Karnataka High Court
The Management Of Cipla Limited, ... vs Cipla Karmikara Sangha (Registered), ... on 2 February, 2000
Equivalent citations: 2001(3)KARLJ346, (2001)IILLJ476KANT
Author: A.V. Srinivasa Reddy
Bench: A.V. Srinivasa Reddy
JUDGMENT
1. The writ appeals are filed assailing the order of the learned Single Judge dismissing the writ petition filed by the appellants and allowing the writ petition filed by the respondent.
2. The brief facts of the case are as follows:
The appellant (petitioner in W.P. No. 30079 of 1998) is a Companies registered under the Companies Act, 1956. It is engaged in the manufacture and sale of pharmaceuticals including hulk drugs. It has got four factories established in the State of Maharashtra and one in Karnataka at Bangalore. The appellant-Company is governed by the Payment of Bonus Act. The appellant maintains a single balance sheet and a single P and L A/c for the Company as a whole and bonus is declared on the basis of the Company's balance sheet and the P and L A/c and in accordance with the Payment of Bonus Act. The workmen employed in the various establishments and covered under the Act were paid the same rate of bonus in all the years. In order to maintain industrial harmony and peace as per the settlement, the appellant on its volition used to pay the workmen an ex gratia amount depending upon the performance of the company and also paid bonus even to the workmen who were not covered under the Act. Before the expiry of the earlier settlement dated 19-7-1990 the Union submitted a Charter of Demands on 10-2-1993. The talks for further settlement took place, but there was no final settlement. The last date for disbursement of bonus and ex gratia amount for the workmen for the accounting year 1992-93 i.e., 30th November, 1993 was declared. The Union demanded the management for payment of bonus to all permanent employees whose wages crossed Rs. 2,500/- per month and also to pay ex gratia amount over and above 20% of bonus. The Director of the Company declined the payment of bonus but agreed to settle its Charter of Demands by paying Rs. 500/- per month, 20% bonus for a period of four years from the date of signing of the settlement which was not agreed by the Union. The Management paid bonus only to those workmen whose basic pay was less than Rs. 2,500/- and did not pay the bonus amount to the workmen whose salary was more than Rs. 2,500/-. The Management denied the legitimate bonus and ex gratia payment to the workmen of the Bangalore unit while the same is paid to the workmen of other units. They also declared the ex gratia amount and did not pay the same. Therefore, the matter was placed before the Government to refer the dispute to Industrial Tribunal. The Government referred the dispute to the Industrial Tribunal to consider whether the demand of the workmen of CIPLA Limited for the payment of bonus @ 20% for the year 1992-93 to the 119 workmen and ex gratia amount of Rs. 3,160/- to 187 workmen is justified and in that case, for what relief the workmen are entitled to. The Industrial Tribunal registered the reference as ID No. 14 of 1994. After the pleadings were filed by both the parties, the Tribunal framed the issues and held that workmen are entitled for the bonus for the year 1992-93 but held that they are not entitled to payment of ex gratia claim. Assailing that order the Management filed W.P. No. 30079 of 1998 contending that the decision of the Tribunal holding that the Union employees are entitled to the bonus is not legal and proper. The Union filed W.P. No. 30890 of 1998. The learned Single Judge after elaborately considering the rival contentions confirmed the award holding that the workmen are entitled for the bonus and reversed the finding of the Tribunal regarding the payment of ex gratia and remanded the matter to the Tribunal for fresh consideration. Assailing that order the present writ appeals are filed.
3. Both the appeals are disposed of by this common judgment.
4. The learned Counsel for the appellant contended that the mere fact that all the workmen were paid bonus in the earlier years will not give any right to claim bonus under Sections 10 and 11 of the Payment of Bonus Act unless they are employees as per Section 2(13) of the Act. It is further contended that the past practice of payment of bonus will not give any right including customary to claim bonus as a matter of right. It is further contended that ex gratia is paid voluntarily and discretionary, so it cannot be claimed as a matter of right as customary bonus or as bonus under the implied terms of the contract. Hence, the learned Single Judge erred in dismissing the writ petition filed by the Management and remanding the same to the Tribunal for fresh consideration.
