Holding

Compensation under Section 15(3) of the Payment of Wages Act cannot be awarded where there is a bona‑fide dispute as to the entitlement to wages, and Section 18 of the U.P. Dookan Aur Vanijya Adhisthan Adhiniyam merely provides a mechanism for wage recovery and does not create a separate right to compensation.

Summary

The Life Insurance Corporation of India (LIC) fixed the retirement age of its field officers at 58 years, but Anwar Khan (deceased) sued for a declaration that the applicable agreement made the retirement age 60 years; the suit was decreed in his favour while a second appeal was pending. During the pendency, Khan filed applications under Section 15(2) of the Payment of Wages Act, 1936 and Section 18 of the U.P. Dookan Aur Vanijya Adhisthan Adhiniyam, 1962 seeking back wages and compensation, and the authorities awarded the wages plus double compensation. LIC contended that compensation could not be awarded because there was a bona‑fide dispute as to the claimant’s entitlement to the wages. The Supreme Court held that Section 18 of the Adhiniyam merely provides a mechanism for wage recovery under the Payment of Wages Act and does not create a separate right to compensation, and that the proviso to Section 15(3) bars compensation when the entitlement itself is disputed. Consequently, the compensation award was set aside, though the wages already deposited could not be recovered, and the appeal was allowed.

Issues considered

Whether Section 18 of the U.P. Dookan Aur Vanijya Adhisthan Adhiniyam, 1962 confers a right to claim compensation in addition to wage recovery.
Whether the proviso to Section 15(3) of the Payment of Wages Act, 1936 applies when there is a bona‑fide dispute regarding the entitlement to wages.
Whether a claim can be made simultaneously under Section 15 of the Payment of Wages Act and Section 18 of the Adhiniyam.
Whether compensation awarded under the Act can be set aside when the entitlement itself is contested.

Legislation cited

Payment of Wages Act, 1936s. 15(3), s. 1(6)

Subjects

retirement agePayment of Wages ActU.P. Dookan Aur Vanijya Adhisthan Adhiniyamcompensationbona fide disputeSection 15(3) provisowage recoverycommercial establishmentSupreme Court

Judgment

'..l ~-
A L.J.C. OF INDIA
v.
ANWAR KHAN (SINCE DECEASED) THROUGH LRS.

APRIL 23, 2007

B [DR. ARIJITPASAYAT AND LOKESHWARSINGHPANTA, JJ.]

Payment of Wages Act, 1936-s. 15(3)-Suit for declaration of age of
f
retirement-Issue Pending in second appeal-In the meantime application
under the Act and also under U.P. Dookan Aur Vanijya Adhisthan Adhiniyam
c claiming wages and compensation-Entitlement of the claimant to the wages
disputed-Compensation granted by the Authorities and Courts below-On
appeal, Held; The claimant could not have been granted compensation in
view of proviso to s. 15(3) as there existed a dispute about entitlement of the
claimant-A claim cannot be raised under the Act as well asunder the
D Adhiniyam-However, some amount of compensation already paid to the
claimant, cannot be recovered-U.P. Dookan Aur Vanijya Adhishtan
Adhiniyam, 1962-s. 18 ~ ....
Appellant-Corporation fixed the age of retirement of Field Officer at
58 years. Employee-respondent filed a suit for declaration that in view of the
E agreement between the field Officers Association and the appellant-
Corporation age of retirement should be 60 years. Suit was decreed. During
pendency of second appeal in the matter, respondent moved an application under
s. 15(2) of Payment of Wages Act, 1936 as also under s. 18 ofU.P. Dookan
Aur Vanijya Adhisthan Adhiniyam 1962 claiming compensation Assistant
F Labour Commissioner held that the claimant was entitled to the wages for "( -
the relevant period plus double the amount as compensation. Appellate
Authority modified the Award to the extent that the claimant was entitled to
the wages claimed along with compensation of amount equivalent to back
wages. Appellant- Corporation filed a Writ Petition questioning correctness
of the order of Appellate Authority. Single judge of the High Court dismissed
G the petition .Division Bench of High Court also dismissed the Letters Patent
Appeal .,
In appeal to this Court appellant-Corporation contended that
compensation could not have been awarded as there was a bona fide dispute
about the liability.
H 450
L.l.C. OF !NOIA v. ANWAR KHAN (SINCE DECEASED) THROUGHLRS. 451

-- .:. Respondent contended that appellant-Corporation being a commercial A
establishment, it is covered by the Adhiniyam; and that porviso to s. 15(3) of
the Act cannot be pressed into service because the dispute is relatable to
amount payable.

