Madras High Court
Uco Bank Employees Association Tamil ... vs The Union Of India (Uoi), Represented By ... on 5 July, 2002
Equivalent citations: (2003)ILLJ20MAD, (2002)3MLJ390
Author: P. Sathasivam
Bench: P. Sathasivam
ORDER P. Sathasivam, J.
1. UCO Bank Employees' Association through its Secretary has filed the above Writ Petition to issue a Writ of Declaration declaring the ceiling on the wages of the employees with regard to entitlement for Bonus in Section 2(13) of the Payment of Bonus Act as illegal and unconstitutional and consequently direct the respondents 1 and 2 not to impose ceiling on the wages of the employees Class III and IV Categories with regard to entitlement for Bonus and direct the respondents 2 and 3 to pay arrears of bonus for the period from 1986 to 1993.
2. The case of the petitioner Association is briefly stated hereunder: The petitioner Association is the Tamil Nadu Unit of the UCO Bank Employees' Association which is a registered Trade Union and has been recognised by the third respondent. Most of the employees of the third respondent were getting bonus until they crossed the limit of Rs.2,500/-. The Secretary of the petitioner Union who is the deponent of the affidavit filed in support of the above writ petition was getting bonus till 1986 and thereafter became eligible as a result of the ceiling on wages at Rs.2,500/-. The Bank Employees' Federation of India of which the petitioner Association is an affiliate made representations to the Government of India for amendment of Section 2(13) to remove the ceiling so as to make all employees particularly Class IV and III eligible to get bonus. Since nothing has been done so far by the Government, the Association was constrained to approach this Court by way of the present writ petition.
3. Joint Director, Ministry of Labour-first respondent herein, has filed a counter affidavit disputing various averments made by the petitioner. Section 2(13) of the Payment of Bonus Act, 1965, defining 'Employees' by which employee drawing more than 2,500 rupees would be ineligible for bonus. The Central Government may from time to time revise the eligibility limit and calculation ceiling taking into account the economic situation prevailing in the country, capacity to pay, etc. These ceilings were last revised in the year 1985. Further, the Payment of Bonus Act, 1965 envisages minimum statutory bonus of 8.33 per cent and a maximum of 20 per cent. The scheme of payment of Bonus to persons employed in certain establishments is on the basis of profit or productivity. The Government can revise a ceiling on salary or wage for entitlement of bonus depending on the conditions prevailing in the country. The Central Government while amending Section 2 (13) by Act 67 of 1985, substituted the words as "two thousand and five hundred rupees" for the words "one thousand and six hundred rupees". The amendment is with reference to salary or wages earned by the employees and not with reference to class III or IV employees. Section 10 of the Payment of Bonus Act, 1965 provides for payment of statutory minimum bonus of 8.33 percent and maximum of 20 per cent.
4. In the light of the above pleadings, I have heard Mr. N.G.R. Prasad, learned counsel for the petitioner Employees' Association; Mr. V.T. Gopalan, learned Additional Solicitor General for respondents 1 and 2 and Mr. G. Venkataraman for third respondent.
5. Mr. N.G.R. Prasad, learned counsel for the petitioner Association, by drawing my attention to Section 2(13) of the Payment of Bonus Act, 1965, would contend that the ceiling imposed therein is bad, unjustified, unrealistic and violative of Article 14 of the Constitution of India. He also contended that there is no such ceiling under Gratuity Act, Workmen Compensation Act and other Social Welfare Legislation. On the other hand, Mr. V.T. Gopalan, learned Additional Solicitor General, appearing for respondents 1 and 2, after pointing out the history of the enactment, contended that it is a legislation policy and it is for the Parliament which alone can prescribe and increase the ceiling. He also contended that inasmuch as the Payment of Bonus Act is self contained, the same cannot be compared with the other legislation and the judicial decisions arising from those enactments. According to him, it must be left to the wisdom of the Parliament. Mr. G. Venkataraman, appearing for the third respondent, adopted the argument of the learned Additional Solicitor General.
