# M/s Modi Rubber Ltd v. State of U.P. And Others

- **Citation:** (2019) 1 ILRA 1251
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-07-29
- **Case number:** C No. 25993 of 2007
- **Bench:** Mrs. Sunita Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-modi-rubber-ltd-v-state-of-u-p-and-others-44446
- **Pages:** 20

## Headnote

C.S.C., Sri C.K. Rai, Sri F. Rai, Ghazala
Bano Quadri, Sri Rajendra Kumar Pandey,
Sri
Samir
Sharma,
Sri
Swatashwa
Agarwal, Sri Y.K. Sinha

A.
Whether
the
Additional
Labour
Commissioner/Prescribed
Authority
under the Timely Payment of Wages Act,
1978 had exceeded in its jurisdiction in
issuing the recovery certificates while
exercising power under Section 3 of the
said Act ?

B. Whether there was an illegal strike or
valid closure of the factory and the
denial on the part of the employer to pay
wages to the workmen since 7.8.2001
was "default" on its part of the employer
within the meaning of the Act, 1978 or
there was a valid dispute with regard to
entitlement of the workmen to wages
which
required
adjudication
by
an
industrial adjudicator ?

C.
Whether
the
settlement
dated
14.1.2002
was
binding
on
all
the
workmen or the union ?

The
enquiry
conducted
by
the
Labour
Commissioner to record reasons while arriving
1252 INDIAN LAW REPORTS ALLAHABAD SERIES
at the conclusion of default on the part of the
employer was well within the limited exercise
of jurisdiction conferred on him under Section
3 of the Act, 1978. It cannot be said that the
Labour Commissioner had acted beyond its
jurisdiction in making enquiry to reach at
the conclusion of genuineness of denial on
the part of the workmen. In absence of legal
lockout or illegal strike, the orders of
recovery cannot be said to be wrongful
exercise of power on the part of the Labour
Commissioner (Para80). The petitioner had
not been able to establish before the Labour
Commissioner that there was a genuine
dispute pertaining to strike or validity of
settlement, which required adjudication by an
industrial adjudicator, there was no question
of relegating the workmen to approach the
industrial
adjudicator
(Para-94).
Such
a
settlement would not be binding on those who
are not signatories to the same (Para-96).

Writ Petitions dismissed.

CHRONOLOGICAL LIST OF CASES CITED:
1:- 1994 SCC (1) 159, Modi Industries Ltd. vs.
State Of U.P

2:- 2006 (5) SCC 442, Hotel and Restaurant
Karamchari Sangh vs. Gulmarg Hotel and
others

3:- AIR 1970 SC 150,A.K.Kraipak &Ors. Vs.
Union of India &Ors.

4:- 2013 (5) AWC 4745, Silk and Kapda
Karmchari Union, Varanasi vs. Deputy Labour
Commissioner, Varanasi and others

5:- AIR 2000 SC 469, National Engineering
Industries
Ltd.
vs.
State
of
Rajasthan
andothers

6:- 2013 (5) ADJ 544,Hawkins Cookers
Mazdoor Union vs. Conciliation Officer

7:- 2000 (84) FLR 162,National Engineering
Industries Limited vs. State of Rajasthan and
others

8:- J.T. 2005 (9) SC 413,ANZ Grindlays Bank
Ltd. vs. Union of India
9:- 2002 LLR 433, Tata Consulting Engineers
and Associates Staff Union Vs. Tata Consulting
Engineers and Another

10:- 1998 (1) UPLBEC 391,Posysha Industries
Company Limited vs.Collector (E-7)

## Text

_Characters 0–39,994 of 67,038. This is a partial read: ask again with offset=39994 for what follows._

1 All. M/s Modi Rubber Ltd. Vs. State of U.P. And Others
1251
to satisfy the test of reasonableness, the same
would be unrea- sonable. In this connection
reference may be made to E.P. Royappa v.
State of Tamil Nadu &Anr., [1974] 4 SCC 3;
Maneka Gandhi v. Union of India &Anr.,
[1976] 1 SCC 248; Ajay Hasia &Ors. v.
Khalid Mujib Sehravardi &Ors., [1981] 1
SCC 722; R.D. Shetry v. InternationalAirport
Authority of India &Ors., [1979] 3 SCC 1 and
also Dwarkadas Marlaria and sons v. Board
of Trustees of the Port of Bombay, [1989] 3
SCC 293. It appears to us that rule of reason
and
rule
against
arbitrariness
and
discrimination, rules of fair play and natural
justice are part of the rule of law applicable in
situation or action by State instrumentality in
dealing with citizens in a situation like the
present one. Even though the rights of the
citizens are in the nature of contractual rights,
the manner, the method and motive of a
decision of entering or not entering into a
contract, are subject to judicial review on the
touchstone of relevance and reasonableness,
fair play, natural justice, equality and nondiscrimination in the type of the transactions
and nature of the dealing as in the present
case."

20. Since in the facts of the present
case, there is a complete failure to follow
due process, we find ourselves unable to
sustain the order dated 21.06 .2019 passed
by the respondent No.2.

