Holding

The employer may lawfully deduct statutory tax from the one month's wage paid under Section 33(2)(b) because the wage remains remuneration subject to tax while the dismissal order is pending Tribunal approval.

Summary

The appellants, employees of Air India, were dismissed after disciplinary proceedings and were paid one month's salary reduced by Rs.10-15 for tax deducted under the West Bengal State Tax Act, 1979. Air India sought approval of the dismissal under Section 33(2)(b) of the Industrial Disputes Act, 1947, which was rejected by the National Industrial Tribunal on the ground of short payment. The Bombay High Court remanded the matter for merits, and the appellants appealed. The Supreme Court held that the order of dismissal remains incomplete until Tribunal approval, so the employer‑employee relationship continues and the one month's wage remains "remuneration" within the meaning of Section 2(rr) of the Industrial Disputes Act. Consequently, statutory tax deduction from that wage is permissible and does not violate the mandatory requirement of full payment of one month's wages. The Court dismissed the appeals.

Issues considered

Whether the one month's wage payable under Section 33(2)(b) of the Industrial Disputes Act constitutes "wages" for the purpose of statutory tax deduction.
Whether deduction of statutory tax from that wage amounts to short payment prohibited by Section 33(2)(b).
Whether the employer may deduct tax when the dismissal order is pending approval and the employment relationship is not yet terminated.
Whether an approval application can be rejected solely on the ground of tax deduction reducing the wage.

Legislation cited

Employees' Provident Funds Act
Industrial Disputes Act, 1947s. 2(rr), s. 33(2)(b), s. 33(5)
West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979s. 4

Subjects

Industrial DisputesDismissalOne month's wageStatutory tax deductionSection 33(2)(b)Employer-employee relationshipWage definitionWest Bengal State Tax Act

Judgment

A S. GANAPATHY AND ORS.

AIR INDIA AND ANR.

JU.NE 16, 1993
B [MADAN MOHAN PUNCHHI ANDS.C. AGRAWAL,J.J.)

Industrial Dispwes Act, 1947 :
Section 33(2) (b) read with Section 2( rr}-Statutory wage-Computation of
amount of one month's wages ro .be ."paid to discharged/dismissed
c workinen-Whether employer jusiijied·in reducing the amount by statutory tax.
deductions-Whether approval applications liable to be rejected on g~ound thai
deduction of tax resulted in payment of less thanone month's wages-Order of
discharge/termination requiring .approval of competent authority-Na111re and
effect of order till approval.
/

D The appellants, e~ployees of the respo~dent ·- .Air India, who were
awarded penalties of removal or dismissal by the respondent, as a result of the
disciplinaQ· proceedings, were paid oite month's s"alary or.wages, reducing it
by a sum of Rs. 10 or 15, as deductible. on acco.unt of m~nthly paymel)t of tax
on employment, imposed on salary and wage earners, under the provisions of
the West Bengal State Tax on Professions,.Trades, Callings and Employ-
E
ments Act, 1979. The respond.ent ~Air Iridia sought approval ofits action from
the National Industrial Tribunal, under Section 33(2) (b) of the lndustria'I
.Disputes Act, which was opposed by the appellants on the ground that there·
was short payment and accordingly it was 11f!t in terins of the mandatory
provisions of Section 33(2) (b).ofthe Act. The Tribunal upheld the objection
F . and rejected the approval applications. ·

In writ petitions preferred by the respondents; a Single .Judge of the "'"
High Court held that the Tribunal was in error in refusing approval on the <t'
ground of short payment and remanded. the matter to the Tribunal for
<lecision on merits~ Letters Patent Appeals preferred by the appellants were
G dismissed by a Division Bench of the High Court ~ffirming the view Jr the
Single Judge.

In the appeals preferr~d by the employees, on behalf of the appellants it
H . was contended that one month's wagesta~torily required to be paid in terms
S. GANAPA THY v. AIR INDIA l007

of Section 33(2) (b) was a payment which did not P'Jl't~1l..e the charader 111 A
)
salary or wage. as the appellant'> were n(}tsalary or wage earners wl~ile getting
that one month's wage, and therefore, not being salary or wage earners in that
month, order of dismissal or termination of service having bt;en passed
against them, they were not in employment and hence not liable to pa)· tax,
that the very basis of tax stood displaced and hence the deduction of tax at the
snapped source rendered the paj•ment. or deposit of one month's wage B
deficient, contravening the mandatory provisions of Section 33(2) (b) of the
Act.

