. 4, s. 5, s. 6

Subjects

Industrial peaceTimely payment of wagesLabour CommissionerSummary inquiryQuasi‑judicial powerIndustrial disputeWage‑billPayment of Wages ActIndustrial Disputes ActReasoned orderJurisdiction

Judgment

MODI INDUSTRIES LTD. A
v.
STATE OF UTTAR PRADESH AND CRS.

OCTOBER 14, 1993

[P.B. SAWANT AND A.S. ANAND, JJ.] B

Labour Law: U.P. Industrial Peace (Timely Payment of Wages) Act,
197~Section 3---Dispute between management and Workmen-Halt in
production-Management not paying wages-Workmen-Whether to resort to
usual process of industrial adjudication--Exercise of power under this C
provision:--Power of the Labour Commissioner-Scope and nature of-Quasi-
judicial power-Giving of reasons-Requirement of-Dependent upon cir-
cumstances of each case.

Interpretation of Statutes : Internal aids--lnterpretation with the aid of
Preamble. Statemettt of Reasons--U.P. Industrial Peace (Timely Payment of D
Wages) Act, 197~Section 3-lnterpretation of.

In one of th~ units of the appellant-company, there was a halt in
production due to suspension of some workers. Later, the production
commenced and for the interregnum between 21.12.1990 and 3.3.1991 when E
there was no production, the management refused to pay wages to the
workmen. The trade unions claimed that the Workmen reported for duty
during the said period, but there was no production since in the absence
of technicians, who were suspended, the machi~es could not be operated.

The Additional Labour Commissioner issued a notice under S.3 of F
the U.P. Industrial Peace(Temporary Payment of Wages) Act, 1978 calling
upon the appellant-company to show cause as to why order for payment
of wages to the workmen should not be made against it. After hearing the
appellant-company, an order was passed directing recotery of Rs. 3,67,474
from the Company for payment of wages to the workmen of the month of G
January, 1991 only.

The appellant-company filed a Writ petition before the High Court
challenging the said order. The High Court having dismissed the Writ
Petitions the appellant-company preferred the present appeal. It con·
tended that sin .:e there was a dispute as to whether the workmen v1ere H
281
282 SUPREME COURTREPORTS (1993) SUPP. 3 S.C.R.
~
A entitled to receive payment of wages for the period in question, the Labour
Commissioner ought to have directed the workmen to raise an industrial
dispute or to approach the Civil Court, and that he had no jurisdiction to
decide the said dispute; that no speaking order was passed and that such
an order could be passed only when there was default in payment of wage
bill in respect of the entire establishment and not of :i few individual
B workmen.

On behalf of the Workmen it was contended that the power conferred
on the Labour Commissioner was of summary nature to give speedy relief
to the workmen who were deprived of their wages; and that the order in
c question being administrative in nature, the authority was not bound to
give reasons for the same•
..
Allowing the appeals, this Court

HELD: 1. The U.P. Industrial Peace (Temporary Payment of Wages)
D Act, 1978 does not supplant or substitute the Payment of Wages Act, 1936
but supplements the said Act, in the limited area, viz., where the estab·
lishment produces, processes, adopts or manufactures some articles;
where there is a default in the wage-bill of the entire establishment; and
where such wage-bill exceeds Rs. S0,000. The object of the Act is not so
much to secure payment of wages to individual workmen but to prevent
E 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 work-force as a whole. Many establishments had a tendency to delay
the payment of wages to their workmen and ".Vere playing with the lives of
the workmen with impunity. This r,'lturally led to.~despread disturbance
F 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 'l.111
the workmen are entitled to them. (289-G-H; 290-A-C]
G
2. 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 part. He does not act as an adjudicator if
the entitlement of workmen to the wages is disputed otherwise then "on
H frivolous or prima facie untenable grounds. When the liability to pay the
MODI INDU. v. STATE 283

wages, as in we present case, is under dispute which involves investigation A
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 forum. (290-E-G]