21. We accordingly allow the writ
petition and quash the the order dated
21.06.2019. We further clarify that in case
the respondents do choose to initiate fresh
proceedings against the petitioner, we
leave it open to them to do so subject to
the observation that the proceedings if
initiated
shall
be
undertaken
in
accordance with law and the observations
appearing herein above.
----------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 29.07.2019

BEFORE
THE HON'BLE MRS. SUNITA AGARWAL, J.

Writ-C No. 26661 of 2007 connected with Writ
C No. 25993 of 2007

M/s Modi Rubber Ltd. ...Petitioner
Versus
State of U.P. And Others ...Respondents

Counsel for the Petitioner:
Sri Vijay Sinha, Sri Anurag Khanna, Sri
Syed Fahim, Sri Syeed Fahim Ahmed, Sri
V.B. Singh.

Counsel for the Respondents:
C.S.C., Sri C.K. Rai, Sri F. Rai, Ghazala
Bano Quadri, Sri Rajendra Kumar Pandey,
Sri
Samir
Sharma,
Sri
Swatashwa
Agarwal, Sri Y.K. Sinha

A.
Whether
the
Additional
Labour
Commissioner/Prescribed
Authority
under the Timely Payment of Wages Act,
1978 had exceeded in its jurisdiction in
issuing the recovery certificates while
exercising power under Section 3 of the
said Act ?

B. Whether there was an illegal strike or
valid closure of the factory and the
denial on the part of the employer to pay
wages to the workmen since 7.8.2001
was "default" on its part of the employer
within the meaning of the Act, 1978 or
there was a valid dispute with regard to
entitlement of the workmen to wages
which
required
adjudication
by
an
industrial adjudicator ?

C.
Whether
the
settlement
dated
14.1.2002
was
binding
on
all
the
workmen or the union ?

The
enquiry
conducted
by
the
Labour
Commissioner to record reasons while arriving
1252 INDIAN LAW REPORTS ALLAHABAD SERIES
at the conclusion of default on the part of the
employer was well within the limited exercise
of jurisdiction conferred on him under Section
3 of the Act, 1978. It cannot be said that the
Labour Commissioner had acted beyond its
jurisdiction in making enquiry to reach at
the conclusion of genuineness of denial on
the part of the workmen. In absence of legal
lockout or illegal strike, the orders of
recovery cannot be said to be wrongful
exercise of power on the part of the Labour
Commissioner (Para80). The petitioner had
not been able to establish before the Labour
Commissioner that there was a genuine
dispute pertaining to strike or validity of
settlement, which required adjudication by an
industrial adjudicator, there was no question
of relegating the workmen to approach the
industrial
adjudicator
(Para-94).
Such
a
settlement would not be binding on those who
are not signatories to the same (Para-96).

Writ Petitions dismissed.

CHRONOLOGICAL LIST OF CASES CITED:
1:- 1994 SCC (1) 159, Modi Industries Ltd. vs.
State Of U.P

2:- 2006 (5) SCC 442, Hotel and Restaurant
Karamchari Sangh vs. Gulmarg Hotel and
others

3:- AIR 1970 SC 150,A.K.Kraipak &Ors. Vs.
Union of India &Ors.

4:- 2013 (5) AWC 4745, Silk and Kapda
Karmchari Union, Varanasi vs. Deputy Labour
Commissioner, Varanasi and others

5:- AIR 2000 SC 469, National Engineering
Industries
Ltd.
vs.
State
of
Rajasthan
andothers

6:- 2013 (5) ADJ 544,Hawkins Cookers
Mazdoor Union vs. Conciliation Officer

7:- 2000 (84) FLR 162,National Engineering
Industries Limited vs. State of Rajasthan and
others

8:- J.T. 2005 (9) SC 413,ANZ Grindlays Bank
Ltd. vs. Union of India
9:- 2002 LLR 433, Tata Consulting Engineers
and Associates Staff Union Vs. Tata Consulting
Engineers and Another

10:- 1998 (1) UPLBEC 391,Posysha Industries
Company Limited vs.Collector (E-7)

(Delivered by Hon'ble Mrs. Sunita Agarwal, J.)

1. Heard Sri Syed Fahim Ahmed
learned counsel for the petitioner, Sri
C.K. Rai for the respondent no. 8, Ms.
Ghazala Bano Quadri for the respondent
no. 9 and learned Standing Counsel on
behalf of respondent nos. 1 to 7. No one
appeared for the remaining respondent
nos. 10 to 102 during the course of
hearing.

2. Heard learned counsels for the
parties at length and perused the record.

3. Two above noted writ petitions
are directed against the recovery orders
issued
by
the
Additional
Labour
Commissioner,
Ghaziabad/Prescribed
Authority under the U.P. Industrial Peace
(Timely Payment of Wages) Act, 1978
(hereinafter referred to as "the Timely
Payment of Wages Act" or "the Act,
1978"). Main contest is in writ petition
filed by M/s Modi Rubber Ltd., the
employer, as the connected writ petition is
by the workmen who stood in support of
the employer/management. The petitioner
hereinafter,
therefore,
refers
to
the
employer/management only.