It was contended on· behalf' of the respondent - Air India that the
statutor~· deduction of tax payable under the Tax Act inhered in th,e payment
of one month's wage, and in an)' case, the difference had been tendered before
c
the Tribunal for pa)·mcnt to the workman, on objection raised, during the
pend enc)' of the approval proceedings.

Dismissing the appeals, this Court
D
HELD : I. When an order of discharge or dismissal of a workman is
}
incomplete and inl·hoate until it'> approval is obtained from the Tribunal,
there is no effective termination of the relationship of the employer and the
employee. Not only in a limited way that the relationship is snapped factually
and one month's wage is given to the employee to soften the rigour of his
factual unemplo)·ment, but the content and character of the wage ~ould E
extendedly tend to remain the same so tar as subjection to statutory tax
deduction is concerned, being remuneration paid as understood in Section 2
(rr) of the Industrial Disputes Act, OR' the supposition that the terms of
emplo)'ment, exp1·essed or implied, were fulfilled and the same was du.e as
wages payable to the workman in respect of his employment, or of work done
F
in such employment, even though he was not put to work.

f 2.1. Bare-facedl)' the inclusions and exclusions provided in Section 2(rr)
do not refer to tax dues. Rather the 'provision is silent about statutor~· tax
deductions. But it goes without saying; if there is a statutory compulsion to
deduct, that compulsion would have an intrusive role to pla)', getting a proper G
fitment, as the law may warrant it'i effect, Secthm 33(2) (b) apart. The matter
has to be viewed in this light. ·

... 2.2. In the instant case, the appellant<; were salar)' or wage earners,
getting sala1·ies or wages per month and from their wages, prior to their order H
1008 SUPREME COl.'RT REPORTS. (I 993) 3 S.C.R.

A of removal or dismissal, tax deductions under the West Bengal State Tax on
.Protcssions, Tm.des, Ceilings and Employment-; Act, 1979, were being plade. (
It was the employer's liabilit~· to deduct and pay the tax on behalf of the
emplo~·ee under -5ection 4 of the Act. Failure to comply with the provisions of
the Section exposed the respondent to penalties and prosecuiion under other
provisil!ns of the Act.
B
3.t. The proviso to Section 33(2) (b) mandates two steps, that unless the
workman is paid u•ages for one month and an application as contemplated is ·
made by the ·employer to the Tribunal for approval of his action, no such
workman can be discharged or dismissed. The intention of the legislature in
pro,·iding for such a contingency was.to sotlen the rigour of unemplo~·ment
c that will face the workman, against whom an order of discharge or diimlissal.
has been _passed.

3.2, By passing the order of discharge or dismissal de-facto relationship
of employer and employee is ended, but not ·de~jure, for that could happen
D when the Tribunal accords its approval. The employee thus gets factuall~·

·-
unemployed from the date of the approval application in the s~nse that he is
not called to work and is paid only a month's \\•age representing the succeed-
ing month ofhii> unempl"~·ment. The relationship of employer and employee
is legally not terminated till approval of discharge or dismissal is given by the
Tribu.nal. Artd this state.of' atfa.irs was required to be ended ,\·ithin a period
E of three months from the date of receipt of such application in terms of sub-
section (5) of Section 33, though th~ lapse of such period would not end t.he
proceeding. and such time was. extendablc b~· the Tribunal for reasons to he
recorded in writing.

3.3. In this fluid state ofatl'airs, the legal character of one month's wage
F
would undergo a change depending on the result of the. approval applicati!m·
It' the Tribunal were to refuse the approval, the inchoate and incomplete order
of di,.charge or dismissal would end and the legal character 'or one month's
wa~es would transform to be the same as before, from which statutory tax
deduction could legitimately be made by the employer. ln the. event of
G approval of the application by the Tribunal, the legal character of one
month's wage would; on the other hand; he a wage without employment. In
the gh·en situation, if the Tribunal were to refuse approval solely on the
J!round that statutory tax deduction stands in its way to the grant of appro~·al,
it could legitimately make il,. order conditional on making good such pay·
ment. This isa field in which theinterestofhotb parties has to be kept in view,·
--
S. GANAPA THY v. AIR INDIA 1009

