The Management Vs S.Vijayan

To issue a Writ of Certiorari or any other Writ or Order or Direction in the nature of Writ of Certiorari to call for the records of the II Additional Labour Court, Chennai in C.P.No. 113/2016 dated 10.06.2019 and to quash the same, as that the same is without the jurisdiction & against the scope of Section 33C(2) of the Industrial Disputes Act, 1947 and pass such other orders as this Hon’ble Court may deem fit and proper.

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Prayer in W.M.P.No.603 of 2020

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To pass an order of Ad-Interim Stay of all other further proceedings pursuant to the order passed by the II Additional Labour Court, Chennai in C.P.No.113/2016 dated 10.06.2019, pending disposal of the above Writ Petition.

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W.P.No.513 of 2020

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Appearance of Parties:

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For Petitioner : Dr.K.Thirugnanam, Advocate For Respondent : Mrs.Abdul Wahab, Advocate

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JUDGMENT

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Heard.

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The petitioner in this writ petition is the Tamil Nadu Civil Supplies Corporation Ltd., a state-owned undertaking (hereinafter referred to as "Management"). Through this writ petition, the Management challenges the order dated 10.06.2019 passed by the II Additional Labour Court in C.P. No. 113 of 2016. By the impugned order, the Labour Court computed a sum of Rs. 5,04,713/- as due and payable to the respondent workman, along with a cost of Rs. 25,000/-.

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When the writ petition came up for admission on 10.01.2020, this Court, while ordering notice to the respondent, also granted an interim stay for a period of four weeks. Subsequently, on 10.07.2020, the interim stay was extended until further orders. Thereafter, when the matter was listed on 28.08.2020, this Court passed the following order:

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“The grievance ventilated by the Petitioner in this Writ Petition is that the Labour Court has denied the Petitioner of the right to adjust that amount towards the losses owed to the Petitioner by the Respondent.

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Having due regard to the nature of the controversy involved, it would not be justified to unconditionally stay of the impugned order without providing security for its due compliance, if it has to be ultimately confirmed. As such, there shall be an order of interim stay of the impugned order till the next hearing on condition that the Petitioner shall invest the entire amount of Rs. 5,04,713/along with costs of Rs. 25,000/- in terms of the impugned order in an interest fetching fixed deposit in the name of the Presiding Officer, II Additional Labour Court, Chennai, in any Nationalized Bank in Chennai initially for a period of one year and renewable automatically for the same period from time to time and hand over the original Fixed Deposit receipt to the II Additional Labour Court, Chennai, under written acknowledgment, and file proof of such compliance before the Registrar (Judicial) of this Court by 13.10.2020 without fail.”

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In compliance with the aforesaid direction, the Senior Regional Manager of the petitioner corporation addressed a letter dated 28.09.2020 containing the following statement:

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' ghhpitapy; fhZk; ePjpkd;w cj;jutpy; bjhptpj;Js;sgo

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jpU/S.tp$ad;. cjtp nkyhsh; (juf;fl;Lg;ghL) gzpxa;t[ gzg;gad; tH';fplnfhhp bjhlug;gl;l C.P.No.113/2016 tH';fg;gl;l jPh;g;gpid vjph;j;J eph;thfk; bjhlh;e;j tHf;F W.P.No.513/2020 in WMP.No.603/2020-y ; ,ilf;fhy cj;jut[ tH';fg;gl;L kDjhuh;

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nfhhpa U:/5,04,713/- kw;Wk; tHf;fhL bryt[ bjhif U:/25.000-/ nrh;j;J bkhj;jkhf U:/5.29.713-/ (U:gha; Ie;J yl;rj;J ,Ugj;J x;dgjhapuj;J vGE}w;W gjpK:d;W kl;Lk;) bjhifapid muR m';fPfhuk; bgw;w t';fpapy; xU tUl fhyj;jpw;F epue;ju itg;gPL (fixed deposit) bra;a mpwt[Wj;jg;gl;lJ/

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nkw;TwpathW U:/5.29.713-= (U:gha; Ie;J yl;rj;J ,Ugj;J xd;gjhapuj;J vGE}w;W gjpK:d;W kl;Lk;) =w;F The Presideing Officer, II Additional Labour Court, Chennai mth;fs; bgahpy; muR m';fPfhuk; bgw;w State Bank of India t';fpapy; epue;ju itg;gPL (fixed deposit Account No/39683415487) bra;ag;gl;Ls;sJ/ mjid ePjpkd;wj;jpy; ,jd; K:yk; jhf;fy; bra;fpnwhk; vd;gjid bjhptpj;Jf;bfhs;fpnwhk;.