4.

The
recovery
orders
are
challenged on the ground that there was a
dispute with regard to entitlement of the
workmen to wages for different period
mentioned therein. It is contended that on
receipt of notice from the Presiding
Officer, Timely Payment of Wages Act,
1978, a written statement was filed by the
1 All. M/s Modi Rubber Ltd. Vs. State of U.P. And Others
1253
employer/petitioner
herein.
It
was
submitted therein that the workmen had
resorted to illegal strike in the factory
w.e.f 7th August, 2001, which had
resulted in stoppage of production. The
act of illegal strike of the workmen was
communicated to the Deputy Labour
Commissioner, Meerut from time to time.
With the efforts of management and few
workers' representative, a settlement dated
14.1.2002 had been arrived, which was
registered
by
the
Assistant
Labour
Commissioner, Meerut vide registration
certificate dated 30th January, 2002.

5. It was, inter alia, agreed in the
settlement in Clause 7 that the management
would strive to restart the production after
arranging required funds and raw materials
and other means w.e.f. 1st February, 2002
and the workers would not demand wages till
when the production was not commenced or
till the production was restarted. It was
submitted that the fact of illegal strike and
that the management had not been able to
restart the production operations which
continued to remain disrupted for the act of
the workers was well within the knowledge
of the Labour authorities. The settlement
dated 14.1.2002 registered under Section 6-B
of the U.P. Industrial Disputes Act readwith
Rule 27 of the U.P. Industrial Disputes
Rules, 1947 was binding upon the workmen
having been signed by the office bearers of
the then existing registered union. Another
settlement had been arrived on 19.11.2003
and the workmen had admitted that they
were not entitled to wages on the principle of
"no work no pay" for the period of disruption
of production in the factory.

6. It was further contended that the
said dispute was beyond the purview of
the Assistant Labour Commissioner who
was manning the office of the Prescribed
Authority, Timely Payment of Wages
Act. The claim of the workers was
required to be rejected outrightly.

7. Learned counsel for the petitioner
placing the abovenoted averments in the
written statement vehemently submits that
enquiry under Section 3 of the Timely
Payment of Wages Act, 1978 is limited in its
scope. The power of the Prescribed
Authority under the said Act extends only to
find out whether the workmen had put in
work for the period of demand of wages as
per terms of their employment and they were
entitled to wages for no default on their part
or it has wrongly been withheld by the
employer. The Prescribed Authority has no
jurisdiction to act as an adjudicator if
entitlement of the workmen to the wages is
disputed. In the instant case, the liability of
the employers to pay wages to the workmen
was seriously disputed, it was, thus,
incumbent on the Prescribed Authority to
relegate the workmen to the labour
court/industrial tribunal. The disposal of
claim made under the provisions of Act,
1978 involved complicated questions of law
and a decision on the binding effect of the
settlement dated 14.1.2002 duly registered
under Section 6-B of the U.P. Industrial
Disputes Act, 1947 was required to be taken
before issuance of the recovery certificates.
The Prescribed Authority was also required
to see the effect of the settlement dated
19.11.2003 signed between the workmen and
management of the employer.

8. It is contended that out of total
1147 workmen on roll, 1103 workmen
had individually signed the settlement.
For the claim of remaining handful of
workmen, the settlement with the majority
workers was binding on them. The
adjudication on the question of binding
effect of settlement was beyond the
1254 INDIAN LAW REPORTS ALLAHABAD SERIES
jurisdiction of the Prescribed Authority
under the Timely Payment of Wages Act,
1978. In its limited jurisdiction, the claim
of the workmen could not have been
decided in a summary manner.

9. It was further contended that in
view of the complete disruption of activities
in Modipuram Plant since August, 2001, the
company's network had been eroded. Hence
the company had filed a reference with the
Board
for
Industrial
and
Financial
Reconstruction (in short "BIFR") on
4.2.2004 under Section 15(I) of Sick
Industrial Companies (Special Provisions)
Act, 1985. The reference had been
registered as Case No. 153 of 2004. This
fact was duly brought to the notice of the
Prescribed Authority to assert that no
recovery proceedings could not initiated
against the company during the pendency of
the reference before BIFR and hence the
proceedings were required to be dropped.

10. It was contended that the
workmen had not earned a single penny
as the production activities in the factory
of the employer had completely remained
suspended since 7th August, 2001,
subsequent to illegal strike by the
workmen in the plant, their demand is,
therefore, illegal.

11. As far as the bonus is concerned,
it was contended that the workmen could
not claim the minimum wages under the
provision of Payment of Bonus Act, 1965
as their claim was not based on any
existing right. There was, thus, no
question of issuance of recovery for bonus
for the period from 1st April, 2000 to 31st
March, 2004.

12. It is further contended that
during pendency of the present writ
petition, another settlement dated 2nd
September, 2007 was arrived whereunder
remaining workmen had settled their
dispute and pursuant thereto only handful
of workmen (120 or 74) remained who
are contesting their claim in the present
writ petition.