for the situation would be precarious for the employer if he were not to deduct A
tax under section 4 of the Tax Act and exposing him to the dangersofpenli!lties ·
and prm;ecution. If approval was to be rejected on merit and otherwise tc be·
rejected for not making complete payment of one month wage, it would thus
he just and proper to let the employer deductthe statutory tax deduction from
that one month wage, since the relationship of employer and an employee has
effectively not been terminated, to meet the eventualit}·, lest the approval B
application be dismissed on merit. On the other ha'nd, it would be just and
proper either for the emplo}·er on his own or on the asking of the Tribunal to
let the sum representing statutory tax deduction be deposited in the Tribunal
for payment to the workman in the event of the approval application being
allowed. If these two situations can he saved in this manner.there would, in no
e\'ent, be a dismissal of the approval application for payment of wage c
subjected to statutory tax deduction.

3.4 Distinction would have tO be drawn between statutory deductions
like tax deductions and other deductions which the employer considers he can
make. In either event, he takes the risk when making a de'duction. ln the case D
of statutory tax "deductions, his justifieatory burden is less, for he has the
shelter of the tax law. The case of the other deductions would obviously be on
different footing for he may not have any thrust of law. Those.may purely be
contractual. Those deductions may not be compulsive under any law. The
e!"ployer makes the deduction in such cases at his peril.
E
3.5 In the instant case, there definitely arose a genuine claim tO make the ·
tax deduction and doing so the employer projected its case before the
Tribunal in that angle. Not a paisa otherwise was kept back. Thus, in the facts
and cir~umstances of the case the respondent was able to establish that its
deliberate deduction representing the tax from one month's wage was not to
F
shorten the wage and cause infraction of Section 33 (2) (b), but a compulsive·
deduction to fulfil a statutory obligation by the thrust of the Tax Act.

Syndicare Bank Lid. v.RamNath Bhat, (1967-68) (XXXII) F.J.R.490; Tata
Iron and Su~el Co. Ltd. v. S.N. Modak, [1963] 3 S.C.R. 41 l and Bharat
Electronics ltd.. Bangalore v. lndus1rial Tribunal. Kamatqk, Bangalore and G
Anr., [1990] l S.C.R. 971, relied on. · .

- Muza.{farpur Electric Supply Co. v. S.K. Dutta, (l'i70) LLJ Vol.2 p.547;
Dinesh Khare v. Industrial Tribunal, Rajastltqn, (1982) LAB l.C. 517 and
Balmer Lawrie and <:;o. Ltd. v. Waman B. More, [1981] 42 F.L.R. 272, distin.- H
guished.
~OIO SUPREME COURT REPORTS 119931 3 S.C.R.

A CIVIL APPELLJ\ TE JURISDICTION : Civil Appeal Nos. 3134-36 of
19 1>3.

from the Judgment and Order dated 12.7 .91 of the Bombay I ligh Court in
Appeal NlJs. 1308. 1309 and 1311 of 1987.

-H M.K. Ramamurthy. Ms. Chandan Ramamurthi and M.A. Krishna Moorthy
for the Appellants.

r:.s. Nariman.Arun Jaitly. Lal it Bhasin. .I .K. Das. Yiplay Sharma and Yineet
Kumar for the Respondents.
c
The Judgment of the Cllurt was <lelivered hy

PUNCHHI, ,J. Leave to appeal granted.

The ques!iun which falls for di:tennination in these appeals is whether in
.:n .~mnputing the amt)Unt llf 1rne month· s \vages. lll be paid un<ler section 33(2) (b)
t)f the
Industrial Disputes Act. 1947. (hereafter n;ferred to as the 'Act") the
employer is justified in reducing the amnunt by statutory tax deductions'!

The three appellants hl!rcin, in the period i 979-80 were in the employment
of the iesp1m<lent-Air lndia, . anti statii:me<l at Cakulla.
. They in<lividually suffere<l
E disciplinary proceedings un the charges of some mis-conduct.s an.d having been
found guilty were awarded penalties of removal or dismissal by tht! Air India. as
due to each. It is comm1m groun<l that the respondent-Air fodia. statutorily hound.
applied to the National Industrial Tribunal. Bombay by means of separate approval
applications under sectilln 33(2) (b) '-'f the Act to have its actilln apprnved. In terms
orn1e said prtivi.sion it paid t11 the appellants 1me month" s salary or wages. reducing
F it by sum. of Rs. IO or 15. as deductible·\lll account uf mllnthly payment 1Jf tax on
employment. imposed on salary _and wage earners. under the provisions i:Jf the ..... .
West Bengal State Tax on Prnfessions. Trades, Callings and Employments Act,
1979 (hereafter referred w as 'the Tax Act'). The approval ·sought "t!y the
respondent-management was opposed by the appellants before the Tribunal. and
though initially not part oflhe defence taken in the written statement. defence was
G later set up by them that they had not been paid wages in terms of the mandatory
provisions of section 3~(2) (b) of the Act, as there was short payment. This put the