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,izg;g[ ; mry; epue;ju itg;gPL gj;jpuk;/'

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Upon receipt of notice from this Court, the Respondent entered

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appearance through counsel and filed a counter affidavit dated Nil, August 2020. When the matter was listed on 10.02.2025, a request was made for time to file an additional typed set concerning the undertaking given by the Respondent workman, relating to the deduction from earned leave wages payable to the Respondent. Pursuant thereto, the counsel for the Petitioner produced a copy of the consent letter dated 13.03.2015, executed by the Respondent at the time of retirement. The said consent letter, which was also marked as Ex.R1 = Ex.R12 before the Labour Court, reads as follows:

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' ma;ah.

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ehd; 31.03.2015-=y; taJ Kjph;tpd; fhuzkhf gzp xa;t[ bgw csnsd;/ tUk; fhy';fspy; vdJ bgahpy; gzg;gpoj;j epYit VnjDk; ,Ue;jhYk; mjida[k;. jzpf;if bra;ag;glhj fhyj;jpy; gzg;gpoj;jk; epYit ,Ue;jhYk;. Mjid vdf;F mspf;fg;gl ntz;oa <l;oa tpLg;g[ xg;g[tp[g;g[ bjhifapy; gpoj;jk; bra;J bfhs;s ,f;fojk; K:yk; Kgrk;kjk; bjhptpj;Jf; bfhs;fpnwd;/ '

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The Respondent filed a claim statement before the Labour Court

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under Section 33C(2) of the Industrial Disputes Act, claiming a sum of Rs. 5,04,713/- towards earned and unearned leave. He stated that he had served

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as Assistant Manager – Quality Control and retired on 31.03.2015 under certain conditions. It was also communicated to him that an amount of Rs. 17,376/-, along with a sum towards stock deficit, was payable by him. However, although reports received from various officers indicated that no dues were outstanding, the Respondent was not paid his wages. The application was registered as C.P.No.113/2016 by the Labour Court, and notice was ordered to be issued to the Management.

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Upon receipt of notice, the Management filed a detailed counter

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statement dated Nil before the Labour Court. In the counter statement, the particulars of the Respondent’s service were set out, indicating that the Respondent was predominantly engaged in work at the godown. It was alleged that during his tenure, shortages were found in the articles intended

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for public distribution at those godowns. As a consequence of these shortages, the Respondent was placed under suspension on multiple occasions and was subjected to disciplinary action, including the postponement of increments. Further, while he was employed at the Modern Rice Mill and open godowns, he faced repeated punishments.The Management also contended that, as a measure of economic prudence, recovery of amounts from employees at the time of retirement was routinely carried out. It was further submitted that the claim petition was not maintainable.

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Before the Labour Court, the Respondent examined himself as PW1 and marked four documents on his side, which were exhibited as Ex.P1 to Ex.P4. On behalf of the Management, one N. Karthikeyan, who was serving as Assistant Manager, Tiruvarur region, was examined as RW1. The Management filed 16 documents, marked as Ex.R1 to Ex.R16.Among these, Ex.R1 and Ex.R2 (which were also erroneously marked as Ex.R12 and Ex.R13 by the Labour Court) were letters submitted by the Respondent, conveying his consent for the deduction of shortages from his wages. The copies of the disciplinary proceedings initiated against the Respondent at Thanjavur, Nagapattinam, and Tiruvarur were produced and

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marked as Ex.R3 to Ex.R11.

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Although the Respondent was permitted to retire on 31.03.2015, the retirement order dated 31.03.2015 (Ex.R13), signed by the Senior Regional Manager, explicitly stated as follows:

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“In the Head Office proceedings, 1^st read above, Thiru.S.Vijayan, Assistant Manager (Quality Control), Chennai (North) Region, is permitted to retire from the services of the Tamil Nadu Civil Supplies Corporation on the afternoon of 31.03.2015 without prejudice to pending recovery related to Movement shortage, pending regularization of 404 proposals related to Thriuvarur Region and if any recovery found for un-audit period on attaining the age of superannuation.”

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The Labour Court held that Exhibits R1 and R2 constituted clear admissions by the Respondent regarding his obligation to repay the stock shortage, with the amount being adjustable against earned leave salary. However, relying on the oral evidence of MW1, the Labour Court noted that the recovery was made only in 2017, and observed that, as per procedure, any shortage exceeding 1% would necessitate the issuance of a charge memo. This would require obtaining an explanation from the workman, conducting an enquiry, and establishing the charges before effecting recovery. The Labour Court further held that the recovery order

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contained in Ex.R15 was issued without following the requisite process,

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including the issuance of a charge memo. After referring to a decision in

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T.G. Govindarajan v. Tamil Nadu Civil Supplies Corporation Ltd.,

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reported in 2010 SCC Online Mad 185, the Labour Court concluded that if any order of recovery was pending as on the date of retirement, the Management could adjust the amount accordingly. In the absence of such an order, however, the terminal benefits would necessarily have to be disbursed to the employee.

