HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT

JAMMU

Reserved on: 28.08.2023

Pronounced on : 09.11.2023

Case No. :- OWP No. 338/2019

CM Nos. 1679/2019 [1/2019]
CM No. 4798/2019

Davinder Kumar Batra

S/o Sh. Dharam Vir Batra
R/o 49-A/D Green Belt Park,
Gandhi Nagar Jammu.
Partner M/s Jay Kay Automobiles,
Gurudwara Kalgidhar Building,
Rehari Chowk, B.C. Road, Jammu. …Petitioner

Through: Mr. S. S. Ahmed, Adv with Mr. Rahul Raina, Adv.

v/s

1. The Authority Under Payment of Wages Act 1936

(Assistant Labour Commissioner), Jammu
2. Vidhya Sagar (Mechanic) S/o Sh. Beli Ram
R/o Ghari, P.O. Purkhoo, Tehsil and District Jammu
3. Jag Mohan (Mechanic) s/o Sh. Buloo Ram
R/o Village Chak Sardar Desa Singh
P.O. Mandal Jhajjar Kotli, district Jammu.
4. Mohan Lal (Mechanic) S/o Sh. Mani Ram
R/o Village Jagti, P. O. Nagrota Tehsil Nagrota District Jammu
5. Kishori Lal (Mechanic) S/O Sh. Birbal,
R/o Village Paragpur P.O. Amroh Tehsil Jaswan District Kangra (H.P.)

…Respondents
Through: Mr. Ajay Gandotra, Adv.

CORAM: HON'BLE MR. JUSTICE WASIM SADIQ NARGAL, JUDGE

JUDGMENT

1. The present petition has been preferred under Article 226 of the

Constitution of India for issuance of writ, direction or order in the

nature of Certiorari seeking quashment of order dated 31.12.2018

 2 OWP No. 338/2019

passed by the Assistant Labour Commissioner, Jammu (Authority

under the Payment of Wages Act, 1936), respondent No. 1 herein,

whereby the petitioner has been directed to pay retrenchment

compensation @ 15 days salary for every completed year to

respondents No. 2 to 5, besides directing the petitioner to deposit an

amount of Rs. 3,10,230/- with the authority.

BRIEF FACTS

2. The present petition has been preferred by the partner of M/s Jay Kay

Automobiles who was the authorized dealer of LML Limited in

Jammu and was carrying out the business of sale and service of two

wheelers manufactured/produced by LM Limited, Kanpur (U.P) in

Jammu Division.

3. It is the specific case of the petitioner that the order passed by the

respondent No. 1 is beyond jurisdiction and the provisions of the

Payment of Wages Act, 1936 (for short, „Act of 1936‟) as the

authority below has exercised the power which is not vested in it and

thus, the order impugned cannot sustain the test of law and is liable to

be set aside.

4. It is averred in the petition that the principal company- LML Limited

has stopped the production of two wheelers in August 2015 and

subsequently went into liquidation under the court order. It is also

averred that since the supply of two wheelers from the principal

company i.e. LML Limited Kanpur was stopped due to its

liquidation/closure, the petitioner firm/establishment decided to close

 3 OWP No. 338/2019

the business of sale and service of two wheelers

manufactured/produced by LML Limited w.e.f. 31.03.2017.

5. It is stated that since the decision to close the business of sale and

service of two wheelers of LML Limited was taken by the

establishment, therefore, establishment served two months advance

notice to its employees on 01.02.2017 by conveying the reasons for

such closure of business, as a consequence whereof, the

production/manufacturing of two wheelers by LML limited Kanpur

has been stopped and the employees working with the petitioner were

relieved from the employment/services of the establishment on

31.3.2017.

6. It is urged that respondent No. 2 to 5, who were the erstwhile

employees of the petitioner-firm preferred a joint application under

the Act of 1936 on 16.10.2017 before the respondent No. 1, being the

Authority under Act of 1936 and sought the following reliefs:

i. Retrenchment compensation;

ii. Leave with wages; and

iii. Bonus under Bonus Act and prayed that a direction may
be issued under Section 3 for payment of estimated Rs.
4,29,750/- along with interest under law and costs and other
relief as delayed/deduction of wages

7. It is also urged in the petition that pursuant to the filing of the

aforesaid application by the respondents No. 2 to 5 herein, the

petitioner filed detailed objections to the said application along with a

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cheque dated 10.01.2018 drawn on Oriental Bank of Commerce,

Branch B. C. Road, Rehari Chungi, Jammu for Rs.95,330/- in the

name of Assistant Labour Commissioner, Jammu (Authority under

Payment of Wages Act, 1936) towards settlement of the claims of the

applicants/ respondents No. 2 to 5 herein as Leave with Wages and

Bonus under Bonus Act.

8. It is also stated in the petition that in response to the claim of

retrenchment compensation, the petitioner had specifically raised the

objection and submitted that the applicants/respondents No. 2 to 5

herein are neither entitled to the retrenchment compensation nor the

Authority has the jurisdiction to entertain or adjudicate upon such

claim.

9. It is further stated in the petition that the respondent No. 1 i.e., the

Authority under the Payment of Wages Act had finally decided the

application of the applicants/respondents No. 2 to 5 herein and passed

the order dated 31.12.2018 which is impugned in the present petition

whereby, the Authority had directed the petitioner to pay the

retrenchment compensation @ 15 days salary for every completed

year to the applicants/respondents No. 2 to 5 herein. The Authority

had also directed the petitioner to deposit an amount of Rs. 3,10,230/-

with the Authority.