H
respondent-management to alert and it laid before the Tribunal account which·had
gone on to work out the month's wages. It is common ground that the payment
11therwise was proper hut since it was short by 10 or 1:5 rupees, a" respec.dvclydue
nn acc1 •unt llf tax pay.ah le under the Tax Act, the payment was termed as inrnlid.
-
S. GANAPATHY v. AIR INDIA [PUNCH!. J.) lOll

r
The Tribunal sustaining the objection rejected the approval applications on that A
score alone and not on merits. In separate writ petitions by the respondents, the
Bombay High Court interfered in the matter taking the view that the Tribunal was
in error in refusing approval on the ground of the suggested short payment and
hence breach of section 33 (2) (b) of the Act. The !Il<ltter could not be finalised by
the learned Single Judge and remand to the Tril5unal was made for decision on
merits. Letters Patent Appeals preferred by the respective appellants were dis- B
missed by a division bench of the Bombay High Court affirming the view of the
learned Single Judge. That is why the instant appeals. ·

The issue, on the face of it, is extremely narrow. But before we get into grips
with it, let us take stock of the statutory provisions which come jnto action leading
to the answer. The first in priority are the two provisions of theAct being section
c
2 (rr) defining 'wages' and section 33(2) (b) imposing the discipline, which are .
. _reproduced hereafter:

"2. IN Tms. ACT, UNLESS THERE IS ANYTHING REPUG-
NANT IN THE SUBJECT OR CONTEXT, - D

(rr) ·wages· means all remuneration capable of being expressed in
terms of money, which would, if the terms of employment, ex-
pressed or implied, were folfilled, be payable to a workman in
respect Of his employment, or of work done in such employment,
and includes - E

(i) Such allowances (including dearness allowance) as the workman
is for the time being entitled to;

(ii) the. value of any house accommodation, or of supply of light, F
water, medical attendance or other amenity or of any service or of
any concessional supply of foodgrains or-other articles;

(iii) any travelling concession;

G
(iv) any conunission payable on the promotion of sales or business
or both;

but does not include-
H
(a) any bonus; .
1012 SUPREME COURT REPORTS [1993) 3 S.C.R ..

A (b) any contribution paid or payable by the employe~ to any pension
fund or providen't funcl cir for the benefit of the workman under any
law for the time being in force;

(c) ''any gratuity payable on the t~rmination o('his scrv:.:e"

B
"SE<:;TION33-CONDITIONS OF SERVICE, ETC. TO REMAIN
UNCHANGED UNDER CERTAIN CIRCUMSTANCES DUR-
ING PENDENCY OF PROCEEDINGS
(l) xxxxxxxxxxx

c (2) During the p~ndency of any such proceeding in respect of an
industrial dispute, the employer may, in accordance with the stand-
ing orders applicable to a workman ·concerned in such dispute or.
where there are no such standing orders, in accordance with the
terms of the contract, whether express or implied, between him and .
the workman, - ·
D
(a) xxxxxxxxx
. .

(b) for any misconduct not connected with the dispute. discharge or
punish, whether by dismissal or otherwise, that workman :

E PROVIDED that no such workman shaH be discharged or dis-
rfiissed, unless he ha.S been paid wages for one· month and an
application has been made by the employer to the.authority .before
which the.proceeding.is pending for.approv(!.I of the action taken by
the employer:·•·

F Bare-facedly the inclusions and exclusions provided in section 2(rr) do not
refer to tax du~s. Rather the provision is silent:about st~tutory tax deductions. But
. it goes without saying, if there is astatutory compulsion to deduct, that compulsion
would have an intrusive roie to play getting a proper fitment, as the law may
warrant its effect, section 33 (2) (b) apart. The· matter has to be viewed in this light.

