Allahabad High Court
The Fertilizer Corp. Of India Ltd. ... vs A.D.J. Gorakhpur & Others on 14 July, 2017
Author: Sangeeta Chandra
Bench: Sangeeta Chandra
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR RESERVED ON 09.03.2017 DELIVERED ON 14.07.2017 Case :- WRIT - C No. - 6291 of 2002 Petitioner :- The Fertilizer Corp. Of India Ltd. Gorakhpur Respondent :- A.D.J. Gorakhpur & Others Counsel for Petitioner :- R.S. Misra Counsel for Respondent :- C.S.C., Arvind Kumar Hon'ble Mrs. Sangeeta Chandra,J.
The above mentioned writ petition has been filed by the petitioner which is a Central Government Company against the order dated 06.03.1991 passed by the Prescribed Authority under the Payment of Wages Act i.e. the Assistant Labour Commissioner, Gorakhpur Region, Gorakhpur and the judgment dated 08.10.2001 passed by the Additional District Judge, Court No. 9, Gorakhpur, the Appellate Authority, under Section 15 of the Payment of Wages Act.
2. Heard Mr. Arun Kumar holding brief of Mr. R.S. Mishra, learned counsel for the petitioner and Mr. Komal Mehrotra holding brief of Mr. Arvind Kumar, learned counsel for the private respondent Nos. 4 to 22 and the learned Standing Counsel for State-Respondents.
3. The facts in brief, relevant for the controversy, are that the respondent Nos. 4 to 22 filed nineteen separate applications under Section 15(2) of the Payment of Wages Act, 1936 (hereinafter referred to as the Act, 1936) before the Prescribed Authority under the Payment of Wages Act, the Assistant Labour Commissioner, Gorakhpur Region, Gorakhpur claiming a total sum of Rs.400/- as bonus for the year 1984-1985 and ten times of the said amount as compensation. Each of the nineteen respondents in their objections claimed the same amount of the bonus as compensation for the same period against the petitioner and the respondent No. 3, Dubar, who is a registered contractor of the petitioner. These objections were filed making almost identical allegations that the respondent Nos. 4 to 22 had been working as Mazdoor in the Fertilizer factory of the petitioner for several years under the contractor Ram Dubar. They were entitled to bonus for the year 1984-1985 of Rs.400/-. But it was illegally deducted from their wages by the contractor. In terms of the provisions of the Act not only were the respondent Nos. 4 to 22 entitled for illegally deducted bonus but also to ten times of the said amount as compensation.
4. The petitioners filed their written statement in all nineteen cases i.e. in Case Nos. 98 to 116 of 1996 taking almost identical objections on the applications of the respondent Nos. 4 to 22. It was alleged that the respondent Nos. 4 to 22 were not employed by the petitioner but by the contractor Ram Dubar and in terms of the Contract Labour Regulation and Abolition Act, 1970 (hereinafter referred to as Act, 1970), the contractor was liable to make payments to his employees and the petitioner was only to ensure that the contractor paid the wages to his employees/workmen regularly without deductions. Since the respondent Nos. 4 to 22 were not regular employees of the petitioner Establishment, they were not entitled to payment of any bonus by them.
5. The respondent No. 3, Ram Dubar, the contractor, in his written statement admitted that he was registered as a contractor under the Act, 1970 had worked as such in the petitioner's Establishment under the control of the contractor. But he denied that the respondent Nos. 4 to 22 were engaged by him and alleged that no relationship of employer and employee existed between the Respondent No. 3 and Respondent Nos. 4 to 22.
6. In their rejoinder to the written statement of the petitioner and the contractor, the respondent Nos. 4 to 22 alleged that they had been working in the factory of the petitioner as regular employees and that they were entitled to all benefits/remunerations as was paid to regular employees; since the petitioner had given 8.33% bonus amounting to Rs.400/- to its regular employees under the Payment of Bonus Act, for the year 1984-1985 they were also entitled for the payment of same benefit. The respondent Nos. 4 to 22 claimed that the petitioner was the principal employer although they had been engaged by the contractor.
7. On an application being made by the petitioner all nineteen cases were clubbed together and heard by the Respondent No. 2 and he rejected the preliminary objection regarding the maintainability of Application under Section 15(2) of the Payment of Wages Act and framed four issues to be decided, namely, (i) Whether there was a relationship of employer and employee between the applicants and the respondents and if so, to what effect?; (ii) Whether the applicants are entitled to the mandatory claim made by them?; (iii) Whether the respondent No. 2 (Shri Dubar) comes within the definition of 'Establishment' and whether the Payment of Bonus Act is applicable to him and if so, to what effect?; and (iv) Whether the application made by the workers involves complicated questions of fact and law rendering it outside the jurisdiction of the authority under the Payment of Wages Act and if so, to what effect?