GROUNDS:

10. The petitioner has challenged the order impugned on the following

grounds:
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(i) That the order impugned has been passed without jurisdiction
as claim for retrenchment compensation can be adjudicated
upon by the Industrial Tribunal as per the provisions of
Industrial Disputes Act, 1947;
(ii) That the Authority below has not acted in accordance with the
provisions of the enactment in question i.e., Act of 1936 and
(iii) That the order has been passed without the application of
mind as the applicants/respondents No. 2 to 5 herein have
filed the application under Section 3 of the Act of 1936 which
deals with the claims of payment of wages and deductions
made from wages whereas issue of retrenchment
compensation falls in the jurisdiction of Industrial Tribunal
under the Industrial Tribunal Disputes Act, 1947 as such the
Authority has passed the impugned order without perusing
the contents of the application and without the application of
mind.

ARGUMENTS ON BEHALF OF PETITIONER

11. The argument of Mr. S. S. Ahmed, learned counsel appearing for the

petitioner in the instant petition confines to the jurisdiction and

entitlement of the applicants/respondents No. 2 to 5 for retrenchment

compensation. In this regard, learned counsel has referred to the

Third Schedule as envisaged under Section 7A of the Industrial

Dispute Act 1947, (for short, the Act of 1947) wherein, details have

been given about the matters which fall within the jurisdiction of the

Industrial Tribunal which are as under:

"Matters within the Jurisdiction of Industrial Tribunals

1. Wages, including the period and mode of payment;
2. Compensatory and other allowances;
3. Hours of work and rest intervals;
4. Leave with wages and holidays;
5. Bonus, profit sharing, provident fund and gratuity;
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6. Shift working otherwise than in accordance with

standing orders;
7. Classification by grades;
8. Rules of discipline;
9. Rationalization;
10. Retrenchment of workmen and closure of
establishment; and
11. Any other matter that may be prescribed.

12. He further argues that in spite of the fact that a specific objection has

been raised before the appropriate Authority with respect to the

jurisdiction and the entitlement of the applicants/respondents No. 2 to

5 herein but no finding has been recorded by the said Authority while

passing the order impugned.

13. Learned counsel for the petitioner further submits that the petitioner

could not prefer an appeal under Section 17 of the Act of 1936,

within a stipulated period of 30 days as the Manager of the

petitioner's firm suffered paralytic stroke and was undergoing

medical treatment at that point of time and all the documents

pertaining to the case was lying in his custody, and this was precisely

the reason that the petitioner has not availed the alternate efficacious

remedy and has straightway come to this Court by way of instant

petition.

14. Learned counsel for the petitioner further submits that since the legal

question is involved in the present petition, therefore, his case falls

within exceptions carved out by the Apex Court in bypassing the

alternate and efficacious remedy and thus, he has filed the instant

petition without availing the alternate and efficacious remedy

provided under the statute.

 7 OWP No. 338/2019

15. Learned counsel for the petitioner with a view to fortify his claim has

placed reliance on a definition of „Wages‟ as defined under Section

2(vi) of the Act of 1936 with a view to establish that “wages” does

not include the retrenchment compensation. As per the learned

counsel, the issue of retrenchment of the workman and the closure of

the establishment falls within the jurisdiction of Industrial Tribunal as

laid down in clause 10 of the Third Schedule of the Act of 1947.

Thus, according to him, it was within the domain of the Industrial

Tribunal which ought to have adjudicated the issue of retrenchment

compensation, and not the Authority under Payment of Wages Act.

ARGUMNETS ON BEHALF OF RESPONDENTS

16. Per contra, reply has been filed by Mr. Ajay Gandotra, learned

counsel appearing for respondent No. 2 to 5 has taken a preliminary

objection with respect to the maintainability of the instant petition.

He submits that the instant petition is not maintainable against the

order impugned passed under Section 15 of Act of 1936 by the

Assistant Labour Commissioner in view of the mandatory provisions

of Section 17 which provides the remedy of an appeal and that too,

when the memorandum of appeal has to be accompanied by a

certificate issued by the Authority with regard to the deposit of the

amount payable under the direction in the order which is appealed

against. Learned counsel further points out that the petitioner with a

view to avoid the payment of statutory amount for filing the appeal
 8 OWP No. 338/2019

has filed the instant petition which is not maintainable and is barred

by alternate efficacious remedy provided under the statute.

17. Learned counsel for the respondents further submits that the plea

taken by the petitioner that an appeal could not be filed owing to ill

health of Manager (Legal) of M/s Jay Kay Automobiles is absolutely

absurd on the ground that as from the record appended with the

petition, it would manifestly reveal that objections to claim petition

was signed by Sh. Davinder Kumar Batra who has filed even the

petition under reply appending annexures as part of petition which

was the record of file of learned counsel.

18. Learned counsel disputes the closure of the establishment and

submits that the closure was not on account of unavoidable

circumstances and therefore, the respondents/workmen were entitled

to retrenchment compensation which is 15 days average pay for every

completed year of continued service. By placing reliance on 25-F of

the Industrial Disputes Act, 1947 (for short, „Act of 1947‟), he further

submits that merely showing that establishment has been closed does

not suffice the purpose, when in fact, it was incumbent on the part of

the establishment who have closed the institution to have followed

detailed procedure as envisaged under 25-O of the Act of 1947.

19. The learned counsel for the respondents has taken a specific stand

that the Assistant Labour Commissioner, Jammu is the only

competent authority for the purpose of deciding the claims of

respondents/claimants with regard to their wages, as per the term

“Wages” defined under Section 2(vi) of the Act of 1936, in exercise

 9 OWP No. 338/2019

of the power as vested in it under Section 15 read with Section 3 &

5(2) of the Act.

