M/s AM Associate through Amin Jan VS Majeed Hassan etc

ORDER SHEET

IN THE ISLAMABAD HIGH COURT, ISLAMABAD

JUDICIAL DEPARTMENT

W.P.No.279 of 2020 M/s AM Associates through Amin Jan Versus Majeed Hassan and another S. No. of order Date of order/ Order with signature of Judge and that of parties or counsel / proceedings Proceedings where necessary. 07.03.2022 M/s Salah-ud-Din and Ch. Usama Tariq, Advocates for the petitioner, Malik Mahmood Qureshi, Advocate for respondent No.1.

Through the instant writ petition, the petitioner, M/s AM Associates, impugns the order dated 26.12.2019 passed by the Authority under the Payment of Wages Act, 1936 (“the 1936 Act”) whereby the application filed by respondent No.1 (Majeed Hassan) for the payment of wages amounting to Rs.281,469/- was allowed to the extent of Rs.247,583/-. Furthermore, the petitioner was directed to pay as compensation an amount of Rs.2,475,830/- being ten times the amount of respondent No.1’s outstanding salary.

2.At the very outset, learned counsel for the petitioner submitted that he is under instructions to state that as a gesture of goodwill, the petitioner is ready to pay Rs.247,583/- which had been determined by the Authority as respondent No.1’s outstanding salary but the petitioner has issued with the decision of the Authority to award compensation ten times the amount of respondent No.1’s outstanding salary. He submitted that although Section 15(3) of the 1936 Act empowers the Authority to award compensation to an unpaid worker as the Authority may think fit not exceeding ten times the amount deducted while directing the employer to refund the deducted amount but the discretion to award compensation has to be structured and based on evidence brought on the

record; that respondent No.1 was employed against the post of Project Manager of Khanpur Crush Plant on the Hazara Motorway with the responsibility of supervising the entire labour; that respondent No.1 had been entrusted with the responsibility to protect the petitioner’s financial interests; that in 2018, several complaints of embezzlement had been received against respondent No.1; that after an internal inquiry was conducted, respondent No.1 was stopped on 20.04.2018 to stop working; that in the inquiry report dated 15.05.2018, respondent No.1 was found guilty of corruption and having caused a loss of Rs.862,843/- to the petitioner; that respondent No.1’s outstanding salary at that time was Rs.247,583/- which was adjusted against the loss caused to the petitioner and the remaining amount of Rs.615,260/- was promised to be paid by respondent No.1; that on 21.05.2018, respondent No.1 was terminated from service; that in the complaint before the Authority, respondent No.1 claimed an amount of Rs.281,469/-; that the Authority awarded Rs.247,583/- in respondent No.1’s favour as well as compensation ten times of the said amount; that the Authority had no jurisdiction to take cognizance of respondent No.1’s complaint since he was employed in the Province of Khyber Pakhtunkhwa which is beyond the territorial jurisdiction of the Authority; and that the territorial jurisdiction of the Authority is confined to the Islamabad Capital Territory. Learned counsel for the petitioner prayed for the writ petition to be allowed in terms of the relief sought therein.

3.On the other hand, learned counsel for respondent No.1 submitted that respondent No.1’s monthly salary was Rs.110,000/-; that after

respondent No.1 was relieved from his duties, a letter of experience dated 31.05.2018 was given to him by the petitioner; that in the said letter, nothing adverse was mentioned against respondent No.1; that the employment agreement between the petitioner and respondent No.1 was executed at the petitioner’s head office situated at House No.456, Street No.28, E-11/4, Islamabad, and therefore, the Authority had the territorial jurisdiction to decide respondent No.1’s complaint; and that Section 15(3) of the 1936 Act clearly empowers the Authority to grant as compensation ten times of the amount deducted from the worker’s dues. Learned counsel for respondent No.1 prayed for the writ petition to be dismissed. In making his submissions, learned counsel for respondent No.1 placed reliance on the law laid down in the case of Manager, Printing Corporation of Pakistan Press Vs. Muhammad Tahir (2014 PLC

4.I have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance.

