M/S. N.MAHALINGAM & COMPANY v. T.SANTHOSH KUMAR and THE LABOUR COURT, KOLLAM

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN THE HONOURABLE MR. JUSTICE A.HARIPRASAD & THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR TUESDAY, THE 9TH DAY OF DECEMBER 2014/18TH AGRAHAYANA, 1936 WA.No. 451 of 2008 ( ) IN WP(C).22563/2006 -------------------------------------------- ORDER IN I.A.16572/07 IN WP(C) 22563/2006 of HIGH COURT OF KERALA APPELLANT(S)/1ST RESPONDENT: ------------------------------- M/S. N.MAHALINGAM & COMPANY P.B.NO.3843, NEW NO.98 A/ OLD NO.468) DR.NANJAPPA ROAD, COIMBATORE-641 018 REPRESENTED BY ITS MANAGING PARTNER SRI.A.SHANMUGHASUNDARAM. BY ADVS.SRI.E.K.NANDAKUMAR SRI.K.JOHN MATHAI SRI.ANIL D. NAIR RESPONDENT(S)/PETITIONER & 2ND RESPONDENT: ----------------------------------------------- ## 1. T.SANTHOSH KUMAR, T.C.21/1877 KULATHINKARA VEEDU, ELANKAM, THIRUVANANTHAPURAM. 2. THE LABOUR COURT, KOLLAM. R.1 BY ADV. SRI.GOPAKUMAR R.THALIYAL THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 29.10.2014, THE COURT ON 9.12.2014 DELIVERED THE FOLLOWING: ## **C.R.** ## **P.N.RAVINDRAN,** ## **A.HARIPRASAD & P.B.SURESH KUMAR, JJ.** ## **-----------------------------------------------** ## **W.A.451 of 2008** ## **-----------------------------------------------** ## **Dated 9[th] December, 2014.** ## **J U D G M E N T** ## **P.B.Suresh Kumar, J.** Is an employer obliged under Section 17B of the Industrial Disputes Act, 1947, to pay the last drawn wages to the workman even after the closure of the establishment, is the issue referred for decision by the Full Bench. 2. A short summary of the facts needs to be mentioned for a proper understanding of the issue. The appellant was an agent of M/s.Bajaj Tempo Limited for sale of their products at Pathanamthitta and Thiruvananthapuram. The first respondent was a Mechanical Assistant in the establishment of the appellant. His service was terminated from 19.6.1995. An industrial dispute was raised by the first respondent in connection with the termination of his service and the said dispute was referred by the Government to the Labour Court for adjudication. The Labour Court answered the W.A.No.451 of 2008 2 reference, holding that the termination of the service of the first respondent was unjustifiable and passed an award directing reinstatement of the first respondent in service. The award of the Labour Court is challenged by the appellant in W.P.(C) No.22563 of 2006. One of the grounds raised by the appellant in the writ petition is that during the pendency of the proceedings before the Labour Court, the establishment of the appellant was closed down and therefore, an order of reinstatement could not have been issued by the Labour Court. It is stated in the writ petition that though the factum of closure was brought to the notice of their counsel by the appellant, it was omitted to be pointed out to the Labour Court and the award happened to be passed, in the circumstances, without taking note of the closure of the establishment. 3. The first respondent filed I.A.No.16572 of 2007 in the writ petition, seeking orders directing the appellant to pay the last drawn wages, invoking Section 17B of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act' for short). A counter affidavit was filed by the appellant in I.A.No.16572 of 2000, contending that since the establishment of the appellant does not exist, the first respondent is not W.A.No.451 of 2008 3 entitled to the wages as provided for under Section 17B of the Act. Even though a reply was filed by the first respondent to the counter affidavit, the averment in the counter affidavit as to the closure of the establishment is not disputed. Instead, the stand taken in the reply is that the closure of the establishment is irrelevant in the context of Section 17B of the Act. The learned Single Judge allowed I.A.No.16572 of 2007, holding that in view the decision of this Court in **Bhaskaran v. Janardhanan Pillai** ( 1988(2) KLT 695), the closure of the establishment is irrelevant in the context of an application under Section 17B of the Act. The said order of the learned Single Judge is under challenge in this appeal. 4. On 15.6.2010, when this Writ Appeal came up for hearing, a Division Bench of this Court took the view that the decision in **Bhaskaran v. Janardhanan Pillai** (supra) has not dealt with all the relevant aspects and therefore, the issue whether the liability of the employer to pay wages under Section 17B of the Act continues even after the closure of the establishment, needs to be considered by a Larger Bench. This matter has come up accordingly before us for decision. 5. Heard senior counsel Sri.E.K.Nandakumar for the W.A.No.451 of 2008 4 appellant and Adv.Sri.Thaliyil R. Gopakumar, for the first respondent. ## 6. Section 17B of the the Act, which was introduced by virtue of Act 46 of 1982 reads thus : 17B. Payment of full wages to workman pending proceedings in higher courts.-- Where in any case, a Labour Court, Tribunal or National Tribunal by its award directs reinstatement of any workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme Court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him under any rule if the workman had not been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such Court: Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that such workman had been employed and had been receiving adequate remuneration during any such period or part thereof, the Court shall order that no wages shall be payable under this section for such period or part, as the case may be. ## The statement of objects and reasons of Act 46 of 1982, pertaining to the newly introduced Section 17B reads thus : “It is observed that when Labour Courts pass awards of reinstatement, these are often contested by an employer in the Supreme Court and High Courts. The delay in the implementation of the award causes hardship to the workmen concerned. It