M/S Madan Trading Co. Pvt. Ltd. v. Govt. of NCT of Delhi

13. Learned counsel for the Petitioner further submitted that even in case wherein the Petitioner did not respond to the communication made by the Respondents with regards to the conciliation proceedings, the appropriate measure on behalf of the Respondents would have been to refer the matter for adjudication to the learned Labour court as per Section 10 or 12(4) & (5) of the I.D. Act. Learned Counsel draws the attention of this Court to Section 33-C(1) of the I.D. Act which can be invoked by the appropriate government only where there exists “money due” in favour of the workmen under an “award or settlement or under provisions of Chapter V-A or V-B” of the I.D. Act. Therefore, in the absence of any adjudication and prior existing right in favour of the workmen, it is highly improper, arbitrary and illegal for Respondent no.2 to issue recovery order under Section 33-C(1) of the I.D. Act.

14. It is the contention of the learned counsel for the Petitioner that under the provisions of Section 33-C(1) of the I.D. Act is in the nature of an execution Petition and no recovery can be made unless and until there is a “right entitling” such recovery under an award or settlement or under provisions of Chapter V-A and V-B of the I.D. Act. Under the scheme of the I.D. Act, the appropriate government has not been bestowed with adjudication power but with mere administrative function of forming prima facie opinion as to whether there exists bonafide Industrial dispute or not. Respondent no. 2 by passing the impugned recovery order has attempted to usurp/hijack the functions or powers given to a Labour court/Tribunal for adjudication of an industrial dispute, thereby defeating the whole scheme of the legislation. It is only and only for the Labour court to adjudicate as to whether there exists violation of Section 25-N of the I.D. Act and decide the matter upon the merits of the case.

15. To buttress the contentions raised, learned counsel for the Petitioner has placed reliance upon Indian Refrigeration Industries v. Lt. Governor, 1991 SCC OnLine Del 299; Bombay Union of Journalists v. State of Bombay (1964) 6 SCR 22; M.P. Irrigation Karamchari Sangh v. State of M.P. (1985) 2 SCC 103; Telco Convoy Driver’s Mazdoor Sangh v. State of Bihar (1989) 3 SCC 271. It is his submission that the Respondents shall not be permitted to invoke the provisions of Section 33-C(1) of the I.D. Act by assuming the role of an adjudicatory body.

16. With these submissions, learned counsel for the Petitioner prays for setting aside of the impugned order dated 23.09.2004 and impugned notice dated 12.10.2004.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS

17. Per contra, Mr. Gautam Narayan, learned counsel representing respondent nos. 1 to 3 has submitted in favour of the impugned order dated 23.09.2004 and impugned notice dated 12.10.2004. It was argued by Mr. Narayan that the action of Respondent no.2 of passing an order under Section 33-C(1) of the I.D. Act is justified since there exists no dispute at all regarding the retrenchment of the workmen. The petitioner failed miserably to raise any bonafide dispute regarding the allegation of retrenchment. Petitioner did not respond to the numerous show cause notices dated 27.04.2004, 07.05.2004, 11.05.2004, 12.05.2004, 01.10.2004 and 12.10.2004.

18. It has further been submitted on behalf of Respondent Nos.1-3 that any retrenchment without permission of the appropriate Government under Section 25N (1) (b) of the I.D. Act is deemed to be null and void under Section 25N (7) of the I.D. Act. Since such retrenchment is null and void, the employer-employee relationship between the workmen and the employer does not cease to exist. Hence the workmen is deemed to be in continuous employment of the employer and entitled to the wages. Therefore, following this rationale, impugned order is legal and justified as it seeks to recover such wages which are preexisting right of the workmen for which there can be no dispute.

19. Further, Mr. Narayan has submitted that legislative history of Section 33-C(1) of The I.D. Act demonstrates that provisions of Chapter V-A and V-B of the I.D. Act forms an independent ground in addition to a settlement or award in exercise of powers under Section 33C of the I.D. Act.

