BY AD vs SHYAM S

Judgment

1. The present intra court appeal is directed against the judgment of the Single Bench whereby the challenge against show cause notice/order Ext.P9 dated 25.04.2011 and consequential revenue recovery proceedings Ext.P12 and P12(a) on various grounds has been accepted only on the ground that the Inspector who issued the show cause notice did not have the power of adjudication to raise the demand and initiate the steps of recovery.

2. Respondent-petitioner, as per the averments as

culled out from the writ petition, is a 100% export oriented unit providing service to its counter part in United States and for that, had employed qualified engineers, who do not according to the averments and submissions, fall within the definition of 'employees' as defined in Kerala Industrial Establishments National and Festival Holidays Act, 1958, WA NO. 100 OF 2023 4 (hereinafter called ‘Act 47 of 1958’). Vide Ext.P2 dated

14.03.2007 was given license under Section 58 of the Customs Act and permission under Section 65 of the Act to carry out manufacturing activities and other operations in relations to the goods in the warehouse subject to the condition mentioned therein in an area of 11,000 square feet. The quality management system of M/s.Poornam Infovision Pvt. Ltd. has been assessed and found complying with the requirements of ISO. An ISO certificate has been issued by Moody International, a Company, authorised to issue such certificate as per Ext.P3. Assistant Labour Officer, Ernakulam issued a notice dated 02.11.2010 for not complying with the various provisions of the following Acts; KS and CE Act and Rules, Minimum Wages Act and Rules, Kerala Industrial Establishments National and Festival Holidays Act, Maternity benefit Act and Rules, KS and CE Workers Welfare Fund Scheme. The aforesaid notice was replied vide Exts.P5 and P6.

3. On 21.03.2011 vide Ext.P7 a show cause notice WA NO. 100 OF 2023 5 was issued to the respondent/petitioner for violation of Kerala Shops and Commercial Establishment Act 1960 and Rules framed thereunder, Minimum Wages Act, 1948, Kerala Industrial Establishment National Festival Holidays Act and Rules (Emphasis supplied) on the basis of Inspection.

4. Respondent/petitioner is stated to have submitted a reply Ext.P8 dated 04.04.2011 requesting the Inspector to drop the proposal to prosecute. However, on inspection conducted in the establishment by the Inspector appointed, found that the employer as defined under Section 2(c) of Act of 47 of 1958 had not allowed four (4) national holidays and nine (9) festival holidays to the employees for the year 2010 as stipulated under Section 3 of the Act and vide Ext.P9, directed to pay double the rate of wages, amounting to Rs.48,72,678/- (Rupees forty eight lakhs seventy two thousand six hundred and seventy eight only) by giving six (6) days time and produce relevant records under the Act along with the receipts of payment on 04.05.2011 at 12.30 Noon, failing which, revenue proceedings as provided under WA NO. 100 OF 2023 6 sub section 4 of Section 5 of the 1958 Act would be initiated. Along with the aforementioned show cause notice, Annexure-1 was attached giving the name of the employees. First six employees were of the core team and remaining were of operating staff, graphic designers, system administrators and kitchen staff.

5. The aforementioned show cause notice was duly replied vide Ext.P10 dated 03.05.2011 for dropping the charges on the ground that they are not industrial and commercial establishment as defined under the provisions of Act of 47 of 1958 Act being an export oriented unit and service provider under the control of the Central Government as provided under Section 10 of the Act.

6. However, the Inspector did not adjudicate the reply or it is also not clear from the reply that the respondents/petitioners submitted the detailed documents to belie the claim of the Inspector and resulted into a revenue recovery proceedings dated 26.09.2012 Ext.P13. It is in that background, a cause of action accrued in favour of the WA NO. 100 OF 2023 7 respondent/petitioner to approach this Court with the following prayers: “A. Call for the records relating to Exts.P4 to P13 from the respondents; B. Quash Exts.P4, P7, P9, P12 and P12(A) by the issue of a writ of certiorari or other appropriate writ direction or order; C. Issue a writ of mandamus commanding the respondents to refrain from initiating action against the Company under the Act; AND D. Such other reliefs which in the circumstances of this case, this Honourable Court deems just and proper.”

7. Appellant/Respondent, State contested the aforementioned claim on the premise that the 3rd respondent Inspector as per the provisions of Section 7C of the Act has ample powers and jurisdiction to seek the implementation and achieve the purpose of the Act which would also include non- compliance of the provisions of the Act. In Paragraph 5 of the counter affidavit, it was categorically submitted that no final order was passed on Ext.P9.