6. In order to appreciate the rival contentions, it is useful to refer the definition "employee"
in Section 2(13) of the Payment of bonus Act, 1965 (hereinafter referred to as "the Act").
"Section 2(13) "employee" means any person (other than an apprentice) employed on a salary or wage not exceeding three thousand and five hundred rupees per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work of hire or reward, whether the terms of employment be express or implied;"
Section 12 of the Act is also relevant which speaks about calculation of bonus with respect to certain employees.
"Section 12. Calculation of bonus with respect to certain employees.- Where the salary or wage of an employee exceeds two thousand and five hundred rupees per mensem, the bonus payable to such employee under Section 10 or, as the case may be, under Section 11, shall be calculated as if his salary or wage were two thousand and five hundred rupees per mensem."
It is to be noted that at the time of enactment of the Act in 1965, the ceiling of a salary or wage was fixed at Rs.1,600/-, it was subsequently enhanced to Rs.2,500/-, and by Amendment Act 34/1995, the ceiling was raised to Rs.3,500/- with effect from 1-4-93. It is clear that after filing of the writ petition, the ceiling was increased from Rs.2,500/- to Rs.3,500/-. Mr. N.G.R. Prasad, learned counsel for the Association has contended that having included skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work in any industry, the eligibility criteria and fixing ceiling is unrealistic and unjustified. He further emphasized that the persons incharge of supervisory or managerial or administrative work undoubtedly get salary or wages more than the ceiling prescribed, accordingly they are forced to out of the pension benefit, which cannot be sustained. It is also stated that there is no ceiling to claim gratuity under the Payment of Gratuity Act, 1972 or compensation under Workmen Compensation Act.
7. Now I shall consider decisions cited by Mr. N.G.R. Prasad in support of his claim that ceiling provided under Section 2(13) of the Act is bad and irrational. The first decision is in the case of Imperial Bank of India Pensioners' Association v. S.B.I., (1989 Supp. (1) S.C.C. 236). The grievance of the petitioners therein is that the instant Pension Plan governing the employee of the erstwhile IBI is outdated and does not provide reasonable pension required for survival. Before the Supreme Court, the submission was twofold: Firstly, the ceiling of Rs.1,300/- is unrealistic and secondly the calculation of pension at 50 per cent of the basic salary is uncalled for as it introduces a second ceiling. The Supreme Court has accepted the first contention, namely, that the ceiling of Rs.1,300/- is unrealistic. After holding that once it is realised that pension is a right and not a bounty, it would not be proper to leave the quantum of pension at the discretion of the Trustees in each case, the Supreme Court opined that the figure of Rs.1,300/- in the proposed Rule 20 (1) (a) should be replaced by the figure of Rs.2,400/-. First of all, the said decision deals with payment of pension under IBI Employees Pension and Gratuity Fund Rules and Regulations. On the other hand, we are dealing with bonus under a statute, namely, Payment of Bonus Act, 1965. Even in the said decision, the Supreme Court has altered the amount in the proposed rule. In such a circumstance, I am of the view that the said decision is not helpful to the petitioner's claim.
8. The next decision relied on by Mr. N.G.R. Prasad is in the case of Rattan Arya v. State of Tamil Nadu, . In that case the tenants of residential buildings were paying monthly rent exceeding Rs.400/- excepted from the protection of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. After holding that there is no justification at all for picking out the class of tenants of residential buildings paying a rent of more than four hundred rupees per month to deny them the rights conferred generally on all tenants of buildings residential or non-residential by the Act, that the tenants of non-residential buildings cannot be said to be in a disadvantageous position as compared with tenants of residential buildings and that the argument based on protection of the weaker section of the community is entirely inconsistent with the protection given to tenants of non-residential buildings who are in a position to pay much higher rents than the rents which those who are in occupation of residential buildings can ever pay, the Supreme Court struck down Section 30(ii) of the Act as violative of Article 14 of the Constitution of India.