20. He further submits that the order impugned is absolutely legal and

has been passed by Authority having jurisdiction to pass an order and

there is no manner of doubt that the order would not sustain going by

the provision of Section 15 r/w Section 3 & 5 of Act of 1936 as the

claim of Retrenchment Compensation owing to closure of business

undertaking as provided u/s 25(FFF) of the Act of 1947 falls within

the definition of “Wages” as contained in Section 2(iv)(d) of Payment

of Wages Act and against an order passed by Authority, only Appeal

lies before District Judge by appending therewith, Certificate for

deposit of the amount ordered which is condition precedent.

According to him, the writ petition is not maintainable in view of an

alternate and efficacious remedy available under the Act.

LEGAL ANALYSIS

21. Heard learned counsel for the parties at length and perused the

record.

22. With the consent of learned counsel for the parties, the instant

petition was taken up for final disposal.

23. Ordinarily, if the petitioner was aggrieved of the order passed by the

Assistant Labour Commissioner passed under the Act of 1936, then

the remedy for the petitioner was to file an appeal within the

stipulated period before the appellate authority as per Section 17 of

 10 OWP No. 338/2019

the Act of 1936. The petitioner while arguing the matter has

specifically projected that since his case falls within the exceptions

carved out by the Hon‟ble Supreme Court in Whirlpool Corpn. v.

Registrar of Trade Marks [(1998) 8 SCC 11 (although the said

ground has not been taken in the writ petition), the petitioner

accordingly, prays that he has challenged the very jurisdiction of the

Assistant Labour Commissioner, exercising the powers under the

Payment of Wages Act, 1936, to grant retrenchment compensation

and thus, according to him, this Court has the jurisdiction to decide

the instant petition. The issue has been raised by the petitioner in the

instant petition that the jurisdiction to grant retrenchment

compensation can be adjudicated by the Industrial Tribunal under the

provisions of the Industrial Tribunal Act and since the petitioner has

challenged the very jurisdiction of the Assistant Labour

Commissioner to pass the order impugned, the petitioner has

preferred the instant writ petition and not availed the alternate and

efficacious remedy by way of an appeal as provided under the

Statute. Since, important questions of law have been raised in the

instant writ petition, accordingly, this Court deems it proper to decide

the same on merits with a view to answer the questions.

Accordingly, this Court proceeds to decide the following issues

raised in the instant petition.

24. The moot questions which arise for consideration in the instant

petition are as under:

 11 OWP No. 338/2019

(i) Whether the petitioner in the facts and circumstances of

the instant case can bypass the alternate and efficacious
remedy provided under Section 17 of the Act of 1936 and
that too when memorandum of appeal is to be accompanied
by a Certificate issued by the Authority with regard to
deposit of amount payable under the directions against
which the appeal is preferred?
(ii) Whether the retrenchment compensation falls within the
ambit of “Wages” defined under the definition clause of the
Act of 1936?
(iii) Whether the Assistant Labour Commissioner exercising
the powers under Section 15 of the Act of 1936 has the
jurisdiction to decide the application under Section 15 of
the Act of 1936 by awarding retrenchment compensation?
(iv) Whether the respondents No. 2 to 5 are entitled for the
retrenchment compensation after the closure of the
establishment?
(v) Whether the petitioner establishment has followed the
procedure as envisaged under the statute while closing the
establishment?

25. With a view to answer Issue No. (i), it would be apt to refer to the

reply filed by the respondents 2 to 5, wherein, they have challenged

the maintainability of the petition on the ground that the remedy for

the petitioner was to file an appeal under Section 17 of the Act of

1936 and not the writ petition. For facility of reference, Section 17 of

the Act is reproduced as under:

17. Appeal.—

(1) [An appeal against an order dismissing either wholly or

in part an application made under sub-section (2) of section
15, or against a direction made under sub-section (3) or
 12 OWP No. 338/2019

sub-section (4) of that section] may be preferred, within

thirty days of the date on which [the order or direction] was
made, in a Presidency-tow1 [***] before the Court of Small
Causes and elsewhere before the District Court—

(a) by the employer or other person responsible for the

payment of wages under section 3, if the total sum
directed to be paid by way of wages and compensation
exceeds three hundred rupees [or such direction has the
effect of imposing on the employer or the other person a
financial liability exceeding one thousand rupees], or

[b] by an employed person or any legal practitioner or any

official of a registered trade union authorized in writing
to act on his behalf or any Inspector under this Act, or any
other person permitted by the authority to make an
application under sub-section (2) of Section 15, if the total
amount of wages claimed to have been withheld from the
employed person exceeds twenty rupees or from the
unpaid group to which the employed person belongs or
belonged exceeds fifty rupees or

[c] by any person directed to pay a penalty under [sub

section (4) of section 15.

[(1A) No appeal under clause (a) of sub section (1) shall lie
unless the memorandum of appeal is accompanied by a
certificate by the authority to the effect that the appellant
has deposited the amount payable under the direction
appealed against.

[2] Save as provided in sub section (1) any order

dismissing either wholly or in part an application made
under sub section (2) of section 15, or a direction made
under sub section (3) or sub section (4) of that section
shall be final.