G
That the appellants were salary or wage earners, getting salaries or wages per
month is not in dispute. It is also not in dispute that from their wages, prior to their
order of removal or dismissal, tax deduction~ under the Tax Act ~ere being made.
There Wl\S no objection by the appellants to such deduc;tions at that point of time.
That it was the employers liability to deduct and pay the tax on behalf of the .
H employee under section 4 of the Act is also beyond dispute. Section 4 of the Tax
S. GAN APA THY v. AIR INDIA [PUNCH!. J.) 1013

Act pointedly enjoins upon the employer to deduct the tax payable under the Act A
from the sal.ary or wages payable to any person earning a salary or wage, before
such salary or wage is paid to him and the employer has also .been foisted with the
liability to pay tax on behalf of salary or wage earner irrespective of the fact.
whether such deduction has been made or not when the salary or wage was paid
to such person. In other words, the tax payable by the wage earner is deductible
from his wage irrespective of the fact whether such deduction has been made or Q
not, hut the liability to pay tax is on the employer. Thus il cannot be denied that
while the appellants were salary or wage earners, their wages or salary had to suffer
& deduction of payment of tax at the hands of the respondent-employer. Failure
to comply the provisions of section 4 of the Tax Act exposed the respondent to
penalties and prosecution under other provisions.of the Act, details of which need
not be brought herein. c

It was canva~sed on behalf of the appellants that one month's wage
statutorily required to be paid in terms of section 33(2) (b) is a payment whi.ch does
m)t partak·~ the characterof salary or wage. as the appellants were not salary or age
earners while getting that one month's wage Sequelly it was can\'assed that not D
being salary or wage earners in that month. orders of dismissal or termination of
service having been passed against them, they were not in employment and hence
not liable to pay tax. It was asserted that the very basis of tax stood displaced and
hence the deduction of tax at the snapped source rendered the payri1ent or deposit
of one month· s wage deficient. contravening the mandatory provisions of section
33 (2) (bJ of the Act. On the other hand, it was contended imer alia on behalf of the E
respondent that the statutory deduction of tax payabie under the Tax Act inhered
in the payment of one month's wage, and in any case the difference had been
tendered before the Tribunal for payment to the workmen. on objectiun raised.
during the pendency of the approval proceedings. These are the contours of the
dispute.
F
The proviso to section 33(2) (b) mandates two steps. that unless the workman
is paid wages for one month .and an application as contemplated is made by the
employer to the Tribunal for approval of his action, no such workman can be
discharged or dismissed. The intention of the legislature in providing for such a
contingency is not far to seek and as was pointed out by this Court in the case of G
Swdica·Te Bank Umifed v. Ram Nmll Bluu [ 196 7-68] (XXXII) FJR 490 at 497 was
"to soften the rigour of unemployment that will face the workman. against whom
an order of discharge or di.smissal has been passed ...

A three-judge bench decision, authored by Gajendragadkar. C .J. of this
· (\ iurt in Tala Iron and Slee/ Co. Lld. v. S.N. Moc/a~ [ l %3] 3 SCR 411 at page 418, H
1014 SUPREME COL'RT REPORTS I 1993) 3 S.C.R.

A had the occasion to spell out the.nature of the order of discharge or dismissal. It was •
ruled that -such.order being incomplete and inchoate until the approval fa obtained.
-
could not effectively terminate the relationsµip orthe employer and the employee,
·as the question of the. validity of the order would have to be gone into, and if
approval is not accorded by the Tribunal the employer would be bound to treat the
workmen concerned a<; its employee and pay him all the wages for the period even
.B though the employer subsequently could proceed to terminate the employee·s
services. Thus this Court's view always has been that relationship of employer and
employee is not effectively terminated by the passing of the order of discharge or
dismissal until approval thereto in terms of section 33(2) (b) is accorded by the
Tribunal.·

c A three~judge bench of this Court in Bharat Electronic Limited, Bangalore
v. /11d11strial frihimal, Karnatak. Bangalore and another;[ 1990] l SCR 971 at
pages 976~977 observed as follows :

..One month's wages as thought and provided ·to be given are
D conceptually for the month to follow, the month of une!llployment
and in the context wages for the month· following the date of
· dismissal and not a repetitive wage of the month previous to the date
of dismissal. If the converse is read in the context of the proviso to
section 32(b). it inevitably would have to be read as double the
wages earned.in the month previous to the date of dismissal and that
E would, in our view be, reading in the provision something which is
not there, either expressly or impliedly."

