Bombay High Court
Shashikant Janardan Pimpalpure vs Development Corpn. Of Vidarbha Ltd. on 20 February, 1995
Equivalent citations: (1996)IIILLJ570BOM
Author: R.M. Lodha
Bench: R.M. Lodha
ORDER
1. This batch of four writ petitions arises out of the common order passed on September 13, 1986 by the 1st Labour Court. Nagpur in the matter of different applications filed under Section 33-C(2) of the Industrial Disputes Act, 1947 (for short, the 'Act of 1947') and in view of the common questions of facts and law involved, all these writ petitions have been heard together and are disposed of by this common judgment.
2. Since broad facts of all the four writ petitions and identical, to appreciate the real controversy between the parties. the facts of Writ Petition No. 3352 of 1989 may be noted. The petitioner was appointed as Clerk-cum-Assistant by the respondent Corporation vide office order dated February 22/28. 1977 initially on probation for a period of six months with the stipulation that after completion of probation period satisfactorily, the petitioner would be taken up on regular establishment. In the appointment order, it was mentioned that the petitioner shall be governed by the rules and regulations of the Corporation as are applicable to other employees and as amended from time to time. Subsequently, by the order dated October 27, 1978, the petitioner was appointed as Junior Field Officer on probation of six months by the respondent Corporation and on completion of the period of probation, he was taken on regular establishment. It was made clear in the said order that the appointment of the petitioner has been made for the Carpet Project only and shall be borne on the establishment of this project exclusively. The petitioner made a representation to the respondent Corporation on October 30, 1978 seeking clarification as to whether the rules and regulations of the Corporation would be made applicable to the Carpet Projects or separate rules and regulations would be framed in the near future. The petitioner made it clear that in any position or cadre, his present facilities and benefits should not be curtailed and he should be governed as per the rules and regulations of the respondent Corporation. Since according to the petitioner, while he was working at Carpet Weaving Project of the respondent Corporation, he was entitled to minimum bonus at 8.33% payable to him under the payment of Bonus Act, 1965 and the said payment was not made, the petitioner was constrained to file application under Section 33-C(2) of the Act of 1947 before the Labour Court. Nagpur. In the said application it was contended by the petitioner that he was employee of the respondent Corporation and serving in Carpet for the last three years as Junior Filed Officer. According to the petitioner, he was transferred to the Carpet Weaving Project of the respondent No. 1 Corporation, but there being no service conditions framed relating to the employees working in the Carpet Weaving Project, he was governed by the rules and regulations of the respondent Corporation for the purpose of leave, salary, promotion and other leave conditions and the Carpet Weaving Project was nothing but a part and parcel of the respondent No. 1 Corporation. The employees of the Corporation and the Carpet project were transferred to TASAR Project and the Corporation is in over-all supervision of the said Project. On the basis of these facts, the petitioner claimed bonus at 8.33% from the respondent No. 1 Corporation.
3. The respondent No. 1 Corporation filed reply to the application and contested the claim of the petitioner. The respondent set up the defence that the petitioner was not employee of the respondent Corporation, but was appointed in Carpet Weaving Center only and is on the rolls of that establishment only. According to the respondent Corporation, Carpet Weaving Center was totally separate and distinct from the Corporation and had no resemblance to the terms of employment of the employees of the respondent Corporation. The Corporation set up the plea that since the Carpet Weaving Center was a training center and an educational institution and has no profit motive, bonus was not payable under the Payment of Bonus Act. The Corporation also set up the defence that the said Training Center has not completed five years of service and on that ground under Section 16 of the Payment of Bonus Act, the employee is not entitled to the payment of bonus.
4. Before the Labour Court, the petitioner and other applicant examined 11 witnesses while the respondent Corporation examined two witnesses. Lots of documentary evidence was placed by the parties on record of the Labour Court and the said Court by its order dated September 30, 1986. dismissed the application of the petitioner and all other applicants. The Labour Court concluded that the Carpet Weaving Training Center/Carpet project was an institution established not for purpose of profit within the meaning of Section 32 of the Payment of Bonus Act and that the said establishment attracted the provisions under Section 16 of the Act of 1965. Consequently, the Labour Court held that the applicants were not entitled to payment of minimum bonus under Section 10 of the Act of 1965 for the years 1978-79, 1979-80 and 1980-81.
5. All these four writ petitions have been filed challenging the legality and correctness of the order dated September 30, 1986 passed by the 1st Labour Court dismissing the applications filed by the petitioners under Section 33-C(2) of the Act of 1947.