3. The power conferred on the Labour Commissioner being meant
to be used speedily to prevent apprehend'd or continuing industrial B
unrest, the procedure to be adopted by him is essentially of a summary
nature. It does not contemplate a protracted inquiry. It does not prevent
either party from approaching the regular forum for the radressal of its
grievance. The purpose of the inquiry being to redress the grievance of the
non-payment of wages, the authority of the Labour Commissioner extends C
only to finding out whether on the admitted fact that the workman had
worked, the grievance of the workmen has a substance in it or noL It does
not, however, mean that the employer can defeat the provisions of the Act
by raising frivolour pleas to avoid the payment of wages or that when the
employer does so, the Labour Commissioner can wash his hands off the D
complaint of the workmen. [p. 292-D-F]

State of Uttar Pradesh and Others v. Basti Sugar Mills Co. Ltd., (1961)
2 SCR 330 and Basti Sugar Mills Co. Ltd. v. State of U.P. & Anr., (1989] 1
SCR 590, relied on.
E
4. The inquiry that. the Labour Commissioner conducts is of a
quasi-Judicial nature. It is the Collector to whom he forwards the certifi-
cate who in fact acts as the n:covery officer. As Is provided in Seetion 3
itself, on receipt of the claim or complaint of the workmen, tbe Labour
\
Commissioner has to satisfy himself that the occupier of the industrial p
establishment concerned is in default of payment of wages and that the
wage-bill in respect of which the default is complained of exceeds Rs.
50,000. He cannot satisfy himself on the said facts without hearing the
occupier of the industrial establishment on the claim made. That is why
under Section 4, he is clothed With the powers of the Civil Court in the
matter of enforcing the attendance of the witnesses, examining them on G
oath and compelling production or documents. Further, the consequence
to the parties of the issuance of non-issuance of the certificate are grave.
When the certificate is not issued, the employees' claim stands deferred to
an indefinite period. When however it is issued, the employer is saddled
with a sizeable financial liability and the non-payment of the amount H
284 SUPREME COURT REPORTS (1993) SUPP. 3 S.C.R ..

A indicated in the certificate visits him with penal consequenc£ of both
imprisonment and fine. (293-A-D]

5. The Labour Commissioner is not called upon to give any reasons
while issuing the certificate, where there is no defence whatsoever raised
by the·emplc.yer to the claim of the workmen. The Labour Commissioner
B has to give reasons as to why according to him the the pleas raised by the
employer are untenable. When he rejects the claim of the workmen, he has
to indicate the disputed questions of law or fact which prevent him from
exercising his limited jurisdiction. Thus, both for issuing the certificate aft·
well as for rejecting it, the Labour Commissioner may be called upon to
C give his reasons depending upon the facts in each case. Therefore, it is not
correct to say that the Labour Commissioner is not required to give
reasons for his orders. (293-G-H, 294-A-B]

A.K Kraipak & Ors. etc. v. Union of India & Ors., (1970) 1SCR457,
relied on.
D
Mahabir Jute Mills Ltd. Gorakhpur v. Shibbon Lal Saxena and Ors.,
(1976) 1 SCR 168; Maharashtra State Board of Secondary and Higher
Secondary Etjucation v. KS. Gandhi & Ors., (1991) 2 SCC 716 and C.B.
Gautam v. Union of India & Ors., (1993) 1 SCC 78, referred to.
;

E 6. Whether the certification is issued or not, th1~ 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. (294-B-C]

7. In the instant case there did exist a genuine dispute between the
F parties as to whom acts of omission or commission were responsible for
the halting of the production in the factory for the period in question. This
was put in issue before the Labour Commissioner by the appellant Com-
pany. The Labour Commissioner, therefore, could not have proceeded to
issue the certificate. He ought to have referred the parties to industrial
G adjudication which was the proper forum for the purpose. [294-D-E]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5446 of
1993.

From the Judgment and order dated 12-11-91 of the Allahabad High
H Court in CMWP No. 13001/91.
MODI INDU. v. STATE [SAWANT,J.) 285

Harish N. Salve and Vined Kumar for the Appellants. A
V.M. Talkunde, C. Ramamurthi, S.K. Sabharwal and R.B Mishra for
the Respondents.

The J udgmenl of the Court was delivered by
B
SWANT, J. Leave granted.