20. By placing reliance on judgment delivered in Central Bank of India Ltd. v. PS Rajagopalan (1964) 3SCR 140, learned counsel for Respondent Nos.[1] to 3 put forward his argument that Section 33-C of the I.D. Act excludes from its purview such disputes which have to be adjudicated by way of reference under Section 10 of the I.D. Act, however no reference under Section 10 can be made in case of violation of statutory procedure laid down in Section 25N of the I.D. Act.

21. Mr. Narayan further placed reliance upon the judgments delivered by the Hon‟ble Supreme Court in Board of Directors of the South Arcot Electricity Distribution Co. Ltd.

V. NK Mohammed Khan (1969) 1 SCC 192; U.P. Electric Supply Co. Ltd.

V. RK Shukla (1969) 2 SCC 400; Sawtram Ramprasad Mills Co.Ltd. V. Baliram Ukandaji (1966) 1 SCR 764; Empire Industries Ltd. V. State of Maharastra (2010) 4 SCC 272; Lal Mohammad v. Indian Rly. Construction Co. Ltd.

22. With these submissions, learned counsel for Respondent Nos.[1] to 3 prayed for the dismissal of the present Writ Petition.

LEGAL ANALYSIS

23. This Court had heard the arguments advanced by the learned counsel for both the parties and perused the documents on record and Judgments relied upon by the parties.

24. The question before this court is “Whether Respondent no. 2 was justified in invoking the executory mechanism under Section 33C (1) of the Act for issuing recovery order, in absence of there being any award or settlement or adjudication under provisions of Chapter V-A and V-B of the I.D. Act?”

25. It is an undisputed fact that impugned order dated 23.09.2004 issued by the office of Respondent no.2 is a recovery order directed against the Petitioner. A perusal of this order suggests that Respondent no.2 by invoking power given under Section 33-C(1) of the I.D. Act directed Respondent no. 3 that the full wages for period of 14.04.2004 to 31.05.2004 onwards can be recovered as arrears of land revenue from the Petitioner as the Petitioner failed to make payments of wages as per Section 25-N of the I.D. Act.

26. For effective adjudication of present matter in hand, it would be relevant to break the dispute into two sub-parts, namely: (a) Interpretation of provision of Section 33-C(1) of the I.D. Act for understanding the scheme and purpose behind introduction of this provision in the legislation; (b)Examination of the impugned order and notice in the present case to determine whether the „appropriate government‟, judiciously exercised the power vested in it under Section 33- C(1) of the I.D. Act.

I. SCOPE OF SECTION 33-C(1) OF THE I.D. ACT

27. Before advancing with further discussion, it is pertinent to scrutinize the provision of Section 33-C of the I.D. Act for gaining insights. Said Provision has been reproduced as follows: “33C. Recovery of money due from an employer.--(1) Where any money is due to a workman from an employer under a settlement or an award or under the provisions of [Chapter VA or Chapter VB], the workman himself or any other person authorised by him in writing in this behalf, or, in the case of the death of the workman, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue: Provided that every such application shall be made within one year from the date on which the money became due to the workman from the employer: Provided further that any such application may be entertained after the expiry of the said period of one year, if the appropriate Government is satisfied that the applicant had sufficient cause for not making the application within the said period. (2) Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if any question arises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may, subject to any rules that may be made under this Act, be decided by such Labour Court as may be specified in this behalf by the appropriate Government; [within a period not exceeding three months:] [Provided that where the presiding officer of a Labour Court considers it necessary or expedient so to do, he may, for reasons to be recorded in writing, extend such period by such further period as he may think fit.] (3) For the purposes of computing the money value of a benefit, the Labour Court may, if it so thinks fit, appoint a commissioner who shall, after taking such evidence as may be necessary, submit a report to the Labour Court and the Labour Court shall determine the amount after considering the report of the commissioner and other circumstances of the case. (4) The decision of the Labour Court shall be forwarded by it to the appropriate Government and any amount found due by the Labour Court may be recovered in the manner provided for in sub-section (1). (5) Where workmen employed under the same employer are entitled to receive from him any money or any benefit capable of being computed in terms of money, then, subject to such rules as may be made in this behalf, a single application for the recovery of the amount due may be made on behalf of or in respect of any number of such workmen. Explanation.--In this section Labour Court includes any court constituted under any law relating to investigation and settlement of industrial disputes in force in any State.]”

28. At this juncture, it is relevant to examine the observation made by this Hon‟ble court in Weston Electroniks case (supra) pertaining to scope of Section 33-C(1) of the I.D. Act: “38. From the aforesaid discussion, we conclude that the proceedings under Section 33-C(1) are in the nature of execution proceedings providing an additional mode of speedy recovery of money due to a workman from an employer under a settlement or an award of the provisions of Chapter V-A or Chapter V-B. Section 33-C(1) does not vest any power of adjudication on the appropriate government except to the limited extent of examining the facts to find out whether objections to jurisdiction of the appropriate government has been taken by the employer simply with a view to oust the jurisdiction of the appropriate government under the said Section and deprive the workman of money due to him. On the interpretation of Section 33-C(1) of the Act and scope of power of the appropriate government under this Section, we summarise our conclusions as follows:—

(i) Proceedings under Section 33-C(1) of the Act are in the nature of execution proceedings.

(ii) The appropriate government has not been invested with powers of a

(iii) In case the management raises bona fide dispute/s on the right of a workman to claim of money due under a settlement or an award or under the provisions of Chapter V-A or V-B, the appropriate government has no right of adjudication of such dispute/s.

(iv) in case of bonafide dispute about the right of a workman of the money claimed as due from the management, the workman will have to raise an industrial dispute for reference being made for adjudication by the Labour Court/Industrial Tribunal.

(v) The appropriate government has however, a limited right of examining the objection of the management to the claim of the workman, only to form a prima facie opinion whether the objection of the management is perverse, frivolous or malafide taken with a view to deprive the workman of the money due to him.

(vi) The appropriate government is required to afford a reasonable opportunity complying with the principles of natural justice to the management and the workman before taking a decision under Section 33- C(1) and is also required to make a speaking order giving reasons to that the aggrieved party— management or workman may seek judicial review of the decision of the appropriate government in accordance with law.”

29. In case of Central Bank of India Ltd. (Supra), The Apex court observed that:

The court also went to differentiate between the scope of sub-section (1) and (2) of the Section 33-C of the I.D. Act “19. We have already noticed that in enacting Section 33-C the legislature has deliberately omitted some words which occurred in Section 20(2) of the Industrial Disputes (Appellate Tribunal) Act, 1950. It is remarkable that similar words of limitation have been used in Section 33-C(1) because Section 33-C(1) deals with cases where any money is due under a settlement or an award or under the provisions of Chapter V-

30. It is the prime contention of the petitioner that powers under Section 33-C(1) of the I.D. Act is executory in nature i.e. it can be put into action only when there is a „pre-existing’ right in favour of workmen by way of an adjudication or settlement or an award. Perusal of the language of this provision cogently indicates that a workman shall have a pre-determined right with respect to money due from the employer under an award or a settlement. It is, therefore, adequately clear that invocation of power under Section 33-C(1) of the I.D. Act must be preceded by an award or settlement under which right of payment of sum is bestowed upon the workman.

II. Examination of the impugned order and notice in the present case, to determine whether the „appropriate government‟, judiciously exercised the power vested in it under Section 33- C(1) of the ID Act

31. A settlement dated 15.04.2004 was reached between the petitioner and Respondent no. 4 under which it was agreed by the petitioner to pay earned wages to 42 members of Respondent no. 4 for a period of 01.03.2004 to 13.04.2004, while the rest 7 members were to be paid only after verification of the petitioner‟s record. However, the impugned order has been issued for recovery of wages for period of 14.04.2004 to 31.05.2004. Therefore, payment of earned wages after 13.04.2004 was a matter of dispute that required judicial consideration of an adjudicatory authority as per the provisions of the I.D. Act. However, Respondent no. 2 by issuing the impugned order completely overlooked this fact that dispute regarding violation of Section 25-N of the I.D. Act is meant to be decided by the Labour Court, and rather proceeded hastily by assuming functions of an adjudicatory body and concluding that petitioner acted in violation of Section 25-N of the I.D. Act.

