The Bombay High Court has clarified that mere credit of wages into an employee’s bank account, coupled with documented withdrawals, conclusively establishes payment - reversing an Industrial Court’s finding of unfair labour practice based on speculative assumptions about fictitious entries.
Background & Facts
The Dispute
The petitioners, Tapi Sahakari Patpedhi Ltd., were found guilty of unfair labour practices by the Member, Industrial Court, Thane, under Item Nos. 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU and PULP Act). The Industrial Court held that the petitioners failed to pay wages to respondents for the period from November 2019 to January 2020, despite showing salary credits in bank statements.
Key Facts
- The petitioners are a cooperative society engaged in agricultural credit and related services.
- The respondents were employees whose salaries were credited to their individual bank accounts during the period November 2019 to January 2020.
- Bank account extracts submitted by the petitioners showed:
- Credit entries corresponding to salary amounts for each month
- Subsequent debit entries indicating withdrawals by the respondents
- The Industrial Court dismissed these withdrawals as "paper entries" without requiring the petitioners to prove the employees were prevented from accessing funds.
- No evidence was presented that the employer retained control over the accounts after crediting salaries.
- The Industrial Court imposed liability under Clause 3 and Clause 4 of its order, directing payment of specified amounts and wages for the disputed period.
Procedural History
- 14.08.2023: Industrial Court, Thane, passed order holding petitioners guilty of unfair labour practices under MRTU and PULP Act.
- 14.08.2023: Order directed:
- Cessation of unfair labour practices
- Payment of Rs. 1,00,000/- under Clause 3
- Payment of unpaid wages for November 2019 to January 2020 under Clause 4
- 25.03.2026: Petitioners filed affidavits in all five writ petitions undertaking to deposit Rs. 1,00,000/- by 02.07.2026 and Rs. 74,740/- by 03.08.2026, along with interest.
- 17.04.2024: Writ Petitions Nos. 3509, 3520, 3555, 3564, and 3511 of 2024 filed before Bombay High Court challenging the Industrial Court’s order.
- 17.04.2026: Judgment delivered by Justice Amit Borkar.
Relief Sought
The petitioners sought:
- Quashing of the Industrial Court’s order dated 14.08.2023
- Setting aside of the direction to pay wages under Clause 4
- Confirmation of their undertaking to deposit Rs. 1,00,000/- and Rs. 74,740/- as directed under Clause 3
The Legal Issue
The central question was whether an employer can be held liable for non-payment of wages under the MRTU and PULP Act when bank statements clearly show both credit of salary and subsequent withdrawals by the employee, and no evidence exists that the employer controlled access to the account.
Arguments Presented
For the Petitioner
The petitioners contended that the Industrial Court erred in disregarding bank account extracts that demonstrated actual payment through credited amounts and corresponding withdrawals. They argued that the burden to prove that the withdrawals were not genuine or that the employees were prevented from accessing funds lay with the respondents, not the employer. Reliance was placed on principles of natural justice and the requirement for adjudicatory bodies to consider all material evidence.
For the Respondent
The respondents did not contest the authenticity of the bank statements. Their case before the Industrial Court rested on the unsupported assertion that the credited amounts were "notional" and that the withdrawals were not real. No documentary or testimonial evidence was adduced to substantiate this claim.
The Court's Analysis
The Court observed that the Industrial Court’s finding that salary credits were "paper entries" was not supported by any evidence. The bank account extracts, which formed part of the record, clearly showed both credit and debit entries corresponding to the respondents’ names. The Court emphasized that once salary is credited to an employee’s personal bank account, the employer ceases to have any control over the funds.
"Once there is a record of withdrawal, it becomes difficult to accept that the entries were merely notional or only for record purpose."
The Court further noted that the Industrial Court failed to address why the debit entries should be disbelieved, and made no inquiry into whether the account was under employer control after credit. The Court held that such assumptions, unsupported by evidence, render the adjudication legally unsustainable.
"Ignoring such entries without adequate explanation renders the finding unsafe. The adjudication therefore suffers from non-consideration of relevant material and reliance on assumptions."
The Court also reiterated that the burden of proving that wages were not actually paid lies on the party alleging non-payment. Since the respondents failed to discharge this burden, the Industrial Court’s conclusion under Clause 4 was legally untenable.
The Verdict
The petitioners succeeded in part. The Bombay High Court set aside the Industrial Court’s direction under Clause 4 to pay wages for November 2019 to January 2020, holding that the evidence of bank withdrawals conclusively established payment. The Court accepted the petitioners’ undertaking to deposit Rs. 1,00,000/- by 02.07.2026 and Rs. 74,740/- by 03.08.2026, along with interest as contemplated under Clause 3. Criminal proceedings for execution of the award are stayed until 11.08.2026, and the petitions shall be listed for compliance on 10.08.2026.
What This Means For Similar Cases
Bank Statements Are Conclusive Proof of Wage Payment
- Employers must retain and produce bank statements showing salary credits and employee withdrawals as primary evidence of payment
- Labour courts cannot dismiss such entries as "paper transactions" without concrete evidence of fraud or control
- The burden shifts to the employee to prove they were denied access to funds
Assumptions Cannot Replace Evidence in Labour Adjudication
- Industrial Courts must engage with documentary evidence, not speculate on its authenticity
- General assertions of "fictitious entries" without supporting proof are legally insufficient
- Failure to analyze bank records constitutes a violation of natural justice and renders orders liable to be set aside