6. Before I advert to the rival contentions raised by the learned counsel for the parties, an additional fact relating to Writ Petition No. 256 of 1987 may be noted. In the appointment order of the petitioner in Writ Petition No. 256 of 1987 which is issued by the respondent Corporation on October 23, 1978, it is mentioned that in case the management decides that the petitioner's appointment is to be treated for a particular project only then in that case, he shall be borne on the establishment of that project exclusively and in that case he shall be governed by the rules and regulations as made applicable to that project. However, the fact remains that no appointment order was issued as regards petitioner in Writ Petition No. 256 of 1987 for his appointment in the Carpet Weaving Training Centre and the petitioner in that writ petition, therefore, was not borne on the establishment of the Carpet Weaving Training Centre.
7. Mr. Thakur and Mr. Marpakwar, the learned counsel for the petitioners in the aforesaid writ petitions strenuously urged that the Labour Court has misdirected itself in not properly considering that the Carpet Weaving Training Centre was part and parcel of the respondent No. 1 Corporation and both, the Corporation and the said Training Centre was interdependent on each other. In this connection, the learned counsel for the petitioners referred to few material documents and evidence to show that the accounts of the Carpet Weaving Training Centres were amalgamated in the accounts of the respondent No. 1 Corporation, the employees of the respondent Corporation and the Carpet Centre have been inter se transferred and that the Corporation has over-all control, supervision and management over the Carpet Weaving Training Centre and has mixed capital in labour. By reference to exhibit 74, the learned counsel for the petitioners sought to show that by this order, the continuity of service of the employees was maintained by the respondent Corporation who were working with the Carpet Weaving Training Centre and it showed that the employees working in the Carpet Weaving Training Centre were the employees of the respondent Corporation. The learned counsel for the petitioners also contended that the office order (Exhibit 72) has not been considered and the Labour Court has wrongly held that the respondent Corporation was not brought into existence with an object to earn profit and in that connection misread exhibit 80. The learned counsel for the petitioner maintained that the application filed by the petitioners under Section 33-C(2) of the Act of 1947 seeking minimum payment under the Payment of Bonus Act was maintainable under Section 33-C(2) of the said Act and in that connection relied on Chief Mining Engineer. M/s. East India Coal Co. v. Rameshwar, : R. B. Bansilal Abirchand Mills v. The Labour Court, Nagpur, (1972-I-LLJ-231), Sushil Kumar v. Union of India (1987-I-LLJ-7), and M/s. Anand Oil Industries v. Labour Court, Hyderabad, . The learned counsel for the petitioners, thus, submitted that the order passed by the Labour Court deserve to be quashed and set aside.
8. On the other hand, the learned counsel appearing for the respondent Corporation submitted that till the right of bonus of petitioners was adjudicated. application under Section 33-C(2) of the Act of 1947 was not maintainable. The learned counsel in this connection relied on Jagannath Barik v. Labour Court, (1993-I-LLJ-534) (Ori), Om Prakash v. State of Haryana (1994-I-LLJ-533) (P&H) Regional Manager SBI v. Central Govt. IT cum Labour Court (1993-II-LLJ-449) (All) and Gulabevi Memorial Hospital Trust v. PO Labour Court, (1993-II-LLJ-1250) (P&H). The learned counsel for the respondent Corporation also submitted that on proper appreciation of the evidence on record, the Labour Court rightly held that the Carpet Project or Carpet Weaving Training Centre had no functional integrality with the respondent No. 1 Corporation and the Labour Court has also properly considered the position of law laid down by the Apex Court in Babu Barkya Thakur v. State of Bombay. and The Management of Pakshiraja Studios v. The workers in Pakshiraja Studios, .
9. The first and foremost question which requires consideration is, whether an application under Section 33-C(2) of the Act of 1947 is maintainable seeking payment of minimum bonus under the Payment of Bonus Act. Admittedly, the petitioners are only seeking minimum payment of bonus under the Payment of Bonus Act. It is also admitted that before filing of the application under Section 33-C(2) of the Act of 1947, there was no order for payment of bonus to the present petitioner under the Payment of Bonus Act. Scope of Section 33-C(2) of the Act of 1947 is now well settled and does not require any debate. The right to the benefit which is sought to be computed under Section 33-C(2) must be an existing one and that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between the industrial workmen and his employer.