The appellant-Company 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 dispute between the management and the c
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 form service. According to the
Company, from December 21, 1990 the workmen came to the Company's
premises but did not discharge their duties. On account of this, there was D
a complete halt in production. According to the respondent-trade unions,
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 E
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 the non-cooperation of 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 F
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 G
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 H
286 SUPREME COURT REPORTS [1993) SUPP. 3 S.C.R.

A 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, b, · No positive reply was received from the
management with the result that work could not be carried on upto and
inclusive of March 3, 1991. The work started and the production com-
menced only on March 4, 1991. The management did not pay wages to the
B workmen for the period from Decemuer 21, 1990 to March 3, ·1991.

2. the Additional Labour . Commissioner issued a notice dated .
February 27, 199J. under Section 3 of the U.P. Industrial Peace (Temporary
Payment of Wages) Act, 1978 (hereinafter referred to as the 'Act')
C whereby the appellant-company was called upon to show cause as to why
order for payment of wages to the workmen under Section 3 of the Act be
not ma~<? against it. The hearing of the notice was fixed on March 10, 1991.
The appellant-Company submitted its representation including the sup-
plementary representation. The Company was given personal hearing.
After considering the material placed by the Company on record, the
D Additional Labour Commissioner passed an order on April 29, 1991 direct-
ing 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
E contentions and dismissed the petition. The operative part of the order of
the High Court is as follows :

"When order is passed under Sec. 3 of the Act for recovery of
wages and the aggrieved party approaches the Government of refer
F the dispute under the Industrial Disputes Act, the Government has
hardly any option in view of the reasons given above. The Govern-
ment if required by any party to refer the dispute to ~he Industrial
Tribunal, it has to pass an appropriate order in connection there-
with. -.
G The writ petition is accordingly dismissed. There shall be no
order as to costs. In case the petitioner approaches the Govern-
ment for reference under the Industrial Disputes Act to the In-
dustrial Tribunal, Labour Court, the State Government shall pass .
appropriate order within six weeks from the date of presentation
H of the application for reference along with the certified copy· of
MODI INDU. v. STATE (SAWANT, J.) 287

this order. After reference is made, the Industrial Tribunal Labour A
Court will decide the dispute expeditiously in accordance with law."

The short question that falls for consideration is whether the order
passed by the Labour Commissioner on April 29, 1991 directing the
recovery of the amount is valid. Shri Salve, the learned counsel appearing B
for the appellant-Company contends that since in the present case there
was dispute as to whether the workmen were entitled to receive the
payment of wages for the period on question, the Labour Commissioner
ought to have directed the workmen to raise an industrial dispute or to
approach the civil court. He had no jurisdiction to decide the said dispute
which he virtually did by passing the impugned order. The learned counsel C
further contended that assuming that the Labour Commissioner had such
power, he ought to have passed a speaking order dealing with the conten-
tions of the parties and since in the present case the Labour Commissioner
has merely given a certificate of recovery without giving any reasons, the
order is prima facie bad in law. His third submission was that the Labour D
Commissioner could not have entertained the complaint of non-payment
of wages since Section 3 of the Act under which the Labour Commissioner
has chosen to exercise his power, confers on him jurisdiction to make an
order of payment oitly when the industtial establishment is in default of
the payment of a wage-bill in respect of the entire establishment and of a
few individual workmen. Shri Tarkunde, the learned counsel appearing for E
the Workmen, while not q~estioning the submission that the Labour Com-
missioner under the Act cannot go into the disputed questions of law and

. fact submitted that the disputed question in the present case was only of
an incidental· nature and the Labour Commissioner has the authority to
decide the same in order to give relief to the workmen. He submitted that
F
the power conferred on the Labour Commissioner under Section 3 of the
Act is of a summary nature and it has been conferred on him with a view
. . to give a speedy relief to the workmen who are deprived of their wages.
He further contended that the order passed by the Commissioner being
administrative ~ nature, he was not bound to give reasons for the same.
G
3. Jn 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
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 H
288 SUPREME COURT REPORTS (1993] SUPP. 3 S.C.R ..