Bharat F.ilectronics was a case in which wages had been paid or offered to the
workman in ternis Q~· section 33( 2) (b). short of the night shift allowance, and this .
F ·.Court took the view that from the date of dismissal or removal (factual though), the
occasion to earn night shift allowance could not and did not arise. In order to eatn
night shift allowance the workman had to actually work in the night shift and for
the purpose had to report for duty on being put to that shift. lt was in this situation
held that night shift allowance automatically did not form partofhls wage as it was
not such an allowance which Bowed to him as entitlement tll)t restricted to his
G service.

In this extreme situation, the employee, in one sense, gets unemployed as he '-"'
stands.deprived of work with effect from the date of the application for appro\'al,
H 1m which date his discharge of dismissal is fa~tually effective. He stands paid his
month's wage from such date and this is a. wage conceptually for the month
S. GANAPA THY v. AIR !'.'/DIA IPliNCHI. J.] . 1015

ti.>llowing. not double the wage for the month previous to the date of the A
application. This is the dicta uf Blwi·at E/ectrmiics case (supra). In the other sense
the order of discharge or dismissal is incomplete and inchoate, unless approved by
the Tribunal and till approval is granted there is no effective break of the employer
and einployee relationship. This is the dictum of Tata Iron & Steel Company's
case. So. if these two features are grasped. appreciated and blended. it would lead
us to the understanding that by passing the orderofdischarge or dismissal de-facto 8
relationship of employer and employee is ended, but not de-jure, for that could
happen when the Tribunal acc1lrds its approval. The employee thus gets factually
unemployed from the date of the approval application in the sense that he is not
called to work and is paid only a month ·s wage representing the succeeding month
of his unemployment. The relationship of employer and employee is legally not.
terminated till approval of dis~hargc or dismissal is given by the Tribunal. And this c
state 11r affairs was required tu be ended within a period of three. months from the
date or receipt of such application in terms nr s~b-section (5) of section 33, though
the lapse or such period would not and the pruceeding and such lime was
extendabk by the Tribunal for reasons to he recorded in writing. Now in this fluid
state of affairs, the legal character or 1me· month· s wage would undergo a change
.D
depending on the result of the approval application. If the Tribunal were to refuse
the approval, the inchoate and incomplete order of discharge or dismissal .wou"ld
tnd and the legal character of one month· s wages would transform to tie the same
as bdi.lre, from which statutory tax deduction could 'legitimately be made by the
employer. In lhe eYent nr approval of the application by the Tribunal, the legal
. character of one month's wage would on the other" hand be a wage without E
employment. In the given situation, ifthe Tribunal were to refuse approval solely
on the ground that statutory tax d~duction stands in its way to the grant of approval.
il could legitimately make its order conditional on making good such payment.
This is a field in w.hich the interest of hlllh parties has to be kept in view, for the
situathm would he precaricus for the employer if he were not lo deduct tax under
section 4 of the Tax Act and exposing him to the dangers of penalties and F
prosecution. If approval was lo be rejected on merit and otherwise to be rejected
for not making complete payment of one month wage, it would thus be just and
proper to let the employer deduct the statutory tax deduction tro1:n that one mont~
wage. since the relationship ofemployerand an employee has effectively not been
1ermina1eJ, to meet the eventuality, lest the appro,·al application be dismissed on
G
merit. On tile other har1d it would be just and proper either for the employer on his
own or on the asking of the Tribunal tu let the sum representing statutqry tax
deduction be dep1)sited in the Tribunal for payment to the workman in the event
llf the approval application hcing allowed. If these two situations can be saved in
this manner there would, in nil event be a dismissal of the approval application f9r
payment ufwage subjected to statutory tax deduction. Taken in this light one is to ff
A
1016 SCPRE~IE COl'RT REPORTS 1199.~1 ~ S.C.R.

,·iew the dedm:tion anq the subsequent offer llf the respondent to pay the tax
-
deducted. and later dep1)sited ·11cfore the Tribunal. f1>r payment w the workman.
This payment \vas offered and depositeil before the decision of the approval
application at a time when the rel:itionship or employer and employee had
effectively not been terminated. Here distinction Wlluld have llJ he drawn between
statutnry deductions like tax deductions and other deductions which the employer
U ·considers he can make. In either event. he takes the risk when making a deduction.
In the case of statutory tax deductions. his justificatory burden is less. for he has .
the shelter of the tax law. The case of the uthcr deductions would obviously be 1rn
different footing for he may nut have any thrust of law. Those may purely be
contractual. Tlmse deductions may not be compulsive under any law. The
employer makes tl1e deduction in such cases at his peril. But here, in the present
c situation, there definitely arose genuine dairri to make"the tax dcdu"i.:tion and
a
doing su the einployer projected.its case before the Tribunal in that angle. Not a
paisa otherwise was kept back. Thus iii the facts and circumstances it appears to
us that the rt:sp1mdent wa-; able to establish that its dt:liberate deduction represent-
ing the tax from1mc month ·s wage was not to shorten the wage andc<mse infraction·
or section 33( 2) (b) but a compulsiYe deduction to fulfil a statutory obligation hy
D
the thrust of the Tax Act. ·