10. In M/s. East India Coal Company v. Rameshwar (supra), the Apex Court has held as under :-
"(5). It is clear that the right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between an industrial workman and his employer. Since the scope of sub-section (2) is wider than that of sub-section (1) and sub-section (2) is not confined to cases arising wider an award, settlement or under the provisions of Chapter VA, there is no reason to hold that a benefit provided by a statute or a Scheme made thereunder, without there being any thing contrary under such statute or Section 33-C(2), cannot fall within sub-section (2). Consequently, the benefits provided in the bonus scheme made under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 which remains to be computed must fall under sub-section (2) and the Labour Court therefore has jurisdiction to entertain and try such a claim. It being a claim in respect of an existing right arising from the relationship of an industrial workman and his employer. The contention that the Labour Court had no jurisdiction because the claim arose under the said scheme or because the benefit was monetary or because it involved any substantial question between the Company and the workmen must in view of the said decision, fail"
11. The principles laid down in M/s. East India Coal Company's case (Supra) were further reiterated by Apex Court in R. B. Bansilal Abirchand Mill v. The Labour Court, Nagpur (Supra). The Supreme Court thus, held -
"Following the above decision, it was held in Mining Engineer v. Rameshwar , that sub-section (2) of Section 33-C was not confined to cases arising under an award, settlement or even under the provisions of Chapter V-A of the Act and the benefit provided in the bonus scheme under the Coal Mines Provident Fund and Bonus Schemes Act. 1948 would be covered by sub-section (2) ".
12. The Full Bench of this Court in Kohinoor Tobacco Products (Pt) Ltd. v. II Labour Court, Nagpur, , considering the ambit and scope of Section 22 of the Payment of Bonus Act, 1965 vis-a-vis application under Section 33-C(2) of the Act of 1947 for claiming bonus payable under Section 10 of the Payment of Bonus Act and the catena of cases of the Apex Court as well as different High Courts, in unequivocal terms held as under :-
"Bonus Act is complete Code so far as the right to bonus is concerned. It is not a complete Code as far the remedies are concerned. Application under Section 33-C(2) of the I. D. Act for claiming minimum bonus under Section 10 of the Bonus Act is maintainable under the given circumstances".
13. The question also came up for consideration before the Full Bench of the Andhra Pradesh High Court as to whether such application under Section 33-C(2) of the Act of 1947 claiming minimum bonus under Section 10 of the Payment of Bonus Act was maintainable or not and the Full Bench of the A. P. High Court held as under :-
"20. From the above discussion, it is clear that irrespective of the fact whether an Industry makes a profit or not, the employees are assured a minimum bonus as also the minimum wage. The employers are enjoined by the statute to pay minimum bonus and minimum wage to its employees. These are statutory rights vested in every employee. The mere denial of this right cannot oust the jurisdiction of the Labour Court to entertain a petition under S. 33-C(2) or the Act".
"..... It may be clarified even at this stage that the petitioner-employer did not assert that it is not an "establishment" to which the Payment of Bonus Act does not apply; nor did it assert that the respondent were not employees of the petitioner-firm, nor that they had not put in this requisite length of service. Even in this Writ Petition these contentions were not raised. Hence if the petition filed by the respondents-employees under S. 33-C(2) is held entertainable by the Labour Court, we must find that the respondent-employees would be entitled to receive the minimum bonus declared under Section 10(2) of the Act".
