J. C. Jain vs R. A. Pathak And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 75 of 1956

Decision Date: 12 January, 1960

Coram: P.B. Gajendragadkar, K.C. Das Gupta, Subbarao, K. Gupta

In this matter the petition was filed by J C Jain against R A Pathak and several other respondents. The Supreme Court of India delivered its judgment on the twelfth day of January, 1960. The judgment was authored by Justice P B Gajendragadkar, who was joined on the bench by Justice K C Das Gupta, Justice Subbarao, and Justice K Gupta. The case is reported in the 1960 volume of the All India Reporter at page 619 and also in the 1960 Second Series of the Supreme Court Reports at page 701. The operative provision concerned was the Payment of Wages Act of 1936, specifically sections fifteen three, sixteen, and seventeen one a, which deal with an employer’s right of appeal against a direction for payment of wages. The headnote explained that the phrase “the total sum directed to be paid” in section seventeen one a, when read in context, does not refer to the sum payable to each individual claimant. Accordingly, an employer against whom a payment direction is issued under section fifteen three acquires a right of appeal under section seventeen one a not only when a single claimant is awarded more than three hundred rupees, but also when a comparable amount is awarded on a single application made under section sixteen two on behalf of a group of employees belonging to the same unpaid class, or when multiple applications are consolidated under section sixteen three. The provision does not require that each individual claimant receive an award of at least three hundred rupees before the employer’s appellate right arises. The Court emphasized that the language of the statute is clear and that no hypothetical anomalies should be read into its plain meaning. The judgment overruled the earlier decision in Laxman Pandu and Others v. Chief Mechanical Engineer, Western Railway (B B and C I Railway), Lower Parel, Bombay, reported in 1957 at 57 B.L.R. 399. It also approved earlier authorities such as Union of India v. S P Nataraja Sastrigal & Others, A.I.K. 1952 Mad. 808; A C Arumugam & Others v. Manager, Jawahar Mills Ltd., Salem Junction, A.I.R. 1956 Mad. 79; Promod Ranjan Sarkar v. R N Mullick, A.I.R. 1959 Cal. 318; and Cachar Cha Sramik Union v. Manager, Martycherra Tea Estate & Another, A.I.R. 1959 Assam 13.

The appeal originated as Civil Appeal No. 75 of 1956 and was taken to the Supreme Court by way of special leave from a judgment and order dated the seventeenth of March, 1955, rendered by the Small Causes Court in Bombay in Appeal No. 1 of 1955. Counsel appearing for the appellant included the Attorney‑General for India and other senior advocates, while counsel for the respondents were also instructed. The Court noted that the central issue to be resolved was the point at which an employer acquires a right to prefer an appeal against a direction made under subsection three of section fifteen of the Payment of Wages Act, 1936. The Court identified this as the concise question presented by the present group of four appeals. It further observed that the answer to this question depended upon the interpretation of section seventeen one a of the Act. The judgment was delivered by Justice Gajendragadkar, who framed the question and indicated that the decision would hinge upon the construction of the statutory language.

In order to answer the question presented in these four appeals, the Court first examined the facts and the decision in Civil Appeal No. 75 of 1956. That appeal, which was brought before this Court by way of special leave, arose from a dispute between the General Manager of the Times of India Press in Bombay, a company owned by Bennett Coleman & Co., Ltd., and a number of its employees. The employees are referred to in the judgment as the respondents. In November 1953 the Vice‑President of the Times of India Indian Employees Union filed a total of 1,066 applications on behalf of some of the respondents before Mr. C. P. Fernandes, who was the authority appointed under the Payment of Wages Act, 1936, to hear claims of that nature. The applications sought payment of arrears of salary increments that the employees alleged had been withheld by the employer for the period from 1 July 1951 to 30 September 1953, and also claimed an increased dearness allowance for the period from 1 January 1953 to 31 August 1953. The appointed authority treated the whole batch of applications as one collective application in accordance with section 16(3) of the Act. After examining the claims, the authority held that the respondents’ claim for an increased dearness allowance was not justified. Regarding the allegation of withheld increments, the authority rejected the claim of 761 employees but allowed the claim of 305 employees. Consequently, on 31 December 1954 the authority ordered the employer to deposit a sum of Rs. 22,698 to be distributed to the 305 employees whose claims had been allowed. The direction issued by the authority gave rise to two separate appeals before the Small Causes Court at Bombay, which is the appellate authority provided for under the Act. The employer filed Appeal No. 11 of 1955, while the employees filed Appeal No. 187 of 1954.