8. Documentary evidence as well as oral evidence produced on behalf of all the parties was considered by the Prescribed Authority under the Payment of Wages Act and it came to the conclusion that the petitioner was taking work, which should be performed by regular employees, from these applicants who were engaged through the contractor, only to deprive them of beneficial provisions of various Labour Laws. Gate Passes were issued to the Respondent Nos. 4 to 22 through the contractor but Gate Passes for the relevant period i.e. 1984-1985 had been snatched away and Gate Passes of 1986 alone could be produced. The case set up by the applicants was accepted that although the contractor had engaged them and was instrumental in getting the Gate Passes issued to them, the wages were distributed through officials of the petitioner Establishment. Shri Dubar, contractor, admitted that he was a registered licensee under the Act of 1970 and he used to do contractual work in the petitioner's Establishment for each year. The contract lasted for about 3-4 months.
9. The petitioner-Establishment produced Shri Harey Ram Singh as DW-1 who was Operator Grade-I in the petitioner's factory and he stated on oath that he had never distributed the wages directly to the applicants nor did he issue Gate Passes to them. Shri Dubar, contractor, was instrumental in engaging them. There was no employer and employee relationship between the petitioner and applicants i.e. Respondent Nos. 4 to 22. At best they were employees of the contractor and they were not entitled to emoluments as admissible to regular workers of the factory. The provisions of Payment of Bonus Act, 1965 (hereinafter to referred as "Act of 1965") were applicable to the petitioner's Establishment and bonus had been paid in terms thereof to its regular employees. Bonus cannot be paid to the applicants (Respondent Nos. 4 to 22) as they are not regular employees of the petitioner's Establishment.
10. It has been argued by the counsel for the petitioner that even if it is the case that the petitioner was an establishment, the respondents No. 4 to 22 having mentioned that they were employed through contractor, the Prescribed Authority without any reasons came to the conclusion that the Respondents No. 4 to 22 were employees of the petitioner Establishment. The Prescribed Authority arbitrarily held that since bonus was being given to the regular employees, the fact that it was not given to the respondents No. 4 to 22 in the year 1984-1985 would be a violation of provisions of the Payment of Bonus Act and was an illegal deduction.
11. The basis as mentioned in the order of the Prescribed Authority for coming to this conclusion is that contractor had denied to have ever engaged the applicants (Respondents No. 4 to 22), therefore, it shall be deemed that they were employees not of the contractor but of the petitioner's Establishment.
12. With regard to the preliminary objections raised by the petitioner's Establishment and based on which Issue No. IV was framed, although it was argued by the petitioner Establishment that the terms of employment would not be determined by the Prescribed Authority under the Payment of Wages Act and applicants' case involving complicated questions of law and facts, it was beyond the jurisdiction of the Prescribed Authority; in the order impugned it has been mentioned that the applicants (Respondents No. 4 to 22) themselves have claimed that they were employees of the contractor and petitioner Establishment had employed the contractor and this fact was not denied by the petitioner Establishment. Since U.P. Contract Labour Regulation and Policy Rules, 1975 prescribes under the Rules 72 that the responsibility for making due payments of wages was on the Principal Employer, then, under Section 21 of the Act of 1970 bonus should be paid by the Principal Employer and thereafter be recovered from the contractor. Taking work from the applicants without making payment of bonus to them would amount to illegal deduction and therefore, the applicants were entitled for payment of bonus to them, illegally deducted from their wages. Issue No. (ii) was decided in favour of the applicants and with regard to the Issue No. (iii) the Prescribed Authority came to the conclusion that the applicants were employees of petitioner Establishment and not of the contractor.
13. It is the case of the learned counsel for petitioner that the Prescribed Authority had, admittedly, framed an issue whether the applicants were employees of contractor i.e. Respondent No. 2 in PW Case No. 98 of 1986. Yet by the time it rendered the judgment, it somehow came to the conclusion that the applicants were employees of the petitioner Establishment. It was all along the case of the Respondents No. 4 to 22 that they had been employed through the contractor by the petitioner Establishment, and the contractor was instrumental in getting the Gate Passes issued to them. They worked like regular employees and therefore, were entitled to wages as given to the regular employees. The contractor had illegally deducted bonus from their wages as was given by the petitioner Establishment to its regular employees for the year 1984-1985 and therefore, they were entitled to payment of bonus along with compensation.
