Kwality Motors and Components (P.) Ltd. vs Dy. Labour Commissioner, Meerut and Another

By means of present writ petition under Article 226 of the Constitution of India, Petitioner-employers challenge the order/ recovery certificate dated 17.5.1999, passed by Dy. Labour Commissioner, Meerut, under the provision of U.P. Industrial Peace (Timely Payment of Wages) Act, 1978 (hereinafter referred to as the ''Act of 1978''), a copy whereof has been annexed as Annexure-6 to the writ petition.

The facts leading to the filing of present writ petition are that Petitioner was served with a notice dated 3.2.1999 (Annexure-2 to the writ petition) to show cause as to why recovery u/s 3 of the aforesaid Act of 1978 (U. P. Act No. 5 of 1978) be not issued as the employers have not paid a sum of Rs. 95,785.26 with regard to the lay off compensation of their 12 workmen between the period October, 1998 to December, 1998. The employers submitted their reply that the provisions of Section 3 of the aforesaid Act of 1978 are not attracted as the amount of lay off compensation cannot be said to be covered within the meaning of wages under the Payment of Wages Act, and that the employees are less than 20 in number, therefore the Dy. Labour Commissioner has no jurisdiction/ authority to recover the aforesaid amount. The aforesaid reply of the employers does not find favour by the Respondent No. 1, who vide its order dated 17.5.1999 issued recovery certificate to the Collector, Meerut, for recovery of the aforesaid amount. The only submission made by learned Counsel for the Petitioner-employers is that from the admitted facts, the amount for which the aforesaid recovery has been issued under the aforesaid U.P. Act No. 5 of 1978, is not covered by the definition of the wages, even assuming that the provisions of U.P. Act No. 5 of 1978 are applicable to the establishment of the employers. Learned Counsel for the employers has relied upon a decision in Mohan Kumar Vs. Dy. Labour Commissioner, ,wherein the Kerala High Court considering the case of Nutan Mills Vs. Employees State Insurance Corporation, , of Bombay High Court has observed as under:

"The lay-off compensation paid u/s 25C of the Industrial Disputes Act cannot come within the ambit of "salary" or "wage" as defined u/s 2(21) of the Act. The lay-off compensation is evidently not remuneration payable to the employees for work done. During the period of lay-off, the contract of employment is suspended, and is not operative. The language of Section 25C of the Industrial Disputes Act, the definition of ''lay-off'' u/s 2(kkk) and the definition of ''wages'' in the Industrial Disputes Act make this amply clear that lay-off compensation does not come within the definition of "salary" or "wage"."

The another decision relied upon by learned Counsel for the employers is in Anusuya Vithal and Others Vs. J.H. Mehta and Another, wherein the Division Bench of Bombay High Court after considering the case of Supreme Court in Bala Subrahmanya Rajaram Vs. B.C. Patil and Others, has observed:

"Remuneration is only a mere formal version of ''payment'' and payment is a recompense for service rendered." Compensation which is payable for lay-off, that is, on account of the failure or inability of the employer to provide work, cannot therefore be said to be remuneration. The payment is made not as consideration for work done or services rendered, but as compensation for temporary loss of employment."

In Para 4 of the aforesaid judgment, the Division Bench further observed:

"The compensation for lay-off is, therefore, paid in respect of a period when no work is done and when in fact there is no liability on the employer to provide work and on the employee to do work. It is not paid as additional remuneration for work done previously. It cannot, therefore, be said to be attributable to the employment of a worker or to the work done by him. It is made payable in order to mitigate or reduce the hardship caused by reason of unemployment or temporary loss of employment. Consequently, it cannot be said to be a payment "in respect of employment or work done in such employment".

In paragraph 8 of the aforesaid judgment, the Division Bench further observed:

"We are accordingly of the opinion that compensation payable for lay-off, under the provisions of the Industrial Disputes Act, is not wages within the meaning of the Payment of Wages Act."

The Madhya Pradesh High Court has also taken the similar view, which is in Burhanpur Tapti Mills Ltd. Vs. Labour Officer, Govt. of Madhya Pradesh and Others, ,wherein in paragraph 6 it has been observed:

"The amounts of lay-off compensation payable to a worker under Chapter V-A of the Industrial Disputes Act does not come within the definition of ''wages'' under the Payment of Wages Act, 1936, and therefore, its recovery cannot be made under that Act : See Anusuya Vithal and Others Vs. J.H. Mehta and Another, Accordingly, we hold that the Government had no jurisdiction to determine u/s 33C or Rule 62 the amount of lay - off compensation payable to the six workers. The amount could be adjudicated only by the Labour Court u/s 7 of the Act in case of a dispute. It is only if and after the amount due to the employee is so determined that the Government gets the power of ordering its recovery u/s 33C."

In this view of the matter, learned Counsel for the Petitioner - employers contended that since the amount even assuming it is due and the provisions of U.P. Act No. 5 of 1978 are applicable to the employers'' establishment, the same cannot be recovered under the provision of the aforesaid U.P. Act No. 5 of 1978 and the recovery certificate issued by the authority deserves to be quashed. Learned Counsel appearing for the contesting Respondent has contested the aforesaid claim, but is unable to show any authority, which may support his contention that the lay - off compensation will be covered by the definition of wages so as to make it recoverable under the provisions of U.P. Act No. 5 of 1978.

Having heard learned Counsel for the parties and going through the decisions relied upon by both the parties, I am in full agreement with the arguments advanced and the decisions relied upon by learned Counsel for the employers and consequently, I hold that the lay - off compensation is not covered by the definition of wages under the Payment of Wages Act, 1936, and, therefore, it is not recoverable under the provisions of U.P. Act No. 5 of 1978.

This writ petition, therefore, succeeds and is hereby allowed. The order/recovery certificate dated 17.5.1999, Annexure - 6 to the writ petition, is quashed. However, the parties shall bear their own costs.