5.It is an admitted position that respondent No.1 was employed as a Project Manager at the petitioner’s stone crushing plant at Khanpur between 17.04.2017 and 21.05.2018. After respondent No.1’s services were terminated by the petitioner, he was issued an experience certificate on 31.05.2018 in which no allegation of embezzlement or corruption was made against him.

6.The position taken by the petitioner was that since the internal inquiry conducted against respondent No.1 culminated in a report according to which the acts and omissions of respondent No.1 had caused a loss of Rs.862,843/- to the

petitioner, the latter deducted Rs.247,583/- from respondent No.1’s unpaid dues and terminated him from service.

7.Vide impugned order dated 26.12.2019, the Authority has directed the petitioner to pay his outstanding salary amounting to Rs.247,583/-. The petitioner is willing to pay the said amount but questions the Authority’s decision to award compensation amounting to Rs.2,475,830/- which is ten times of respondent No.1’s outstanding salary. Section 15(3) of the 1936 Act provides inter alia that where contrary to the provisions of the said Act any deduction has been made from the wages of an employed person or any payment of wages or of any dues relating to provident fund or gratuity payable under the law has been delayed, such person may apply to the Authority for a direction under Section 15(3). Section 15(3) of the 1936 Act inter alia empowers the Authority, after conducting an inquiry, to direct the employer to refund the amount deducted from the employed person’s wages or to direct the payment of delayed wages together with the payment of such compensation as the Authority may think fit not exceeding ten times the amount deducted and not exceeding ten rupee in case of the delayed wages.

8.Respondent No.1 placed reliance on the judgment in the case of Manager, Printing Corporation of Pakistan Press Vs. Muhammad Tahir (supra) wherein the award of compensation which was not even equal to the amount held by the Authority be payable to the employed person was upheld. In the said case, the amount withheld by the employer was determined to be Rs.307,154/-, whereas the compensation awarded by the Authority was only Rs.75,000/-.

9.Learned counsel for respondent No.1 did not come up with any precedent whereby the High Court had upheld the award of compensation in excess of the amount determined as unlawfully deducted from the employed person’s salary. Indeed Section 15(3) of the 1936 Act gives the Authority the power to award compensation up to ten times the amount determined as deducted from the employed person’s salary but it is well settled that the exercise of discretion must not be arbitrary, vague or fanciful but must be legal and regular. Even where there is no guiding rules providing for the exercise of discretion, it cannot be unbridled or unfettered but the same must be exercised reasonably, fairly, and justly without giving any cause of complaint to any person who may be interested in the exercise of such discretion. A reference in this regard may be made to the law laid down in the case of M/s Gadoon Textile Mills Vs. WAPDA (1997 SCMR 641). Whenever wide-worded powers conferring discretion are found in a statute, there remains the need and desirability to structure the discretion. Discretionary decisions should be made according to rationale basis.

10.In the impugned order dated 26.12.2019, the Authority has given no reasons whatsoever for awarding compensation ten times the amount determined as respondent No.1’s outstanding salary. To this extent the impugned order is in violation of Section 24-A of the General Clauses Act, 1897. No reference has been made to any evidence that may have been recorded by the Authority for coming to the conclusion that the petitioner should be burdened with compensation ten times the amount determined as respondent No.1’s outstanding salary. Therefore, the

impugned order, to the extent of burdening the petitioner with an amount of Rs.2,475,830/- as compensation payable to respondent No.1 deserves setting-aside.

11.Since the petitioner has agreed to pay the amount determined by the Authority as respondent No.1’s outstanding salary, the same may be paid to respondent No.1. This petition is allowed to the extent of the award of the compensation amounting to Rs.2,475,830/- being ten times to the amount determined as respondent No.1’s outstanding salary. The matter is remanded to the Authority with the direction to determine the compensation, if any, payable by the petitioner to respondent No.1 strictly in accordance with the law and exercise of discretion in a rationale and reasonable manner. Before proceeding with the merits of the case, the Authority shall determine whether it has the territorial jurisdiction to decide respondent No.1’s complaint bearing in mind that Section 15(1) of the 1936 Act gives jurisdiction to the Authority to hear and decide claims with respect to “any specified area” of persons employed or paid in that area.

(MIANGUL HASSAN AURANGZEB)

JUDGE

Sultan*