14. The Prescribed Authority directed payment of Rs.400/- as bonus and Rs.1200/- as compensation to each of the applicants (Respondent Nos. 4 to 22) but rejected the claim, however, for ten times amount of bonus as compensation
15. Aggrieved by the order dated 06.03.1991 the petitioner preferred Misc. Appeal No. 118 of 1991 under Section 15(3) of the Payment of Wages Act in the Court of District Judge along with 18 other appeals. All 19 appeals viz. Misc. Appeal No. 118 of 1991 along with Misc. Appeals No. 161 of 1991 to 178 of 1991 were clubbed together and heard by the learned Additional District Judge, Court No. 9, Gorakhpur. In the appeals specific arguments were raised by the petitioner Establishment that bonus does not come within the definition of Wages under the Payment of Wages Act and therefore, the Prescribed Authority had no jurisdiction to decide the applications made by the Respondents No. 4 to 22 in their favour. However, the Appellate Authority came to the conclusion that under the Payment of Wages Act Section 2(vi) has defined wages which would include bonus as it was a remuneration, bonus itself was "deferred wages" and since payment of wages were governed by the Payment of Wages Act, 1936 bonus being "deferred wages" was also governed by the same Act.
16. The Appellate Authority also relied upon the submissions of the learned counsel for the Respondents No. 4 to 22 that under the Act of 1970 Sections 17 to 20 have prescribed the facilities/amenities to be given by the contractor to the labour and under Section 21 and Section 25 the responsibility was placed on the principal employer to see that no illegal deductions are made from the wages of the labour by the contractor and in case this was done the principal employer was required to make good the deductions and then recover the same from the contractor. The Appellate Authority came to the conclusion that since the applicants (Respondents No. 4 to 22) had been engaged through contractor and were not regular employees of the petitioner Establishment, they were entitled to all payments being made to them in terms of the Act, 1970 under the supervision of the principal employer.
17. It is the case of the counsel for the petitioner that without specifying as to which judgments it was referring to, the Appellate Court made a cursory mention of several judgments of the High Court and Supreme Court laying down that it is responsibility of the principal employer to make such payments, as are admissible to regular employees, to contract labour engaged through a contractor by supervising the payment so made by the contractor. The arguments made by the appellant-petitioner before the Appellate Court that since the applicants (Respondents No. 4 to 22) were not regular employees they were not entitled to payment of bonus, was rejected on the ground that bonus comes within the definition of "deferred wages". Payment of wages had to be done by the contractor under the supervision and guidance of the principal employer. Bonus being part of the wages had been illegally deducted and therefore, the Employer i.e. principal employer should ensure payment thereof to the applicants (Respondents No. 4 to 22) and then recover the amount from the contractor. The appeal was rejected on 08.10.2001.
18. Learned counsel for the petitioner in his challenge to the orders impugned has pointed out that three Acts have been mentioned in the orders impugned and the provisions of the three Acts namely Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and the Contractual Labour Regulation and Abolition Act, 1970 should have been considered before a direction was issued to the petitioner Establishment to make payment of bonus to the Respondents No. 4 to 22 who were, admittedly, engaged to do specific work in terms of contract entered into between the contractor and the petitioner Establishment.
19. The Payment of Wages Act, 1936 (hereinafter referred to as the Act of 1936) defines under Section 2(vi) 'wages', thus "wages" means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes -
"(a) any remuneration payable under any award or settlement between the parties or order of a Court;
(b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period;
(c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);
(d) any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made;
(e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force;
But does not include - -
(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court."
20. Under the Payment of Bonus Act, 1965 (hereinafter to referred as Act of 1965). Section 2(21) defines 'salary' or 'wage' as follows :-
"Salary or wage" means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to an employee in respect of his employment or of work done in such employment and includes dearness allowance (that is to say, all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living), but does not include -
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grans or other articles;
(iii) Any travelling concession;
(iv) Any Bonus (including incentive, production and attendance bonus)."
