Compensation has to be paid in case of retrenchment of workmen: HC

Decides questions of law under Payment of Wages, ID Acts

Excelsior Correspondent

JAMMU, Nov 16: High Court of Jammu & Kashmir and Ladakh has held that compensation has to be paid under Industrial Disputes (ID) Act in case of retrenchment of the workmen.
The bench of Justice Wasim Sadiq Nargal was dealing with a petition filed by Davinder Kumar Batra, partner of M/s Jay Kay Automobiles seeking quashment of order dated 31.12.2018 passed by the Assistant Labour Commissioner, Jammu (Authority under the Payment of Wages Act, 1936), whereby the petitioner has been directed to pay retrenchment compensation of 15 days salary for every completed year to respondents besides directing the petitioner to deposit an amount of Rs 3,10,230 with the authority.
The petitioner challenged the order impugned on the ground that it has been passed without jurisdiction as claim for retrenchment compensation can be adjudicated upon by the Industrial Tribunal as per the provisions of Industrial Disputes Act, 1947 and the Authority below has not acted in accordance with the provisions of the enactment in question— Act of 1936 etc.
There were several questions before the High Court for consideration—-whether the petitioner in the facts and circumstances of the instant case can bypass the alternate and efficacious remedy provided under Section 17 of the Act of 1936 and that too when memorandum of appeal is to be accompanied by a certificate issued by the Authority with regard to deposit of amount payable under the directions against which the appeal is preferred? Whether the retrenchment compensation falls within the ambit of “Wages” defined under the definition clause of the Act of 1936? and Whether the Assistant Labour Commissioner exercising the powers under Section 15 of the Act of 1936 has the jurisdiction to decide the application under Section 15 of the Act of 1936 by awarding retrenchment compensation etc.
After hearing Advocates Sheikh Shakeel Ahmed and Rahul Raina for the petitioner and Advocate Ajay Gandotra for the respondents, High Court observed, “the case of the petitioner falls within the exception carved out by Supreme Court in “Whirlpool Corporation Vs Registrar of Trade Marks, Mumbai” thus this court has the jurisdiction to adjudicate the writ petition”.
Deciding the issue as to whether the compensation falls within the purview of definition of “Wages” or not has to be gone into at the first instance, High Court said that if a workmen is retrenched then a certain compensation has to be paid under Industrial Disputes Act. This being a compulsory payment under the statute, must be taken to be an implied term of the contract of the employment and thus, the same falls within the definition of “wages? under the Act of 1936 as originally defined as well as under the amended definition.
About whether the Authority under Payment of Wages Act, 1936 has rightly exercised its jurisdiction in awarding compensation to the retrenched employees, High Court said that retrenchment if not disputed as is the case in present petition, where the factum of retrenchment has been admitted by the petitioner by bringing the fact of closure of the establishment on account of liquidation before this court, an order for the payment of retrenchment compensation could be made under Section 15 of the Act of 1936.
About whether the respondents are entitled for retrenchment compensation or not after the closure of the establishment, High Court said, “termination of respondents was the consequence of closure of the business and the petitioner is liable to compensate the respondent as closure of business for the reason mentioned is not covered under Section 25 FFF of Industrial Disputes Act Therefore respondents claim of seeking retrenchment compensation could not have been denied by their employer”.
Accordingly, High Court dismissed the petition and upheld the order passed by the Authority under Section 15 of the Payment of wages Act, 1936 by the Assistant Labour Commissioner dated 31.12.2018. The High Court held the petitioner liable to compensate the private respondents by way of retrenchment compensation of 15 days salary for every completed year at the rate specified in the order passed by the Assistant Labour Commissioner, Jammu, within a period of one month failing which the same shall be recovered as a fine by invoking Section 15(5) of the Payment of Wages Act or by freezing the official accounts of the establishment or by confiscating and selling the articles of the establishment or by any other mode as provided under law.