9. In Malpe Vishwanath Acharya v. State of Maharashtra, , the Supreme Court, while considering Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, has held that law should be just to all sections of the society and it should not be unjust to one and give disproportionate benefit to the other.
10. He also relied on M/s Kasturi Lal v. State of J and K , wherein Their Lordships have held that in granting largess, the Government action must satisfy test of reasonableness and public interest.
11. Among these decisions, the decisions, namely, and (cited supra) arose under Rent Control Act, whereas (cited supra) is with reference to grant of largess by the Government. Mr. V.T. Gopalan, learned Additional Solicitor General, by pointing out that unless those provisions are in pari materia with Payment of Bonus Act,1965, the same cannot be cited as a binding decision for the issue in question. In this regard, he very much relied on a recent decision of the Apex Court in Babu Khan v. Nazim Khan . The following conclusion of Their Lordships is relevant: (para 5) "5......It is true that the courts while construing a provision of an enactment often follow the decisions by the courts construing similar provision of an enactment in pari materia. The object behind the application of the said rule of construction is to avoid contradiction between the two statutes dealing with the same subject. But in the present case, what we find is that the Madhya Bharat Land Revenue and Tenancy Act contains one integrated scheme providing for remedy to a pucca tenant claiming restoration of possession under Section 91 and 93 of the Act. The Madhya Bharat Land Revenue and Tenancy Act was repealed by the M.P. Land Revenue Code. In the repealing Act i.e. M.P. Land Revenue Code we do not find any provision like Section 93 of the Act. We are, therefore, of the view that Sections 91, 92 and 93 of the Act are not in pari materia with the provision of Section 250 of the M.P. Code. It is not a sound principle of construction to interpret a provision of an enactment following the decisions rendered on a similar provision of an enactment when two statutes are not in pari materia....."
11(a). In Park Leather Industry (P) Ltd., v. State of U.P., reported in (2001) 3 Supreme Court Cases 135, the Supreme Court has held thus: (para 19) "19. We have considered the arguments of both the parties. In our view it is clear that the interpretation has to be on the basis of the expression "agricultural produce" as set out in Section 2(a) of the said Act. In so determining decisions based on different statutes, statutes such as sales tax laws can be of no assistance. All the cases relied upon by Mr. Sudhir Chandra are cases under the taxing statutes where the interpretation has been given on the basis of the terms as defined in those statutes."
12. In Board of Trustees of the Port of Bombay v. Sriyanesh Knitters, , Their Lordships have held thus: (paras 12 and 13) "12. In J.K. Steel Ltd., v. Union of India it was held that cognate and pari-materia legislation should be read together as forming one system and as interpreting and enforcing each other. In B.C. Shukla v. Khubchand it was held that Code of Civil Procedure has to be read along with the Limitation Act. In State of Madras v. Vidyanatha Iyer, it was held that Prevention of Corruption Act should be read along with the Evidence Act. In Mannan Lal v. Mst. Chhoitaka Bibi it was held that the Code of Civil Procedure has to be read along with the Court Fees Act. In V.R. Shelat v. Pranlal this Court observed that the Companies Act should be read along with the Transfer of Property Act.
13. From the aforesaid decisions it clearly follows that it is permissible to read the provisions of the two Acts together when the same are complementary to each other..."
13. In Dadi Jagannadham v. Jammulu Ramulu ((2001) 7 Supreme Court Cases 71), the Constitution Bench has considered the issue relating to interpretation of Statutes. The following conclusion is relevant (para 13) "13. We have considered the submission made by the parties. The settled principles of interpretation are that the court must proceed on the assumption that the legislature did not make a mistake and that it did what it intended to do. The court must, as far as possible, adopt a construction which will carry out the obvious intention of the legislature. Undoubtedly, if there is a defect or an omission in the words used by by legislature, the court would not go to its aid to correct or make up the deficiency. The court could not add words to a statute or read words into it which are not there, especially when the literal reading produces an intelligible result. The court cannot aid the legislature's defective phrasing of an Act, or add and mend, and, by construction, make up deficiencies which are there."
