Hamdard (Wakf) Laboratories v. Aslamzaki

1. Vide the instant application, the applicant/respondent is seeking direction against the petitioner Management to pay an amount ofRs.1,21,950/which allegedly has been deducted by the Management towards tax at source (IDS)alongwith interest for the delayed payment.

2. Mr.M.A.Niyazi, learned counsel appearing on behalf ofthe applicant submits that vide award dated 02.09.2011 passed in LD. No.319/03, titled as 'Aslant Zaki Vs. Hamdard (Wakf) Laboratories', the learned Labour Court Wle deciding the claim ofthe respondent workman held that services ofthe respondent workman were illegally terminated by the petitioner Management. Accordingly, the petitioner Management was directed to reinstate the respondent workman with 50% back wages.

3. Bemg aggrieved, the petitioner Management filed the present petition W.P.(C) No.976/2012 Page 1of[5] 2014:DHC:7497 beforethis Court. During pendency of the petition, matter was referredto the Lok Adalat for settlement. Accordingly, both the parties have agreed to settle the matter for a total amount of Rs.11.25 lacs and the petitioner Management agreed to paythe balance amount of Rs.6.12 lacs [Rs.11.25 lacs - Rs. 5.13 lacs (amount already deposited with the Court)].

4. It is averred in the application that while paying the settlement amount, the petitioner Management deducted an amount of Rs.1,21,950/- towards TDS ^ on the total agreed amount of Rs.11.25 lacs from the balance amount of Rs.6.12lacs and paid only Rs.4,90,050/- to the respondentworkman. / 5. Learned counsel for the applicant/respondent further submits that inthe settlement arrived at before the Continuous Lok Adalat-I, there is no mentioning of TDS amount, hence, the petitioner Management was to pay the entire balance amount of Rs.6.12 lacs instead of paying Rs.4,90,050/- after wrongly deducting Rs.1,21,950/-as TDS from the settlement amount.

6. Even otherwise, whether it is mentioned in the settlement or not, as per the settledlaw, on the compensation amountTDS is not liable to be deducted.

7. To strengthen his arguments, learned counsel has relieduponthe caseof All India Reporter Ltd. Vs. Ramchandra D. Datar, [1961] 41ITR 446 (SC), wherein the Apex Court held as under:- " We are not concerned to decide in this appeal whether in i the hands of the respondent the amount due to him under the ^ decree, when paid, will be liable to tax; that question does not fall to be determined in this appeal. The question to be determined is whether as between the appellant company and the respondent the amount decreed is due as salary payment which attracts the statutory liability imposed by section 18. The claim decreed by the civil court was for compensation, for wrongful termination of employment, arrears ofsalary, salary due for the period of notice and interest and costs, less W.P.(C) No.976/2012 Page 2 of[5] withdrawals on salary account. The amount for which execution was sought to be levied was the amount decreed against which was set off the claim under the cross-decree. A substantialpart ofthe claim decreed represented compensation for wrongful termination of employment and it would be difficult to predicate of the claim sought to be enforced what part thereof if any represented salary due. Granting that compensation payable to an employee by an employer for wrongful termination of employment be regarded as in the nature ofsalary, when the claim is mergedin the decree ofthe court, the claim assumes the character ofa judgment-debt and tojudgmentdebts section 18has not been made applicable. The decreepassed bythe civil courtmust be executed subjectto the deductions and adjustments permissible underthe Code ofCivil Procedure

8. Learned counsel further submits that similar situation came before the Division Benchof Calcutta HighCourt in the case ofSaroj Kumar Maheswari Vs. Hindustan Motors Ltd. & Am. (1985) 154 ITR 363, wherein held as under;- " The appellant-petitioner, Saroj Kumar Maheswari, was employed as Assistant Development Engineer in Hindustan Motors Limited (hereinafter referred to as the "respondent company"). The services of the petitioner were terminated with effect from June, 1970, under the service rules of the respondent company. The petitioner being aggrieved by the said order of termination made an application under Section 33A of the Industrial Disputes Act, 1947, before the 4th Industrial Tribunal. The Tribunal by an award datedAugust 17, 1974, set aside the order of termination of the services of the petitioner and directed his reinstatement with halfback wages from the date oftermination up to the date ofthe order ofthe Tribunal. The respondent company thereafterfiled an application under Article 226 ofthe Constitution ofIndiafor setting aside V.[1] W.P.(C)No.976/2012 Page 3 of[5] thesaid award whereupon rule nisiwas issuedand operationof the said award was stayed. By judgment and order dated September 16, 1976, Amiya Kumar Mukherjee J. discharged the rule nisi. The respondent company, thereafter, filed an appeal against the said order datedSeptember 16, 1976, and the said appeal was also dismissed by the judgment and order dated November 30, 1979. The respondent company, thereafter, filed a special leave petition before the Supreme Court ofIndia in January, 1980. During the pendency of the said petition, the respondent ||^ company and the petitioner entered into a compromise on the basis whereoftheSupreme Courtpassed thefollowing order on Y February 14, 1980. "CONSENT TERMS" Special Leave granted. Appeal is disposed of in the following terms

1. Respondent No. 2, Shri Saroj Kumar Maheswari, having categorically intimated his resignation from the service of the appellant with effect from today, the appellant do pay to respondent No. 2, Saroj Kumar Maheswari, a sum of Rs. 1,50,000 (Rupees one lakh andfifty thousandonly) infull and final settlement ofall his claims, in respect ofwages, provident 'T' fund, gratuity and all other emoluments and dues either under the impugnedjudgment otherwisefrom June 9, 1970, up to date withinfour weeksfrom today. " On the other hand, Mr. Arvind Kumar, learned counsel for the nonapplicant/petitioner submits that under Section 10(b) ofthe Industrial Disputes Act, 1947, TDS has been erroneously deducted; however, the same has been deposited with the Income Tax Department. He further submits that the petitioner Management may withdraw the same after producing TDS certificate/deposit challan before the Income Tax Department. W.P.(C) No.976/2012 Page 4 of[5] y

10. The similar issue came before this Court in the case ofHimadari Dutta &Ors. Vs. Joginder Singh &Ors., wherein held that TDS cannot be deducted onthe compensation amount, however, the same is liable to be deducted only on the interest earned on the compensation amount if it exceeds to Rs.50,000/per assessee.

11. However, the issue in case in hand is not similar as noted above. In this case, the awarded amount is compensation and settled in LokAdalat, the same ^ isnotliablefor anytaxorlevy.

12. In view of the above noted facts and settled law, the petitioner Management is directed to pay the amount of Rs.1,21,950/- to the applicant/respondent within a period oftwo weeks from today with liberty to withdraw the deposited amountfrom the Income Tax Department.

13. It is clarified that on producing the deposit challan by the petitioner Management, the Income Tax Department shall refiind the amount to itto that extent.

14. The application is allowed accordingly.

15. Acopy ofthis order be given dasti to the learned counsel for the parties under the signature ofthe Court Master.

SURESH KAIT, J. AUGUST 08,2014 sb