5. The learned Counsel appearing for the Union contended that the bonus was paid continuously since 1977 except one or two years, thus, the payment of bonus and ex gratia became a customary. Therefore, the contentions of the appellants that the workmen are not entitled for bonus and ex gratia is not tenable. The Tribunal as well as the learned Single Judge concurrently found that the Union members are entitled for bonus and ex gratia. It is contended, that the learned Single Judge correctly remanded the matter to the extent of the consideration of payment of ex gratia amount as it was paid continuously to the workers and the same has been received by them as it had become customary payment as a part of bonus. So, the contention of the Company that payment of ex gratia amount cannot be claimed as a matter of right by the worker is not tenable. Therefore, it is contended that there are no grounds in the writ appeals and are liable to be dismissed.
6. To appreciate the above contentions it is proper to refer to the relevant provisions of the Payment of Bonus Act.
7. The 'Bonus' is not defined under the Act, nor there exists any definition of 'Bonus' under any other enactment. The 'Bonus Commission' report says: "It is difficult to define in rigid terms the concept of bonus but it is possible to urge that once profits exceed a certain base, labour should legitimately have a share in them. In other words, we think it proper to construe the concept of bonus, as sharing by the workers in the prosperity of the concern in which they are employed.
This has also the advantage that in the case of low paid workers such sharing in prosperity augments their earnings and so helps to bridge the gap between the actual wage and need based wage. If it is not feasible to better the standard of living of all the industrial and agricultural workers as aimed at in Article 43 of the Constitution, there is nothing wrong in endeavouring to do so in respect of at least those workers whose efforts have contributed to the profits of the concern in which they have worked". Thus, the 'Bonus' as per the observations of the 'Bonus Commission' makes it clear that the extra profits earned by an establishment are due to the output of workers employed by the employers in the industry. Therefore, they are paid towards their work which resulted in the profits to the establishment. In other words, a worker shall be entitled to the extra profits earned by the establishment or industry so that it may be an incentive to the workers to do more work to augment the production and so that there will be increase in the national wealth. Section 8 says that every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year. Section 9 deals with the disqualification for bonus. Sections 10 and 11 deals with payment of minimum and maximum bonus. Section 12 deals with calculation of bonus with respect to certain employees. Section 13 deals with the proportionate reduction in bonus in certain cases. Section 17 deals with adjustment of customary or interim bonus against bonus payable under the Act. Section 19 provides time-limit for payment of bonus. Section 22 deals with reference of disputes under the Act with respect to payment of bonus to the Tribunal as Industrial Dispute. As per the above provisions of the Act there is an obligation on the part of the employer, to pay every employee the minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year or Rs. 100/-whichever is higher, whether or not the employer has allocated surplus in the accounting year. Where in an accounting year, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wages. Thus, the Act provides for payment of minimum bonus and extra bonus where profits are more.
8. The first question that arises for consideration is, whether the respondent-Union members are entitled for 20% of bonus for the accounting year 1992-93.
9. The Tribunal and the learned Single Judge has considered the material on record and concurrently found that workers are entitled for bonus. It is the case of the workers that they were paid bonus and also ex gratia amount since 1977, and it is their case that after expiry of the earlier settlement, it was terminated by the appellant. By exercise of its power under Section 9 of the Payment of Bonus Act, the Management refused to pay the bonus and ex gratia to all the workmen. Therefore, they made claim. The Tribunal has considered the evidence of the workmen to the effect that during the accounting year 1979-80, the Management paid bonus at 18% without ex gratia amount. However, the Tribunal recorded a finding that since the year 1981 the Management has been paying the bonus at 20% and ex gratia amount to the workmen. In the evidence of WW-1 he stated that Management has got sufficient financial resources to pay bonus and ex gratia amount to its workers as has been paid earlier to them. MW-1, who is the head of the corporate personnel of the Management stated that the management has declared the payment of bonus every year payable to the workmen as per the Payment of the Bonus Act and issued notices in respect of the payment of bonus to the workmen for the years 1989-90, 1990-91 and 1991-92 and he has also produced the statement showing the payment of bonus and ex gratia amount to the workmen of Bangalore Unit for the period from 1977-78 to 1992-93 which is marked as Ex. M-4. In his cross-examination MW-1 has admitted that the Management has paid the bonus amount for the year 1992-93 for the eligible employees as per the Payment of Bonus Act and further he has admitted that earlier to accounting year 1992-93 the Management has paid the bonus amount to all the employees, irrespective of the ceiling limit of the salary under the provisions of the Payment of Bonus Act. He has further admitted that Management has not paid ex gratia amount to the workmen of Bangalore Unit because there was some industrial unrest, He stated that payment of bonus amount is made to the workmen on the basis of the balance sheets and ex gratia amount is paid to the workmen as per the discretion of the Management. Further, no notice was issued by the Management informing the workmen that they are not eligible for the payment of bonus and ex gratia amount. After considering the above evidence, the Tribunal as well as the learned Single Judge recorded a finding that Management has been paying bonus as well as ex gratia amount to its workers and the bonus is paid to the workmen under the Bonus Act irrespective of ceiling limit and the ex gratia payment has been made voluntarily. Thus, the material, evidence on record shows that bonus and at gratia payment have been made to the workmen since 1977-78 onwards.