is, therefore, proposed to provide for payment of W.A.No.451 of 2008 5 wages last drawn by the workmen concerned, under certain conditions, from the date of the award till the case is finally decided in the Supreme Court or the High Courts.” ## 7. In **Bharat Singh v. Management of New** **Delhi Tuberculosis Centre** [AIR 1986 S.C. 842], the Apex Court held that the three necessary ingredients for the application of Section 17B of the Act are (i) that the Labour Court should have directed reinstatement of the workman (ii) that the employer should have preferred proceedings against the award of reinstatement in the High Court or in the Supreme Court and (iii) that the workman should not have been employed in any establishment during such period. The issue that arose for consideration in the said case was whether the workman could be denied the benefit of Section 17B of the Act, if the award was passed prior to Act 46 of 1982 and in the said context, the Apex Court held that if the said ingredients are satisfied, the workman is entitled to the benefit of the provision, notwithstanding the time at which the award was passed. In **Bhaskaran v. Janardhanan Pillai** (supra), the issue was whether the workman is entitled to the benefit of the provision, if the establishment is closed down and this Court, W.A.No.451 of 2008 6 relying on the decision of the Apex Court in **Bharat Singh v. Management of New Delhi Tuberculosis Centre** (supra), held that the question whether the industry is in operation or has been closed down is irrelevant for the purpose of Section 17B of the Act. The ratio in **Bhaskaran v. Janardhanan Pillai** (supra) was quoted with approval in **Commandant, D.S.C. Centre v. Secy., N.C.C. Group URC Employees Association** [2001 LAB. I.C. 2002], though the said issue did not arise for consideration in that case. 8. In **Dena Bank v. Kiritikumar T. Patel** [AIR 1998 S.C. 511], after referring to the objects and reasons of the enactment, the Apex Court held that the object underlying the provision is to relieve to a certain extent the hardship that is caused to the workman due to the delay in implementing the award of reinstatement. In **Hind Rectifiers Ltd. v. Presiding Officer, 1[st] Labour Court and another** [2001(89) FLR 55], the Bombay High Court considered the question whether a workman, who had attained the age of superannuation, can claim payment of wages thereafter, under Section 17B of the Act and held that since the workman has no right to claim employment beyond the age of superannuation, he cannot W.A.No.451 of 2008 7 claim the benefit of wages by taking recourse to Section 17B of the Act, beyond the age of superannuation. In other words, according to the Bombay High Court, though Section 17B speaks about payment of wages during the pendency of the proceedings in the High Court or the Supreme Court, that right is always subject to the basic right of the workmen to claim employment. This decision has been followed by the High Court of Calcutta in **I.C.I. India Ltd. v. Second Labour Court** [(2010-III-LLJ 862) (Cal)] and the High Court of Gujarat in **Essar Project Ltd. v. N.D.Jagdishwara** [2012-III-LLJ 657 (Guj)]. In **Essar Project Ltd. v. N.D.Jagdishwara** (supra), the Gujarat High Court, after referring to the decisions of the Bombay High Court and the High Court of Calcutta, held that the wages directed to be paid to the workman under Section 17B of the Act has a direct nexus with the order of reinstatement and since reinstatement is ordered by the Labour Court only in a case where the workman is entitled to claim employment, the workman cannot claim the wages under Section 17B of the Act on attaining the age of superannuation when he does not have the right of employment. In **D.T.C. v. Prem Singh** [2014-IVLLJ 231 (Del)], the High Court of Delhi also considered the W.A.No.451 of 2008 8 question as to whether an employee who has attained the age of superannuation is entitled to the wages provided for under Section 17B of the Act. In the said case, it was held that section 17B was introduced for the purpose of mitigating the hardship faced by the workman, who had been reinstated, but the reinstatement had been delayed and not as a punitive measure or as a disincentive for the employers to challenge the award passed by the Labour Court and therefore, the amplitude of the provision cannot be expanded beyond the sphere of employment. 9. The crux of the argument of the learned counsel for the first respondent is that the provision in Section 17B of the Act is in the nature of a subsistence allowance intended to relieve the hardship caused to the workman on account of the delay in implementing the award directing reinstatement and therefore, the same has to be paid by the employer throughout the proceedings. 10. It is clear from the objects and reasons of Act 46 of 1982 that section 17 B was introduced in the statute with a view to ameliorate the hardship of the workmen who are ordered to be reinstated, but not reinstated on account of the W.A.No.451 of 2008 9 interdiction of the superior courts. If the provision is understood in the background of the purpose for which it was introduced, it can be seen that the wages directed to be paid to the workman is only a portion of the wages that would have been paid to him, had he been reinstated. If what is intended to be given is only a portion of the wages that would have been paid to the workman, had he been reinstated, it cannot be contended that the workman is entitled to that wages, when his right to claim employment is lost. It must be remembered that reinstatement is ordered by the Labour Court only in cases where the workmen have the right to continue in employment. If the workmen do not have the right to continue in employment either on account of attaining the age of superannuation or on account of the closure of the establishment, reinstatement would not be ordered in their cases. Therefore, it can be safely concluded that if the workmen lose their right to continue in employment during the pendency of the proceedings before the High Court or Supreme Court on account of attaining the age of superannuation or on account of the closure of the establishment, they cannot claim the benefit of the provision. Further, as pointed out by the High W.A.No.451 of 2008 10 Court of Delhi in **D.T.C. v. Prem Singh** (supra), the provision is not one introduced as a punitive measure or as a disincentive for the employers to challenge the award passed by the Labour Court and therefore, its amplitude cannot be expanded beyond the sphere of employment. 