14. In the light of the direct, judgments of the Apex Court, the Full Bench of this Court and the Full Bench of the A. P. High Court, the cases which have been cited by Mr. Samuel, the learned counsel for the respondent Corporation and stated supra, may be seen. In Jagannath Barik's case (supra), the Orissa High Court held as under :-
"7. Applying the legal perspective indicated above, it would be necessary to find out whether on the facts of the case the claim to bonus and differential house rent allowance call be said to be in the nature of industrial disputes, set out in Schedule-III of the I. D. Act. Invoking jurisdiction of Section 10(3) of the Industrial Tribunal, or the matters are incidental or ancillary to the question of any existing right of the employees, which could appropriately be adjudicated upon by the Labour Court under Section 22-C(2) of the ID Act. It is well known that the provisions contained in the Bonus Act, namely, Section 1(3) of the Act deals with the applicability of the Act to different establishments, factories etc., while Section 32 of the Act deals with the classes of employees to whom the Bonus Act is not applicable and Section 22 takes the case for reference of disputes as an Industrial Dispute under the jurisdiction of I. D. Act. In the present set of cases, the stand of the Board from the very beginning was that it had never paid bonus to any of the employees, as it is exempt from such payment by virtue of the provisions of Section 32(iv) read with Clause (v) (c) of the Act, being an establishment engaged in industries carried on by or under the authority of the Industries Department of State Government. A perusal of the record would go to show that no evidence has been led in this respect as to the applicability of Section 32, 22, and 1(2) of the Bonus Act. No previous decision has been brought to the notice of the Labour Court to show either way, if the employee of the Board were entitled to bonus as a condition of their service, or under the settlement order or under the provisions of the Bonus Act. The only ground oil which the Labour Court appears to have granted the relief is that there was some material, though very scanty and undependable, coming from the mouth of a witness, that the Board had in the past had paid bonus to a few retrenched employees. There is no material, however, on record to show under what circumstances bonus, if any, was paid to those retrenched employees. That apart, the claim of the present employees to bonus was not in their capacity as retrenched employees, but as continuing in service and bonus is claimed as of right. A perusal of the order of the Labour Court would clearly indicate that there was absolutely no finding as to the entitlement of bonus to the employees of the Board as of right. No discussion was held on any of the provisions of the Bonus Act or about the exemption claimed by the Board under Section 32 of the Act. In such view of the matter, it can safely be concluded that the order giving benefit of bonus as unpaid wages to the employees/petitioners was without any basis. It cannot be said on the materials on record that it was ancillary or incidental to the question, but it goes to the very root of the matter, and as such it is a matter coming with Schedule-III of I. D. Act and as such requires determination by the Industrial Tribunal as an industrial dispute in accordance with the provisions contained in the I. D. Act."
8. Coming to the question of differential house rent allowance it would be noticed that the stand of the Board was that the provisions of the Orissa Service Code is applicable to the employees of the Board under Clause 40 of the Regulations read with the a few other Regulations like-41 to 43 and others. Clause 40 dealing with the general conditions of service says, inter alia, that the rules in the Orissa Service Code (Volume I) with all its appendices except 1 to 4 and 8 and 12 as amended from time to time by the Government, shall apply to the employees of the Board mutatis mutandis. The further contention is that the employees of the Board were being paid house rent allowance at the rate of 12 1/2% following the decision of the State Government as in F. D. Resolution as admissible to State Government employees. But consequent on pay revision in 1974, there was a change in the scale of house rent allowance to 7 1/2% and this was not being paid to the employees. Certain document, namely the office order dated March 31, 1976 of the Board has been filed on behalf of the Board in all the OJCs which contain the various F. D. resolutions as also the decision of the Board. On a fair construction of these provisions of the Orissa Khadi and Village Industries Board Act, Rules and Regulations it would appear that the employees should ordinarily have no grievance when in consequence of their revision of pay-scale in the year 1974 which they accepted by giving option, the reduction in the house rent allowance was affected. Another question, however, arises which is very strenuously urged by the learned counsel appearing for both parties. It is contended on behalf of the employees relying on Section 9A of the I. D. Act that change in the house rent allowances, being a change in the conditions of service applicable to workmen in respect of matters specified in the IV Schedule, prior notice of the proposed change was mandatory. On behalf of the Board, it is contended relying on the proviso (b) to Section 9A that the Board being governed by a set of rules, which follow the State Government Service Rules, should be exempted from the operation of section 9A of the I. D. Act. In other words, it is sought to be contended that no notice is necessary to be given by the Board before effecting any change in the house rent allowance, and it could unilaterally effect necessary change. The IV Schedule dealing with die conditions of service for change of which notice is to be given under Section 9A includes wages, the period and mode of payment. There is no controversy that house rent allowance is included in "wages". The question as to whether notice under Section 9A was necessary or not is a matter which never engaged the attention of the Labour Court, as would appear from the text of the orders. Without any discussion whatsoever, the Labour Court appears to have straightway, jumped to the conclusion that the employees are entitled to differential house rent allowance, in as much as they have got a right to house rent allowance, which they were getting to the change in the scale. It is pertinent to mention that as contended by the Board, the question of wages including the period and mode payment is a subject matter coming within the jurisdiction of the industrial Tribunal, as provided for in III Schedule of the I. D. Act, and as such entertainable only by the Industrial Tribunal and not by the Labour Court".
14A. The Madras Court in Commr. Coimbatore Municipal Corporation v. PO. Labour Court, (1994-I-LLJ-535), has held as under :-
"17. The Supreme Court held that most of the points referred to the Labour Court in that case under Section 33-C(2) of the Act could not be gone into by that Court. All that the Labour Court could do under Section 33-C(2) of the Act was to compute the benefit, if there was already an adjudication in favour of the workman as against the Corporation or the said benefit was otherwise provided for as payable by the Corporation.