[3] Where an employer prefers an appeal under this

section, the authority against whole decision the appeal
has been preferred may and if so directed by the court
referred to in sub section (1) shall pending the decision of
the appeal withhold payment of any sum in deposit with it.
 13 OWP No. 338/2019

[4] the court referred to in sub section (1) may, if it thinks

fit, submit any question of law for the decision of the High
Court and if it so does, shall decide the question in
conformity with such decision.”

26. A bare perusal of the aforesaid statutory provision reveals that an

appeal against an order dismissing an application, made under sub-

section (2) of section 15, or against a direction made under sub-

section (3) or sub-section (4) of that section] may be preferred within

30 days of the date on which the order or direction was made, which

has not been done in the instant case by the petitioner.

27. I am conscious of the fact that the powers conferred under Article

226 of the Constitution of India are rather wide but are required to be

exercised only in extraordinary circumstances. An alternate remedy

by itself does not divest the High Court of its powers under Article

226 of the Constitution in an appropriate case though ordinarily, a

writ petition should not be entertained when an efficacious alternate

remedy is provided by law. The petitioner has tried to make out his

case by challenging the very jurisdiction of the Assistant Labour

Commissioner, Jammu exercising the power under Section 15 of the

Act of 1936 by way of filing the instant petition in this Court instead

of filing of an appeal before the appropriate forum. Thus, the

petitioner has tried to project that his case falls within the exceptions

carved out by the Hon‟ble Supreme Court in “Whirlpool

Corporation vs. Registrar of Trade Marks, Mumbai and ors”

reported in (1998) 8 SCC 11, accordingly, this Court is of the view

 14 OWP No. 338/2019

that petitioner succeeds in making out his case as his case falls within

the exceptions carved out by the Apex Court in Whirlpool‟s case

(supra). For facility of reference, the relevant paras of the said

judgment are reproduced as under:

“14. The power to issue prerogative writs under Article 226 of

the Constitution is plenary in nature and is not limited by any
other provision of issuing writs in the nature of habeas corpus,
mandamus, prohibition, quo warranto and certiorari for the
enforcement of any of the Fundamental Rights contained in Part
III of the Constitution but also for “any other purpose”.

“15. Under Article 226 of the Constitution, the High Court,

having regard to the facts of the case, has a discretion to
entertain or not to entertain a writ petition. But the High Court
has imposed upon itself certain restrictions one of which is that
if an effective and efficacious remedy is available, the High
Court would not normally exercise its jurisdiction. But the
alternate remedy has been consistently held by this Court not to
operate as a bar in at least three contingencies, namely, where
the writ petition has been filed for the enforcement of any of the
Fundamental Rightds or where there has been a violation of the
principle of natural justice or where the order or proceedings
are wholly without jurisdiction or the vires of an Act is
challenged. There is a plethora of case law on this point but to
cut down this circle of forensic whirlpool, we would rely on some
old decisions of the evolutionary era of the constitutional law as
they still hold the field.

28. It would be apropos to refer to a judgment of the Apex Court in

M/s Magadh Sugar and Energy Ltd vs. The State of Bihar

reported in 2021 SCC Online SC 801, wherein the Apex Court in

paragraph 25 of the said judgment observed as under:

 15 OWP No. 338/2019

“25. While a High Court would normally not exercise its writ
jurisdiction under Article 226 of the Constitution if an
effective and efficacious alternate remedy is available, the existence of
an alternate remedy does not by itself bar the High Court from
exercising its jurisdiction in certain contingencies. This principle has
been crystallized by this Court in Whirpool Corporation v. Registrar
of Trademarks, Mumbai and Harbanslal Sahni v. Indian Oil
Corporation Ltd. Recently, in Radha Krishan Industries v. State of
Himachal Pradesh & Ors a two judge Bench of this Court of which
one of us was a part of (Justice DY Chandrachud) has summarized the
principles governing the exercise of writ jurisdiction by the High
Court in the presence of an alternate remedy. This Court has
observed:

“28. The principles of law which emerge are that:

(i) The power under Article 226 of the Constitution to issue

writs can be exercised not only for the enforcement of
fundamental rights, but for any other purpose as well;

(ii) The High Court has the discretion not to entertain a writ
petition. One of the restrictions placed on the power of the
High Court is where an effective alternate remedy is available
to the aggrieved person;

(iii) Exceptions to the rule of alternate remedy arise where

(a) the writ petition has been filed for the enforcement of a
fundamental right protected by Part III of the Constitution;

(b) there has been a violation of the principles of natural

justice; (c) the order or proceedings are wholly without
jurisdiction; or (d) the vires of a legislation is challenged;

(iv) An alternate remedy by itself does not divest the High

Court of its powers under Article 226 of the Constitution in an
appropriate case though ordinarily, a writ petition should not
be entertained when an efficacious alternate remedy is
provided by law;

(vi) When a right is created by a statute, which itself prescribes

the remedy or procedure for enforcing the right or liability,
resort must be had to that particular statutory remedy
before invoking the discretionary remedy under Article
226 of the Constitution. This rule of exhaustion of statutory
 16 OWP No. 338/2019

remedies is a rule of policy, convenience and discretion;

and (1998) 8 SCC 1 (2003) 2 SCC 107 2021 SCC OnLine SC
334 (vi) In cases where there are disputed questions of fact,
the High Court may decide to decline jurisdiction in a writ
petition. However, if the High Court is objectively of the view
that the nature of the controversy requires the exercise of its
writ jurisdiction, such a view would not readily be interfered
with.”

29. Keeping in view the aforesaid settled legal position coupled with the

peculiar facts and circumstances of the case, the case of the petitioner

falls in the exceptions carved to the rule of alternate remedy by the

Apex Court mentioned supra and thus, this Court has the jurisdiction

to adjudicate the instant writ petition.

