Karnataka High Court
G. Venkataramanappa vs C. Kotappa on 23 June, 1988
Equivalent citations: ILR1988KAR2037, 1988(2)KARLJ136
JUDGMENT Shivashankar Bhat, J.
1. When the matter was taken up for hearing on the 8th instant the learned Counsel for the 1st respondent was absent and we heard Sri K. Subba Rao, the learned Counsel for the appellants and reserved the Judgment. After a while, on the same day, the learned Counsel for the first respondent appeared and requested for being heard. Hence, the case was taken up for hearing again on the 9th instant when both the learned Counsel were present. We heard the learned Counsel for the 1st respondent in detail and the matter was again reserved for Judgment.
2. Appellants, claiming to be the workmen under the first respondent (referred as the employer), filed an application under Section 33-C(2) of the Industrial Disputes Act, 1947 (for short 'the I.D. Act') for enforcement of their claim for minimum bonus under the provisions of the Payment of Bonus Act (for short 'the Act'). The application was opposed by the employer, on the ground that, the relationship of employer and employee ceased in March 1976 and that as per the settlement arrived at between the parties, the employees received various sums in full satisfaction of all their claims. The Labour Court raised the following issues :-
" 1. Whether the applicants prove that there is relationship of employer and employee?
2. Whether the respondent proves the settlements dated 8-3-76 and 13-3-76 and prove the payments to the applicants as mentioned in para-2 of the objection statement?
3. Whether the applicants prove their claims?
4. To what reliefs?"
3. The issues were answered in favour of the employees. The Labour Court directed the employer to make the payments claimed by the employees.
4. The employer challenged this order in W.P.No. 32549/1981. This was heard along with other Writ Petitions involving similar questions and all the Writ Petitions were allowed. The learned Single Judge held that the Labour Court had no jurisdiction to entertain an application for awarding bonus to the employees, under the provisions of Payment of Bonus Act. The learned Single Judge was of the view that such a dispute regarding bonus could be resolved only by reference under Section 22 of the said Act. Consequently the order of the Labour Court in so far as it relates to the payment of bonus was quashed. Hence this appeal by the employees.
4A. The contention advanced by the employer, to contend that the Labour Court cannot entertain an application under Section 33-C(2) of the I.D. Act, to enforce the claim for the minimum bonus was, that the subject matter of bonus and its payment is statutorily regulated by the Act, provisions of which constitute an exhaustive Code as to the rights and liabilities for bonus and the forum for their enforcement. It was argued, that if the question raised was that the Act was inapplicable to an establishment or that the workmen concerned had no subsisting right to the payment of bonus, any of the said contention results in raising a dispute between the employer and his employees "with respect to the bonus payable" under the Act, which is deemed to be an industrial dispute, capable of being resolved only as an Industrial Dispute as per the provisions of I.D. Act read with Section 22 of the Act. It was argued that the applicability of the Act to the establishment in question was also raised in this case.
5. Sri K. Subba Rao, learned Counsel for the workmen, contended that, the Act does not provide an exclusive forum to investigate and determine all the questions that may arise, in respect of a claim for the bonus under the Act, and the jurisdiction created under Section 22 was a limited one, not applicable to the fact situation, as is involved in these cases. The learned Counsel pointed out that the forum created under Section 33-C(2) of I.D. Act can be resorted for the enforcement of an employer's obligation to pay the minimum bonus, in the absence of an exhaustive machinery created for the purpose under the Act. We find considerable force in these propositions advanced by Sri Subba Rao.
6. An analysis of the provisions of the Payment of Bonus Act, 1965 shows that it is not a self contained Code in so far as the enforcement of the rights and liabilities created by the said Act.
The Act applied to (a) every factory and (b) every other establishment in which 20 or more persons are employed on any day during an accounting year, as per Section 1(3). Section 8 says that every employee shall be entitled to be paid bonus in accordance with the provisions of the Act, provided he has worked in the establishment for not less than 30 working days in the accounting year. Term 'employee' is defined. Section 10 imposes an obligation oh every employer to pay, a minimum bonus. This minimum bonus is not dependent upon any other circumstance. Section 11 provides for the maximum bonus, which depends upon the availability of 'allocable surplus' a term which is defined under Section 2(4). Sections 12 to 15 prescribe the mode and computation of working days etc. In the case of a newly set up establishment, payment of bonus is governed by Section 16, Section 20 provides as to when the Act applies to establishments in the public sector. Section 21 provides a machinery for the recovery of bonus by applying to the Government which is, 'without prejudice to any other mode of recovery.' Section 22 provides for reference of disputes under the Act as an industrial dispute as provided by the I.D. Act or of any other corresponding law. This Section reads as follows:
"22. Where any dispute a rises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to an industrial dispute within the meaning of the Industrial Disputes Act, 1947, or of arty corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly."