14. In Harshad S. Mehta v. State of Maharashtra , the following conclusion is pressed into service: (para 52) "52. There is no provision in the Act which negates the power of the Special Court to grant pardon. The Special Court has power to grant pardon at any stage of the proceedings. The power under Section 307 cannot be denied merely because no commitment of the case is made to the Special Court. Learned Solicitor-General, in our view, rightly contends that the other statutes are only an external aid to the interpretation and to rely upon the omission of a provision which is contained in another different enactment, it has to be shown that the two Acts are similar which is not the position here. The scheme of the two Acts is substantially different as has been earlier noticed by us...."
15. In Jagatram Ahuja v. Commissioner of Gift Tax , Their Lordships have arrived at the following conclusion: (para 23) "23. We find that Kantilal Trikamlal case supports the view taken in Getty Chettiar case . Added to this, Section 2(15) of the Estate Duty Act, defining "property" came up for consideration in Kantilal Trikamlal case (cited supra). We may state here itself that the words and expressions defined in one statute as judicially interpreted do not afford a guide to construction of the same words or expressions in another statute unless both the statutes are pari materia legislation or it is specifically so provided in one statute to give the same meaning to the words as defined in the other statute. The aim and object of the two legislations, namely, the Gift Tax Act and the Estate Duty Act are not similar."
16. All the above decisions of the Supreme Court make it clear that the words and expression defined in one statute as judicially interpreted do not afford a guide to construction of the same words or expressions in another statute unless both the statutes are pari materia legislations. Further, it is clear that the other statutes are only an external aid to the interpretation and to rely upon the omission of a provision which is contained in another different enactment, it has to be shown that the two Acts are similar. It is also clear that it is permissible to read the provisions of the two Acts together when the same are complementary to each other. It is also stated that the Courts while construing a provision of an enactment often follow the decisions by the courts construing similar provision of an enactment in pari materia. The object behind the application of the said rule of construction is to avoid contradiction between the two statutes dealing with the same subject. But, in the present case we are concerned with the ceiling prescribed for Payment of Bonus to the Employees. The cases relied on by Mr. N.G.R. Prasad are cases under Tamil Nadu Buildings (Lease and Rent Control) Act and Bombay Rent Control Act where the interpretation has been given on the basis of the terms as defined in those statutes. Accordingly, as rightly argued by the learned Additional Solicitor General, those principles cannot be applied to the present case.
17. Another decision very much relied on by the learned Additional Solicitor General is in the case of State Bank Staff Union Madras Circle v. Union of India (2001 (1) CTC 309). Before the Division Bench, one of the contentions of the petitioner was that the bonus, which the Tribunal has directed the Management to pay was in the nature of deferred wages, that impugned legislation had the effect of freezing wages, and that Parliament not being vested with the power to reduce the wages, the legislation is invalid on that account as well. On behalf of the Government of India, it was contended before the Division Bench that the power of legislation is plenary and it is open to the law maker to amend or repeal existing legislation so long as it acts within its field of legislative competence, and that such power extends to taking away vested rights. It was further submitted that in matters of economic policy, the State has wide latitude and is to be allowed play at the joints. While construing the amendment made in the State Bank of India Act, the Division Bench has concluded thus: (para 28 and 39) "28. The legislation with which we are concerned in this case has already been set out. The amendment made by the impugned enactment is to the State Bank of India Act and other enactments concerning other public sector Banks. By Section 7(1) of the State Bank of India Act, the Bank was vested with the power to change the conditions of service of those of its employees, who had earlier served in the Imperial Bank. Those employees cannot assert that they have a vested unalterable right in their terms and conditions of the employment. So far as other employees are concerned, by Section 43 of the Act, the Bank is empowered to determine the terms and conditions of service. The State Bank of India Act, as also the other Acts amended by this amending Act, are not beyond the pale of the legislative power of the Parliament. Parliament has undoubted power to legislate on the topic of bonus and Parliament is not precluded from legislating on that topic in enactments other than the Payment of Bonus Act. The principles, including custom, on basis of which bonus is payable, are capable of being altered by legislation.