Thus, the issue No. (i) is decided in favour of the petitioner.

30. While deciding the issue No. (ii) as to whether the compensation falls

within the purview of definition of “Wages” or not has to be gone

into at the first instance. For facility of reference, it would be apt to

reproduce Section 2 (vi) of the Payment of Wages Act, 1936:

"2 (vi) "wages" means all remuneration, whether by way

of salary, allowances, or otherwise) expressed in terms of
money or capable of being so expressed which would, if
the terms of employment, express or implied, were
fulfilled, be payable to a person employed in respect of his
employment or of work done in such employment, and
includes-

(a) any remuneration payable under any award or

settlement between the parties or order of a court;

(b) any remuneration to which the person employed is

entitled in respect of overtime work or holidays or any
leave period;
 17 OWP No. 338/2019

(c) any additional remuneration payable under the terms

of employment (whether called a bonus or by any other
name);

(d) any sum which by reason of the termination of

employment of the person employed is payable under law,
contract or instrument which provides for the payment of
such sum, whether with or without deductions, but does
not provide for the time within which the payment is to be
made;

(e) any sum to which the person employed is entitled

under any scheme framed under any law for the time
being in force, but does not include

(1) any bonus (whether under a scheme of profit sharing

or otherwise) which does not form part of the
remuneration payable under the terms of employment or
which is not payable under any award or settlement
between the parties or order of a Court.

(2) the value of any house-accommodation, or of the

supply of light, water, medical attendance or other amenity
or of any service excluded from the computation of wages
by a general or special order of [the appropriate
Government];

(3) any contribution paid by the employer to any pension

or provident fund, and the interest which may have
accrued thereon;

(4) any travelling allowance or the value of any travelling

concession;

(5) any sum paid to the employed person to defray special

expenses entailed on him by the nature of his employment;
or (6) any gratuity payable on the termination of
employment in cases other than those specified in sub-
clause (d)].”

31. This court in order to answer the question mentioned supra has placed

reliance upon the judgment of the High Court of Calcutta titled “B N

Elias & Co. Pvt Ltd. V/s The Authority Appointed under the
 18 OWP No. 338/2019

Payment of Wages Act and ors” reported as AIR 1960 Cal 603,

wherein the Court has held thus:-

“7. While agreeing with this view, I think that the matter is
abundantly clear, so far as the old definition is concerned,
from the definition itself, even without going into the
question of an implied contract. In defining the word
“wages” it was Stated expressly in the old definition that it
would judge „any sum payable to such person by reason
of the termination of his employment‟. This brings the
compensation payable under section 25-F(b) of the Industrial
Disputes Act directly within the definition of „wages‟ in the
Payment of Wages Act, because it is clearly a sum payable to
the workman by reason of the termination of his
employment…

…I, therefore, see no conflict the final position is, therefore,

as follows: If a workman is retrenched then a certain
compensation has to be paid under section 25-F(b) of the
Industrial Disputes Act. This being a compulsory payment
under the statute, must be taken to be an implied term of the
contract of employment. It will, therefore, come within the
definition of „wages‟ under the Payment of Wages Act as
originally defined, as well as under the amended definition. I
am, therefore, of the opinion that the respondent No. 1 had
jurisdiction to entertain an application under the Payment of
Wages, Act, 1936”

32. Further, with a view to answer the above question, it would be apt to

place reliance upon the view taken by the High Court of Orissa in

Rameshwar Lal Vs Jogendra Das reported as AIR 1970 Ori 76. In

the said judgment, the High Court of Orissa as held thus:

“13. It is true that in this case we are not concerned with

a case of retrenchment compensation payable either
under Section 25-FF or Section 25-FFF of the Industrial
Disputes Act, but with a claim of compensation made
under Section 25-F of the Industrial Disputes Act. In
cases where retrenchment itself is not disputed or is
clearly indisputable, there can be no doubt that a claim
for retrenchment compensation as per Section 25-F of
the Industrial Disputes Act can be entertained by the
Authority under the Payment of Wages Act as
 19 OWP No. 338/2019

retrenchment compensation comes within the definition

of "wages". There are no materials in this case from
which it can be inferred that it is a clear case of
retrenchment. The employer disputes the claim that the
termination of service was by way of retrenchment. The
question, therefore, is whether under such
circumstances, it is within the province of the relevant
Authority under Section 15 of the Act to investigate into
this question as a matter incidental to the claim arising
out of deduction from wages.

14.This specific question came up for

consideration before the Mysore Court in Manager,
Codialabail Press V/s K Mohappa AIR (1963) Mys 128,
and the learned Judge held-

“Even if retrenchment compensation payable

under S. 25-F of the Industrial disputes Act can be
regarded as wages - an order for its payment can be
made under S. 15 only when the retrenchment is not
disputed or is clearly indisputable. But if the employer
who admits the termination of the employment disputes
that the termination was by the process of retrenchment,
there being no provision in the Payment of Wages Act for
an adjudication on that matter, the foundation for a
complaint under S. 15 that wages though due were
withheld would be unavailable, since the purpose of the
Act is to enforce payment of wages in a case where the
facts admitted by the employer clearly establish the
liability to pay the wages and it is complained that there
is non-payment or incomplete payment”

33. Keeping in view the aforesaid settled legal position, this Court is of

the view that if a workmen is retrenched then a certain compensation

has to be paid under Industrial Disputes Act. This being a

compulsory payment under the statute, must be taken to be an

implied term of the contract of the employment and thus, the same

falls within the definition of „wages‟ under the Act of 1936 as

originally defined as well as under the amended definition.

