WP/26534/2008 of M/s. Motor Car Beedi Factory, rep. by its Proprietor, Vs The Controlling Authority underr Payment of Gratuity on 30 December 2008

O r d e r:

The petitioner, namely M/s. Motor Car Beedi Factory,represented by its Proprietor, has filed this writ petition, praying for awrit of certiorari or any other appropriate writ, order or orders ordirections quashing the orders dated 18.10.2008, passed by the respondent No.1, namely the Controlling Authority under the Paymentof Gratuity Act, 1972, in P.G. Nos. 21 to 27, 29 to 46, 48, 49, 51, 54 to68, 70 to 75, 77, 79 to 81, 83 to 86, 88, 95 and 97 to 99 of 2007.

The petitioner states that the factory is engaged in themanufacture of beedis, and that it came into existence about fourdecades back. It is registered with the Central Excise Department andis also covered by the Provident Fund Act. The petitioner states thatthe factory engaged nearly 32 home workers and it was regularlypaying central excise duty and contributing to the provident fund. Thatit maintained the books of accounts to show the purchase of rawmaterials, expenses and personal ledgers, till it was permanentlyclosed down in the year 2005 under intimation to the Central ExciseDepartment and Provident Fund Department.

The petitioner states that respondent Nos. 2 to 64 herein neverworked in the factory. However, they along with 78 other persons filedcases before respondent No.1 claiming gratuity on the ground that theywere in the employment of the petitioner-factory since many years. The petitioner contested the said cases inter alia taking a stand thatthe said persons never worked in the factory, and there is norelationship of employer-employee between them. Before respondentNo.1, on behalf of the claimants, one witness was examined and Exs.A1 to A3 were filed, while on behalf of the petitioner, the petitionerdeposed as M.W.1, and marked Exs. B1 to B15. However, thepetitioner states that respondent No.1 without deciding the issuerelating to relationship of the said persons with the petitioner, passedorder dated 24.04.2008, awarding gratuity to all the 141 claimants.

Questioning the said order, the petitioner states that the factory filedwrit petitions in W.P. No. 13206 of 2008 and batch, and this Court byorder dated 08.07.2008, allowed the writ petitions, and while settingaside the order impugned therein, remanded the matter to respondentNo.1, for consideration and disposal of the matter afresh in accordancewith law.

Conclusion

On remand, the petitioner states that the claimants did notadduce any further evidence before respondent No.1. Exs. A1 and A2,the petitioner states are the legal notice issued by the claimants andthe reply notice issued by the petitioner. While Ex. A3, is a letterdated 16.04.2005, alleged to have emanated from the Office of theAssistant Commissioner of Labour, Kurnool, and addressed to thePresident, Kurnool Beedi Workers Union, wherein it is stated that theAssistant Labour Officer, Kurnool-II Circle visited the factory of thepetitioner on 17.09.2004 and found that about 81 persons were on therolls, and that out of the said 81 persons, 76 were physically presenton that day and the remaining five were not present. Relying on Ex.A3, it is the case of the petitioner that respondent No.1, by his ordersdated 18.10.2008, allowed the claim of respondent Nos. 2 to 64, whilehe rejected the claim of the remaining claimants. Questioning the saidorder, on several grounds, the petitioner filed the present writ petition,praying for the relief, as stated in the introductory paragraph of thisorder.

The learned counsel for the petitioner submitted that theimpugned order passed by respondent No.1 is perverse and patentlyerroneous, in that respondent No.1 relying on Ex. A3, which is anunproved document, has passed the impugned order, allowing theclaim of respondent Nos. 2 to 64. Since Ex. A3 is an unproveddocument, its contents could not have been looked into by respondentNo.3, much less passed the impugned order relying on the same. Hesubmitted that even though the petitioner has an alternative remedy byway of appeal under the Payment of Gratuity Act, but the said remedyis available to the petitioner only subject to the condition of thepetitioner depositing the entire amount of Rs.10,00,000/- awarded byrespondent No.1, which is very onerous and burdensome. Hesubmitted that since the impugned order is perverse and patentlyerroneous and goes to the very root of the jurisdiction, the alternativeappeal remedy available to the petitioner cannot be said to be aneffective and efficacious remedy, and if the petitioner is directed to avail the alternative remedy, it would not only be a case of abuse ofprocess of law, but also a case of causing palpable injustice to thepetitioner. In support of his argument that despite availability ofalternative remedy under a statute, a writ petition would lie, if thepetitioner shows that there is something which goes to the root of thejurisdiction and would cause palpable injustice to him, if he is directedto avail the alternative remedy of appeal provided under the statute, heplaced reliance on the judgment of the apex Court in State of H.P. v.

