Unfair Labour Practice – Non-payment of Wages – Bank Account Entries – Burden of Proof Short Summary
The Bombay High Court held that salary-credit entries appearing in an employee’s bank account cannot be treated as mere paper entries without supporting evidence. Where the bank statement also reflects subsequent withdrawals, such entries prima facie establish that the wages were available to and utilised by the employee. The Court ruled that the burden of proving that the wage entries were fictitious, or that the employee was prevented from withdrawing the credited amount, lies on the party making that allegation. Since the Industrial Court ignored the withdrawal entries and relied on assumptions, its finding of non-payment of wages and the consequential liability could not be sustained. The petitions were disposed of after accepting the petitioners’ undertaking to comply with the remaining monetary directions.
Once wages are credited to an employee’s bank account, the employer ordinarily loses control over the money. Bank debit entries showing withdrawals cannot be disregarded without proper reasons. A finding of non-payment based only on assumptions and without considering relevant banking records is legally unsustainable.
The petitioners challenged the judgment dated 14 August 2023 passed by the Industrial Court, Thane. The Industrial Court had held that the petitioners had committed unfair labour practices under Items 9 and 10 of Schedule IV of the MRTU and PULP Act and directed them to discontinue such practices. The Industrial Court had also directed the petitioners to pay the amounts mentioned in Clause 3 of its order and wages for the relevant period under Clause 4. During the proceedings before the High Court, the petitioners filed affidavits undertaking to deposit the amounts directed by the Industrial Court. They agreed to deposit ₹1,00,000 by 2 July 2026 and the balance amount of ₹74,740 by 3 August 2026. The petitioners were also directed to deposit the interest payable under Clause 3 by 3 August 2026. With regard to the wages claimed under Clause 4, the High Court found that the Industrial Court had not properly examined the evidence. The Industrial Court had assumed that the salary credits appearing in the employees’ bank accounts between November 2019 and January 2020 were only paper entries. However, the bank statements showed not only salary credits but also subsequent withdrawals. The Industrial Court did not properly explain why these withdrawals should be ignored or disbelieved. The Court held that the burden of proving that the salary entries were fictitious, or that the employees were prevented from withdrawing the money, rested on the party making that allegation. There was no material to show that the employer continued to control the employees’ bank accounts after the salary was credited. Normally, once salary is deposited into an employee’s bank account, the employer loses control over that amount. The Court further observed that debit entries showing withdrawals ordinarily indicate that the money was available to and used by the account holder. Ignoring such entries without adequate reasons made the Industrial Court’s finding unsafe. Therefore, the finding that wages had not been paid was based on assumptions and failure to properly consider the relevant evidence. The liability imposed under Clause 4 could not be sustained. Since the petitioners had undertaken to comply with Clause 3 of the Industrial Court’s order, their affidavits dated 25 March 2026 were accepted as undertakings to the High Court. Accordingly, no further adjudication was required and the petitions were disposed of. The criminal proceedings initiated for execution of the Industrial Court’s award were stayed up to 11 August 2026. The petitions were directed to be listed on 10 August 2026 under the caption “Compliance” for monitoring compliance with the undertaking.