13. It is, thus, vehemently contended
that only the admitted wages can be
recovered under Section 3 of the Timely
Payment of Wages Act, 1978. The
Assistant Labour Commissioner had no
jurisdiction to adjudicate the issue.

14. Further, no inspection was done.
The Labour authorities were well aware
of the factum of strike resorted by the
workmen and the intimations sent by the
management were lying in their office.
The record lying in the office of the
labour authorities were required to be
examined
by
the
Prescribed
Authority/Assistant
Labour
Commissioner
before
returning
the
finding that there was no illegal strike and
that the production had commenced and
the claimants were actually workmen of
the company.

15. The submission is that the object
of Timely Payment of Wages Act, 1978 is
to maintain industrial peace and harmony.
This Act is not only for the benefit of
workmen. The denial of entitlement of
workmen to wages by the employer took
away the jurisdiction of the Assistant
Labour Commissioner to adjudicate the
issue. Even if, the claim of the workmen
under Section 3 of the Timely Payment of
Wages Act, 1978 was turned down, they
were not remedyless as they would have
remedy
to
approach
the
labour
court/industrial tribunal. The binding
effect of the settlement had
been
1 All. M/s Modi Rubber Ltd. Vs. State of U.P. And Others
1255
completely ignored by the Assistant
Labour Commissioner.

16. Lastly, it is contended that
Timely Payment of Wages Act, 1978 has
been framed for bigger establishment and
it could not have been invoked in a small
establishment like that of the petitioner. It
does not provide remedy for payment of
wages, evidence cannot be appreciated to
decide the dispute. Enquiry under Section
3 is very limited being a summary enquiry
in case of default in timely payment of
wages in a case where wages is
"admittedly
due",
the
Prescribed
Authority could not have issued recovery
by conducting a trial to adjudicate on the
disputed claim.

17. Sri C.K. Rai, learned Advocate for
respondent no. 8 in rebuttal submits that the
management had adopted unfair method and
tactics to succumb the workmen to the
wishes of the establishment. The act of
management in stopping production had
adversely affected the interest of the
workmen. A false compromise against the
interest of the workmen was fraudulently
finalized on 3.8.2001 without any discussion
with the workmen or their representation in
the establishment. The settlement dated
14.1.2002 is an illegal settlement causing
serious prejudice to the workmen who were
total 1500 in number, without any discussion
with their authorized representatives. The
workmen
and
their
representatives
challenged the very said settlement dated
14.1.2002 by filing Writ Petition No. 7421 of
2002, wherein this Court in the judgment and
order dated 20.3.2002 observed that the
petitioners workmen therein who were not
signatories to the settlement which had been
registered under Section 6-B(3) of the U.P.
Industrial Disputes Act, 1947, the terms of
the settlement will not be binding upon them
in accordance with Section 6-B(1) of the
Industrial Disputes Act which provides that
such a compromise is binding only on the
parties to that compromise.

18. With the said observations, the
petitioners therein were turned away to
challenge the settlement entered into
between the employer and other workmen
who had no objection to the said
compromise.

19. The submission is that in view of
the aforesaid observations of this Court, it
is not open for the petitioner to state that
the settlement dated 14.1.2002 was
binding on the workmen who had not
signed and were agitating their claim of
wages through respondent no. 8 namely
the Secretary, Lal Hind Rubber Mazdoor
Union, a registered union of M/s Modi
Rubber Limited, Modipuram, Meerut.

20. It is contended that the recovery
certificates issued by the Deputy Labour
Commissioner in the month of April, 2002
could not be executed on account of the exparte interim order passed by this Court in a
Writ Petition No. 36426 of 2002, wherein the
employers in order to avoid the payment of
wages to the workmen had set up the bank
which had filed the said writ petition without
impleading
the
workmen
and
their
representatives. The impleadment application
filed by the workmen was rejected on the
ground that the workmen had remedy to
approach the appropriate forum. Thereafter,
several applications were filed by the
workmen before the Prescribed Authority
under the Timely Payment of Wages Act,
1978 and recovery certificates had been
issued thereafter.

21. The aforesaid interim order was
later on modified to the extent that the
1256 INDIAN LAW REPORTS ALLAHABAD SERIES
same will not come in the way regarding
payment of wages to the workmen. The
respondent no. 8 filed an application on
behalf of the workmen for releasing the
wages found due towards the workmen.
An amount of Rs. 55,50,000/- deposited
before the Deputy Labour Commissioner
was released by him and recovery
certificates had been issued for the rest of
the wages of the workmen who were on
the roll of the establishment under the
Timely Payment of Wages Act, 1978.

22. It is contended that the petitioners
itself was responsible for the illegal closure of
the factory/plant. The workmen or lack of
electricity was not the ground of closure of the
factory/plant. It was contended that even if a
company is declared sick, the wages of its
workmen could not be withheld and they are
entitled to the wages regularly till employeremployee relationship exist. This is not the
case of the employer that they had terminated
the services of the agitating workmen or the
employer-employee relationship had severed
for any other reason.

23. The assertion that the workmen
had resorted to illegal strike was made
only to deny wages due to the workmen.
The agitating workmen were demanding
wages to which they were legally entitled
to. The denial on the part of the employer
was illegal as there was no illegal strike.
The closure or illegal strike as set up by
the employer in the written statement to
deny wages to the workmen cannot be
attributed to the workmen. The decision
of the Prescribed Authority to grant wages
to the workmen for the period of their
entitlement, therefore, cannot be said to
suffer from any error of law.

24. It is pertinent to note that
respondent no. 10 namely Modi Rubber
Shramik Sangh, Modi Puram, Meerut
filed a counter affidavit which had been
controverted by the petitioner in rejoinder
with the assertion that the said Union had
been derecognized by the Registrar, Trade
Union, U.P., Kanpur by order dated
29.6.2007
by
cancellation
of
its
registration under Section 10 of the Trade
Unions Act, if, therefore, has no locus to
file counter affidavit.

25. In the said rejoinder affidavit, it is
further contended that during pendency of
the proceeding before this Court with the
Corporation of the financial institutions, a
new Management had come into existence
which purchased the entire share holding of
the financial institutions and Sri V.K. Modi
became the Managing Director being the
majority share holder in the company. The
new management gave offer to all the
workmen of Modi Rubber Ltd. who became
jobless from August, 2001 due to halt of the
manufacturing activities to regain their job
as
the
factory
was
to
resume
its
manufacturing activities under in the
rehabilitation
scheme.
Accordingly,
a
registered settlement dated 2.9.2007 was
drawn in the presence of the Deputy Labour
Commissioner, Meerut who had signed the
same alongwith representatives of the
workers. The copy of the settlement has
been appended as R.A.-'4' to the rejoinder
affidavit dated 27.3.2008.

26. Under the said settlement the
workmen had agreed that from 7.8.2001
till the date manufacturing activities
remained suspended, they would not be
paid wages and in lieu thereof, the
Management had agreed to pay Rs. 1 lakh
to each workmen as compensation. The
above settlement had been implemented
and first installment of Rs. 15,000/- had
been paid individually to 1100 workmen.
1 All. M/s Modi Rubber Ltd. Vs. State of U.P. And Others
1257

27. Out of total 1269 workmen
on the roll in August, 2001, 1100
workmen had signed the settlement after
receipt of the first installment of Rs.
15,000/-
each.
The
remaining
169
workmen either were not available or had
left the unit to their native place or were
not interest in the work at all. The
management by letter dated 13.9.2007 as
also the workers by writing letter dated
28.9.2007 had requested the Deputy
Labour
Commissioner,
Meerut
for
withdrawal of recovery certificates in
view
of
the
aforesaid
registered
settlement.
The
Deputy
Labour
Commissioner, Meerut had, however,
replied that the matter was still being
proceeded.

28. A perusal of the reply of the
Deputy
Labour
Commissioner
dated
15.2.2008 indicates that he opined that the
recovery with respect to the workmen
who did not agree to the settlement had to
be separated from those who had signed
the settlement.

29. The contention of learned Advocate
for the petitioner in rejoinder is that the
workers cannot demand wages for the period
for which the manufacturing activities were
put to halt in preparation of rehabilitation
scheme by BIFR. Only remedy before the
workmen was to lay their claim before BIFR.
The recovery orders had become redundant
due to subsequent developments narrated in
the rejoinder affidavit.

30. The workmen are bound by the
settlement dated 14.1.2002 and another
settlement dated 2.9.2007 which was arrived
after the recovery orders were passed.

31. Learned counsel for the
petitioner, thus, vehemently argued that
the manufacturing activities of the unit
was put to halt on account of illegal strike
of the workers.

32. As noted above, the respondent
nos. 11 to 102 were impleaded in the
present writ petition on an impleadment
application filed by them but no one
appeared on their behalf to contest the
matter.

33. A supplementary affidavit
dated 28.5.2018 had been filed by the
petitioner to bring on record the registered
settlement dated 2.9.2007 arrived at with
1100 workmen with the details of name
and address of the workmen who had
signed the same. With reference to the list
of 169 workmen who did not sign the
settlement, it is contended that their
numbers has been reduced to 74 as others
had settled and accepted payments in
terms of the aforesaid settlement, rest of
717 workmen had either resigned, retired
or had died and had settled their full and
final account with the company during the
period from 2001 to 2008, their list is also
appended
with
the
supplementary
affidavit.
The
photo
copy
of
the
registration certificate of the settlement
dated 2.9.2007 has also been brought on
record.

34. It is stated therein that two
unions namely Modi Rubber Shramik
Sangh and Modi Tyre Karamchari Union
had been de-registered by the Registrar,
Trade Unions, U.P., Kanpur in the year
2007 and 2000; respectively.

35. So far as respondent no. 8
namely Lal Hind Rubber Mazdoor Union
is concerned, it is averred that the said
union has no concern with the affairs of
the company and has wrongly been
arrayed
as
party.
As
the
workers
personally are not impleaded and none of
1258 INDIAN LAW REPORTS ALLAHABAD SERIES
them came forward to show any interest
to contest the writ petition, their claim
cannot be considered.