21. It is the case of the counsel for the petitioner that in both these Acts i.e. Act of 1936 and Act of 1965 'salary' or 'wages' has been specifically described and defined as not to include any bonus. Thus, the Prescribed Authority under the Payment of Wages Act could not have considered non payment of bonus by the contractor to its labour as an illegal deduction from wages and thus cast the responsibility upon the principal employer to make such payments under Section 21 of the Act, 1970 and then recover the same from the contractor under Section 25 (2).
22. The counsel for the petitioner to buttress his arguments has relied upon various judgments of the Hon'ble Supreme Court. They are as follows:-
(1) Hindustan Steel Works Construction Limited Vs. Commissioner of Labour and others: (1996) 10 SCC 599;
(2) Indian Petrochemicals Corporation Limited and another Vs. Shramik Sena and others: 1999 (5) JT SC 340;
(3) Steel Authority of India Limited and others Vs. National Union Water Front Workers and others : JT 2001 (7) SC 268; and (4) Hamdard (Wakf) Laboratories Vs. Deputy Labour Commissioner and others, 2007 (5) SCC 281.
23. In the case of Hindustan Steel Works Construction Limited (supra) the Hon'ble Supreme Court was considering the case of appellant, a government company, registered under Section 7 of the Act, 1970 which had engaged a private company as a licensed contractor under Section 12 of the Act. In the agreement the licensed contractor agreed to supply workers to the appellant of specified categories on the terms and conditions specified in the contract. The appellant although paid remuneration of the workers as mentioned in the contract, the contractor paid the wages to the workers at lower rates. These labourers, therefore, filed a complaint before the Commissioner of Labour. The litigation went up to the High Court where the Division Bench directed that the contractor should pay the workers the amount retained by it from the date of amount paid by the appellant company towards the wages and the appellant company should pay the contract labour the differences between the wages paid by the contractor and the wages which were paid by the appellant company to its own security staff and in case the contractor failed to pay the amount similarly to the contract labour concerned, the appellant company should pay the same to the contract labour employed by it and may thereafter recover the amount so paid from its contractor.
24. The appellant company approached the Supreme Court and the Supreme Court partly allowed the appeal by holding that in view of Section 2(1) (h) of the Act, 1970 read with Section 2(vi) of the Payment of Wages Act, 1936 the term 'wages' for the purposes of Section 21 of the Act, 1970 means "contractual wages" which are payable under the term of employment as between the contractor who is the employer of the contract labourers who are his employees. "Wages" would also include "any remuneration" which the contractor is required to pay under an award or settlement between the parties or under an order of the Court. If the contractor does not pay full wages to his workmen engaged by him as a contract labourers, then, under Sub Section (4) of Section 21, the principal employer becomes liable to make good the difference, and recover the amount which the principal employer has paid to the workmen of the contractor, from the contractor. However, it held that Section 21 (4) will not apply to such obligations of the contractor which may be the subject matter of dispute between the contractor and his workers at the time of disbursement of the wages and which do not fall within the definition of the 'wages' under the Act. The definition of 'wages' under Section 21(4) of the Act, 1970 read with definition of 'wages' under the Payment of Wages Act, 1936 does not cover any additional amount. It observed in paragraphs - 8, 9 and 10 thus :-
"8. Under this section also, the liability for payment of wages to each employee engaged by a contractor as contract labour is of the contractor. But in case the contractor fails to make payment of wages, then the principal employer shall be liable to make payment of wages in full or the unpaid balance due, as the case may be, to the workers; The principal employer, in turns is entitled to recover, the amount so paid from the contractor. Thus it is clear that under Section 21 also the responsibility for payment of wages of contract labourers is on the contractor who employs them. In case of any default by the contractor, the principal employer is required to make good the default, but at the cost of the contractor from whom the principal employer can recover the amount.
