Personal liability of directors for wage claims is unavailable unless the statute expressly fastens such liability on them.

Under the Payment of Wages Act, 1936, liability to pay wages is cast on the employer and, where the Act so provides, on the manager or other person made responsible under the statute. Directors are not personally liable merely because they control the company, and their personal assets cannot be proceeded against unless the Act expressly or by necessary implication fastens such liability on them. A liability concept from the Factories Act could not be imported to enlarge responsibility under the Payment of Wages Act. The statutory obligation therefore remained confined to the company and the persons specifically named by the Act.

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Issues: Whether the Directors of a company can be treated as personally liable for payment of wages under the Payment of Wages Act, 1936, and whether recovery can be fastened on their personal assets in the absence of a statutory provision creating such liability.

Analysis: The liability to pay wages under section 3 of the Payment of Wages Act, 1936 is cast on the employer, and, in the case of a factory or industrial establishment as amended in Madhya Pradesh, on the person named as manager or the person otherwise responsible together with the employer. Section 15 authorises claims against the employer or other person responsible for payment of wages under section 3. The Act does not create a general statutory liability against directors merely because they control the company. The reasoning in the earlier factories case dealing with the concept of occupier could not be imported, because the Payment of Wages Act contains no corresponding concept. Nor could personal liability be inferred by invoking legislation by incorporation or by reference, since the amendment to the Payment of Wages Act did not incorporate the occupier concept from the Factories Act. The corporate personality of the company remained distinct, and in the absence of statutory fastening of liability on directors, their personal assets could not be proceeded against.

Conclusion: The Directors were not personally liable for payment of wages under the Act, and recovery could not be made against their personal properties merely on that basis.

Final Conclusion: The appeals of the Directors succeeded, and the contrary view of the High Court was set aside; the statutory liability remained confined to the company and the persons specifically made responsible by the Act.

Ratio Decidendi: Personal liability of directors cannot be imposed for wage claims unless the governing statute expressly or by necessary implication fastens such liability on them; a concept drawn from a different statute cannot be imported to enlarge liability under the Payment of Wages Act.

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