On this analysis and understanding the case of the Patna High Court in
M11u!{rarp11r Electric Supply Co. v: S. K. D1111a,(1990) LLJ Yol.2 page 547 where
when the loan and money-order comn~ssion was deductt:d from one month's
E wages, it was held to be vi\ilative 1Jf section 33(2) (b) of the Act and the C<tsl' ,,t"
Rajasthan High Court in Dinesh Khare v. fnd11s1rial Tribunal, Rajasclwn,( l 'JX2)
LAB l.C. 517. decided by S.C. Agrawal, then on that- bench. and whll is happily
now a member of this bench. disapproving the deducti1m of provident fund 1m the
finding that those l1id not represent "emoluments earned by the workman con-
cerned while l'n duty" within the meaning of section 2(rr) or the. Employees
F Provident Fund Act. being cases clearly distinguishable would not further the case
11f the appellants. t\mversely a single bench decision of the Bombay High Court
in Balmer l.nwrie a11il Co. Ltd. v. \\'a111a11 B. Mor~ { l 981142 F.L.R. 272 275 would
alsl) not. further tl1e case \Jf the respondent hecausl! instantly no difficulty or
inahility to make the necessary calculations at a particular point of time arose
<; which difficulty or inability get removed subsequently. The claim to tax deduction
was there to begin·with and could.subsist till the grant of the approval application~
and such grant could be. conditional on the· payment back of the tax deduction.
Adoption of this method should settle the question. We do nnt wish to enter upon
. .
1)t\1er questions cropping tip to determine the tax liability of the employer or the
H employee in that period of one month.
S. GA~APATHY v. AIR INDIA IPL7NCHI. J.J IOI 7

At this juncture, it \VIJU Id add w our understanding if we reproduce a passage A
fr1)m Bharat Electronics case (supra). It is:

"Before·concluding the judgment the observations in S)wiicare

- Bank's case, afore-quoted, are again to be borne in mind. In the facts
and circumst<tnces of this case the management paid to the work-
man a sum ufRs.607.90 as a month's salary "tu soften the rigourof
unemployment that will face the workman''. How could a short
n

payment of Rs. 12 be said to have lessened th.e softening of such
rigour is thought stirring. Viewed in the context, there could
genuin~ly be a dispute, as in the present. case, as to .':Vhether a
particular sum was due as wages. It is, of course: risky for the C
. management to raise it as to pay even a paise less than the month· s
wages clue under section 33(2) (b). would be fatal to its permission
sought. But at the same time it needs to be clarified that it is for the
management to establish. when questiont;d, that the sum paid to the
wor'"nan u~der section 33(2) (b) represented full wages of the
n11:n1h following the date of.discharge nr dismissal, as conceived of

- ir.tlre provision and as interpreted by us in entwining the ratios in
!Jennell Coleman's case (supra) and Ui!baglz Rai .Jarry 's case
(supra) and adding something ourselves thereto."
D

Thu.• on principle and .percept we go on to hold that when an order of
discharg~ordismissal ofa workman is incomplete and inchoate until it's approval E
is obtai;ted rrom the Tribunal, there is no effective termination of the relationship
ofth~employer and the employee. Not only in a limited way tha~ the relationship
is S!'lappcd factually and one month's wage is given to the employee to soften the
ri~ur of his factual unemployment, but the content and character of the wage
. would ex~enqidly tend to remain the.same so fai; as subjection to statutory tax
•
• dedµction is concerned, being remuneration paid as understood in section 2(rr) of
the Act, on the supposition that the terms of employment. expressed or implied,
F

were fulfilled and the same was due as wages payable to the workman in respect

• of his employment, or of work done in such employment, even though he'was not
put to work.
G
Thus as a result, we find no cause to interfere in the judgment and order of

.....
the High Court. According! y we dismiss these appeals but leave 'the parties to bear
their own costs .

N.P.V. Appeals dismissed: