Inspector Can't Adjudicate, Quantify Wages Payable As Compensation Under Kerala Industrial Establishments (National & Festival Holidays) Act: High Court

The Kerala High Court recently considered the question as to whether the Inspector, appointed under the Kerala Industrial Establishments (National and Festival Holidays) Act, 1958, can adjudicate and decide the quantum of wages payable as compensation under the statute.Justice Bechu Kurian Thomas in the decision said that quantifying the amount due to an employee or adjudicating on the right of a person to be entitled to a particular sum and the corresponding obligation of another person to pay a certain quantified sum, are matters that are required to be decided after considering competing claims."Nowhere in the Act has the Legislature conferred such a power of adjudication or a power of quantifying the amount due to an employee on the Inspector. Specific powers have been stipulated, as can be exercised by the inspector. When specific powers of inspection and verification have been conferred on the inspector, without any power of adjudication, the intention of the legislature is explicit. As the term Inspector itself suggests, he is entitled to inspect, identify and even file complaints. His power stops with that, and it cannot be extended to confer the power of adjudication," said the court.The court passed the ruling, while setting aside an order directing a company to pay an amount of Rs 48,72,678/- towards double the rate of wages allegedly payable to the employees for working on three national and eight festival holidays. The authority had issued show-cause notices and also initiated revenue recovery proceedings against senior officers of the company.The CaseThe Chairman and Accounts and Administrative Manager of Poornam Info Vision Pvt. Ltd had challenged the show-cause notices and revenue recovery proceedings intiated against them personally. When several irregularities were noticed by Assistant Labour Officer under the labour legislations including non-payment of double the rate of wages to the employees for working on national and festival holidays and compensatory off for employees, the petitioners were asked to rectify the same vide a notice. A show-cause notice was also subsequently issued against the petitioners directing them to pay the additional wages, and also to produce the register and records and show cause as to why they ought not to be proceeded against. The same was however disputed by the petitioners through their explanation, by contending that the various statutes specified in the show-cause notice were not applicable to their establishment. Pursuant to the same, an order was issued stating that the employees who had worked on national and festival holidays were not provided with double wages and compensatory off and hence there is a violation of section 5(2) of the Act. The petitioners were directed to pay double the rate of wages to the employees amounting to Rs.48,72,678/-, and revenue recovery proceedings were also initiated against them. ArgumentsIt was contended by Senior Advocate N. Sukumaran, who was assisted by Advocates N.K. Karnis and S. Shyam, that the revenue recovery proceedings were vitiated by malice, and are without authority.It was averred that the Assistant Labour Officer had no authority to enter into a process of adjudication or to arrive at the quantum allegedly payable by the petitioners towards wages under the Act for allegedly working during holidays. It was argued that the Inspector under the Act is not vested with any authority to adjudicate on the quantum payable and if at all any quantum is payable as contemplated under the Act, only the employees could have initiated proceedings in accordance with law. The court was told that no application had been filed by any employee claiming the said wages, which shows that the adjudication and the determination of quantum by the Inspector, was "illegal." On the other hand, it was argued by the counsels on behalf of the respondent authorities that the revenue recovery proceedings were initiated as per Section 5(4) of the Act. It was pointed out that if the petitioners wished to question the proceedings, they would have to follow the procedure contemplated under Section 70 of the Kerala Revenue Recovery Act, 1968, and thus make the entire payment under protest and thereafter contest the demand. The counsels also relied upon the Doctrine of Implied Power to contend that the Inspector was vested with all the powers to such acts as are necessary for carrying out the purposes of the Act, including the power of issuing an order quantifying the amount due to an employee.FindingsThe court perused the scheme of the Act, and discerned that Section 5(2) creates a right upon the employee to receive twice the wages if he works on a holiday and also to receive a substituted holiday, and that the said amount could be recovered as arrears of land revenue under the Revenue Recovery Act. It however found that the Inspector had no right to adjudicate and quantify the amount, and rejected the government argument that the power could ...

Inspector Can't Adjudicate, Quantify Wages Payable As Compensation Under Kerala Industrial Establishments (National & Festival Holidays) Act: High Court

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