Gujarat Ambuja Cement Ltd[[1]].

Having heard the learned counsel for the petitioner and havingperused the impugned order, the only question, in the facts andcircumstances of the case, that arises for consideration is – Whetherthe petitioner can be allowed to maintain the writ petition bybypassing the alternative remedy of appeal available to him underthe statute?

Generally speaking, every statutory scheme contains a systemof/hierarchical remedies by way of appeal, second appeal, revisionetc. against an order passed by the lowest public authority in theadministrative hierarchy, who under the statute, is invested with thepower of passing orders/s affecting the legal rights, duties or libertiesof any person. Under the system of hierarchical remedies, theaggrieved party can prefer appeal/revision to a superior publicauthority against the decision of a lower public authority, and uponsuch appeal/revision being preferred, the superior public authorityshall reconsider the decision appealed/challenged in revision, on itsmerits, and either alter/modify/set aside/confirm the order passed bythe lower public authority. Since the statutory remedies, providecorrection/rectification either in part or in whole of the orders passed bythe lower public authorities, the writ Court normally refuses to grantany prerogative order, when such statutory remedies are providedunder a statute, to an aggrieved person against the order/s passed bya lower public authority. In this context a reference be made to theconclusion arrived at by the Law Commission in its Consultation Paper No.126[[2]], as quoted by ”[[3]]P.P. Craig, in his book titled “Administrative Law, which reads asfollows:

The Courts have been mindful not to usurp Parliament/Legislature’s choicewhere it has established a special statutory mechanism to adjudicate on a particular topic. The assumption that litigants must use available statutory machinery has alsobeen influenced by the courts’ desire to control the caseload on judicial review. Specialized statutory appeal mechanisms may, in addition, be better suited toresolving complex issues of fact, and possess expertise in the relevant area. However, as state by the Law Commission, there may well be advantages indetermining the effect of alternative remedies at the permission stage.

None can dispute the fact that Article 226 of the Constitution ofIndia, confers on all the High Courts very wide power in the matter ofissuing prerogative writs. This remedy of writ is absolutely adiscretionary remedy, and the High Courts can refuse to exercise theirdiscretion and grant any writ if it is satisfied that the aggrieved partyhas adequate and suitable remedy by way of hierarchy of appealsprovided under the statute. The apex Court has carved out severalexceptions for grant of writs by invoking the doctrine of exhaustion ofstatutory remedies. It held that even if there existed adequatealternative statutory remedies, writ petition can be entertained, if theparty invoking the extraordinary jurisdiction, had demonstrated anyone or more of these – That there has been a breach of principles ofnatural justice or procedure required for the decision has not beenadopted, seeks enforcement of/complains of infringement offundamental rights, where the proceedings taken or orders passed arewholly without jurisdiction or ultra vires or the vires of the Act ischallenged or where the proceedings itself are an abuse of process oflaw.

The above being the law governing the field relating toentertaining of a writ petition against the order/s of a lower publicauthority despite availability of alternative remedies under the statute,it may be noticed whether the petitioner, in the facts andcircumstances, can be allowed to bypass the remedy of appealprovided to him against the impugned order and maintain this writpetition.

Admittedly, as against the order impugned in the writ petition,passed by the Controlling Authority under Section 7(4) of the Paymentof Gratuity Act, 1972, the petitioner has a remedy of appeal underSection 7(7) to the appropriate Government. The reasons, whichaccording to the petitioner, justify him to bypass the remedy of appealagainst the impugned order passed by the Controlling Authority andprefer the writ petition, are that the Controlling Authority for passing theimpugned order, which directed him to pay gratuity of Rs. 10,00,000/-to respondent Nos. 2 to 64, has merely relied on Ex. A3, which is an unproved document, and therefore, the order passed by the ControllingAuthority, on the face of it, is illegal and perverse and goes to the veryroot of the jurisdiction of the Controlling Authority, resulting in abuse ofprocess of law. He submitted that if the petitioner desires to preferstatutory appeal against the impugned order passed by the ControllingAuthority, he has to invariably deposit Rs.10,00,000/-, which isonerous and burdensome, and the impugned order passed by theControlling Authority, being a perverse order, and deposit of amountdirected to be paid by the Controlling Authority, being a pre-conditionfor preferring statutory appeal before the appropriate Government,would cause him palpable injustice. In support of this argument, asstated above, has relied on the judgment of the apex Court in State ofH.P. v. Gujarat Ambuja Cement Ltd.

In the said case, the apex Court, has considered the twin line ofcases in detail – one governing the entertaining of writ petitionsdespite existence of alternative remedy and the other refusing toentertain writ petitions because of availability of alternative remedy. The apex Court, while refusing to consider the plea raised by State ofHimachal Pradesh, that when there was alternative remedy available,the High Court should not have entertained the writ petition, hasreferred to its earlier decision in Ram and Shyam Co. v. State ofHaryana[[4]],wherein it was held that appeal is from “Ceasar toCeasar’s wife”, the existence of alternative remedy would be a mirageand an exercise in futility. In fact, relying on the said judgment, it heldas follows:

In the instant case, the writ petitioners had indicated the reasons as to whythey thought that the alternative remedy would not be efficacious. Though the HighCourt did not go into that plea relating to bias in detail, yet it felt that alternativeremedy would not be a bar to entertain the writ petition. Since the High Court haselaborately dealt with the question as to why the statutory remedy available was notefficacious, it would not be proper for this Court to consider the question again. Whenthe High Court had entertained a writ petition notwithstanding existence of analternative remedy this Court while dealing with the matter in an appeal should notpermit the question to be raised unless the High Court’s reasoning for entertaining thewrit petition is found to be palpably unsound and irrational.

The apex Court, did not in detail referred to reasons, whichweighed with the High Court in entertaining the writ petition, despiteavailability of alternative remedy, and in fact, it refused to consider thesaid question because the High Court had already considered thesame elaborately and entertained the writ petition. However, the respondents, who were the writ petitioners before the High Court, havetaken a stand, justifying their invoking the writ jurisdiction despiteavailability of alternative remedy, and it would be appropriate to noticethe stand taken by them, which reads:

… It was clearly indicated in the writ petitions as to why the availabilitystatutory remedies would have been an exercise in futility. It was clearly mentionedand substantiated by materials as to why the writ petitioners had become victims of apolitical vendetta. The political parties and persons who had let loose a smearcampaign against the writ petitioners were in power and the subordinate authoritieswould have been in no position to give justice to the writ petitioners contrary to theirdictates. The authorities recorded conclusions which clearly show bias andpreconceived notions. The conclusions were predetermined. In that background, thewrit petitioners were filed and were entertained…

From the above, it is clear that the respondents-writ petitionerswere victims of political vendetta, that the political parties and persons,who were inimical to them, were in power and that the subordinatewould not have been in a position to do justice contrary to theirdictates. Perhaps, considering this situation, the High Court of Punjaband Haryana, entertained the writ petition despite availability ofalternative remedy, as relegating them to alternative remedy would befutile. In such circumstances, the apex Court, had refused to considerthe question relating to availability of alternative remedy, inter aliastating that High Court can entertain writ petition where theproceedings itself are an abuse of process of law, something going tothe root of the jurisdiction, resulting in palpable injustice to the party.

But that is not the case on hand. The facts and circumstances,in the instant case are entirely different. In the instant case, thepetitioner, as stated above, has sought to bypass the remedy of appealand sought to invoke the jurisdiction of the Court, on the ground thatthe Controlling Authority has passed the impugned order, based onEx. A3, an unproved document and that for preferring appeal, he has todeposit the entire amount of Rs.10,00,000/- determined and awardedby the Controlling Authority to respondent Nos. 2 to 64.

May be, the Controlling Authority, has passed the impugnedorder, based on Ex. A1, alleged to be an unproved document, but thatby itself cannot be a ground for the petitioner to bypass the remedy ofappeal and maintain the writ petition. Whether Ex. A1 is a proved orunproved document, and whether the Controlling Authority wasunjustified in placing reliance on it, are questions, decisions on which,go to the root of the merit of the matter. The said questions cannot bedecided in a writ petition, for there is fundamental difference in the

scope of appeal and writ petition – in the former, the statutoryauthority/court is concerned with the merits of the decision underappeal, while in the latter, the Court is concerned with the legality ofthe matter. In an appeal, the question is “right or wrong”, while in writpetition, the question is “lawful or unlawful”. Therefore, mere relianceby the Controlling Authority on Ex. A1, rightly or wrongly, to base hisdecision, cannot be said to be abuse of process of law, going to theroot of the jurisdiction, resulting in palpable injustice to the petitioner,particularly when it is not the case of the petitioner that the ControllingAuthority, had no jurisdiction to deal with the matter/adjudicate theclaims made by respondent Nos. 2 to 64 and others. If according tothe petitioner, the Controlling Authority, has passed the impugnedorder, based on Ex. A3, an unproved document, the remedy of thepetitioner is to question the same on merits by preferring the remedy ofappeal available to him under law, and certainly, he cannot maintainthe writ petition.

The next contention raised by the petitioner is that if he isdirected to avail the remedy of appeal under Section 7(7) of theProvident Fund Act, against the impugned order, he has to deposit theentire amount of Rs.10,00,000/- determined and awarded by theControlling Authority to respondent Nos. 2 to 64, which is onerous, andtherefore, appeal remedy is not an effective remedy, and as such, hecan file writ petition. To consider this question, it is appropriate to referto the provisions of Section 7(7) of the Payment of Gratuity Act, 1972,which reads:

Any person aggrieved by an order under sub-section (4) may, within sixtydays from the date of the receipt of the order, prefer an appeal to the appropriateGovernment or such other authority as may be specified by the appropriateGovernment in this behalf:

Provided that the appropriate Government or the appellate authority, as thecase may be, may if it is satisfied that the appellant was prevented by sufficientcause from preferring the appeal within the said period of sixty days, extend the saidperiod by a further period of sixty days.

Provided further that no appeal by an employer shall be admitted unless atthe time of preferring the appeal, the appellant either produces a certificate of thecontrolling authority to the effect that the appellant has deposited with him an amountequal to the amount of gratuity required to be deposited under sub-section (4), ordeposits with the appellate authority such amount.

From the above, it is clear that any person aggrieved by anorder passed under sub-section (4) can prefer appeal to appropriateGovernment within sixty days, which can be extended by the appellateauthority by a further period of sixty days if he is satisfied by the cause show for the delay in preferring the appeal, but the same shall beadmitted only if a certificate is produced in token of having paid theentire amount as ordered to be paid under sub-section (4).

In fact, this Court considered the self-same question, as israised by the petitioner, involving deposit of the entire amount orderedby a lower authority, for preferring appeal, in M/s. Vissa Television Network Ltd. v. V.V. Ramana Kumar[[5]], which arose under theprovisions of the A.P. Shops and Establishments Act, 1988, andrefused to accede to the plea of the petitioner to file writ petitioninstead of availing the alternative remedy of appeal, on the ground, ashas been raised by the petitioner, holding as follows:

I am unable to accept this contention of the petitioner. Merely because thepetitioner for preferring the second appeal will be required to deposit the entire backwages, as order by the 2[nd] respondent, it does not mean that he is entitled to file thewrit petition assailing the impugned order, against which, remedy of second appeal isavailable to him under Section 48(3) of the Act. The proviso to Section 48(3) of theAct specifically requires the person preferring second appeal against the decision ofthe authority under sub-section (2), to deposit the back wages, order by the authority. The deposit of the back wages for preferring the second appeal being mandatory, thepetitioner to avoid deposit of the back wages, cannot be allowed to file writ petition bypassing the remedy of second appeal. Though the proviso to Section 48(3) of the Actspecifically requires the person preferring the second appeal to deposit the backwages, as ordered by the authority under sub-section (2), it does not speak ofwithdrawal of the said back wages by the workman. In such circumstances, it shouldbe considered whether the second appellate authority, in whom the power to hear anddecide the second appeal is vested, can restrain the workman from withdrawing theback wages to be deposited by the petitioner for preferring the second appeal.

In fact, this Court has considered the incidental power of theappellate authority, to pass orders protecting the interests of theparties, and held as follows:

Where an Act confers a jurisdiction, it impliedly also grants the power of doingall such acts, or employing such means as are essentially necessary to itsexecution. The power to hear and decide the appeal is a substantive power, withwhich power flows incidental power of taking actions, pending appeal, else the verypurpose of preferring the appeal would be frustrated. Therefore, it can be concludedthat the authority in whom the power of deciding the second appeal is vested, is alsovested with the power of granting stay of the operation of the decision sought to beappealed, which is essential for the proper exercise of the substantive power todecide the second appeal. But having regard to the fact that the proviso to Section48(3) of the Act, for preferring the second appeal, mandatorily requires deposit of backwages, as ordered by the authority, the second appellate authority, shall having regardto the incidental power vested in it, decide whether the back wages to be deposited bythe petitioner for preferring the second appeal, can be permitted to be withdrawn bythe workman or not, and more so when Section 48 of the Act, does not speak ofwithdrawal of the back wages by the workman.

Since the facts situation raised by the petitioner in this writ petition i.e. for preferring appeal, deposit of the entire amount asordered under the order to be appealed, is a pre-condition, is similar tothe facts situation that arose in M/s. Vissa Television Network Ltd. v.V.V. Ramana Kumar, I am of the considered opinion that the petitionercannot be allowed to bypass the remedy of appeal and file writpetition, and more so on the grounds raised by him. Hence, I deem it appropriate to dispose of the writ petition withthe following directions:

The petitioner is at liberty to avail the remedy of appealavailable to him against the impugned order under Section 7(7) of thePayment of Gratuity Act, 1972 before the appropriate Government.. Since the petitioner contends that the impugned order is an illegalorder, he is at liberty to file an application along with the appealrequesting the appellate authority to restrain respondent Nos. 2 to 64from withdrawing the amounts to be deposited by him, for preferringthe appeal. If any such application is filed, the appellate authority, inwhom the substantive power of hearing and deciding the appeal isvested, may in exercise of its incidental power to grant stay of the orderappealed, shall consider and pass appropriate orders thereon,restraining respondent Nos. 2 to 64 from withdrawing the amounts tobe deposited by the petitioner, pending disposal of the appeal,keeping in view the fact that in the event the monies to be deposited bythe petitioner, are allowed to be withdrawn, then the petitioner wouldbe left with no remedy to recover the same from respondent Nos. 2 to64 in the event the petitioner succeeds in the appeal.

Accordingly, the writ petition is disposed of. No costs.

Dated: 30[th] December, 2008.

_________________

N.V. RAMANA, J.

Note:

Mark LR copy.(B/o)

KSR

[1](2005) 6 SCC 499(2005) 6 SCC 499

[2]See para 14.14 of Law Commission Consultation Paper No. 126, AdministrativeLaw and Statutory Appeals (1993), pp. 18-19

[3]Administrative Law, Fifth Edition, P.P. Craig – pp. 84

[4](1985) 3 SCC 267 = AIR 1985 SC 1147(1985) 3 SCC 267 = AIR 1985 SC 1147

[5]2006 (6) ALD 4882006 (6) ALD 488