10. The learned Counsel for the appellant relied on the judgment in the case of M/s. Sanghvi Jeevraj Ghewar Chand and Others v Secretary, Madras Chillies, Grains and Kirana Merchants Workers' Union and Another . In the above said decision the facts of the case are that the workmen engaged in certain chillies and kirana shops in Madras who were members of the respondent-Union made a demand for payment of bonus for the year 1964-65 equivalent to four months' salary. The conciliation proceedings having failed, the dispute was referred to Industrial Tribunal, Madras. In this case and another connected case, which is the subject-matter of judgment, the Tribunal held that though the Act did not apply in the first case by reason of Section 1(3) and in the other by reason of Section 32(x), the employees are entitled to claim bonus. Those judgments are challenged before the Supreme Court.
The Supreme Court interpreted provisions of the Act and held that though the Act is exclusive and self-contained Act, it applied to all industrial establishments which are not exclusive, and having regard to the facts and circumstances of the case it has been held that the employees are not entitled to bonus. In this case the question is whether it is a customary bonus or not and that point did not arise at all. Therefore, the facts and circumstances of the above case will not apply to the facts and circumstances of the present case. So far as profit bonus is concerned there cannot be any award outside the Act. There is no dispute that profit bonus is paid as per the implied terms of the Act. But the bonus is paid to the employees as per the terms of the contract and also the customary bonus which is outside the purview of the Act. The customary bonus is not barred under the Act and if a custom as a practice prevails in the establishment and festival bonus is paid continuously for a longer period a right accrues to the workmen to demand such customary right or festival bonus:
"In the case of Baidyanath Ayurueda Bhawan Mazdoor Union, Patna u The Management of Shri Baidyanath Ayurveda Bhavan Private Limited and Others , it has been held that customary bonus, such as attendance bonus being paid from before, not covered by Payment of Bonus Act and therefore, payable over and above the profit bonus payable under the Act".
"In the case of Union of India and Others v R.C. Jain and Others2, it has been held that the liability to pay bonus is not a question of mere legal liability but it must be considered in the context of maintenance of sound industrial relations".
"In the case of Dishergarh Power Supply Company Limited, Calcutta and Another v Workmen of Dishergarh Power Supply Company Limited and Others, the Supreme Court held that in the absence of any allocable surplus for the concerned accounting year, only minimum bonus is payable".
Further in view of tbe settlement entered into before Conciliation Officer agreeing to pay bonus at a higher rate, the bonus was held accordingly payable to the worker for the year. The Supreme Court has laid down the text to determine whether the extra bonus is customary bonus or festival bonus giving following guidelines: (1) that the payment has been made over a series of years; and (2) that it has been paid for sufficient longer period, and that bonus has to be longer in the case of implied terms of the contract and payment should have been made at an uniform rate throughout. Thus, the customary bonus or festival bonus or attendance bonus is a bonus voluntarily paid by the Management, to have good industrial peace and industrial relations, is not barred under the Act. On the other hand by the judgments of the Apex Court the payment of customary bonus or festival bonus is recognised by judicial pronouncements and when the same is denied, the workers or unions can claim for bonus as a matter of right.
The Supreme Court in case of Mumbai Kamgar Sabha, Bombay v M/s. Abdulbhai Faizullabhai and Others, wherein, at paragraph 36, it was held that, the end product of our study of the anatomy and other related factors is that the Bonus Act spreads the canvas wide to exhaust profit based bonus but beyond its frontiers is not void but other cousin claims bearing the caste name "bonus" flourish miniatures of other colours. The Act is neither prescriptive nor predicative of other existence".
