L.I.C. of India Vs. Anwar Khan (Since Deceased) Through Lrs  Insc 435
(23 April 2007)
Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA
Dr. ARIJIT PASAYAT, J.
Challenge in this appeal is to the order passed by a Division Bench of the
Allahabad High Court affirming the order passed by the learned Single Judge of
the said High Court.
Background facts in a nutshell are as follows:
Questioning decision taken by the appellant-Life Insurance Corporation of
India (in short 'LIC') fixing the age of retirement of Development 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 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 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 correctness of the order
of the Appellate Authority.
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 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").
The High Court noted that the Assistant Labour Commissioner observed that no
evidence was led regarding nature of the job. Therefore, the claim that the
applicant was belonging to the supervisory 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-mature since there
was no definite determination as second appeal was pending. The High Court held
that even if the Act has no application that does not render the proceedings
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 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 dispute about the liability.
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 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 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 is not a fit case for exercise of jurisdiction
under Article 136 of the Constitution of India, 1950 (in short the
A few provisions of the Act and the Adhiniyam need to be noted. Sections 14
and 15 of the Adhiniyam read as follows:
"14. Payment of wages for period of earned leave (1) 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.
(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, as may be
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
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 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 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 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 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 (c) the failure of the
employed person to apply for or accept payment."
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
1936, as if the same wages were payable under that Act."
It is to be noted that the original amount of Rs.1,000/- was fixed 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/-.
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.
It has to be noted that the heading of Section 18 of the Adhiniyam is
"recovery of wages". It only provides that once an employee under the
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 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.
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, compensation cannot be
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
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.
Though we have hold that proviso to Section 15(3) has application,
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 second appeal.
The appeal is allowed.