Allahabad High Court: Payment of Wages Act authority lacked jurisdiction over cooperative society employee’s claim governed by special co-operative law

Respondent No. 2 was employed by the petitioner cooperative society, initially as a salesman and later as an accountant; he also officiated as its secretary for a period.

He filed P.W. Case No. 27 of 1995 under Section 15(2) of the Payment of Wages Act, 1936.

The Prescribed Authority directed payment of ₹4,09,547.68 on 28 August 2014, and, on respondent No. 2’s appeal under Section 17, the Additional District Judge enhanced the amount to ₹10,23,869.20 with 6% interest for delayed payment.

The Society challenged both orders, disputing the authority’s jurisdiction, the effect of an alleged transfer of cases, the applicability of the Government Order underlying the claim, and the amount and supporting documents.

It also relied on a recall application filed after the original order, which remained undecided.

1. Whether the Prescribed Authority had jurisdiction under the Payment of Wages Act, 1936 to adjudicate the claim against an employee of a cooperative society governed by the U.P. Cooperative Societies Act, 1965.

2. Whether the alleged transfer of jurisdiction and the pending recall application raised material objections requiring consideration before the orders could stand.

3. Whether the appellate order enhancing the monetary liability could be sustained despite the jurisdictional objections and the disputed basis of the claim.

Section 15 of the Payment of Wages Act, 1936 empowers the prescribed authority to adjudicate specified claims concerning deductions from or delay in payment of wages, while Section 17 provides an appellate remedy against orders under Section 15.

The Court applied the principle in Ghaziabad Zila Sahkari Bank Ltd. v. Additional Labour Commissioner, (2007) 11 SCC 756, that the U.P. Cooperative Societies Act, 1965 is a special enactment governing employment in cooperative societies and prevails over general labour legislation in the field it covers.

Registration under the U.P. Dookan Aur Vanijya Adhishthan Adhiniyam, 1962 does not, by itself, establish that the Payment of Wages Act authority has jurisdiction over a particular employment dispute.

Subject-matter jurisdiction cannot be conferred by consent, waiver, or non-participation, and the alternative-remedy rule is discretionary where a substantial jurisdictional question is raised.

The Court treated the claim as arising from employment in a cooperative society governed by the special cooperative-societies regime, and held that the Society’s registration under shops and commercial establishments legislation did not alone establish the Prescribed Authority’s jurisdiction under the Payment of Wages Act.

The Society’s initial appearance or later non-participation could not cure a lack of subject-matter jurisdiction.

Further, the alleged transfer of the case, the pending recall application, the applicability of the Government Order, and the evidentiary basis for the claimed arrears were material matters that required consideration; the appellate authority had also substantially enhanced the liability without resolving the foundational jurisdictional objection.

The Court therefore found the original order unsustainable and the appellate order unable to stand independently.

The Court quashed the Prescribed Authority’s order dated 28 August 2014 and the appellate order dated 16 January 2016, annulling the direction to pay ₹10,23,869.20 and the consequential interest direction.

Because the original order was quashed, the Society’s recall application was treated as infructuous.

The Court clarified that it had not determined whether respondent No. 2 had a substantive claim and left him at liberty to pursue any surviving claim before the competent forum, subject to limitation, maintainability, and other statutory objections.