While these appeals were pending, the Court considered the extent of the right given to an employer to prefer an appeal under section 17(1)(a) of the Act. The Bombay High Court had earlier addressed the same issue in the case of Laxman Pandu & Ors. v. Chief Mechanical Engineer, Western Railway (B.B. & C.I. Railway), Lower Parel, Bombay. In that decision the High Court held that an employer acquires the right to appeal only when the order of the authority under the Act directs payment of an amount of Rs. 300 or more in respect of a single employee. The Court further held that the right of appeal does not arise when the order directs a collective payment that exceeds Rs. 300 in total but each individual employee is to receive an amount less than Rs. 300. Applying that interpretation, the appellate authority in the present case concluded that the appeal filed by the employer was incompetent and consequently dismissed it. The employer then applied for and obtained special leave from this Court to challenge the decision of the appellate authority. The principal issue raised in the appeal therefore concerns the proper construction of section 17(1)(a) of the Payment of Wages Act, 1936. The Act itself was enacted in 1936 with the purpose of regulating the payment of wages to certain classes of persons employed in industry, and the construction of the aforementioned provision is now the subject of determination by this Court.

The Factories Act was enacted in 1936 with the purpose of regulating the payment of wages to certain classes of persons employed in industry. Section fifteen, clause one, empowers the State Government, by Gazette notification, to appoint a Commissioner for Workmen’s Compensation or any officer experienced as a Civil Court Judge or stipendiary Magistrate. The appointed authority must hear and decide, for the specified area, all claims arising from deductions from wages or delays in salary payment of persons employed or paid there. Section seven of the Act enumerates the specific deductions that may lawfully be made from an employee’s wages. Any deduction that is made contrary to the provisions of section seven, or any wage whose payment has been delayed, may be presented before the authority under sub‑section two of section fifteen. Sub‑section three of section fifteen authorises the authority to consider the applications filed under sub‑section two of that section. The authority may then order a refund of the deducted amount to the employee, or direct payment of delayed wages together with compensation it deems appropriate, the compensation not exceeding ten times the deducted amount in the former case and not exceeding Rs 10 in the latter case. Sub‑section four of section fifteen provides that if the authority is satisfied that an employee’s application was made maliciously or vexatiously, it may impose a penalty of up to Rs 50 on the employer or any other person responsible for wage payment. Consequently, section fifteen establishes both the procedure for employees to make applications concerning unlawful deductions or delayed wages and the manner in which the authority may decide those applications in accordance with the Act.

Before addressing the construction of section seventeen, clause one, it is necessary also to examine section sixteen of the Act. Section sixteen deals with the filing of a single application on behalf of claims arising from an unpaid group of workers. Subsection one of section sixteen defines an unpaid group as employed persons who work for the same establishment and whose wages for the same period or periods have remained unpaid after the day fixed by section five. Subsection two authorises a single application under section fifteen to be made on behalf of, or in respect of, any number of employed persons belonging to the same unpaid group. It also stipulates that in such cases the maximum compensation that may be awarded under subsection three of section fifteen shall be Rs 10 per head. Subsection three further provides that the authority may treat any number of separate pending applications presented under section fifteen, which relate to persons belonging to the same unpaid group, as a single application filed under subsection two. Accordingly, the provisions of subsection two shall then apply to the consolidated application. Consequently, the effect of section sixteen is that a single application may be made on behalf of any number of employed persons who belong to the same unpaid group, and that separate applications by such persons may be combined and dealt with as one.

The provision allowed a single application to be filed on behalf of any number of employed persons who belonged to the same unpaid group, and it also permitted separate applications filed by such persons to be merged and tried as one application. The Court then turned to Section 17, which dealt with appeals. Section 17(1) stated that an appeal against a direction issued under sub‑section (3) or sub‑section (4) of Section 15 could be lodged within thirty days of the date on which that direction was made. The appeal had to be filed in a Presidency‑town before the Court of Small Causes and elsewhere before the District Court. The appeal could be brought by (a) the employer or any other person responsible for paying wages under Section 3, provided that the total sum directed to be paid as wages and compensation exceeded rupees three hundred; or (b) an employed person, if the total amount of wages claimed to have been withheld from him or from the unpaid group to which he belonged exceeded rupees fifty; or (c) any person who had been ordered to pay a penalty under sub‑section (4) of Section 15. Section 17(2) rendered the directions made under sub‑sections (3) and (4) of Section 15 final, except as provided in sub‑section (1). On a plain reading of Section 17(1)(a), the Court observed that the sole condition for an appellant to prefer an appeal against a direction issued under Section 15(3) was that the total sum directed to be paid by the respondent should be more than rupees three hundred. Accordingly, when a single application was filed on behalf of several employed persons belonging to the same unpaid group under Section 16, sub‑section (2), and a direction was issued for the payment of a specified amount, that specified amount alone had to be examined to determine whether the condition in Section 17(1)(a) was met. The Bombay High Court, however, had taken a different view. It held that Section 17(1)(a) applied only where the amount directed to be paid to each individual applicant exceeded rupees three hundred. In that interpretation, the phrase “the total sum directed to be paid” in Section 17(1)(a) was read as referring to the total sum to be paid to each applicant, thereby effectively adding words to the statute. Under that view, if an application was made by a single employee, the employer could appeal the direction only if the sum directed to be paid to that employee exceeded rupees three hundred. Conversely, when a single application represented several employees of the same unpaid group, the relevant test was not whether the employer was directed to pay rupees three hundred or more to each employee individually, but whether the direction required the employer to pay rupees three hundred or more in total on that single application.

In this case, the Court observed that the application sought a direction from the employer to pay the applicants an amount of three hundred rupees or more. The Court said that reading section 17(1)(a) on its own presented no difficulty in arriving at the conclusion that the provision applied to such an application. Nevertheless, counsel argued that a proper construction of section 17(1)(a) required a comparison with clause (b) of section 17, sub‑section (1). Clause (b) confers on an employee the right to prefer an appeal, but only when the total wages claimed as withheld from the employee, or from the unpaid group to which the employee belongs, exceed fifty rupees. The argument stressed that clause (b) expressly mentions both an individual employee and an unpaid group, and therefore the absence of the words “unpaid group” in clause (a) must mean that clause (a) refers only to each individual employee. The Court stated that it was not persuaded by that line of reasoning. The Court noted that the Act already allows a single application to be filed on behalf of a number of workers belonging to the same unpaid group, as well as separate applications by individual workmen. Consequently, it was unnecessary for the legislature to refer to the notion of an unpaid group when providing the right to appeal against a direction issued under section 15(3). Conversely, had the legislature intended that the employer’s right to appeal should arise only when a direction required the payment of at least three hundred rupees to each individual employee, it would have inserted additional language in clause (a) to that effect. Accordingly, the Court held that the presence of the term “unpaid group” in clause (b) does not assist in interpreting clause (a). The Court further expressed the view that it was unlikely that the legislature meant to limit the employer’s right of appeal to situations where each applicant was ordered to receive three hundred rupees or more. The Court recognized that the policy of the Act is to provide a speedy remedy for unauthorized deductions or delayed wages, and that the Act therefore creates an authority and a summary procedure for adjudicating such claims. However, the Court found it highly improbable that, while permitting an employee to appeal under clause (b) whenever the disputed amount is fifty rupees or more—whether the dispute concerns an individual applicant or an unpaid group—the legislature would have simultaneously intended to deprive the employer of any right to appeal a direction issued on a single consolidated application, even if the total liability arising from that direction runs into several thousands of rupees. In the case presently before the Court, the direction required payment of an amount exceeding twenty‑two thousand rupees, but