8. Before the learned Single Judge, contention on WA NO. 100 OF 2023 8 behalf of the respondent/petitioner was confined only to lack of jurisdiction of the Inspector defined under the Act to take a call on the adjudication process for non-compliance of the provisions of the Act.

9. Learned Single judge by noticing the rival contentions on the point confined, as per the submissions, held that in the absence of any adjudicative forum, Inspector would not be having a power to adjudicate the issue for the purpose of non-payment of the wages to the employees who had worked on the four (4) national holidays and nine (9) festival holidays. It is in that background, the State is in intra court appeal.

10. Learned Government Pleader appearing on behalf of the Appellant in support of the memorandum of appeal has raised the following submissions: By referring to the statement as well as definitions of 'industrial establishment' defined under Section 2(e) and wages under Section2(h), much less Section 3 and provisions of Section 7, submitted that it is the only Inspector who has WA NO. 100 OF 2023 9 been defined under Section 6 by way of a notification in the Gazette to exercise powers necessary for carrying out the purpose of the Act. For achieving the purpose of the 1958 Act, he is enjoined upon an obligation and duty to inspect the establishments and find whether there has been compliance of various provisions of the Act including Act of 47 of 1958. The notices, as mentioned above, were issued for non- compliance of the various provisions of Act but controversy for the time being is only confined to the applicability of the Act, which though was given up at the time of the argument.

11. Respondent-petitioner failed to place on record any material ie., the receipts of the payment to the employees who discharged the duties on national and festival holidays or whether it be not an establishment or exempted unit as defined under Section 10 of the Act, for, Sub section 4 of Section 5 of the Act empowers the Inspector to seek the recovery of the amount due from an establishment by initiating steps under the revenue recovery Act. The provisions of the Act are clear and unambiguous. WA NO. 100 OF 2023 10 There was no requirements for the Single Bench to take the assistance of various case laws to form an opinion that there was no such adjudicative forum; neither any direction has been issued to the State to establish such adjudicative forum. No doubt, Ext.P9 was only a show cause notice and six (6) days’ time was given to the petitioner to supply the documents but no such documents were supplied. Inspector, in the absence of any specific order, was remiss in issuing the recovery notice Ext.P13.

12. We have heard the learned counsel for the parties and appraised the paper book.

13. Before assigning the reasons, we would like to read the relevant portion of the judgment under challenge whereby the arguments before the Single Bench were only confined to the jurisdictional powers of the enforcement but not with regard to the applicability of the Act: “14. Since the learned Senior Counsel for the petitioner confined his submissions to the question of jurisdiction or authority of the third respondent to issue Ext.P9 and the WA NO. 100 OF 2023 11 validity of the revenue recovery proceedings, the question of applicability of the Act to the petitioners' establishment is not being considered, and the said question is left open.”

14. We are of the view that, the jurisdiction of the Inspector could not have been challenged in the absence of applicability or non-applicability of the Act; both are correlated and cannot be dissected for the purpose of adjudication. Section 2(e) and (h) of the Act of 47 of 1958 defines establishment and wages. They are extracted hereinbelow: Section 2(e) “industrial establishment” means,- (i) any establishment, industrial, commercial or otherwise, where twenty or more persons are employed, or were employed on any day of the preceding twelve months and includes- (a) factory as defined in the Factories Act, 1948 (Central Act 63 of 1948); and (b) a plantation; (ii) any other establishment which the Government may, by notification in the Gazette, declare to be an industrial establishment for the purposes of this Act; Section 2(h) “wages” means all remuneration capable of being expressed in terms of money, which would, if the WA NO. 100 OF 2023 12 terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of the work done by him in such employment, and includes,- (i) such allowances, (including dearness allowance) as the employee is for the time being entitled to; (ii) the value of any house accommodation, of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles; but does not include- (a) any bonus; (b) any contribution paid or payable by the employer to any pension fund or provident fund, or for the benefit of the employee under any law for the time being in force; the service; (c) any gratuity payable on the termination of (d) any sum paid to the employee to defray special expenses entailed on him by the nature of his employment; (e) any traveling concession. “

15. Section 3 entitles an employee, in each calendar year of a holiday of one whole day on 26th January, 15th August, 01st May and 02nd October and nine other holidays and in case he is made to work, double the wages of those particular days. Keeping in view that background, state WA NO. 100 OF 2023 13 legislature framed the aforementioned Act. Section 6 defines the Inspector and Section 7 describes the powers of the Inspector. The same reads as under: “6. Inspectors.- (1) The government may, by notification in the Gazette, appoint such persons or such class or persons as they think fit to be inspectors, for the purposes of this Act for such local limits as the Government may specify. (2) Every Inspector shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code (Central Act XLV of 1860).