 20 OWP No. 338/2019

Thus, the Issue No. (ii) is decided in favour of the respondents

No. 2 to 5 accordingly.

34. The next question which has come for consideration of this court in

the instant petition is whether the respondent No 1 (Authority Under

Payment of Wages Act, 1936) has rightly exercised its jurisdiction in

awarding compensation to the retrenched employees (respondents

No. 2 to 5 herein). While deciding the point of jurisdiction, the

question of conflict is who has the appropriate jurisdiction/powers to

adjudicate upon the matter of retrenchment compensation.

35. Keeping in view the submissions of the ld. Counsel for the petitioner

and the Respondents 2 to 5, this Court is of the opinion that

respondents 2 to 5 having moved an application before Respondent

No 1 under section 15(2) of payment of wages Act under the head

“Claims arising out of deductions from wages or delay in payment

of wages and penalty for malicious or vexatious claims” wherein

one of the authorities to be appointed for adjudication of claims is

Assistant Labour Commissioner and that the Respondent No 1 has

rightly entertained the application within the ambit of his

jurisdictional powers.

36. For facility of reference, Section 15 of the Act of 1936 is reproduced

as under:

15. Claims arising out of deductions from wages or delay in

payment of wages and penalty for malicious or vexatious
claims.—
(1) The appropriate Government may, by notification in the
Official Gazette, appoint—
(a) any Commissioner for Workmen’s Compensation; or
 21 OWP No. 338/2019

(b) any officer of the Central Government exercising functions

as,—
(i) Regional Labor Commissioner; or
(ii) Assistant Labor Commissioner with at least two years’
experience; or
(c) any officer of the State Government not below the rank of
Assistant Labour Commissioner with at least two years’
experience; or
(d) a presiding officer of any Labour Court or Industrial
Tribunal, constituted under the Industrial Disputes Act, 1947
(14 of 1947), or under any corresponding law relating to the
investigation and settlement of industrial disputes in force in
the State; or
(e) any other officer with experience as a Judge of a Civil
Court or a Judicial Magistrate, as the authority to hear and
decide for any specified area all claims arising out of
deductions from the wages, or delay in payment of the wages,
of persons employed or paid in that area, including all matters
incidental to such claims: Provided that where the appropriate
Government considers it necessary so to do, it may appoint
more than one authority for any specified area and may, by
general or special order, provide for the distribution or
allocation of work to be performed by them under this Act.]
(2) Where contrary to the provisions of this Act any deduction
has been made from the wages of an employed person, or any
payment of wages has been delayed, such person himself, or
any legal practitioner or any official of a registered trade
union authorized in writing to act on his behalf, or any
Inspector under this Act, or any other person acting with the
permission of the authority appointed under sub-section (1),
may apply to such authority for a direction under sub-section
(3):
Provided that every such application shall be presented
within [twelve months] from the date on which the deduction
from the wages was made or from the date on which the
payment of the wages was due to be made, as the case may be:
Provided further that any application may be admitted after
the said period of [twelve months] when the applicant satisfies
the authority that he had sufficient cause for not making the
application within such period.

[(3) When any application under sub-section (2) is

entertained, the authority shall hear the applicant and the
employer or other person responsible for the payment of
wages under section 3, or give them an opportunity of being
heard, and, after such further inquiry, if any, as may be
necessary, may, without prejudice to any other penalty to
which such employer or other person is liable under this Act,
direct the refund to the employed person of the amount
deducted, or the payment of the delayed wages, together with
the payment of such compensation as the authority may think
fit, not exceeding ten times the amount deducted in the former
case and not exceeding three thousand rupees but not less than
one thousand five hundred rupees in the latter, and even if the
amount deducted or delayed wages are paid before the
 22 OWP No. 338/2019

disposal of the application, direct the payment of such

compensation, as the authority may think fit, not exceeding
two thousand rupees:

Provided that a claim under this Act shall be disposed of as far

as practicable within a period of three months from the date of
registration of the claim by the authority:

Provided further that the period of three months may be

extended if both parties to the dispute agree for any bona fide
reason to be recorded by the authority that the said period of
three months may be extended to such period as may be
necessary to dispose of the application in a just manner:

Provided also that no direction for the payment of

compensation shall be made in the case of delayed wages if
the authority is satisfied that the delay was due to—

(a) a bona fide error or bona fide dispute as to

the amount payable to the employed person; or

(b) the occurrence of an emergency, or the

existence of exceptional circumstances, the
person responsible for the payment of the wages
was unable, in spite of exercising reasonable
diligence; or

(c) the failure of the employed person to apply for

or accept payment.]

[(4) If the authority hearing an application under this

section is satisfied—

(a) that the application was either malicious or

vexatious, the authority may direct that a penalty
5[not exceeding three hundred seventy five
rupees] be paid to the employer or other person
responsible for the payment of wages by the
person presenting the application; or

(b) that in any case in which compensation is

directed to be paid under sub-section (3), the
applicant ought not to have been compelled to
seek redress under this section, the authority may
direct that a penalty 65 [not exceeding three
hundred seventy five rupees] be paid to 6[the
appropriate Government] by the employer or
 23 OWP No. 338/2019

other person responsible for the payment of

wages.

(4A) Where there is any dispute as to the person

or persons being the legal representative or
representatives of the employer or of the
employed person, the decision of the authority on
such dispute shall be final.

