Delhi High Court

M/S Tops Security Ltd. vs Tops Detective And Secuirty ... on 27 January, 2014

Author: N.V. Ramana,Chief Justice

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                     Date of decision: 27th January, 2014

+      LPA No.407/2013, CM No.1673/2014 (for amendment in appeal)
       & CM No.9186/2013 (for stay).

       M/S TOPS SECURITY LTD.                    ..... Appellant
                    Through: Mr. K.C. Dubey, Adv.

                                   Versus

    TOPS DETECTIVE AND SECUIRTY SERVICES LTD.
    KARAMCHARI UNION (REGD.)                  ..... Respondent

Through: Mr. Prabhakar, Adv.

CORAM :-

HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1. This intra court appeal impugns the judgment dated 3rd May, 2013 of the

learned Single Judge of this Court of dismissal of W.P.(C) No.2771/2013

preferred by the appellant. The said writ petition was preferred by the appellant

challenging the order dated 19th January, 2012 of the Authority appointed under

the Minimum Wages Act, 1948 allowing the application of the respondent

Union under Section 20 of the Act for release of difference of minimum wages

and wages paid for the period 1st August, 2005 to 31st January, 2006 and further

directing the appellant to pay compensation equivalent to five times the said

difference.

2. The counsel for the appellant during the arguments on 2nd December,

2013 confined the challenge to the judgment of the learned Single Judge and

resultantly to the order of the Authority, to the quantum of compensation which

the appellant has been directed to pay. Notice of the appeal limited to the said

aspect was issued to the respondent Union. The counsel for the respondent

Union has appeared. We have finally heard the counsels on the appeal.

3. Before coming to the merits of the appeal, it may be mentioned that the

appellant has after the order dated 2nd December, 2013 filed CM No.1673/2014

for amendment of the Memorandum of Appeal contending that inadvertently no

ground challenging the quantum of compensation which the appellant has been

directed to pay has been urged and for formally taking the said ground in the

Memorandum of Appeal. We allow the appellant to do so.

4. Notice of the appeal having been issued limited to the aspect of quantum

of compensation which the appellant has been directed to pay, need is not felt

to discuss the challenge earlier made by the appellant to the applicability of the

Act to it and to it being the "employer".

5. The Authority, in its order dated 19th January, 2012, has not given any

reason whatsoever for directing the appellant to pay compensation five times

the difference between the wages paid by the appellant and the minimum wages

which were liable to be paid.

6. Section 20(3)(i) of the Act empowers the Authority to, upon finding the

employer to have paid less than the minimum rates of wages direct the

employer to pay to the employee the amount by which the minimum wages

payable to him exceed the amount already paid, together with the payment of

such compensation as the Authority may think fit, not exceeding ten times the

amount of such excess. The Act or the Rules are not found to lay down any

guidelines or criteria for determining the quantum of such compensation, i.e.

whether it has to be Nil or ten times.

7. The said question is found to have vexed the Courts from time to time.

The Division Bench of the Bombay High Court in C.S. Parameswaran Vs.

The Authority under the Minimum Wages Act, 1948 for Nandgaon

MANU/MH/0193/1968 held, that the Act vests a discretion in the Authority

whether to impose penalty or not; this discretion has to be judicially exercised

and all the circumstances connected with the matter i.e. non-payment or

delayed payment must be taken into account; each case must depend upon the

equities of the case; there may be cases where the employer may not be at fault,

there may be some difficulties in his way or there may be some cause which

prevented him from implementing the provisions of the Act, all these matters

are to be taken into account before any order is made granting compensation in

a particular amount. It was further held that the Authority is not bound to grant

compensation.

8. The Division Bench of the Patna High Court also in G.S. Dugal & Co.

(Private) Ltd. Vs. Labour Inspector (Central) AIR 1968 Patna 90 held that

although no criteria is indicated for fixing the amount of compensation which

has to be directed to be paid along with the amount of the excess wages, the

outer limit of the amount of compensation is ten times such excess amount;

however that can never mean that without any rhyme or reason and in all cases

it must be ten times the said amount; the quantum of compensation has got to

be fixed with reference to the facts of each case; it can be to the maximum limit

where the Authority is of the view that the employer has deliberately paid less

wages than the minimum and has done so in spite of demands by the employees

concerned or any officer, authority or body on their behalf. Finding the

employer in that case to have been misled by the wrong meaning given by the

Labour Welfare Officer to the Notification and further finding the employees to

have never made any grievance, the direction for payment of compensation at

ten times was held to be capricious and arbitrary and reduced to an amount

equal to the amount of wages paid less to the employees concerned.

9. The question again came up before the Division Bench of the Gujarat

High Court in Chief Officer, Bhavnagar Nagarpalika Vs. Meghjibhai

Ugabhai MANU/GJ/0173/1992; it was again held that the award of

compensation is not compulsory or mandatory and would depend upon various

factors like the nature of employment, the status of the employer, the nature of

defaults, the number of defaults, the frequency thereof, the amount involved,

the delay in making payment of less than the minimum wages fixed and like

matters. The challenge to the constitutional validity of Section 20(3)(i) on the

ground of vesting unguided discretion in the Authority, was negatived.

10. The Supreme Court in Prerna Sahygo Vs. Authority under Minimum

Wages (2001) 9 SCC 247 set aside the judgment of the High Court of Punjab

and Haryana refusing to interfere with payment of compensation of

Rs.92,500/- for paying Rs.2,550/- less than the minimum wages and held the

award of such compensation to be exorbitant and reduced the compensation to

equivalent to the amount of wages.

11. A learned Single Judge of this Court also in Kerala Automobiles Ltd. Vs.

Mrs. Naveetha P. MANU/DE/0699/2008 held that the intention behind Section

20(3)(i) is to compensate the workman and not to penalize the employer and

reduced the compensation from that imposed of ten times to twice the amount

of difference between the wages paid and the minimum wages.

12. Applying the aforesaid principles in the facts of the present case, we

find:-

(a) the Authority to have held that the Private Security

Agencies (Regulation) Act, 2005 had come into force on 15th

March, 2006 making the minimum wages applicable to security

workers;

(b) the Authority as well as the learned Single Judge to have held that

though the Supreme Court in Lingegowd Detective & Security

Chamber (P) Limited Vs. Mysore Kirloskar Limited (2006) 5

SCC 180 relied upon by the appellant had held minimum wages to

be not payable to security personnel but the said judgment

pertaining to the State of Karnataka was not applicable to Delhi for

the reason of the Government of National Capital Territory of

Delhi having issued a Notification dated 28 th April, 1989 in

relation to employment in all shops and establishments covered by

the Delhi Shops and Establishments Act, 1954, bringing the

establishments situated within Delhi under the ambit of the

Minimum Wages Act, 1948;

(c) there being nothing on record to show that the employees of the

appellant on any earlier occasion had made any grievance of not

being paid minimum wages;