18. The above decision of the Supreme Court thus reiterates that the Labour Court under Section 33-C(2) can merely calculate the amount of money due to a workman from his employer if the workman is entitled to a benefit, which is capable of being computed in terms of moneys. Labour Court can proceed to compute the benefit in terms of money. But all the same, this calculation or computation can follow only upon an existing right to the money or benefit"
15. In Regional Manager, SBI, Lucknow v. Central Govt. I. T. -cum-Labour Court (supra), the Allahabad High Court has held as under :-
"5. The expression 'wages' has been defined in Clause (rr) of Section 2 of the Act and the definition contained in the said clause would be relevant for the purpose of adjudication of the controversy raised herein inasmuch as the dispute pertains to and is covered by the Act. Clause (rr) defines wages to mean all remuneration capable of being expressed in terms of money which would, if the terms of employment, expressed or implied, were fulfilled by payable to a workman in respect of his employment, or of work done in such employment, and including such allowances (including dearness allowance) as the workman is for the time being entitled to; 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 foodgrains or other articles; any travelling concession; any commission payable on the promotion of sales or business or both but does not include any bonus; any contribution paid or payable by the employer to any pension fund or for the benefit of the workman under any law for the time being in force; any gratuity payable on the termination of his service. It is thus apparent that bonus and the employer's contribution towards the provident fund and gratuity payable to the workman on termination of his service are expressly excluded from expression 'wages' and the expression wages used in the award has, therefore, to be understood to mean remuneration payable to the respondent No. 2 excluding bonus, banker's contribution towards the provided fund and gratuity. So far as the contention of Sri Yog that the parties to the award dated May 29, 1981 had understood and intended that while computing the wages payable to the respondent No. 2, the bonus, banker's contribution towards the provident fund and gratuity would also be included is concerned, it is to be noticed that neither any, pleading to that effect was set up nor any, evidence was led before the respondent No. 1 in that regard. Even before this Court, no material has been produced to fortify the said submission regarding the intention of the parties to the award for assigning meaning to the expression 'wages' other than the one assigned under the Act. The contention of Sri Yog has thus no footing".
16. In Guladevi Memorial Hospital Trust v. PO Labour Court (supra), the Punjab & Haryana High Court held as under :-
"3. It is well settled that the scope of Section 33-C(2) of the Act is indeed limited in that right or the benefit which is sought to be computed in proceedings thereunder must be an existing right, that is to say, a right already adjudicated adjudicated upon or provided for. In other words, it is only an existing right that can constitute the foundation of a claim under Section 33-C(2) of the Act. This was so held by this Court in State of Punjab v. Paramjith Kaur, 1992 (1) ILR Punjab and Haryana 312, which in turn was founded upon the judgments of the Supreme Court in Central Inland Water Transport Corporation Ltd v. The Workmen, and Chief Mining Engineer East India Coal Co. Ltd. Rameshwar, (supra) ".
17. It would be seen that none of the judgments cited by Mr. Samuel has any bearing on the question involved and in none of the four judgments cited by Mr. Samuel and referred to hereinabove. the question was examined whether an application under Section 33-C(2) of the Act of 1947 was maintainable claiming payment of minimum bonus under the Payment of Bonus Act. On the face of the Supreme Court's judgment in M/s. East India Coal Company Company Limited's case and R. B. Bansilal's case (supra), the issue can be said to be no more res integra since it has been authoritatively laid down by the Apex Court that Section 33-C(2) of the Act of 1947 was not confined to the cases falling under the award, settlement or even under the provisions of Chapter V-A of the Act of 1947, but would also cover the claim of minimum bonus under the Payment of Bonus Act. The Full Bench of this Court has also in unequivocal terms laid down that the dispute relating to minimum bonus payable under Section 10 of the Bonus Act does not fall under the scope of Section 22 and application under Section 33-C(2) of the Act of 1947 for claiming minimum bonus under Section 10 of the Payment of Bonus Act is maintainable. In view of the aforesaid decisions, it can safely be held that the applications filed by the petitioners under Section 33-C(2) of the Act of 1947 claiming minimum bonus under Section 10 of the Payment of Bonus Act was maintainable.