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Relying on the Division Bench judgment in N. Kunnai Gowder v. Coimbatore District Milk Producers Union Ltd., reported in 2007 (5) CTC 491, it was held that, in the absence of an enabling provision, the employer has no authority to initiate or continue disciplinary proceedings after the retirement of an employee. The judgment further mandated that the employer must periodically assess shortages and, if the shortage exceeds 1%, conduct an enquiry. In the absence of such an enquiry held during the tenure of service, no deduction from the employee’s dues is permissible. Adhering to this principle, the Labour Court computed the amount claimed by the workman and awarded costs accordingly.

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In the affidavit filed in support of the writ petition, the management

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relied on the judgment of the Supreme Court in Chief Mining Engineer,

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East India Coal Co. Ltd. v. Rameshwar & Ors. , reported in 1968 (1) SCR 140, to assert that the Labour Court, under Section 33C(2) of the Industrial Disputes Act, cannot compute amounts when the claim itself is in dispute. Further, the management relied on the decision in P.K. Singh v. The Presiding Officer & Ors., reported in 1988 (3) SCC 457, to contend that in the absence of a reference under Section 10(1) of the Industrial Disputes Act, the Labour Court lacks the jurisdiction to exercise power under Section 33C(2) when there is no prior award justifying such relief.

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In the counter affidavit, at paragraph 9(F), it was stated that the management had already paid a sum of Rs.42,837/- and was only challenging a portion of the amount, namely Rs.4,75,483/-, as directed to be paid to the respondent. In response, the respondent, in their counter affidavit, placed reliance on the judgment of the Supreme Court in Central

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Inland Water Transport Corporation v. Second Labour Court & Ors.,

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reported in 1974 (1) LLJ 445, contending that the Labour Court possesses the authority to examine incidental issues as well.

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Regrettably, the Labour Court took a technical stance without

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delving into the merits of the claim or adequately considering the scope of Section 33C(2) of the Industrial Disputes Act. During cross-examination, the respondent, who testified as PW1, made the following admissions:

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“ 31.03.2015-y; ehd; gzp Xa;t[ bgw;nwd;/ ehd; gzp Xa;t[ bgWk;nghGJ ,Wg;g[ Fiwtpw;fhf ehd; brYj;j ntz;oa bjhiffis vy;yhk; gpoj;jk; bra;Jjhd; gzp Xa;t[ cj;jut[ th';fpa[s;shh;fs; vd;W brhd;dhy; mJ rhpay;y/ fhl;lg;gLk; fojk; ehd; bfhLj;jJjhd; mJ Ex.R1. ehd; brYj;j ntz;oa ghf;fp bjhiffSf;F vd;dila <l;oa tpLg;g[ bjhifapy; gpoj;jk; bra;a[k; go TwpapUf;fpnwd; vd;W brhd;dhy; rhpjhd;/ fhz;gpf;Fk; mLj;j fojKk; ehd; vGjpaJjhd; mJ Ex.R2, mjpy; ehd; brYj;j ntz;oa U:/4,776-/ epYit bjhifia nfhg;gpd; Kotpd; go brYj;j rk;kjpj;Js;nsd; vd;why; rhpjhd;/ ehnd vd;Dila <l;oa tpLg;g[ rk;gsj;jpy; ehd; brYj;j ntz;oa epYit bjhiffis gpoj;jk;9 bra;Jbfhs;syhk; vd rk;kjk; bjhptpj;Jtpl;L jw;nghJ <l;oa tpLg;ig nfl;L ,e;j kDit jhf;fy; bra;jpUg;gJ rl;lg;go rhpay;y/”

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The reliance placed on the judgment in Central Bank of India Ltd. v. P.S. Rajagopalan, reported in AIR 1964 SC 743, may not be appropriate. In that case, the Supreme Court merely held that the scope of Section 33C(2) of the Industrial Disputes Act is broader than that of Section 33C(1). It observed that, in addition to recognizing a pre-existing right of the workman, the Labour Court may incidentally interpret an award or

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settlement for the purpose of computing the dues.

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“..therefore, the employee continues to be the workman of the employer and is entitled to the benefits due to him under a preexisting contract, cannot be made under s. 33 C (2). If a settlement has been, duly reached between the employer and his employees and it fails under s. 18 (9.) or C3) of the Act and is governed by s.(19) 2 it would not be open to an employee, notwithstanding the said settlement, to claim the benefit as though the said settlement had come to an end. If the settlement exists and continues to be operative no claim can be made under s. 33C(2) inconsistent with the said settlement. If the settlement is intended to be terminated, proper steps may have to be taken in that behalf and a dispute that may be arise thereafter may to be dealt with according. to the, other procedure prescribed by the Act. Thus, our conclusion is that the scope of s. 33G (2)is wider than s. 33C (1) and cannot be wholly assimilated with it, though for obvious reasons, we do not propose to decide or indicate what additional cases would fall under s. 33C (2) which may not fall under s. 33C (1). In this connection, we may incidentally state that the observations made by this Court in the case of Punjab National Bank Ltd (1), that s. 33C is a provision in the nature of execution should not be interpreted to mean that the scope of s. 33C (2) is exactly the same as s. 33C (1) (page 238). (1) 1962 (1) L.L.J.234.”