36. Counter affidavit to the said
supplementary affidavit had been filed on
behalf of both respondent nos. 8 and 9.

37. In the supplementary counter
affidavit of respondent no. 8, the
registration certificate under the Trade
Unions Act issued by the Registrar of
Trade Unions, U.P., Kanpur has been
appended to assert that the respondent no.
8 is a registered Trade Union and its
certificate is still valid. It is contended
that the petitioner/M/s Modi Rubber Ltd.
with a new name M/s Modi Tyre
Company Pvt. Ltd., Modipuram, Meerut
had started production activity. The
respondent no. 8 on behalf of 121
workmen had submitted an application on
9.9.2009 before the Deputy Labour
Commissioner, Meerut Region, Meerut to
direct the employer to give joining to the
workmen without any condition and pay
their balance wages in full. A letter was,
accordingly, issued to the employer by the
Deputy Labour Commissioner asking
them to appear before him on 14.9.2009.
The employer, however, did not appear
before the Deputy Labour Commissioner.

38. In rejoinder to the supplementary
counter affidavit filed on behalf of
respondent no. 8, the assertions in
paragraph '3' thereof that Lal Hind Rubber
Mazdoor Union, Meerut is a registered
union under the Trade Unions Act and its
certificate is valid till date, is not denied.
Only this much is submitted that
respondent no. 8/Union is being managed
by handful of workmen for litigating and
raising unnecessary demands as the
majority of workmen had settled their
dispute with the employer. It is further
contended that 94% of the workmen had
joined their duties and started contributing
in the production, rest who did not turn up
were asked in writing by sending letters to
come and join the duties, but to no avail.
Other two Unions set by the employer had
caused serious injury to the workmen and
were de-registered accordingly, vide order
dated 29.6.2007 and 25.1.2000.

39. In the counter affidavit filed on
behalf of respondent no. 9, though it is
contended that the management had filed
fabricated documents with wrong details
of employees but nothing could be said on
the stand of the petitioner and respondent
no. 8 that respondent no. 9 namely the
Modi Tyre Karamchari Union had been
de-registered by the Registrar, Trade
Union in the year 2007.

40. Another supplementary counter
affidavit has been filed on behalf of
respondent no. 9 to assert that respondent no.
8 had no concern with the affairs of the
workmen and is not functional. It is then
contended that the deponent union itself have
no concern with the present case as this matter
relates to 93 employees only.

41. In view of the said stand of the
respondent no. 9, other submissions of
learned Advocate appearing on its behalf
are not required to be considered.

42. As noted above, learned counsel
for the petitioner had insisted on the fact
that manufacturing activities of the Union
was put to halt on account of illegal strike
observed by the workmen w.e.f. 7.8.2001.
On the said submission, time was granted
to the counsel for the petitioner to bring
on record the documents filed by the
petitioner before the Prescribed Authority
1 All. M/s Modi Rubber Ltd. Vs. State of U.P. And Others
1259
in this proceeding under Section 3 of the
Timely Payment of Wages Act, 1978 .

43. Pursuant thereto, a supplementary
affidavit dated 26.2.2019 has been filed, few
averments of which are relevant to be noted
hereunder:-

Paragraph '6' of the said affidavit
states that the tyre industry was passing
through a very low phase and demand of
tyres had declined from the company due to
various competitors, who came up in the
market example MRF, JK, Appollo etc. Only
way for the petitioner company to survive
was
to
reduce
its
expenses.
The
management, therefore, issued an office
order dated 4.8.2001 proposing that the
employees would get wages/monthly salary
(including all allowances) linked to the
production of truck tyres actually achived i.e.
proportionate to the production. The said
decision was put on the notice board of the
Union on 7.8.2001 in the first shift (6.00
A.M. to 2.00 P.M.). Since thereafter, the
workers had stopped working on the
machines and came out and stopped
production in the second shift. An appeal
was made by the management on the notice
board
requesting
workmen
to
start
production. It is contended that another
notice was pasted on 7.8.2001 on the notice
board at about 11:45 P.M. The management
sent
letters
to
the
Deputy
Labour
Commissioner intimating him about the
illegal strike resorted by the workmen on
8.8.2001 and 9.8.2001. On 11.8.2001 and
13.8.2001 letters were written to the District
Magistrate informing him about continuation
of illegal strike. On 13.8.2001, a meeting was
conducted with the workmen and 22
workmen were chosen to represent all the
workmen to enter into a settlement with the
management. The decision of the workmen
to remain on strike was intimated to the
Labour
Commissioner,
Kanpur
on
14.8.2001. On 13.8.2001, a settlement was
arrived between the company and the
workmen which was modified on 15.8.2001.
On 16.8.2001, a notice was put on the notice
board informing workmen about settlement
dated 15.8.2001 and requesting them to join
duties. The workmen continued on strike and
intimation was given to the district and
Labour authorities. Various notices were
given to the workmen to resume the work
intimating them that if they continue on
strike, disciplinary action will be taken
against them coupled with deduction of
wages on the principle of "no work no pay".
With the efforts of BIFR and the promoters
manufacturing operations in the unit at
Modipuram had commenced on 13.6.2009.
Second installment of Rs. 35,000/- under the
settlement dated 2.9.2007 was paid to the
workers in the year 2009 and third and final
installment of Rs. 50,000/- was paid in
August, 2001 to all those workers who had
signed the aforesaid settlement.