The Court held that because none of the individual employees had been ordered to receive three hundred rupees or more, the employer possessed no right to appeal. Thus, after a fair and reasonable examination, the Court concluded that its interpretation of clause (a) was well‑founded. Section sixteen, paragraph three, empowered the authority to merge several applications filed by different employees into one consolidated application, treating it as if presented under section sixteen, sub‑section two. Counsel argued that this provision should not decide the employer’s right to prefer an appeal under section seventeen, sub‑section one, clause a. The Court noted that if the individual applications were not consolidated and were heard separately under section sixteen, paragraph three, each employee would receive a direction. In such a situation, the employer could appeal only when the total amount ordered to be paid exceeded three hundred rupees. Conversely, the Court observed that where the authority consolidated the applications and issued a direction covering the total sum payable to all members of the group, the employer could lodge an appeal. The Court replied that it could not perceive any persuasive force in that argument, finding it unconvincing. Conversely, the Court explained that, in normal practice, when several applications arise from employees belonging to the same unpaid group, the authority is likely to treat them as a single consolidated application under section sixteen, paragraph three. However, setting aside this practical tendency, the Court emphasized that if section sixteen, paragraph three permits consolidation and thereby renders the multiple applications equivalent to a single application contemplated in section sixteen, sub‑section two. The Court then asked whether the direction being challenged meets the condition set out in section seventeen, sub‑section one, clause a. The Court added that it had hesitation in holding the test prescribed by section seventeen, sub‑section one, clause a required direction sought to be appealed must order payment of an amount exceeding three hundred rupees. Moreover, the Court thought it would not be right to assume that the situation was anomalous simply because different procedural routes produced different consequences for employees’ claims, for example an appeal being unavailable when applications were heard separately but becoming available when similar applications were consolidated under section sixteen, paragraph three. The Court observed that this distinction was intended by the legislature, noting a comparable divergent result in the provisions dealing with the award of compensation, namely section fifteen, sub‑section three, and section sixteen, sub‑section two. Consequently, the Court concluded that the argument based on an alleged anomaly had no weight when construing section seventeen, sub‑section one, clause a. The judgment further mentioned that, incidentally, if one or

In the situation where several employees belonging to the same unpaid group receive a payment that exceeds three hundred rupees while the remaining members of that group receive amounts that are less than three hundred rupees, an alternative interpretation of the statutory provision would permit the employer to file an appeal only against the award made to the workman who was ordered to be paid more than three hundred rupees. Under that view, the employer could not challenge the awards made to the other workmen even though the aggregate sum directed to be paid to all of them might be far greater than three hundred rupees. If the employer’s appeal with respect to the larger awards succeeded, the result would be two contradictory decisions: the majority of the employees in the same unpaid group would obtain the amounts ordered by the original authority, whereas those workers whose awards exceeded three hundred rupees would receive a reduced amount as determined by the appellate authority. The Court points out this apparently anomalous outcome only to demonstrate that, when the language of the relevant clause is clear and unambiguous, conjectures about hypothetical anomalies must not alter its ordinary meaning. Consequently, the Court chooses to disregard any possible anomalies on either side and confines its analysis strictly to the ordinary construction of the words in section seventeen paragraph one sub‑a. The Court further observes that, had the wording been reasonably susceptible to two different constructions, it would have been appropriate to adopt the interpretation that avoided any inconsistency. Because the wording is not capable of such dual meaning, the Court concludes that the appellate authority erred in dismissing the appeal on the ground of incompetence under section seventeen paragraph one sub‑a.

The Court also notes that the question of construing section seventeen paragraph one sub‑a has been examined by several high courts, including the Madras High Court in Union of India, owning the South Indian Railway by the General Manager v. S. P. Nataraja Sastrigal & Ors. (1) and A. C. Arumugam & Ors. v. Manager, Jawahar Mills Ltd., Salem Junction (2), the Calcutta High Court in Promod Ranjan Sarkar v. R. N. Munllick (3), and the Assam High Court in Cachar Cha Sramik Union v. Manager, Martycherra Tea Estate & Anr. (4). All of those decisions arrived at a conclusion that differs from the view taken by the Bombay High Court and they interpreted section seventeen paragraph one sub‑a in the same manner as adopted here. Accordingly, the Court allows the appeal, sets aside the order of dismissal issued by the appellate authority, and remands the matter to that authority for disposal in accordance with law. Because the hearing of the appeal has already been delayed, the Court directs the appellate authority to decide the appeal as quickly as possible. In the circumstances of the present case, each party is ordered to bear its own costs. The appeal is therefore allowed.