7. Powers of Inspectors .-Subject to any rules made by the Government in this behalf, an Inspector may, within the local limits for which he is appointed,- (a) enter, at all reasonable times and with such assistants, if any who are persons in the service of the Government or of any local authority as he thinks fit, to take with him, any place which is or which he has reason to believe is, an industrial establishment; (b) make such, examination of the premises and of any prescribed registers, records and notices and take on the spot or otherwise, the evidence of such person as he may deem necessary for carrying out the purposes of this Act. (c) exercise such other powers as may be necessary for carrying out the purposes of this Act: Provided that no one shall be required under this section to answer any question or give any evidence tending to incriminate himself. “ WA NO. 100 OF 2023 14

16. On perusal of the aforementioned Section, Government has, except any other person by notification, appointed only Inspectors for the purpose of this Act and by virtue of provisions of sub-section C of Section 7, empowered him to take any action necessary for carrying out the purpose of this Act. Vide SRO No.1118/1998, a notification of the Inspector to exercise jurisdiction under Section 6(1) of the Act was published and against serial number 79, power has been entrusted to an Assistant Labour Officer Grade-II, first circle, Ernakulam. The same reads as under: 79 Assistant Labour Ernakulam The following areas of Cochin Officer, Grade II, 1st Corporation, the Southern side Circle, Ernakulam Civil Station Chembumukku to Madhava Pharmacy junction, Eastern side of Mahathma Gandhi Road from Madhava Pharmacy Junction to Thevara Bridge of Corporation, Tripunithura Municipality and the Panchayats of Thirkkakara, Kumbalam, Maradu, Thiruvankulam, Mulamthuruthy, Amballoor, Udayamperoor, Chottanikkara of Kanayannur Taluk WA NO. 100 OF 2023 15

17. The argument of the learned Senior Counsel that all the notices except one notice were issued by the Assistant Labour Officer and not by the Inspector would not in view of the notification aforementioned have any substance or legs to stand thus is rejected.

18. It was an obligation and duty on behalf of the respondents/petitioners to place on record material in support of reply Ext.P10 vis-à-vis the non-applicability of the Act as well as whether the employees would be falling within the definition of provisions of the Act. Ext.P10 does not disclose any attachment of the enclosure. If that be so, Inspector/Assistant Labour Officer had derelicted in not passing a detailed order in response to Ext.P10 after having sent Ext.P9 show cause notice for payment of the amount or by giving an opportunity of six (6) days and in the absence of any such adjudication, could not have taken steps for recovery as indicated in Ext.P13. The Rules framed under the Act also do not specify any adjudicative forum. The law with regard to the interpretation of the Act is that when the WA NO. 100 OF 2023 16 language and the words are clear and unambiguous, the court should not take the assistance of any other Acts to form a different opinion. On perusal of the definition of the 'Inspectors' defined under Section 6 and the powers under 7(c), we hold that the Inspector has the power to take any action necessary for the purpose of the Act which would also include the enforcement/non-compliance of the provisions by any of the establishment or the employees except the exempted ones, falling under Section 10.

19. As an upshot of our findings, we set aside the judgment of the Single Bench with regard to the findings regarding the powers of the Inspector but uphold the findings with regard to the quashing of recovery notice as there was no such adjudication on the show cause notice and the reply Ext.P10. We direct the competent Inspector to take a call on the show cause notice Ext.P9 or may send additional show cause notice with all relevant material. In case fresh show cause notice is issued, the respondent/petitioner would be given a reasonable time to rebut the same along with the WA NO. 100 OF 2023 17 material and thereafter shall take a call after affording an opportunity of hearing. Let this exercise be undertaken within a period of three months from the date of receipt of certified copy of this judgment. Writ appeal stands allowed. Sd/- AMIT RAWAL JUDGE Sd/- C.S. SUDHA JUDGE