9. "Wages" are defined in Section 2(1) (h) of the said Act to have the same meaning assigned to them as in "wages" in Clause (vi)of Section 2 of the Payment of Wages Act, 1936; Section 2(vi) of the Payment of Wages Act, 1936, defines "wages" to mean :
"all remuneration (whether by way of salary, allowances or other-wise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes -
(a) any remuneration payable under any award or settlement between the parties or order of a Court;
10. Therefore, the term "wages' for the purpose of Section 21 of the Contract Labour (Regulation and Abolition) Act; 1970, means contractual wages which are payable under the terms of employment as between the contractor who is the employer and the contract labourers who are his employees- "Wages" would also include, inter alia, any remuneration which the contractor is required to pay under any award or settlement between the parties or under an order of the Court By reason of Section 21 of the Contract Labour (Regulation and Abolition) Act, 1970, the principal employer is required to nominate a representative to be present at the time of disbursement of wages by the contractor to the contract labour employed by him, in order to certify that the contractor has paid these wages. And similarly a duty is cast on the contractor to ensure that the disbursement of wages takes place in the presence of the authorised representative of the principal employer. The purpose of keeping the representative to the principal employer present is obviously to ensure that the contractor makes full payment of wages to each worker employed by the contractor as contract labour. These wages are the wages which the contractor has to pay to his workers in terms of the agreement of employment, or any award, settlement etc. If the contractor does not pay these wages to his workmen engaged by him as contract labourers, then under : sub-section (4) of Section 21 the principal employer becomes liable to make good the difference and recover this amount which the principal employer has paid to the workmen of the contractor from the contractor, (Vide Gujarat Electricity Board v. Hind Mazdoor Sabha and Ors., [1995] 5 SCC 27 and R.K. Panda and Ors. v. Steel Authority of India and Ors. : 5 SCC 304."
25. The Supreme Court has thereafter held that under Section 21 only contractual wages which have been agreed upon by the contractor to be paid to each of his workers have to be paid and since under the definition of wages no additional amounts are included and such contingencies are not covered by Section 21 of the Act, 1970, the principal employer is not liable to pay the additional amounts.
26. In the case of Indian Petrochemicals Corporation Limited (supra) which again was a government company having its factory registered under the Indian Factories Act, 1948 and was running a canteen as part of its statutory obligations under the Indian Factories Act through a contractor. The workmen raised a dispute that the work carried on by them is of a perennial nature and the canteen being an integral part of the factory and run under the statutory obligations the management was resorting to unfair labour practices in denying the said workmen the status of its regular employees and was treating them as contract employees. They were entitled to regularization. The High Court had allowed the claim set up by the workmen holding that they were working in a statutory canteen run by the management although through contractor and thus, they were entitled to be absorbed in employment. When the matter reached the Supreme Court it was argued that these labourers were 'workman' defined as such under Section 2 (1) of the Factory Act 1948 and the definition clearly includes the persons employed either directly or through any contractor in a place where manufacturing process is carried on. The definition being wide, the contractual labour was also entitled to the status of workman under the Factory Act. The Supreme Court, however, determined the question as to whether this status of a workman under the Factory Act can form the basis of relationship of employer and employee beyond the requirements of Factory Act and whether this definition can extend for all other purposes which included continuity of service, seniority, pension and other benefits which regular employees enjoy.
27. The Supreme Court held in paragraph - 17 that Factory Act does not govern the rights of employees with reference to recruitment, seniority, promotion, retiral benefits etc. These are governed by other statutes, rules, contracts or policies. Therefore, the workmen's contention that employees of statutory canteen ipso facto became employees of the establishment for all purposes could not be accepted. The deemed employment is only for the purposes of Factory Act. The Three Judges decision relied upon the judgment rendered by the Coordinate Bench of Three Judges in MMR Khan and others Vs. Union of India and others, JT 1990 (3) SC 1 and Three Judges Bench decision in the case of Reserve Bank of India Vs. Workmen, 1996 (3) SCC 267.
28. The counsel for the petitioner while relying upon these two judgments argued that although respondents No. 4 to 22, applicants before the Prescribed Authority, under the Payment of Wages Act may be considered to be employed by the principal employer for the purposes of Act of 1970, the benefits of such employment would only be restricted to the benefits as determined under the Act of 1970. Such benefits could not be said to be extended in such a manner that the relationship of employer and employee would also govern the benefits which, admittedly, were limited only to the terms of the contract. The Payment of Wages Act or the Payment of Bonus Act clearly defined therein that "wages", although included all remunerations, payable to an employee in terms of contract of employment did not include bonus and therefore, the Prescribed Authority under the Payment of Wages Act could not have considered bonus to be "deferred wages" and decide that since the wages were payable under the supervision of the principal employer in terms of the liability fixed under Section 21 (1) of the Act, 1970, bonus would also be said to be payable by the principal employer when it was not included in the terms of employment between the workmen and contractor or in terms of the contract between the principal employer and his agent, the contractor.