(4B) Any inquiry under this section shall be

deemed to be a judicial proceeding within the
meaning of sections 193, 219 and 228 of the
Indian Penal Code (45 of 1860).]

(5) Any amount directed to be paid under this

section may be recovered—

(a) if the authority is a Magistrate, by the

authority as if it were a fine imposed by him as
Magistrate, and

(b) if the authority is not a Magistrate, by any

Magistrate to whom the authority makes
application in this behalf, as if it were a fine
imposed by such Magistrate.”

37. Further, the court is of the view that while deciding on the point of

jurisdiction, the question of conflict is who has the appropriate

jurisdiction/powers to adjudicate upon the matter of retrenchment

compensation. While deciding on the point of jurisdiction, the

question as to whether the compensation falls within the purview of

definition of wages is to be looked into.

38. Keeping in view the legal position discussed above, this court is of

the view that retrenchment if not disputed as is the case in present

petition, where the factum of retrenchment has been admitted by the

petitioner by bringing the fact of closure of the establishment on

 24 OWP No. 338/2019

account of liquidation before this court, an order for the payment of

retrenchment compensation could be made under section 15 of the

Act of 1936.

Thus the issue No. (iii) is also decided in favour of the

respondents No. 2 to 5, accordingly.

39. The other issue which is raised by the petitioner is whether the

respondents No. 2 to 5 are entitled for retrenchment compensation or

not after the closure of the establishment.

40. After hearing both the counsel for the parties and perusing the record,

this court is of the opinion that termination of respondents was the

consequence of closure of the business and the petitioner is liable to

compensate the respondent as Closure of business for the reason

mentioned is not covered under section 25 FFF of Industrial Disputes

Act Therefore respondents claim of seeking Retrenchment

Compensation couldn‟t have been denied by their employer.

41. In Manager, Codialabail Press V/S VK Monappa (Supra), it was

observed that even if the retrenchment compensation payable under

section 25-F of 1947 Act can be regarded as wages, as defined under

section 2 (vi) of the payment of wages act, an order for the payment

can be made under section 15 only when the retrenchment is not

disputed, or is clearly undisputable.

42. Further, the Apex Court in Pipraich Sugar Mills Lid. Pipraich Sugar

Mills Mazdoor Union reported as AIR 1957 SC 95 has observed as

under:
 25 OWP No. 338/2019

“15….we are unable to agree with these

observations. Though there is discharge of workmen
both when there is retrenchment and closure of
business, the compensation is to be awarded under
the law, not for discharge as such but for discharge
on retrenchment, and if, as is conceded,
retrenchment means in ordinary parlance,
discharge of the surplus, it cannot include discharge
on' closure of business.”

43. Keeping in view the observations in the cases citied above, this Court

is of the considered view that the retrenchment of employees is

admitted by the petitioner in the instant petition by bringing the fact of

closure of the establishment as the establishment went into

liquidation.

44. As section 25-F provides the compensation to workmen in case of

closing down of the undertakings provided, where the undertaking is

closed down on account of unavoidable circumstances beyond the

control of the employer, the compensation to be paid to the workmen

under Clause B of section 25-F shall not exceed his average pay of

thirty days for every completed year. For facility of reference, Section

25-F is reproduced as under:

25-F. Conditions precedent to retrenchment of

workmen.- No workman employed in any industry who
has been in continuous service for not less than one year
under an employer shall be retrenched by that employer
until—

(a) the workman has been given one month' s notice in

writing indicating the reasons for retrenchment and the
 26 OWP No. 338/2019

period of notice has expired, or the workman has been

paid in lieu of such notice, wages for the period of the
notice:

(b) the workman has been paid, at the time of

retrenchment, compensation which shall be equivalent to
fifteen days’ average pay for [every completed year of
continuous service] or any part thereof in excess of six
months; and

(c) notice in the prescribed manner is served on the

appropriate Government [or such authority as may be
specified by the appropriate Government by notification
in the Official Gazette].

45. The explanation to the section 25-FFF of Industrial Dispute Act

provides that where an undertaking is closed down due to financial

difficulties which is the case in the present petition, shall not be

deemed to be closed down on account of unavoidable circumstances

beyond control of the employer. The explanation is reproduced as

under:

Sec 25-FFF: Compensation to workmen in case of closing

down of undertakings.-

(1) Where an undertaking is closed down for any

reason whatsoever, every workman who has been in
continuous service for not less than one year in that
undertaking immediately before such closure shall,
subject to the provisions of sub- section (2), be entitled
to notice and compensation in accordance with the
provisions of section 25-F, as if the workman had been
retrenched:

Provided that where the undertaking is closed

down on account of unavoidable circumstances beyond
the control of the employer, the compensation to be paid
to the workman under clause (b) of section 25F shall not
exceed his average pay for three months.
 27 OWP No. 338/2019

Explanation.-- An undertaking which is closed down by

reason merely of--

(i) financial difficulties (including financial losses); or

(ii) accumulation of undisposed of stocks; or

(iii) the expiry of the period of the lease or licence

granted to it; or

(iv) in a case where the undertaking is engaged in

mining operations, exhaustion of the minerals in the
area in which such operations are carried on;

shall not be deemed to be closed down on account of

unavoidable circumstances beyond the control of the
employer within the meaning of the proviso to this sub-
section.]

46. In the present petition, the termination of the employees was not a

consequence of unavoidable circumstances; therefore the claim of

respondents for retrenchment compensation is valid under law and

respondent No. 2 to 5 are entitled for retrenchment compensation

after the closure of the establishment.

Thus the issue No. (iv) is also decided in faovur of the

respondents No. 2 to 5, accordingly.