18. The next question which requires consideration is, whether the Labour Court was justified in negativating the claim of the petitioners on the ground that the petitioners were employee of the Carpet Weaving Training Centre and not of the respondent Corporation and whether, Carpet Weaving Training Centre was an institution not for the purpose of profit. The Labour Court considered the issue No. 1 framed by it, viz. whether the Carpet Weaving Training Centre/Carpet project is an institution established not for purpose of profit, within the meaning of Section 32 of the Payment of Bonus Act, 1965, principally from the point of view as to whether the Carpet Weaving Training Centre/Carpet Project had functional integrality with the respondent Corporation or not and having found that the Carpet Weaving Training Centre had no functional integrality with the respondent Corporation, rejected the applications filed by the petitioner, Correctness of this finding is required to be seen in the light of the facts and the evidence which has come on record and the legal position laid down by the Apex Court.
19. The petitioners have placed on record their appointment orders and in all the petitions, the petitioners have been appointed by the Respondent Corporation. The appointment orders have been issued by the respondent Corporation. In three writ petitions represented by Mr. Thakur, after the first appointment order was issued by the respondent Corporation, by subsequent orders, the petitioners were promoted and their appointment was made for the Carpet Project only it has been mentioned in the appointment orders that the petitioners shall be borne on the establishment of the Carpet Project only. However, even these office orders have been issued by the respondent Corporation. So far as Writ Petition No. 256/1987 is concerned. there is no appointment order showing that his appointment was made only, for the Carpet Project. The case of the petitioners set out in the application under Section 33-C(2) of the Act of 1947 was that they were employees of the respondent Corporation and they were governed by the rules and regulations of the respondent Corporation for the purposes of their salary, leave and other service conditions. This was definite case set out by all the petitioners in their application. Though the respondent denied that the petitioners are governed by the rules and regulations of the respondent Corporation for their salary, leave and other service conditions, no documents were placed on record by the respondent Corporation showing as to salary, leave, promotion and other service conditions of the petitioners were governed by which rules. According to the non-petitioners, the Carpet Weaving Training Centre was not part and parcel of the respondent - Corporation and according to it, the Carpet Weaving Training Centre was totally separate and distinct from the respondent Corporation. But no document or documents have been placed on record by the respondent Corporation to show as to how Carpet Weaving Training Centre of the respondent was distinct separate identity from the respondent Corporation. The respondent Corporation has examined two witnesses, viz. Suresh Dudharam Manapure and Diwakar Bhagwat. In his examination-in-chief, witness No. 1 Suresh has deposed that the respondent Corporation's accounts were separate and exhibit 69, copy of profit and loss statement of Carpet Weaving Training Centre was produced and exhibited by him. He also deposed that Carpet Weaving Training Centre was started at Nagpur and Kamptee in 1978 on the basis of the scheme from the All India Handicraft Board and as per this scheme, they were required to give training in carpet weaving. This witness further deposed that as per their pattern the training was given and that grants were utilised for purchase of raw-materials for giving stipend etc. as per the annexure to the trainees. However, the respondent Corporation has not placed scheme from All India Handicraft Board on the basis of which the said Training Centre is said to have started. This witness has also deposed that in or about September 1978, the Corporation started ten looms at Nagpur and gradually, the respondent Corporation increased the number of looms and trainees for starting complete training course which took time till March 1979. However, he admitted in his deposition that candidates for Training Centre for all posts were interviewed by the respondent Corporation and the appointments were also given by the respondent Corporation. He also admitted that the names were invited from, the employment Exchange. He categorically admitted that there was no separate budget for Carpet Weaving Training Centre. He also admitted that expenses and income etc. of all the products of the respondent Corporation were reflected in balance sheet of the respondent Corporation and that was going on since 1978 till date. Few things are clear from the deposition of this witness examined by the respondent Corporation and one of that is, there was no separate budget for Carpet Weaving Training Centre and if there was no separate budget for Carpet Weaving Training Centre, how it could be know that the said Centre was working on no profit no loss basis. This witness has also deposed that the expenses and income were reflected in the balance sheet of the respondent Corporation. The fact that the expenses and income of the Carpet Weaving Training Centre were reflected in the balance sheet of the respondent Corporation further showed that the accounts of the respondent Corporation and the Carpet Weaving Training Centre were fully amalgamated and as a matter of fact, the balance sheet of the respondent Corporation reflected the income and expenditure of this Project also. It would he pertinent to note here that exhibit 69 which, according to the witness of the respondent Corporation, was a profit and loss account of the Carpet Weaving Training Centre, would show that for the period from September 25, 1979 to March 31, 1980, there was loss amounting to Rs. 1,80,866.06 and that has been transferred to the general profit and loss account. In case of profit also it would have been transferred to general profit and loss account. This again is a very strong circumstance to show that by only general profit and loss account of the respondent Corporation, the financial aspects of the respondent Corporation could be found out and this was a circumstance pointing out that the Carpet Weaving Training Centre was one of the components of the respondent Corporation.