7. It is clear that Section 22 creates a legal fiction by deeming certain disputes as industrial disputes under two circumstances. Those disputes are - (i) the dispute between an employer and his employees with respect to the bonus payable under the Act; or (ii) the dispute with respect to the application of the Act to an establishment in public sector. The second category of dispute brings out the limited scope of the dispute, that is deemed as an industrial dispute under the first category. If the applicability of the provisions of the Act is disputed and that question is to be decided, whenever, an establishment raises such a plea and such a dispute falls under the first category, there is no need to have the second category at all. The question about the application of the Act to an establishment in public sector also would have fallen under the first category, because the question that will arise, is the objection regarding the applicability of the Act, which results in a deemed dispute with respect to the bonus payable to the employees by the employer, viz., the public sector establishment. But the Parliament has clearly expressed that such a question would not fall under the first category; and it provided for that question to be decided by creating the second category. This second category is confined to the question of applicability of the Act to an establishment in a public sector. Question as to the applicability of the Act to an establishment in any of the sectors, thus, by clear implication, does not fall under the first category of disputes. The question as to the applicability of the Act in a private sector, is thus not deemed to be an industrial dispute at all.
8. While interpreting the provisions of Section 22, it should be borne in mind, that, it creates a legal fiction and the amplitude of such a fiction cannot be enlarged unless clearly so provided. In COMMISSIONER OF INCOME TAX, BOMBAY CITY II v. SHAKUNTALA & ORS., the Supreme Court has stated the principle governing the interpretation of a legal fiction:
"The question here is one of interpretation only and that interpretation must be based on the terms of the Section. The fiction enacted by the Legislature must be restricted by the plain terms of the statute. Nor do we see how it can be said that the interpretation put on Section 23-A that it is confined to a shareholder registered in the books of the company defeats the very purpose of the Section. The Section will stilt apply to shareholders of the company and to their income will be added the notional income determined under Section 23-A. We are unable to accept the argument that the principle that a legal fiction must be carried to its logical conclusion requires us to travel beyond the terms of the Section or give the expression 'shareholder' a meaning which it does not obviously bear."
A legal fiction deems something as real, which actually is not real. The legislature injects into a conception, something which, otherwise, will not come within that conception. This artificial creation cannot and should not be permitted to be expanded by the process of interpretation. Therefore, it has to be concluded that question as to the applicability of the Act to an establishment in a private sector, does not fall within the provisions of Section 22 at all.
9. Another provision that is relevant here is Section 39 of the Act which reads thus :-
"39. Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State."
The language of this Section is not like the overriding provision enacted under Section 14 of, the Gratuity Act. The provisions of the Payment of Bonus Act, supplants any other provisions of law, though, its provisions are exhaustive on the subject of payment of bonus.
10. If the provisions of Section 22 of the Act do not provide an exhaustive machinery for resolving any question that may arise by virtue of a claim for bonus under the Act, one has to necessarily look elsewhere for such a machinery. In the case of a claim for minimum bonus, scope for dispute is very much limited. Two prominent questions that may arise are, (i) whether the claimant is an employee as defined under the Act and (ii) whether the provisions of the Act are applicable to the establishment in question. These may be termed as jurisdictional facts, which every Authority or Tribunal, competent to grant a relief in such cases, has to decide. Such questions may arise when a claim is lodged with the Government under Section 21 also, and preliminary to the grant of the relief, the Government or the concerned Authority may have to decide these questions, if disputed by the employer.