32. Co-ordinate Bench of this Court in Indian Refrigation Industries case (supra), while dealing with a similar matter wherein it was prayed by management to quash the recovery order, held that application under Section 33-C (1) of I.D. Act is not maintainable as there exists a dispute between parties as to whether workmen are entitled to any wages after the date of award. It is an established principle of law that the „appropriate government‟ under Section 33C (1) is vested only with an executory function, and must confine itself to the same and refer the dispute under Section 10 and 12 of the act for adjudication on merits. The appropriate government must not arrogate to itself the function of adjudicating the dispute.

33. Observation regarding limited and specific power of an appropriate government under the scheme of the Industrial Disputes Act, 1947, in M.P. Irrigation Karamchari Sangh v. State of M.P. (1985) 2 SCC 103 at page 108 was made. In this case, The Hon‟ble Supreme Court of India held that State government indirectly adjudicated the matter wherein it declined to refer the dispute for adjudication on grounds that granting of dearness allowance equal to that of the employees of the Central Government would cost additional financial burden on the Government

34. The Hon‟ble Supreme Court in Namer Ali Choudhury v. Central Inland Water Transport Corpn. Ltd., (1977) 4 SCC 575 discussed regarding the function of appropriate government under Section 33- C(1):

35. It is, therefore, amply conveyed through examination of abovementioned judgements that appropriate government i.e. The Respondent no. 2 in present case, should not enter into merits of the dispute and should act only as an executory court. It should leave it to the tribunal/labour court to perform its adjudicatory function to determine if there is a violation of Section 25-N and whether workmen are entitled to the earned wages. If intention of the legislators was to allow the appropriate government to usurp function of a labour court/Industrial tribunal by passing orders, in such a case legislation would have provided special provisions with respect to that.

36. On the other hand, it is the case of Respondent no. 1 to 3 that there existed no bonafide dispute pertaining to violation of Section 25-N and retrenchment compensation since petitioner despite being provided numerous opportunity to defend its case, failed to raise a dispute before the authority. Therefore, in absence of there being any bonafide dispute, no reference under Section 10 of the act can be made. However, this court perused the Annexure-C of the writ petition which appears to be a complaint filed by Respondent no.4 addressed to Respondent no. 2. In the aforesaid complaint, it is prayed that dispute be referred under provision of Section 12(4) of the act. Respondents have now departed from it earlier taken stance that „dispute‟ shall be referred to the higher adjudicatory authority.

37. This Court is of the considered view that the actual dispute in the present case is not regarding the computation of the retrenchment compensation under Section 33-C (1) & (2) of the Act, but rather revolves around the question that whether the services of the workmen were retrenched in contravention of Section 25 N of the Industrial Disputes Act. Therefore, the submission of the Respondents that absence of pre-determined sum will not per se exclude a dispute from the ambit of Section 33-C(1) is not relevant in this matter. Since there exists no pre-determined right at all in favour of members of Respondent no.4 with respect to „money due, let alone the absence of pre-determined sum. Therefore, judgement relied upon of Sawtram Ramprasad Mills Co. Ltd. (Supra) has no applicability here in this dispute.

38. In light of the above discussion, this court is of the opinion that Respondent no.2 misconstrued the requirement provided under Section 33-C(1) of the act. Therefore, in the absence of any award or settlement in support of the recovery order, the impugned order is illegal, perverse and arbitrary. Impugned notice also holds no force as no recovery certificate can be granted without meeting with the requisites of the provision under the I.D. Act. The impugned order and impugned notice is hereby quashed/set aside.

39. The present petition is allowed with the liberty being granted to the parties to seek their remedy by raising an Industrial Dispute under Section 10 of I.D. Act. Pending application also stands disposed off. No orders as to the cost.

GAURANG KANTH, J. DECEMBER 06, 2022