20. While considering the question as to whether Carpet Weaving Training Centre/Carpet Project was an institution established not for the purpose of profit within the meaning of Section 32 of the Companies Act, the Labour Court, Nagpur has held that by perusal of exhibit 80, it would leave no doubt in the mind that the respondent Corporation was never brought into existence with an object to earn any profits as such. Exhibit 80 on its face, has been misread by the Labour Court when it held that the respondent Corporation was never brought into existence with an object to earn any profit. In exhibit 80 which is Memorandum of Association of the respondent Corporation, Clauses relating to capitalization of profits, read as under :-
"138. (1) Any General Meeting may upon the recommendation of the Board resolve that any money, investments or of other assets forming part of the undivided profits of the Company standing to the credit of any Reserve Fund (Including capital redemption reserve fund or special account or in the hands of the Company and available for dividends and including any profits arising from the sale or revaluation of the assets of the Company or any part thereof or by reason of any other accretion to capital assets or representing premiums received on the credit of the share premium account, be capitalized and distributed amongst such of the shareholders as may be entitled to receive dividends and in the same proportions on the footing that they become entitled thereto as capital.
(2) All or any part of such capitalized fund shall be applied on behalf of such shareholders in paying up in full either at part or at such premium as the resolution may provide, any unissued shares, debentures or debenture stock of the Company which shall be distributed accordingly, or in or towards payment of the uncalled liability or any issued shares, or debentures, and that such distribution or payment shall be accepted by such shareholders in full satisfaction of their interest in the said capitalized sum".
21. On the face of this clause in exhibit 80 which deals with the capitalization of profits by, the respondent Corporation. the finding recorded that the respondent Corporation was never brought into existence with an object profit, is wholly unsustainable and it appears that the Labour Court was influenced unnecessarily on the basis of this finding in holding that the Carpet Training Centre/Carpet Project was an institution established not for purposes of profit within the meaning of Section 32 of the Payment of Bonus Act, 1965. To what extent the ultimate finding has been influenced when the Labour Court considered issue No. 1 would be anybody's guess, but the fact remains that on erroneous premise and erroneous finding that the respondent Corporation was never brought into existence with an object to earn any profit, the Labour Court proceeded to find whether the Carpet Weaving Training Centre was an institution not established for the purposes of profit and definitely, this influenced die ultimate conclusion drawn by the Labour Court on issue No. 1.
22. The Labour Court has found as a fact that few of the employees or the respondent Corporation have worked for sometime in the Carpet Weaving Training Centre, but still it held that fact was not by itself sufficient to attribute that the said training centre was not an independent unit of the respondent Corporation. This fact by itself that the employees of the respondent Corporation for sometime were directed to work at Carpet Weaving Training Centre, may not be sufficient to hold whether the Carpet Weaving Training Centre was an independent unit or not, but coupled with the other facts and circumstances, this again was a circumstances warranting due consideration as to whether the Carpet Weaving Training Centre was an independent unit of the respondent Corporation or not. On the basis of the evidence led by the parties, it is well established on record that the respondent Corporation has the entire control and supervision over the Carpet Weaving Training Centre. It is also established on record that the management of the respondent Corporation has mixed the entire capital and labour of the various projects working under the respondent Corporation. It is also established, there had been transfers of the employee from the respondent Corporation to the Carpet Weaving Training Centre and vice-versa. The subsequent settlement arrived at between the employees of the Carpet Weaving Training Centre and the respondent Corporation on March 4, 1983 (exhibit 74) would show that there was agreement between the parties that the management would allow all the staff to resume duty with continuity in service. The subsequent conduct reflected from this memorandum of settlement (exhibit 74) maintaining the continuity of the employees in the Carpet Weaving Training Centre also showed that the dispute was going on between the Management and the employees as to whether the employees of the Carpet Weaving Training Centre were the employees of the respondent Corporation or not. Thus, certain facts have been established on the basis of the evidence on record and these are -
(a) that, the entire control and supervision of the Carpet Weaving Training Centre was in the hands of the respondent Corporation; (b) that, the management of the respondent Corporation has mixed entire capital and labour of all its projects; and (c) that, the accounts were also merged and amalgamated. In this background, the discussion made by the Labour Court as to whether the Carpet Weaving Training Centre was having no functional integrality with the respondent Corporation, cannot be said to be justified. The Labour Court broadly confined itself to find out as to whether the Carpet Weaving Training Centre had no functional integrality with the respondent Corporation or not and without considering the aforesaid relevant facts and circumstances to find out whether the Carpet Waving Training Centre was a unit inter-dependent on the respondent Corporation or not proceeded with the matter. Besides as observed, above, the Labour Court proceeded to consider this question on erroneous premise that the respondent Corporation was brought into existence without an object of earning profit. Since the entire approach of the Labour Court was erroneous, based on erroneous assumptions, ignoring and overlooking all the material evidence and the circumstances, non-consideration of vital documents like exhibit 74, the finding recorded by the Labour Court that the Carpet Weaving Training Centre had no functional integrality with the respondent Corporation, cannot be said to be justified.