29. The learned counsel for the petitioner has also relied upon paragraph - 104 of the judgment rendered in the case of Steel Authority of India Limited (supra) where the Hon'ble Supreme Court negated the contention raised by the learned senior counsel for the workmen that by virtue of engagement of contract labourers by the contractor in any work of or in connection with the work of an establishment, the relationship of master and servant is created between the principal employer and the contract labourers. The Constitution Bench in the aforesaid case surveyed several judgments cited as binding precedents by the learned counsel for the workmen and came to the conclusion that it could not be said that only because the contractor was engaged in the work assigned to it by the principal employer which was integral part of the work of the principal employer, the relationship of master and servant emerged between the contract labourers and the principal employer.
30. The learned counsel for the petitioner also relied upon Hamdard (Wakf) Laboratories Vs. Deputy Labour Commissioner (supra) wherein the Hon'ble Supreme Court considered the question whether 'bonus' could be said to be included in the definition of "wages". The dispute arose out of an application purported to be made under Section 6H(1) of the U.P. Industrial Disputes Act, 1947 moved by the respondent workmen claiming the back wages and bonus in terms of the award passed by the Labour Court directing reinstatement of 17 workers on duty on the original post and pay scale and granting them 50 per cent of their wages/allowances which they were getting on the date of their illegal termination. The Labour Commissioner, Ghaziabad held that 50 per cent of wages would include entitlement also to 50 per cent of bonus as bonus is only "deferred wages" and thus included in the pay and salary which they were entitled to, as other workmen had been paid bonus in the organization during the period they were forced to sit out. The High Court has rejected the appellant's contention that the definition of the word 'wages' in the U.P. Industrial Disputes Act, 1947 specifically excludes bonus and the mention of 'wages' alone in the award could not be said to include bonus and therefore, the Labour Commissioner's order under Section 6H(1) including bonus in an interpretation of benefits arising out of the original award was erroneous. The High Court held that the definition of word "wages" cannot be meant for construing the U.P. Industrial Disputes Act, since in the award a mention was made of the phrase "50% of the wages and allowances" which had to be read as whatever other similarly situated workers got during the period 17 workers were kept out of employment.
31. The Hon'ble Supreme Court allowed the appeal and accepted the contention of the learned counsel for appellant that the definition of word "wages" contained in Section 2 (y) of the U.P. Industrial Disputes Act and Section 2 (21) of the Payment of Bonus Act has clearly prescribed that 'bonus' is neither "wage" nor "allowance" and as such the term 'wages' must be interpreted in the light of the statute operating in the field. It was not a part of the "remuneration".
32. The Hon'ble Supreme Court in paragraph - 12, 13, 14 and 15 of Hamdard (Wakf) Laboratories (supra) considered the definition of "wages" as given under the U.P. Industrial Disputes Act, 1947 and Payment of Bonus Act, 1965 and Payment of Wages Act, 1936 and observed in paragraphs 21 and 26 that since the definition of 'wages' within the meaning of the U.P. Industrial Disputes Act does not include bonus and Payment of Bonus Act also excludes bonus, then, bonus either in its ordinary meaning or statutory one would not be included in the wages.
33. The Hon'ble Supreme Court in Hamdard (Wakf) Laboratories Vs. Deputy Labour Commissioner (supra) relied upon the judgment rendered in the case of M/s. Sanghvi Jeevraj Ghewar Chand and others Vs. Secretary, Madras Chilies, Grains and Kirana Merchants Workers Union and another: AIR 1969 SC 530 wherein the Court considered the history of the term "bonus" and came to the conclusion that under Section 22 and Section 39 of the Payment of Bonus Act although a dispute with regard to the payment of bonus would be deemed by legal fiction to be an industrial dispute and since the Payment of Bonus Act did not provide any machinery for investigation and settlement of industrial dispute thereon, the machinery provided under the Industrial Disputes Act would be applicable for investigation and settlement of the dispute relating to bonus, yet Payment of Bonus Act was a Special Act, and all claims for bonus would have to be considered in the light of statutory provisions given under the said Act alone.
34. In para - 6 of the judgment rendered in M/s. Sanghvi Jeevraj Ghewar Chand and others (supra) the Supreme Court has observed thus :
"6........Therefore, the distinction there made between that Act and the other laws does not seem to be of much point. It is thus clear that by providing in Section 39 that the provisions of this Act shall be in addition to and not in derogation of those Acts, Parliament wanted to avail of those Acts for investigation and settlement of disputes which may arise under this Act. The distinction between Section 22 and Section 39, therefore, is that whereas Section 22 by fiction makes the disputes referred to therein industrial disputes and applies the provisions of the Industrial Disputes Act and other corresponding laws for the investigation and settlement thereof, Section 39 makes available for the rest of the disputes the machinery provided in that Act and and other corresponding laws for adjudication of disputes arising under this Act. Therefore, there is no question of a right to bonus under the Industrial Disputes Act or other corresponding Acts having been retained or saved by Section 39. Neither the Industrial Disputes Act nor any of other corresponding laws provides for a right to bonus. Item No. 5 in Schedule 3 to the Industrial Disputes Act deals with the jurisdiction of the tribunal set up under Sections 7, 7-A and 7-B of that Act, but does not provide for any right to bonus. Such a right is statutorily provided for the first time by this Act".