11. The learned counsel for the first respondent contended that going by the plain words used in the statute, the employer is liable to pay the last drawn wages to the workman during the pendency of the proceedings before the High Court or the Supreme Court, as the case may be, and any other interpretation would go against the statutory provision. In **Girnar Traders v. State of Maharashtra** [(2007) 7 SCC 555], the Apex Court held that giving a plain meaning to the words used in the statute would not be resorted to when there is a sense of possible injustice. It was explained that simple application of the words in their primary and unqualified sense may sometimes fail to carry out the manifest intention of the law giver and if the plain words lead apparently to some injustice or absurdity and is at variance with, or not required by, the scope and object of the legislation, it would be necessary to examine further and to test, by certain settled W.A.No.451 of 2008 11 rules of interpretation, what was the real and true intention of the legislature and thereafter, apply the words, if they are capable of being so applied, so as to give effect to that intention. It was also held in the said case that where a plain interpretation of the statutory provision would result in manifest injustice never intended by the legislature, the court is entitled to modify the language used by the legislature so as to achieve the intention of the legislature and to produce the rational construction. The relevant passage of the judgment in **Girnar Traders v. State of Maharashtra** (supra) reads thus: “Giving a plain meaning to the words used in the statute would not be resorted to when there is a sense of possible injustice. In such a case, the simple application of the words in their primary and unqualified sense is not always sufficient and will sometimes fail to carry out the manifest intention of law-giver as collected from the statute itself and the nature of subject-matter and the mischiefs to be remedied. If the plain words lead apparently to do some injustice or absurdity and at variance with, or not required by, the scope and object of the legislation, it would be necessary to examine further and to test, by certain settled rules of interpretation, what was the real and true intention of the legislature and thereafter apply the words if they are capable of being so applied so as to give effect to that intention. Where the plain literal interpretation of statutory provision were to manifestly result in injustice never intended by the legislature, the court is entitled to modify the language used by the legislature so W.A.No.451 of 2008 12 as to achieve the intention of the legislature and to produce a rational construction.” In the light of the aforesaid decision of the Apex Court, there is no substance in the argument that going by the plain words used in the statute, the employer is liable to pay the last drawn wages to the workman during the pendency of the proceedings before the High Court or the Supreme Court, as the case may be, even though the workman may have attained the age of superannuation or the establishment has been closed. 12. The learned counsel for the first respondent also contended that the statute being a beneficial legislation in favour of the workman, the same has to be interpreted in a manner to benefit the workman. In **Usha Breco Mazdoor Sangh v. Management of Usha Breco Limited** [(2008) 5 SCC 554] the Apex Court held that the statutory provisions must be construed by courts with a view to uphold the object and purport of the Parliament and it may not be the correct approach for a superior court to proceed on the premise that an Act is a beneficial legislation in favour of the management or the workman. It was also held in the said case that it is only W.A.No.451 of 2008 13 in a case where the court feels difficulty in interpreting or in construing or applying the statute, the doctrine of beneficial construction can be taken recourse to. It was explained by the Apex Court in the said case that even in cases where the said principle is applied, the provision should not be interpreted in a manner which would take the provision beyond the object and purport thereof. In the light of the principles laid down by the Apex Court in the said case, there is no substance in the said argument advanced by the learned counsel for the first respondent also. We are, in the said circumstances, in complete agreement with the views expressed by the Bombay High Court, the High Court of Calcutta, the High Court of Gujarat and the High Court of Delhi, in the decisions referred to above. We, accordingly, hold that an employer is not obliged under Section 17B of the Industrial Disputes Act, 1947, to pay the last drawn wages to the workman even after the closure of the establishment and we respectfully disagree with the reasoning in the conclusion arrived at by the Division Bench of this Court in **Bhaskaran v. Janardhanan Pillai** (supra). 13. In the result, the order impugned is set aside and I.A.No.16572 of 2007 in W.P.(C) No.22563 of 2006 is W.A.No.451 of 2008 14 dismissed. The writ appeal is allowed as above. Sd/- ## **P.N.RAVINDRAN, JUDGE.** Sd/- ## **A.HARIPRASAD, JUDGE.** Sd/- **P.B.SURESH KUMAR, JUDGE.** tgs