23. In Management of Pratab Press v. Secretary Delhi Press Workers' Union (1960-I-LLJ-497), the Apex Court has held as under at page 497 :-
"2. The question whether the two activities in which the single owner is engaged are one industrial unit or two distinct industrial units is not always easy of solution. No hard and fast rule can be laid down for the decision of the question and each case has to be decided on its own peculiar facts. In some cases the two activities each of which by itself comes within the definition of industry are so closely linked together that no reasonable man would consider their as independent industries. There may be other cases where the connection between the two activities is not by itself sufficient to justify an answer one way or the other, but the employer's own conduct in mixing up or not mixing up the capital, staff and management may, often provide a certain answer".
"(9) The position therefore is that the activities of the press unit are independent of the activities of the paper unit and there is no record from which it can be ascertained how the employer himself treated these two units. When in this position of things we find the employer himself making a statement that "there are two institutions, the Vir Arjun and the press, the account books are kept separately", the conclusion reached by the Tribunal that the Press and the Vir Arjun paper are distinct and separate industrial units appears to be reasonable and cannot be successfully challenged".
24. In the Management of Pakshiraja Studios v. The Workers in Pakshiraja Studios. (1961-II-LLJ-380), the Apex Court has held as under : P. 383.
"We have therefore come to the conclusion that the Tribunal has applied the correct principles for the decision of the question before it - whether the studio line of Pakshiraja Studios was distinct from the production and distribution side of the same, and has come to the correct conclusion in holding that they were not distinct, but together from one single industrial unit. The award of bonus therefore was fully justified".
25. The ratio which is deduced from the aforesaid decisions is that no hard and fast rule can be laid down for the decision of the question as to whether it is one industrial unit or there are two distinct industrial units. The Supreme Court has observed that in some cases, the two activities each of which by itself comes within the definition of 'industry' are so closely linked together that no reasonable man would consider their as independent industries, but there may be other cases where the connection between the two activities is not by itself sufficient to justify an answer one way or the other but the employer's own conduct in mixing up or not mixing up the capital, staff and management may often provide a certain answer. Thus, it is obvious that the Labour Court ought to have adverted itself to the question in view of the facts which have come on record as to whether the respondent Corporation's conduct relating to capital, staff and management of the respondent Corporation and the Carpet Weaving Training Centre, there were two distinct industrial units and two different activities, or not. In para 9 of the said judgment, the Supreme Court made it clear that the Labour Court to consider with care how far there was functional integrality between the two units and for finding out functional integrality, the matter of finance and employment is of vital importance. The Labour Court did not advert itself in a proper perspective about the matters of finance and management of the Carpet Weaving Training Centre and the respondent Corporation to find out whether the finance of the two units are separate or integrated. The Labour Court did not advert itself to exhibit 69 and the evidence of the witness No. 1 of the respondent Corporation.
26. Since the Labour Court's approach in examining the question was misdirected and the matter needs to be reconsidered by the Labour Court on the basis of the evidence which have come on record after hearing the learned-counsel for parties, it would not be proper to deal with the infirmities in the order of the Labour Court further lest is should prejudice the rights of either of the parties. The observations have been made in this judgment only to demonstrate the erroneous and misdirected approach of the Labour Court in arriving at the ultimate finding that the Carpet Weaving Training Centre had no functional integrality with the respondent Corporation.
27. For the reasons stated above, the order passed by the Labour Court, Nagpur September 30, 1986 in all the writ petitions is quashed and set aside and the I Labour Court, Nagpur is directed to rehear the applications filed by the petitioners under Section 33-C(2) of the Industrial Disputes Act, 1947 afresh in accordance with law. The parties are directed to appear before the I Labour Court, Nagpur on March 20, 1995. Rule is made absolute in the above terms. No costs.