11. Section 21, again does not create an exclusive machinery. The mode of recovery under Section 21 is without prejudice to any other mode of recovery. Therefore, if the employee has any other forum to recover the dues to him under the Act, such a forum can certainly be resorted to. The limited scope of Section 22 has been brought out by the Supreme Court in SANGHVI JEEVRAJ GHEWAR CHAND & ORS. etc. v. SECRETARY, MADRAS CHILLIES, GRAINS AND KIRANA MERCHANTS WORKERS UNION & ANR. etc., , it is stated, --
"A dispute between an employer and employee, therefore, may not fall under the Industrial Disputes Act and in such a case the Act would not apply and its machinery for investigation and settlement would not be available. That being so, and in order that such machinery for investigation and settlement may be available, Section 22 has been enacted to create a legal fiction whereunder such disputes are deemed to be industrial disputes under the Industrial Disputes Act or any other corresponding law. For the purposes of such disputes the provisions of the Industrial Disputes Act or such other law are made applicable. The effect of Section 22 thus is (1) to make the disputes referred to therein industrial disputes within the meaning of the Industrial Disputes Act or other corresponding law and (2) having so done to apply the provisions of that Act or other corresponding law for investigation and settlement of such disputes. But the application of Section 22 is limited only to the two types of disputes referred to therein and not to others. Section 39 on the other hand, provides that 'save as otherwise expressly provided' the provisions of the Act shall be in addition to and not in derogation of the Industrial Disputes Act or any corresponding law relating to investigation and settlement of Industrial disputes in force in a State. Except for providing for recovery of bonus due under a settlement, award, or agreement as an arrear of land revenue as laid down in Section 21, the Act does not provide any machinery for the investigation and settlement of disputes between an employer and an employee."
12. Next question will be, whether Section 33-C(2) of the I.D. Act can be resorted to by the employees for the recovery of the minimum bonus payable to them under the Act.
Section 33-C(2) has been the subject matter of interpretation in several cases. Section 33-C(2) reads, --
"33-C: Recovery of money due from an employer -
(2) Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if any question a rises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may, subject to any rules that may be made under this Act, be decided by such Labour Court as may be specified in this behalf by the appropriate Government within a period not exceeding three months:
Provided that where the Presiding Officer of a Labour Court considers it necessary or expedient so to do, he may, for reasons to be recorded in writing, extend such period by such further period as he may think fit."
The claim for money that can be enforced under this Act, need not necessarily arise out of the provisions of the I.D. Act. That is not the language or purport of this sub-section. The width of the scope of this sub-section has been recognised as early as the year 1963 in CENTRAL BANK OF INDIA LTD. v. P.S. RAJAGOPALAN etc., . In this decision Supreme Court also held, that, the enforceability of the claim of a workman under Section 33-C(2) is not confined to an undisputed claim. Even when the right of a workman is disputed, still the claim may be enforced by invoking this provision. In the said case, it was observed at page 749:
"It is thus clear that claims made under Section 33C(1), by itself can be only claims referable to the settlement, award, or the relevant provisions of Chapter V-A. These words of limitations are not to be found in Section 33C(2) and to that extent, the scope of Section 33C(2) is undoubtedly wider than that of Section 33C(1). It is true that even in respect of the larger class of cases which fall under Section 33C(2), after the determination is made by the Labour Court the execution goes back again to Section 33C(1). That is why Section 33C(2) expressly provides that the amount so determined may be recovered as provided for in Sub-section (1). It is unnecessary in the present appeals either to state exhaustively or even to indicate broadly what other categories of claims can fall under Section 33C(2)."
Earlier, at page 748 it was held:-
"In our opinion, on a fair and reasonable construction of Sub-section (2) it is clear that if a workman's right to receive the benefit is disputed, that may have to be determined by the Labour Court. Before proceeding to compute the benefit in terms of money, the Labour Court inevitably has to deal with the question as to whether the workman has a right to receive that benefit. If the said right is not disputed, nothing more needs to be done and the Labour Court can proceed to compute the value of the benefit in terms of money; but if the said right is disputed, the Labour Court must deal with that question and decide whether the workman has the right to receive the benefit as alleged by him and it is only if the Labour Court answers this point in favour of the workman that the next question of making the necessary computation can arise. It seems to us that the opening clause of Sub-section (2) does not admit of the construction for which the appellant contends unless we add some words in that clause. The clause 'where any workman is entitled to receive from the employer any benefit' does not mean 'where such workman is admittedly, or admitted to be, entitled to receive such benefit.' The appellant's construction would necessarily introduce the addition of the words 'admittedly, or admitted to be' in that clause, and that clearly is not permissible, Besides, it seems to us that if the appellant's construction is accepted, it would necessarily mean that it would be at the option of the employer to allow the workman to avail himself of the remedy provided by Sub-section (2), because he has merely to raise an objection on the ground that the right claimed by the workman is not admitted to oust the jurisdiction of the Labour Court to entertain the workman's application. The claim under Section 33C(2) clearly postulates that the determination of the question about computing the benefit in terms of money may, in some cases, have to be preceded by an enquiry into the existence of the right and such an enquiry must be held to be incidental to the main determination which has been assigned to the Labour Court by subsection (2)."