35.. In paragraph 17 and 18 of the judgment rendered in the case of M/s. Sanghvi Jeevraj Ghewar Chand and others (supra) the Hon'ble Supreme Court has observed as under:-
"17. We are also not impressed by the contention that the fact that Sec. 39 provides that the provisions of this Act are in a addition to and not in derogation of the Industrial Disputes Act or any other corresponding law shows that Parliament did not wish to do away with the right to payment of bonus altogether to those who cannot either by reason of exclusion or exemption from the Act claim bonus under the Act. Such a construction is fallacious on two grounds. Firstly because it assumes wrongly that the Industrial Disputes Act or any other law corresponding to it provided for a statutory right to payment of bonus. All that those Acts provided for, apart from rights in respect of lay off, retrenchment etc., was a machinery for investigation and settlement of disputes arising between workmen and their employers. It is, therefore, incorrect to say that the right to bonus under this Act is in addition to and not in derogation of any right to bonus under those Acts. Secondly, sec. 39 became necessary because the Act does not provide any machinery or procedure for investigation and settlement of disputes which may arise between employers and employees. In the absence of any such provision Parliament intended that the machinery and procedure under those Acts should be made available for the adjudication of disputes arising under or in the operation of the Act. If, for instance, there is a dispute as to the computation of allocable surplus or as to quantum of bonus, or as to whether in view of sec. 20 an establishment in public sector is liable to pay bonus, such a dispute is to be adjudicated under the machinery provided by the Industrial Disputes Act or other corresponding Acts.
18. Considering the history of the legislation, the background and the circumstances in which the Act was enacted, the object of the Act and its scheme, it is not possible to accept the construction suggested on behalf of the respondents that the Act is not an exhaustive Act dealing comprehensively with the subject-matter of bonus in all its aspects or that Parliament still left it open to those to whom the Act does not apply by reason of its provisions either as to exclusion or exemption to raise a dispute with regard to bonus through industrial adjudication under the Industrial Disputes Act or other corresponding law."
36.. In the judgment rendered in the case of Hamdard (Wakf) Laboratories (supra) the Hon'ble Supreme Court has specifically held that the wages having been defined under the Payment of Wages Act and bonus having been defined under the Payment of Bonus Act, the Labour Commissioner who is a statutory authority could not have ignored the definition as given in the statutory provisions and generalized the term bonus as one relating to "deferred wages" and granted benefit to the workmen. Since the definition clause in the Payment of Bonus Act and Payment of Wages Act includes certain things and does not include others, those others could not be said to be included by way of generalization. The Hon'ble Supreme Court in the case of Hamdard (Wakf) Laboratories (supra) has observed that in paragraphs - 32 and 33 as under :-
"32. The Labour Court was not determining any right under the Payment of Bonus Act. It was while making its award determining the rights and liabilities under the Act (U.P. Industrial Disputes Act).
33. It, therefore, must have in mind the provisions of the Act alone. The aforementioned decisions, therefore, have no application to the facts and circumstances of the present case."
37. The counsel for the respondents No. 4 to 22 have also relied upon certain judgments which are as follows :-
38. In AIR 1951 SC 313 : Maharashtra Sugar Mills Vs. State of Bombay and others where contract labourers were held entitled to the payment of bonus as they were included within the definition of employee contained in Bombay Industrial Rules, 1946. The definition of word 'employees' contained in Section 3 (13) of the Act was in such terms that ''Employee' meant any person employed to do any skilled or unskilled manual or Clerical work for hire or reward in any industry and included - (1) a person employed by a contractor to do any work for him in the execution of a contract with an employer within the meaning of Sub-section (3) of Clause 14." Sub Section 3 of Clause 14 whereof had provided that "Employer' includes, where the owner of any undertaking in the course of or for the purposes of conducting the undertaking contracts with any person for the execution by or under the contract of the whole or any part of any work which is ordinarily part of the undertaking, the owner of the undertaking."