44. The stand of respondent no. 8 in
counter to the said affidavit is that the
workers did not observe strike rather the
employer had stopped production in the
company w.e.f. 8.8.2001. The alleged notices
dated 7.8.2001 are illegal act of employer in
order to avoid its liability towards workmen.
The
documents
appended
with
the
supplementary affidavit dated 26.2.2019 with
false facts had neither been filed nor pleaded
in the proceedings before the Prescribed
Authority under the Timely Payment of
Wages Act, 1978 and as such cannot be
considered.

45. Sri C.K. Rai, learned counsel,
however, has put in appearance on behalf
of respondent no. 7/Lal Hind Rubber
Mazdoor Union, Delhi, Ms. Ghazala Bano
Quadri is representing respondent no.
1260 INDIAN LAW REPORTS ALLAHABAD SERIES
8/Modi
Tyre
Karamchari
Union,
Ghaziabad and Sri Syed Fahim Ahmed,
learned Advocate has appeared for the
respondent no. 9/Modi Rubber Ltd., in the
connected petition.

46. In this factual background, the
following
questions
arise
for
consideration:-

(i)
whether
the
Additional
Labour
Commissioner/Prescribed
Authority under the Timely Payment of
Wages Act, 1978 had exceeded in its
jurisdiction in issuing the recovery
certificates while exercising power under
Section 3 of the said Act.

(ii) whether there was an illegal
strike or valid closure of the factory and
the denial on the part of the employer to
pay wages to the workmen since 7.8.2001
was "default" on its part of the employer
within the meaning of the Act, 1978 or
there was a valid dispute with regard to
entitlement of the workmen to wages
which
required
adjudication
by
an
industrial adjudicator.

(iii) whether the settlement
dated 14.1.2002 was binding on all the
workmen or the union.

47. Answer to these questions take
the Court to first examine the scope of the
Timely Payment of Wages Act, 1978
itself.

48. As the title of the Act itself
states, it has been enacted to secure
industrial peace by ensuring timely
payment of wages to the workmen. The
preamble of the Act states that it is an Act
to provide for "in the interests of
maintenance of industrial peace, for
timely payment of wages in bigger
industrial establishments and for matters
connected therein".

49. The statement of objects and
reasons of the Act states that delay in payment
of wages to workmen lead to simmering
discontent among them. Sometimes a grave
threat to law and order is also posed on this
account. The provisions of the Payment of
wages Act, 1936 have been found to be
inadequate to ensure timely payment of
wages. The incidence of disturbance of
industrial
peace
being
greater
in
comparatively bigger establishments, it was
considered necessary to provide that if the
wage bill in default exceeds Rs. 50,000/-, the
amount should be recoverable as arrears of
land revenue. Further, in order to curb the
tendency of the employees to keep large
amounts of wages in arrears, it was also
necessary to make it a penal offence to be in
default of a wage bill exceeding rupees one
lakh.

50. Section 2(a) of the Act defines
"Industrial establishment" to mean any
factory, workshop or other establishment in
which articles are produced, processed,
adopted or manufactured with a view to their
use, transport or sale.

51. "Wages bill" is defined by Section
2(d) of the Act to mean "the total amount of
wages payable by an industrial establishment
to its workmen".

52. Section 2(g) provides that "default"
of payment of wages would be deemed when
an occupier of an industrial establishment has
not been paid wages within time as provided
in Section 5 of the Payment of Wages Act,
1936.

53. A reading of the provisions of this
Section clearly reveals that this Act has been
enacted to supplement the Payment of Wages
Act in the limited area viz whether the
establishment as stated above; (i) produces,
1 All. M/s Modi Rubber Ltd. Vs. State of U.P. And Others
1261
processes, adopts or manufactures some
article; (ii) whether there is default in the wage
bill of the entire establishment; (iii) whether
such wage bill exceeds Rs. 50,000/-; (iv) the
time period as provided under Section 5 of the
Payment of Wages Act has not been adhered
to by the occupier of the such establishment.

54. The object of the Act as stated is
to
prevent
industrial
unrest
and
disturbance of industrial peace on account
of the default on the part of the
establishment in making payment of
wages to their workforce as a whole.