Thus it is clear that under Section 33C(2), the existence of the right of the workmen for the money claimed by them can be gone into by the Labour Court, and this power is incidental to its main power to enforce the claim.
13. A Full Bench of Andhra Pradesh High Court in ANAND OIL INDUSTRIES v. LABOUR COURT, HYDERABAD & ORS., held that a workman may resort to Section 33-C(2) for the enforcement of his right for the minimum bonus payable to him under the Act. The conclusion arrived at by the Court is found at para-80:
"To sum up: The minimum bonus under the Payment of Bonus Act and the minimum wage under the Minimum Wages Act are respectively rights vested in an employee under a statute. The right to receive the minimum bonus and the minimum wage constituted an existing statutory right. For the enforcement of these rights, an employee can certainly file an application under Section 33-C(2) of the Industrial Disputes Act before a Labour Court, and the Labour Court is competent to compute the amount due to the employee in this behalf. A claim for the payment of minimum bonus cannot constitute an industrial dispute within the meaning of Section 22 of the Payment of Bonus Act. When such a claim is made by an employee, it is not necessary that it should be referred for adjudication by an Industrial Tribunal. The Labour Court has jurisdiction to entertain a petition under Section 33-C(2) of the Industrial Disputes Act in this behalf and determine the amount due."
To the same effect is the decision of a Division Bench of Punjab & Haryana High Court in BAVA SINGH & ORS. v. STATE OF PUNJAB & ORS., 1974(1) L.I.C. 425. Both these decisions, refer to a decision of the Bombay High Court taking the same view, in ILR 1970 Bombay 490. The judicial opinion certainly is in favour of the view, that, (i) workman may apply under Section 33-C(2) of I.D. Act to enforce his claim for the minimum bonus; (ii) the Labour Court acting under Section 33-C(2) of I.D. Act can go into the question of the existence of right in the workmen to claim the bonus and whether the concerned employer was bound under the Act to make the said payment. We concur with this view.
14. The fact that the employer in a private sector may question the applicability of the Act to his establishment will not preclude the jurisdiction of the Labour Court from entertaining an application of an employee for the enforcement of his claim for the minimum bonus under Section 33-C(2). As incidental to the exercise of the main power, the Labour Court may go into this question also.
15. Reference, was made by the learned Counsel for the employer, to the decision of the Supreme Court in STATE OF PUNJAB v. THE LABOUR COURT, JULLUNDUR & ORS., in support of his contention that, when rights and liabilities are created by a special statute the enforcement of the said rights and liabilities can be only through the forum created by the said statute. The decision of the Supreme Court arises out of a claim for payment of gratuity under the provisions of Payment of Gratuity Act.
The scheme of Payment of Gratuity Act, 1972 (referred hereinafter as Gratuity Act) is quite different. Section 3 of the said Gratuity Act provides for the appointment of a 'controlling authority' who shall be responsible for the administration of the Act. Section 7 provides for the determination of the amount of gratuity and any dispute with regard to any matter specified in Section 7(4). The scope of a dispute that is likely to come within Section 7(4) is very wide. The controlling authority has to decide the dispute, against which an appeal lies under Section 7(7) to the State Government or to such other authority as may be specified by the appropriate Government. As per Section 14 of the Gratuity Act, its provisions shall have overriding effect over other enactments. No other provision of this Act, makes it dependent on any other enactment and machineries created under other Acts are not attracted. Thus Gratuity Act has been held to be a complete Code containing essential features of a scheme for payment of gratuity and the Supreme Court held that Section 33-C(2) of the I.D. Act is not attracted in respect of a claim for payment of gratuity. Thus the decision of the Supreme Court, in , referred by the learned Counsel in passing, in the course of his arguments, is not helpful to the proposition advanced by him having regard to the scheme of the Act.
16. In the result, for the reasons stated above, this appeal is allowed and consequently in reversal of the order made in W.P.No. 32459/1981, we direct the dismissal of the said Writ Petition and restore the impugned order of the Labour Court made in Ap.No. 67/1976. However, in the circumstances of the case, we make no order as to costs.