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The Delhi High Court, in the case of Delhi Transport Corporation

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v. D.D. Gupta & Anr., reported in 1978 (1) LLJ 122, while examining the scope of Section 33C(2), laid down the following parameters for the Labour Court to compute any amount due to the workmen:

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“1. If the claim of a workman involves an adjudication of

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disputes which falls within the definition of an industrial dispute as given in the Act, then that dispute cannot be resolved under Section 33C(2)

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If a claim, in the nature of an execution application relating to an industrial award or settlement, is made, then Section 33C(2) is available.

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Even other claims of workman not arising out of awards or settlements can be made the subject-matter of claim under Section 33C.

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If such claims are disputed, the dispute can be resolved and the claims quantified by the Labour Court, unless the disputes raised amount to industrial disputes.

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If there is a subsisting relationship of master and servant or employer and employee, then the Labour Court has jurisdiction under Section 33C(2) to determine the scope of the contract for quantifying the claim made

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If the relationship of master and servant, etc., has been terminated, then the Labour Court cannot determine the validity of the termination for the purposes of determining a money claim.

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If a workman makes a claim for additional wages (beyond his con tract) or relating to the conditions of his work, then it is a matter beyond the Labour Court's power under Section 33C(2) because the claim falls within the scope of an industrial dispute”

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In the present case, the Labour Court, in the impugned order, took a circuitous approach by holding that, in cases of recovery exceeding 1%, the

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loss must be quantified after conducting an enquiry, and that no disciplinary action can be initiated after retirement. Consequently, the Labour Court concluded that the respondent is entitled to receive the full salary for earned leave, disregarding the fact that the respondent had given undertakings twice, as recorded by R1 and R2. In arriving at this conclusion, the Labour Court also overlooked the fact that several recovery proceedings had already been initiated against the respondent, as evidenced by Ex.R3 to Ex.R11, none of which were challenged before any forum. It is pertinent to note that, while conducting disciplinary proceedings after retirement with a view to impose a penalty may not be permissible, recovery of losses caused to the employer can still be made, subject to the applicable rules and in accordance with any consent or undertaking given by the employee.

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Apart from this, Section 7(2) of the Payment of Wages Act, 1936, permits deductions from the wages of employed persons. Notably, Section 7(2)(c) specifically provides for deductions towards loss of goods. The

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provision under Section 7(2)(c) reads as follows:

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“7. Deductions which may be made from wages:

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(2) Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act, and may be of the following kinds only, namely: -

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(a) omitted

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(b) omitted

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(c) deductions for damage to or loss of goods expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;”

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The counsel for the respondent relied on three judgments—one from

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the Supreme Court and two from this Court. Among these, one decision, already referred to in the counter affidavit, has been addressed earlier. All three judgments pertain to cases arising from proceedings under Article 226, filed by employees. The other two decisions, which have not yet been referred to, are as follows:

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1.Bhagirathi Jena Vs. Board of Directors, O.S.F.C & Ors, 1999 (3) SCC 666

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2.S.Pannerselavam Vs. Tamil Nadu Civil SuppilesCorpn. Ltd, 2005 (2) LLN 514

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In Bhagirathi Jena’s case, the Supreme Court held that, in the absence of a specific regulation, no penalty can be imposed after the retirement of an employee. Similarly, in Pannerselvam’s case, this Court, after referring to Regulation 13 of the T.N.C.S.C Regulations, held that there is no provision

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enabling the continuation of disciplinary proceedings after retirement, and consequently, the Management Corporation cannot proceed with the matter post-retirement.

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There is no doubt that these two judgments are binding precedents regarding the prohibition of conducting disciplinary proceedings after retirement in the absence of enabling provisions. However, the present case is distinct, as it pertains to deductions from wages for earned leave, based on the undertaking given by the respondent while in service, as well as the recovery of losses caused by the respondent. Notably, the earlier recovery proceedings remain unchallenged.Furthermore, the Payment of Wages Act, 1936, does not impose any restrictions on deductions from an employee’s wages, thereby allowing recovery in accordance with the terms of the undertaking and applicable rules.

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In the aforesaid circumstances, the impugned order of the Labour Court in C.P.No.113/2016 dated 10.06.2019 is set aside, and the writ petition in W.P.No.513 of 2020 is allowed. There shall be no order as to costs. Consequently, W.M.P.No.603/2020 stands closed.

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