55. On comparison of the provisions
of Timely Payment of Wages Act, 1978
and Payment of Wages Act, 1936, it has
been observed by the Apex Court in Modi
Industries Ltd. vs. State Of U.P1 that
the former does not supplant or substitute
the latter but supplements the said Act in
the limited area as noted above. It was
observed therein that the Timely Payment
of Wages Act, 1978 was enacted as many
establishments had a tendency to delay
the payment of wages to their workmen
and were playing with the lives of the
workmen with impunity. This led to a
widespread
disturbance
of
industrial
peace in the State. Hence the legislature
felt the need for enacting a statute to
ensure timely payment of wages to the
workmen of industrial establishment by
making summary enquiry by the Labour
Commissioner
contemplated
under
Section 3 of the Act, 1978.

56. As to the scope of enquiry made
by the Labour Commissioner under
Section 3 of the Timely Payment of
Wages Act, 1978, Section 3(1) states that
where the Labour Commissioner is
satisfied that the occupier of an industrial
establishment is in default of payment of
wages and that the wage bill in respect of
which such occupier is in default exceeds
fifty thousand rupees, he may, without
prejudice to the provisions of Sections 5
and 6, forward to the Collector, a
certificate under his signature specifying
the amount of wages due from the
industrial establishment concerned.

57. Section 3(2) of the Act states
that upon receipt of the said certificate,
the Collector shall proceed to realise, the
amount
specified
therein
from
the
occupier as arrears of land revenue.
Section 3(4) of the Act provides where
the amount so realised falls short of the
wages bill in respect of which the
occupier has been in default, the Labour
Commissioner
may
arrange
for
disbursement of such proportion or
respective proportions of the wages due to
various categories of workmen as he may
think fit.

58. Section 4 of the Act specifies the
power of Labour Commissioner for the
purpose of ascertaining the wage bill of
establishment in respect of which default
has been committed. It states that the
Labour Commissioner shall have the
power of a Civil Court while trying a suit
under the Court of Civil Procedure, 1908
in respect of enforcing the attendance of
witness and examining them on oath
compelling production of documents.
Penalties for default of a wage bill
exceeding rupees one lakh is provided
under Section 5 of the Act. The Court
therein has been given power to impose a
sentence of imprisonment for a term of
less than three months which may extend
to three years and fine.

59. As has been held in Modi
Industries (supra) looking to the object
1262 INDIAN LAW REPORTS ALLAHABAD SERIES
and purpose of the Act, the nature of
enquiry by the Labour Commissioner
contemplated under Section 3 of the Act
is very limited, the scope of which is to
see whether the establishment has made a
default in Timely Payment of Wages to
all its workmen as a whole and there is no
dispute as to the entitlement of the
workmen to wages. In its limited power,
the Labour Commissioner shall have to
find out whether the workmen who have
put in the work were paid their wages as
per the terms of their employment and
within time stipulated by such terms. If
the Labour Commissioner is satisfied that
the workmen though have worked and
are, therefore, entitled to their wages, but
are not paid the same within time, he has
further to satisfy himself that the arrears
of wages so due exceed to Rs. 50,000/-. It
is only if he is satisfied on both counts
that he can issue the certificate in
question. It is held therein that under the
Act, the Labour Commissioner acts to
assist the workmen to recover their wages
which are admittedly due to them but are
withheld for no fault on their behalf. He
does not act as an adjudicator if the
entitlement of the workmen to the wages
is disputed otherwise than on frivolous or
prima facie untenable grounds. (emphasis
supplied). When the liability to pay the
wages is under dispute which involves
investigation of the questions of fact
and/or law, he has to refer the parties to
the appropriate forum as it is not the
function of the Labour Commissioner to
adjudicate the same.

60. The power conferred on the
Labour Commissioner under Section 3 of
the Act is to prevent apprehended or
present breach of industrial peace. This is
why the enquiry contemplated is of a
summary nature. Moreover, the exercise
of power by the Labour Commissioner
under the Act, 1978 does not prevent
either party from approaching the regular
forum for the redressal of its grievances.

61. In Hotel and Restaurant
Karamchari Sangh vs. Gulmarg Hotel
and others2 the Apex Court has
emphasized that the enquiry by the
Labour
Commissioner
contemplated
under Section 3 of the Act, 1978 is of a
very limited nature to find out whether the
workmen have not been paid wages for no
default on their part.

62. Relevant paragraphs '7' and '8' of
Modi
Industries
(supra)
are
quoted
hereunder:-

7. It will thus be clear from the
preamble, the statement of objects and
reasons and the provisions of the Act that,
firstly the Act has been placed on the
statute book to ensure timely payment of
wages by the bigger establishments, the
incidence of disturbance of industrial
peace
being
greater
in
such
establishments on account of the default
in payment of wages. Secondly, the Act
deals with defaults in payment of the
wage- bill of all the workmen in the
establishment. It is not meant to provide a
remedy for the default in payment of
wages of individual workmen. That can be
taken care of by the provisions of the
Wages Act which provisions are found
inadequate to ensure timely payment of
wages of the whole complement of
workmen in an establishment. Thirdly, it
is not in respect of the default in payment
of every wage-bill; but only if a wage-bill
exceeds
Rs.50,000/-
the
Labour
Commissioner can be approached under
the Act for redressal of the grievance.
Fourthly, the Act is not applicable to all
1 All. M/s Modi Rubber Ltd. Vs. State of U.P.