39. The argument that the impugned legislation is invalid on the ground that it has expropriated the wages of the workmen bonus, according to petitioner being deferred wages, is wholly untenable. Bonus, after the enactment of the Payment of Bonus Act is a statutory right. The bonus though calculated on basis of wages, can no longer be termed as a deferred wage, though that description had been given to it by the Courts prior to the enactment of the Bonus Act. While bonus may form part of wages for purpose of some of the other enactments governing employees, the right to receive bonus and the extent is as regulated or permitted under the Bonus Act...."
It is settled that in matters of economic policy, the State must have a larger area in which to make its decisions without the supervision of the Court, as the State is the better Judge of what the policy should be in relation to matters of economic. Likewise, Parliament has power to legislate on the topic of bonus. The Parliament having legislated that bonus to the employees of Public Sector Banks shall be payable only in accordance with and to those eligible under the Payment of Bonus Act, it is no longer open to the employees to claim bonus on the basis of custom de hors the provisions therein. Likewise, bonus after the enactment of Payment of Bonus Act, 1965, is a statutory right. The right to receive bonus and extent is as regulated or permitted under the Bonus Act.
18. To sum up, after the enactment of the Payment of Bonus Act, the right to receive bonus and the extent is as regulated or permitted under the Bonus Act. There is no scope for claiming bonus de hors the provisions therein. Though in other enactments, the differential treatment or ceiling is found to be bad, in view of the fact that those enactments cannot be compared with the Payment of Bonus Act, those decisions are not helpful to the case on hand. The reference made to the Rent Control legislation of the State of Tamil Nadu and Bombay, Payment of Gratuity Act, Workmen Compensation Act are not in pari materia with section 2(13) of the Payment of Wages Act. In such a circumstance, it is not fair principle of construction to interpret a provision of enactment following a decision rendered in a similar provision of the enactment when the statutes are not in pari materia. The cases relied on by Mr. N.G.R. Prasad are cases under different statutes where the interpretation has been given on the basis of the terms given in those statutes. It is also settled law that it is permissible to read the provisions of two Acts together when the same are complementary to each other. It is true that in Hospital Employees' Union v. Union of India (2002 (1) LLJ 918, a Division Bench of the Delhi High Court has held that prescribing wage ceiling of Rs.1,600/- per month under Payment of Wages Act, 1936 had become obsolete and unreal and issued appropriate direction for change in the Act. In our case, I have already referred to the fact that at the time of enactment of Bonus Act, the ceiling was fixed at Rs.1,600/- and the same was increased to Rs.2,500/- and again by Act 34/1995, it was further increased to Rs.3,500/-. Likewise, the figure mentioned in Section 12 of the Act also increased periodically. I have already held that Section 12 speaks about computation of bonus. In the light of the fact that Parliament is very well aware of the grievance of persons concerned and it increases the ceiling limit then and there, I am of the view that while holding that the impugned legislation is valid, no direction is required to be given by this Court. I hold that Section 2(13) of the Payment of Bonus Act, 1965 defining an employee is constitutional and the same is valid in law. The Bonus Act envisages minimum statutory bonus of 8.33 per cent and a maximum of 20 per cent. The scheme of payment of bonus to persons employed in certain establishments is on the basis of profit or productivity. The Central Government may from time to time revise the eligibility limit taking into account the economic situation prevailing in the country, capacity to pay etc. Inasmuch as the ceiling limit was increased to Rs.3,500/- in 1995, this Court hopes that the Central Government may revise the eligibility limit, more particularly, in view of increased salary/wage payable to Class III and IV employees. With the above observation, I hold that Section 2(13) defining an employee in the Payment of Bonus Act, 1965 is constitutional, valid in law and the same is not liable to be struck down. Accordingly, the Writ Petition fails and the same is dismissed. No costs. Consequently, both the W.M.Ps., are closed.