Allowing the appeal, the Court
B
HELD: 1. The heading ofs. 18 ofU.P Dookan Aur Vanijya Adhisthan
Adhiniyam 1962, is "recovery of wages " It only provides that once an
employee under the Adhiniyam is not paid, the procedure for recovery under
payment of Wages Act, 1936 is to adopted. Once s.1(6) of the Act applies,
tlhe nature of the job is irrelevant. Whether the Field Officers are workmen
or not is really if no relevance in view of s. 1(6) of the Act. Section 15 of the C
Act is relatable only to claim under the Act The entitlement for compensation
is only under the Act and there is no scope for compensation under the
Adhiniyam The compensation has to be worked out in terms ofs.15 of the
Act There cannot be a claim both u/s 15 of the Act and u/s 18 of the Adhiniyam
(Para 12) [455-D, E) D
2. It cannot be said that proviso to s. 15(3) of the Act cannot be pressed
into service because the dispute is relatable to amount payable. The question
of payability of an amount arises only when somebody is entitled to an amount
The proviso makes it clear that when there is bona fide dispute about the
amount payable, compensation cannot be awarded. (Para 13) [455-F, G] E
3. In this case. There exists a dispute about the entitlement of the
claimant The matter is pending before the High Court Therefore, the amount
awarded as compensation is set aside. Pursuant to the directions given a
particular sum has been deposited and a sum has been withdrawn therefrom
by the legal heirs of the claimant. Though proviso to s. 15(3) has application F
considering the fact that the amount has been withdrawn it is directed that
there shall not be any recovery. [Paras 14 and 15) [455-G; 456-A, BJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6288-6289 of
2000.
G
From the Judgment and Order dated 14.07.2000 & l.11.1999 of the High
~-
Court of Judicature at Allahabad in Special Appeal No. 37 (Defective) of2000
and C.M. W.P. No. 34897 of 1999 respectively.

K. Ramamurthy and S. Rajappa for the Appellant.
H
452 SUPREME COURT REPORTS [2007] 5 S.C.R.

A Bharat Sangal, R.R. Kumar and Samyadip Chatterji for the Respondent.

The Judgment of the Court was delivered by

DR. ARIJIT PASAYAT, J. I. Challenge in this appeal is to the order
passed by a Division Bench of the Allahabad High Court affirming the order
B passed by the learned Single Judge of the said High Court.

2. Background facts in a nutshell are as follows:

3. Questioning decision taken by the appellant-Life Insurance
Corporation of India (in short 'LIC') fixing the age of retirement of Development
C Officer, presently called the Field Officer at 58 years, a suit was filed by
respondent-Anwar Khan. The said Anwar Khan has expired in the meantime
and his legal representatives are presently the respondents. The suit was filed
primarily for declaration that in view of the agreement between the Field
Officers Association and the LIC age of retirement is 60 years. The suit was
D decreed on 30.7.1981 and the appeal by the LIC was dismissed on 27.3.1982.
The second appeal filed before the High Court is pending. During the pendency
of the second appeal, the respondent-Anwar Khan moved the authorities
under the Payment of Wages Act, 1936 (in short the 'Act') claiming
compensation. Stand of the LIC before the original authority was that the
Development Officers are not covered by the Act as they get more than
E Rs.1,000/- p.m. By Order dated 11.6.1993, the Assistant Labour Commissioner
held that the claimant was entitled to wages for the relevant period plus
double the amount as compensation. An appeal was preferred by the LIC. The
Appellate Authority by order dated 7.5.1999 modified the Award to the extent
that the claimant was entitled to the wages claimed along with the compensation
of amount equivalent to back wages. LIC filed a writ petition questioning
F correctness of the order of the Appellate Authority.
4. The learned Single Judge dismissed the writ petition. The Division
Bench of the High Court held that Letters Patent Appeal was not maintainable.
As noted above, Anwar Khan died in 1990. Stand before the High Court was
G that the authorities under the Act should not have decided the claim made
as the suit filed was merely for a declaration and no consequential relief was
granted. In any event, the Act has no application and no compensation is .,
payable. The application was filed under Section 15(2) of the Act. Reference
was also made to the U.P. Dookan Aur Vanijya Adhisthan Adhiniyam, 1962
(in short the "Adhiniyam").
H
L.I.C.OFINDIAv.ANWARKHAN(SINCEDECEASED)THROUGHLRS.[PASAYAT,J.] 453

..\, 5. The High Court noted that the Assistant Labour Commissioner A
obseived that no evidence was led regarding nature of the job. Therefore, the
claim that the applicant was belonging to the supeivisory category is not
acceptable. With regard to Section 15 of the Act, it was noted that the salary
which was being paid to the claimant was factually to be decided. Initially the
Assistant Labour Commissioner held that the suit was not maintainable. In
appeal, the matter was remanded. A plea was raised that the suit was pre-
B
mature since there was no defmite determination as second appeal was pending.
The High Court held that even if the Act has no application that does not
J'
1 render the proceedings irregular.