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 pay •. ·.,t 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 provisions of the Payment of Wages Act, 1936
have been found to be inadeq_1te to ensure timely payment of wages. The
B incidence of disturbance of indu!>ll idl 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 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
c to make it a penal offence to be in default of a wage-bill exceeding Rs. 1
lakh.

Section 2 (a) of the Act defines " industrial establishment" to mean
"any factory, workshop or other establishment in which articles are
D produced, processed, adopted or manufactured with a view·to their use,
transport or sale". "Wage-bill" is defined by Section 2 (d) to mean "the total
amount of wages payable by an industrial establishment to its workmen".
Sub-section (1) of Section 3 then states that where the Labour Commis-
sioner is "satisfied" that the occupier of an industrial establishment is in
default of payment of wages and that the "wage-bill" in respect of which
E such occupier is in def~ult "exceeds fifty thousand rupees", he may, without
prejudice to the prov1~1ons of Sections 5 and 6, forward to the Collector,
a certificate...... specifying the amount of wages due from the industrial

-
establishment concerned. Sub-section (2) of that section states that upon
receipt of "the certificate" referred to in sub-section (1), the Collector shall
F proceed to realise from the industrial establishment, the amount specified
therein, besides recovery charges at the rate of ten per cent, as if such
amount was in arrear of land revenue. Sub-section (3) of that section states
that the amount so realised shall be placed at the disposal of the Labour
Commissioner. and he shall disburse the same among the workmen entitled
..
thereto. Sub-section (4) states that when the amount so realised falls short
G of the wage-bill in respect of which there bas been a default, thf' Labour
Commissioner may arrange for disbursement of such proportion or respec-
tive proportions of the wages due to "various categories of workmen", as
he may think fit. Sub-section (5) then states that the liability of the occupier
towards each workman in respect of payment of wages shall to the extent
H of the amount paid to such workman, stand discharged. Section 4 specifies
MODllNDU.v. STATE[SAWANT,J.1 289

the powers· of the Labour Commissioner when he entertains the complaint A
of the default of payment of the wage-bill. It states that for the purposes
of ascertaining the "wage-bill" of an establishment in respect of which
default has been committed, the Labour Commissioner shall have all the
powers of a civil court while trying a suit under the Code of Civil Proce-
dure, 1908 in respect of enforcing the attendance of witnesses, examining B
them on oath and compelling production of documents, and shall be
deemed to be a Civil Court for the purposes of Section 195 and Chapter
XXVI of the Code of Criminal Procedure, 1973. Section 5 prescribes
penalty. It states that no occupier of an industrial establishment shall at
any time be in ·default of a wage-bill exceeding Rs. 1 lakh, and every
occupier who is so in default shall be punishable with imprisonment for a C
term which shall not be less than three months but which may extend to
three years and shall be liable to fine. The Court is given power to impose
a sentence of imprisonment for a term of less than three months for
adequate and special reasons to be recorded in writing. Section 6 provides
for punishment of persons when the offence is by the company, which D
includes firms and association of individuals.

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 E
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 of by the provisions of the Payment of Wages Act, 1936 which F
provisions are found inadequate to ensure timely paynient 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 of a wage-bill
exceeding 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 G
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 manufac-
H
290 SUPREME COURT REPORTS (1993) SUPP. 3 S.C.R.

A tures 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 as stated above is not so much to secure payment of
wages to individual workmen but to prevent industrial unrest and distur-
bance of industrial peace on account of the default on the part of the
B 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 Commis-
C sioner 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 them.