39. This judgment is clearly distinguishable as it was rendered much before the Payment of Bonus Act, which was notified in 1951. At the relevant part of time, the right to bonus which was originally a voluntary payment and had acquired under the Full Bench formula the character of a right to share in the surplus profits enforceable through the Industrial Disputes Act, 1947 and other corresponding Acts bonus has now become a statutory obligation imposed on the employers, which has been referred to in detail in the case of M/s. Sanghvi Jeevraj Ghewar Chand and others (supra).
40. The learned counsel for the private respondents has also relied upon the judgments rendered by various High Courts. They are as follows :
41. In Indian Explosives Limited Vs. State of Uttar Pradesh and others : 1981 (1) LLN 360 this Court held after placing reliance upon Basti Sugar Mills Vs. Ram Ujagar and others: 1963 (II) LLJ 447 and J.K. Cotton Spinning and Weaving Mills Company Vs. Labour Appellate Tribunal, AIR 1961 (II) SC 737 that when an owner of a Factory or Mill enters into a contract with a contractor for execution of any contract relating to the industry run by it or any work incidental to the main industry; employees engaged by the contractor would be workmen and the Mill would be employer within the meaning of Section 2 (i) (iv) of the U.P. Industrial Disputes Act, 1947 and therefore, the contract labour would be entitled to all the benefits as are admissible to regular workmen of the employer.
42. This judgment in Indian Explosives Limited (supra) relies upon the judgment rendered in the case of Basti Sugar Mills (supra) which has been clarified and distinguished by the Hon'ble Supreme Court in the Constitution Bench in the case of Steel Authority of India Limited and others(supra).
43. The second judgment of this Court which has been relied upon is Union of India and others Vs. Rakesh Chandra Sharma and others: 2012 (134) FLR 882 wherein this Court held that even the daily wage workers who had worked for 30 days in an accounting year were entitled for payment of bonus.
44. This judgment is distinguishable on facts as in that case the Union of India had taken a policy decision giving temporary status to casual labourers and bonus was to be paid at the same rate as Group-D employees of the Central Government. But later on, a decision was taken to recover what was paid to such casual employees. The Court observed that these casual daily workers who had put in more than three years continuous service in the department had been placed at par with the Central Government Group-D employees and therefore they were eligible for bonus at the same rate which Central Government employees were being paid.
45. The learned counsel for the private respondents has also relied upon the following judgment of other High Courts:
The H.P. State Forest Corporation Limited Vs. Mohan Singh: 2014 (141) FLR 863 (H.P. HC);
Pradip Lamp Works Vs. State of Bihar: 2015 (147) FLR 148 ( Patna HC); and Union of India Vs. Kameshwar Dubey: 33 (1987) DLT 143 (Delhi High Court).
46. The aforesaid judgments need not be gone into in much detail because of the observations made by the Hon'ble Supreme Court in the case of Hamdard (Wakf) Laboratories (supra).
47. After considering the arguments raised by the learned counsel for the petitioner and the counsel for private respondents as well as perusing the orders impugned in this writ petition, I find that the Assistant Labour Commissioner, the Prescribed Authority, under the Payment of Wages Act failed to determine the issue which was central to the controversy i.e. "Whether bonus could be said to be included within the definition of the wages as given under the Payment of Wages Act?" It is only after the determination of this central issue could it be held by the authorities under the Payment of Wages Act that the contractor having illegally deducted the bonus which was part of the wages, the principal employer would be duty bound under Section 2(i) (iv) of the Act, 1947 to make payments thereof, first to the contract labour and then recover the same from the contractor thereafter. The second key issue that needed to be determined was "Whether bonus was included in wages as per the terms of employment settled between the contractor and the Fertilizer Corporation of India?"
48. In view of the law as laid down by the Hon'ble Supreme Court in the cases discussed herein above the orders impugned are liable to be set aside.
49. The matter is remanded back to the Prescribed Authority under the Payment of Wages Act to first determine the issue whether in this case bonus was included within the wages as defined under the Payment of Wages Act or under the Payment of Bonus Act and whether it was part of remuneration in terms of the contract of employment. Since the matter is old, it is expected that the Prescribed Authority shall decide the same expeditiously say within a period of six months, after giving due opportunity of hearing to all the parties concerned and without giving unnecessary adjournments to either of the parties.
Order Date :- 14.7.2017 LBY