47. The last contention raised by the respondent 2-5 is that the

establishment/petitioner has not complied with the procedure laid

down in section 25-O of Industrial Disputes Act, 1947 for closing

down an undertaking of an industrial establishment. For facility of

reference the said section is reproduced as under:

"25-0. Procedure for closing down an undertaking.-

(1) An employer who intends to close down an
 28 OWP No. 338/2019

undertaking of an industrial establishment to which

this Chapter applies shall, in the prescribed manner,
apply, for prior permission at least ninety days before
the date on which the intended closure is to become
effective, to the appropriate Government, stating
clearly the reasons for the intended closure of the
undertaking and a copy of such application shall also
be served simultaneously on the representatives of the
workmen in the prescribed manner:

Provided that nothing in this sub-section shall apply

to an undertaking set up for the construction of
buildings, bridges, rods, canals, dams or for other
construction work.

(2) Where an application for permission has been

made under sub- section (1), the appropriate
Government, after making such enquiry as it thinks fit
and after giving a reasonable opportunity of being
heard to the employer, the workmen and the persons
interested in such closure may, having regard to the
genuineness and adequacy of the reasons stated by the
employer, the interests of the general public and all
other relevant factors, by order and for reasons to be
recorded in writing, grant or refuse to grant such
permission and a copy of such order shall be
communicated to the employer and the workmen.

(3) Where an application has been made under sub-

section (1) and the appropriate Government does not
communicate the order granting or refusing to grant
permission to the employer within a period of sixty
days from the date on which such application is made
the permission applied for shall be deemed to have
been granted on the expiration of the said period of
sixty days.

(4) An order of the appropriate Government granting

or refusing to grant permission shall, subject to the
provisions of section (5) be final and binding on all
the parties and shall remain in force for one year
from the date of such order.
 29 OWP No. 338/2019

(5) The appropriate Government may, either on its

own motion or on application made by the employer
or any workman, review its order granting or refusing
to grant permission under sub-section (2) or refer the
matter to a Tribunal for adjudication: Provided that
where a reference has been made to a Tribunal under
this sub-section, it shall pass an award within a period
of thirty days from the date of such reference.

(6) Where no application for permission under sub-

section (1) is made within the period specified therein,
or where the permission for closure has been refused,
the closure of the undertaking shall be deemed to be
illegal from the date of closure and the workmen shall
be entitled to all the benefits under any law for the
time being in force as if the undertaking had not been
closed down.

(7) Notwithstanding anything contained in the

foregoing provisions of this section, the appropriate
Government may, if it is satisfied that owing to such
exceptional circumstances as accident in the
undertaking or death of the employer or the like it is
necessary so to do, by order, direct that the provisions
of sub-section (1) shall not apply in relation to such
undertaking for such period as may be specified in the
order.

(8) Where an undertaking is permitted to be closed

down under sub- section (2) or where permission for
closure is deemed to be granted under sub-section (3),
every workman who is employed in that undertaking
immediately before the date of application for
permission under this section, shall be entitled to
receive compensation which shall be equivalent to
fifteen days' average pay for every completed year of
continuous service or any part thereof in excess of six
months."

48. However, in the present petition, the petitioner has not complied with

the procedure provided for closing down an undertaking and has

 30 OWP No. 338/2019

clearly flouted the provisions envisaged therein the Industrial

Disputes Act. The Industrial Disputes Act has provided a penal action

against the employer who doesn‟t follow the procedure mentioned

hereinabove for closing down an establishment. The section is

reproduced as under:

[25R. Penalty for closure.--(1) Any employer who

closes down an undertaking without complying
with the provisions of sub-section (1) of section 25-
O shall be punishable with imprisonment for a
term which may extend to six months, or with fine
which may extend to five thousand rupees, or with
both.

(2) Any employer, who contravenes 2[an order

refusing to grant permission to close down an
undertaking under sub-section (2) of section 25-O
or a direction given under section 25P], shall be
punishable with imprisonment for a term which
may extend to one year, or with fine which may
extend to five thousand rupees, or with both, and
where the contravention is a continuing one, with a
further fine which may extend to two thousand
rupees for every day during which the
contravention continues after the conviction.

49. On this count also, this Court holds that the petitioner has not followed even

the provisions of the Industrial Disputes Act for closing down the

establishment.
 31 OWP No. 338/2019

Thus, the issue No. (v) is also decided in favour of the respondents No.

2 to 5, accordingly.

CONCLUSION

50. In the light of the discussion hereinabove coupled with the settled legal

position, this Court is of the view that this petition is devoid of any merit

and is liable to be dismissed and the same is, accordingly, dismissed and the

order passed by the Authority under Section 15 of the Payment of wages

Act, 1936 by the Assistant Labour Commissioner dated 31.12.2018 is

upheld and the petitioner is liable to compensate the private respondents 2

to 5 by way of retrenchment compensation @ 15 days salary for every

completed year at the rate specified in the order passed by the Assistant

Labour Commissioner, Jammu, within a period of one month from today,

failing which the same shall be recovered as a fine by invoking Section

15(5) of the Payment of Wages Act or by freezing the official accounts of

the establishment or by confiscating and selling the articles of the

establishment or by any other mode as provided under law.

51. The writ petition is dismissed accordingly for the aforesaid reasons along

with the connected applications.

(Wasim Sadiq Nargal)

Judge
JAMMU
09.11.2023
Naresh, Secy.

Whether the order is speaking: Yes

Whether the order is reportable: Yes
…
32 OWP No. 338/2019