D · 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 ill the work were paid their wages as per the "terms
of their employment and withiti the time stipulated by such terms. If the
Labour Commissioner is satisfied that the workmen, though they have
E 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 Commis-
sioner act to assist the workmen to recover their wages which are admit-
tedly due to them but are withheld for no fault on their behalf. He does
F not act as an adjudicator if the entitlement of the workmen to the wages
is disputed otherwise than on frivolous or prima f acie untenable ground.
When the liability to pay the wages, as in the present case, is under dispute
which involves investigation of the question of fact and/or law, it is not
function of the Labour Commissioner to adjudicate the same. In such
G 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
H exercise of the said powers by the Labour Commissioner does not prevent
MODI INDU. v. STATE (SAWANT,J.] 291

either party from approaching the regular forum for the redressal of its A
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 and Others
v. Basti Sugar Mills Co. Ltd., (1961] 2 SCR 330, this Court had taken the
same view. The provisions of the said Section 3 (b) read as follows :

"3. Power to prevent strikes, lock-outs, etc. - If, in the opinion of B
the State Government, it is necessary o.r 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 provision- C
(a) xx xx xx xx xx xx xx xx

(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; D

xxxxxxxx"

In that case, the State Government under the above provision had
directed the sugar factories to pay bonus to the workmen. Repelling the
challenge to the direction of the Government, this Court observed as E
follow: ·

"We entirely agree with Mr. Pathak that the normal way of
dealing with an industrial dispute under the Act would be to have
it dealt with judicially either by conciliation or by adjudication and F
that judicial process cannot be circumvented by resort to executive
action. The proceeding before a conciliator or an adjudicator is,
in a sense, a judicial proceeding because therein both the parties
to the dispute would have the opportunity of being heard and of
placing the relevant material befo~e the conciliator or adjudicator.. G
But there my be an emergency and the Government may have to
act promptly "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 maintaining employment" .1It was,
therefore, necessary to arm it with additional powers for; dealing
with sue~ an emergency. aause (b) of S.3 was apparently enacted H
292 SUPREME COURT REPORTS (1993) SUPP. 3 S.C.R.

A for this purpose. An order made thereunder would be in the
nature of a temporary or interim order as would be clear from the
words "for such period as may be specified" appearing therein and
from the second proviso to s.3. Under this proviso where an
industrial dispute is referred for adjudication under cl. (d) an order
made under cl. (b) cannot be enforced after the decision of the
B adjudicating authority is announced by or with the consent of the
State Government. It would, therefore, follow from this that where
the Government has an executive order, as it did in this case, under
cl. (b) of s.3, it is open to the aggrieved party to move the
Government to refer the industrial dispute for conciliation or
c adjudication under cl. (d) of s.3 ........... "

A similar view is expressed in Basti Sugar Mills Co. Ltd. v. State of
U.P. & Anr., [1979) 1 SCR 590. This nature of the provisions of Section 3
of the present Act emphasises two aspects which are relevant for our
D purpose. Firstly, the power conferred on the Labour Commissioner being
meant to be used speedily to prevent apprehended or continuing industrial
unrest, the procedure to be adopted by him is essentially of a summary
nature. It does not contemplate a protracted inquiry. Secondly, the purpose
of the inquiry being to redress the grievance of the non-payment of wages,
E the authority of the Labour Commissioner extends only to finding out
whether on the admitted fact that the workmen had worked, the grievance
of the workmen has a substance in it or not. It does not, however, mean
that the employer can defeat the provisions of the Act by raising frivolous
pleas to avoid the payment of wages and when the employer does so, the
Labour Commissioner has to wash his hands off the complaint of the
F workmen. While looking into the grievance of the workmen, the Labour
Commissioner will undoubtedly have power to find out whether the
employer has a plausible defence or not. Hence the Labour Commissioner
would have to examine the please and to deal with them. He would have,
therefore, to give reasons for accepting or not accepting them.. To that
G extent, he is called upon to give reasons while issuing or refusing to issue
the certificate. It must be remembered that Labour Commissioner is not a
mere recovery officer. While the recovery officer acts on a claim which is
already crystallised in some other, the Labour Commissioner in the present
case, has to ascertain himself whether and to what extent, the worY.men are
H entitled to the wages and then issue or refuse to issue the certificate. The
MODI INDU. v. STATE [SAWANT, J.] 293

