### Statutory Authority Cannot Impose Penalties Exceeding Section 15(3) Limits Under Payment of Wages Act

In brief

The question

1. Whether the Assistant Labour Commissioner-cum-Authority under the Act of 1936 was justified in imposing a penalty of ten times the delayed wages under the provisions of the Payment of Wages Act.

The court held

The Court held that the ALC's imposition of ten times the delayed wages as a penalty was without jurisdiction and contrary to Section 15(3).

It also directed

The Court modified the impugned order dated 15.07.2022, reducing the total payable amount to ₹8,32,533/- (comprising ₹8,29,533/- in delayed wages and the statutory maximum compensation of ₹3,000/-).

01Facts

Monowar Hussain, an unarmed security guard at the erstwhile WIMCO Ltd. (now managed by ITC Ltd.), filed a claim for delayed wages.

On 15.07.2022, the Assistant Labour Commissioner (ALC)-cum-Authority under the Payment of Wages Act, 1936, Dhubri, passed an order determining delayed wages to the tune of ₹8,29,533/- for the period 01.01.2016 to 31.05.2022.

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Crucially, the ALC also imposed a penalty of ten times the delayed wages, amounting to ₹82,95,330/-.

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Hussain filed WP(C)/4965/2023 seeking enforcement of this order, while ITC Ltd. filed WP(C)/5398/2023 challenging the ALC’s jurisdiction and authority to impose such a penalty.

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02Issues

i.1. Whether the Assistant Labour Commissioner-cum-Authority under the Act of 1936 was justified in imposing a penalty of ten times the delayed wages under the provisions of the Payment of Wages Act.

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ii.2. Whether the authority to try offenses and impose penalties under Section 20 of the Act resides with the ALC or the Court.

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03Law Applied

Section 15(3) of the Payment of Wages Act, 1936, which differentiates between "deduction of wages" (where compensation up to ten times is permitted) and "delayed payment of wages" (where compensation is capped between ₹1,500 and ₹3,000).

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Section 20 of the Act, which stipulates that the power to try offenses and impose statutory penalties is conferred upon a Court, not the ALC acting as the Authority under Section 15.

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The principle from Godrej Sara Lee regarding the non-remittal of matters to statutory authorities when there is a clear misapplication of law.

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Provisions in the judgment · 3

Payment Of Wages Act, 1936 Section 3Section 15Section 20

04Reasoning

The Court observed that the ALC confused the two distinct categories of claims under Section 15(3). While ten times the amount can be awarded as compensation for unauthorized deductions, the statute strictly limits compensation for delayed wages to a maximum of ₹3,000.

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The Court reasoned that the ALC’s imposition of a ₹82,95,330/- "penalty" was a jurisdictional error because the power to punish offenses under Section 20 lies with the judiciary, not the ALC acting as an administrative authority.

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Finding that the ALC wrongly applied the provisions of Section 15, the Court determined that the order required modification rather than a remand to the lower authority.

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