6. It was submitted by the learned counsel for the LIC that the High
Court has erred in holding that under Section 18 of the Adhiniyam, the Act
c
has application. It was pointed out that undisputedly the claimant was receiving
salary of more than Rs.1500/-. The expression "employee" is defined under
the Adhiniyam in Section 2(6) and "Wages" has been defined under Section
2(18). Section 18 relates to recovery of wages. It is also pointed out that
compensation could not have been awarded since there was a bona fide D
dispute about the liability.
y
7. In response, learned counsel for the respondent submitted that the
Field Officers are not workmen. The question of the amount received as
wages has to be decided only after it is decided as to whether Section 14 of
the Adhiniyam has no application. It is only then Section 16 of the Adhiniyam E
which shall have no application. Undisputedly, the LIC is a commercial
establishment in terms of Section 2(4) of the Adhiniyam. Since it is covered
by the Adhiniyam, because of non-payment, Section 18 makes the Act
applicable. It was pointed out that in the application made it was clearly
··~
pointed out that the same was under Section 15 of the Act and under Section F
18 of the Adhiniyam. It is pointed out that what is under challenge is the
entitlement and, therefore, there cannot be any bona fide dispute about the
amount payable to bring in application of proviso to sub-section (3) of
Section 15 of the Act. It is pointed out that pursuant to the direction given
by the original authority a sum of Rs.1,28,000/- had been deposited and a sum
of Rs.60,000/- has already been withdrawn. It is, therefore, submitted that this G
is not a fit case for exercise of jurisdiction under Article 136 of the Constitution
'-·
of India, 1950 (in short the 'Constitution').

8. A few provisions of the Act and the Adhiniyam need to be noted.
Sections 14 and 15 of the Adhiniyam read as follows:
H
454 SUPREME COURT REPORTS (2007] 5 S.C.R.

A "14. Payment of wages for period of earned leave (I) An employee /.-
proceeding on earned leave shall, on demand, be given advance
payment of the wages for half the period of the leave, and the wages
for the remaining half period of such leave shall be payable to him
along with the wages for the first wage period after he resumes duty.

B (2) The wages for the period of sickness leave shall be payable to the
employee along with his wages for the first wage period after he
resumes duty.

(15) Deductions from wages - No deductions from the wages of an ~

employee shall be made except to such extent, and in such manner,
c as may be prescribed."

9. Section 15(3) of the Act with the proviso reads as follows:

"(3) When any application under sub-section(2) is entertained, the
authority shall hear the applicant and the employer or other persons
D 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 '1
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
E compensation as the authority may think fit, not exceeding ten times
the amount deducted in the former case and not exceeding twenty-five
rupees in the latter, and even if the amount deducted or the delayed
wages are paid before the disposal of the application, direct the
payment of such compensation, as the authority may think fit, not
F exceeding twenty-five rupees : ~ .
Provided 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
G to the employed person, or .~

'
(b) the occurrence of an emergency, or the existence of exceptional ..
circumstances, such that the person responsible for the payment of
the wages was unable, though exercising reasonable diligence, to
make prompt payment, or
H
L.I.C.OFIND!Av.ANWARKHAN(SINCEDECEASED)THROUGHLRS.[PASAYAT,J.) 455

\ (c) the failure of the employed person to apply for or accept payment." A
Section 18 of the Adhiniyam reads as follow:

"18. Recovery of wages-The wages of an employee, if not paid as
provided by or under this Act, shall be recoverable in the manner
provided in the Payment of Wages Act, 1936, as if the same wages B
were payable under that Act."
• 10. It is to be noted that the original amount of Rs.1,000/- was fixed
"I under Section 1(6) with effect from 15.10.82, it has been increased to Rs.1600/
- . There is also no dispute that at the relevant point of time the applicant
was getting more than Rs.1500/-. c
11. It is only a mechanism for recovery of wages and because the
Adhiniyam has application to any employee that does not automatically bring
him under the umbrella of the Act.

12. It has to be noted that the heading of Section 18 of the Adhiniyam D
is "recovery of wages''. It only provides that once an employee under the
y Adhiniyam is not paid the procedure for recovery under the Act is to be
adopted. Once Section 1(6) of the Act applies, the nature of the job is
irrelevant. Whether the field Officers are workmen or not is really of no
relevance in view of Section 1(6) of the Act. Section 15 of the Act is relatable
only to claim under the Act. The entitlement for compensation is only under
E
the Act and there is no scope for compensation under the Adhiniyam. The
compensation has to be worked out in terms of Section 15 of the Act. There
cannot be a claim both under Section 15 of the Act and Section 18 of the
Adhiniyam.
·~ F
13. Learned counsel for the respondent submitted that proviso·to Section
15(3) cannot be pressed into service because the dispute is relatable to
amount payable. In this case the LIC disputes the entitlement. We find the
plea to be without any substance. The question of payability of an amount
arises only when somebody is entitled to an amount. The proviso makes it
clear that when there is no bona fide dispute about the amount payable, G
'I·
compensation cannot be awarded.

14. In this case, undisputedly there is dispute about the entitlement of
the claimant. The matter is pending before the High Court. Therefore, the High
Court's view holding the claimant to be entitled to compensation is clearly
H
456 SUPREME COURT REPORTS [2007) 5 S.C.R.

A untenable. Accordingly, the amount awarded as compensation is set aside.
.._
However, we find that pursuant to the directions given a sum of
Rs.1,28,000/- has been deposited and a sum of Rs.60,000/- has been withdrawn
by the legal heirs of the claimant.

15. Though we have hold that proviso to Section 15(3) has application,
B considering the fact that the amount has been withdrawn, we direct that there
shall not be any recovery. It is made clear that these directions shall not in
any way affect the decision in the sec'ond appeal.

16. The appeal is allowed.

C KKT.

-
Appeal allowed.

..