inquiry that the Labour Commissioner conducts for the purpose is thus of A
a quasi-judicial nature. It is the Collector to whom he forwards the certifi-
cate who in fact acts as the recovery officer. As is provided in. Section 3
itself, on receipt of the claim or complaint of the workmen, the Labour
Commissioner has to satisfy himself that the occupier of the industrial
establishment concerned is in default of payment of wages and that the B
wage-bill in respect of which the default is complained of exceeds Rs.
50,000. He cannot satisfy himself without hearing the occupier of the
industrial establishment on the claim made. That is why under Section 4,
he is clothed with the powers of the Civil Court in the matter of enforcing
the attendance of the witnesses, examining them on oath and compelling C
production of documents. It has further to be borne in mind that the
consequences to the parties of the issues or non-issuance of the certificate
are grave. When the certificate is not issued, the employees' claim stands
deferred to an indefinite period. When, however, it is issued, the employer
is saddled with a sizeable financial liability and the non-payment of the
amount indicated in the certificate visits him with penal consequences of D
both imprisonment and fine. The decisions of this Court in Mahabir Jute
Mills Ltd. Gorakhpur v. Shibban Lal Saxena and ors., (1976] 1 SCR 168,
/Maharashtra State Board of Secondary and Higher Secondary Education v.
KS. Gandhi & Ors., (1991) 2 SCC 716, C.B. Gautam v. Union of India &
Ors., (1993) 1 SCC 78, on which Shr~ Tarkunde relied in support of his E
proposition that administrative orders need not contain reasons for the
same, according to us, therefore, have only a limited application in the
present case. The Labour Commissioner may have to deal with broadly
three different situations, viz., (i) where there is no defence whatsoever
raised by the employer to the claim of the workmen; (ii) where the F
employer raises frivolous and untenable pleas to resist the claim; and (iii)
where there is a genuine dispute with regard to the entitlement of the
workmen to the wages and the said dispute cannot be resolved without
investigating the disputed questions of fact or law. In the first case, the
Labour Commissioner is not called upon to give any reason while issuing G
the certificate. In the second case, the Labour Commissioner has to give
reason as to why according to him, the pleas raised are untenable. In the
third situation, the Labour Commissioner when he rejects the claim of the
workmen, has to indicate the disputed question of law or fact which prevent
him from exercising his limited jurisdiction. Thus, both for issuing the
H
294 SUPREME COURT REPORTS [1993) SUPP. 3 S.C.R.

A certificate as well for rejecting it, the Labour Commissioner may be called
upon to give his reason depending upon the fact in each case. It is
well-settled by a series of decisions beginning with A.K. Kraipak & Ors. etc.
v. Union of India & ors., (1970) 1 SCR 457, that even administrative decision
must bear reasons for some of them. may have more vital consequences of
B the right of the parties than even judicial decisions. It is not, therefore,
correct to say that the Labour Commissioner is not required to give reasons
for his order. ·

As stated earlier, whether the certificate is issued or not, the parties'
remedy to approach the appropriate forum for the adjudication of their
C 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 the
summary nature meant to deal speedily with situations requirffig urgent
solution.

D 4. 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 of 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 the appellant-company. The Labolir Commis-
E sio~er, in the circumstances, could not have proceeded to issue the certifi-
' eate. 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
Commissioner.

F 5. The record shows that this Court, while granting interim stay of
the recovery proceedings, directed the appellant-Company to pay to the
workmen, 50 per cent of the wages as per the certificate issued by the
Labour Commissioner. The dispute has been pending since 1990. We,
therefore, direct the respondent-State of Uttar Pradesh to refer the dispute
G between the parties with regard to the entitlement of the workmen to
receive the wages and the liability of the app~llant-Company to pay the
I'
same for the period between December 21, 1990 to March 3, 1991, for ,
adjudication to the appropriate authority under the U .P. Industrial Dis-
putes Act, 1947, within four weeks from to-day. In the meanwhile, with a
H view to mitigate hardship of the workmen, the appellant-company will pay
MODllNDU. v. STATE(SAWANT,J.). 295

to the workmen additional 25 per cent of the wages as found due by the A
Labour Commissioner under his impugned certificate. The payments made
shall be ~object to the outcome of industrial adjudication. The appeal is
allowed accordingly and the order of the High Court is modified in the
above terms. In the circumstances of the case, there \\ill be no order as to
costs.
B
G.N. Appeal allowed.