The facts of the above case are quite different with the facts of the present case. The case of N.S. Giri v The Corporation of City of Manga-lore and Others, is not the case of bonus and similarly the decision in New Maneck Chowk Spinning and Weaving Company Limited, Ahmed-abad and Others v The Textile Labour Association, Ahmedabad, relied upon by the learned Counsel, is the case which deals with goodwill. Therefore, the above judgments relied upon by the learned Counsel for the appellant are not applicable to the facts of the present case. The evidence on record particularly of the management itself shows that the bonus is paid to the works commencing from the year 1977-78 till 1992-93. Therefore, there is no reason to deny the same to the workers, and we are not able to agree with the learned Counsel for the appellant. We therefore, confirm the judgment of the learned Single Judge and the order of the Tribunal on this count.
11. The second question that arises for consideration is whether members of CIPLA Karmikara Sangha is entitled for ex gratia payment or not.
12. Learned Counsel for the Management contended that the ex gratia is paid voluntarily and at the discretion of the Management. So, it cannot be claimed as a matter of right or as a customary bonus or bonus paid under the implied terms of the contract.
13. The learned Counsel for the Karmikara Sangha contended that the ex gratia is paid continuously since 1977-78 onwards until 1991-92 and it has become a customary payment during course of long period of time, and therefore, they are entitled for the same as a customary payment or as a part of customary bonus. Therefore, the learned Single Judge was right in setting aside the order of the Industrial Tribunal and remanding the matter.
14. In the claim petition filed by the Karmikara Sangha, at paragraphs 10 and 11, it is specifically claimed that ex gratia amount is paid to the workers since 1977 onwards until 1991-92, and that, over the years, these traditional and customary concessions became established practices in the Company and had ripened into valuable rights and a condition of service of the employees in the Company. This fact had been kept in view by both the Company and the Karmikara Sangha while negotiating their Charter of Demands from time to time, and claimed 20% bonus and ex gratia payment of Rs. 3,160/- per head. A counter is filed denying the allegations. It is stated that the Management has paid 20% bonus as per the provisions of the Payment of Bonus Act to all the eligible employees of all the units, but contended that merely they had been generous, it cannot be said that they have contracted out of the provisions of Payment of Bonus Act. In paragraph 13 of the counter-statement, it is stated that the Management wishes to state that they are fully justified in following the statutory provisions relating to payment of bonus. As for the claim of the ex gratia payment, the term 'ex gratia' denotes that it has to be gratuitous from the Management and the same cannot be claimed as a matter of right or demand. Further, it is submitted that merely because the Management had been generous in the past, they are not bound to continue with the practice. It is further submitted that comparison with the management staff or employees of other units of the Company is not at all tenable because the terms and conditions of employment applicable to them are wholly different from those applicable to workmen members of the I Party (CIPLA Karmikara Sangha). Thus, in the pleadings, the payment of bonus is admitted, and on the other hand it has been admitted that ex gratia amount is paid voluntarily and the same being gratuitous it has not ripened into right.
"When MW 1-Mr. Sundareshan, was examined, he stated in his evidence as follows: The ex gratia payment is a purely discretionary payment depending upon the results of the year. We also give it depending upon when there is an industrial peace and where there is subsisting settlement. For the Vikroli workmen we have not paid ex gratia for the years 1994-95, 1995-96 and 1996-97 due to industrial unrest. . . . The II Party paid the bonus to employees who are not eligible as per the Act and also without reference to ceiling on wages. . . We did not pay the workmen of Bangalore ex gratia for 1992-93 because there was some industrial unrest. . . . The I Party getting the benefits of the 1990 settlement does not cover bonus. 1990 settlement expires on 16-4-1993.
Q: In 1990 settlement you have provided 35% S.R.B. to all the employees basket figure?
A: Yes, we have provided to all the employees.
From 1992 to 1993 there was no problem in the factory. For the year 1992-93 usually the factory paid bonus to the workmen before 30th November. It is true that from 1977 to 1992 we have paid bonus and ex gratia uniformly to all the units. . . We have not issued any notice for the period 1992-93 stating that the workmen are not eligible for bonus and ex gratia. There was no industrial unrest during the year 1992-93".
"WW-1, also clearly stated that the Management has got sufficient financial sources to pay bonus and ex gratia amount. He stated in his cross-examination that, it is correct to suggest that since the Charter of Demands was not settled bonus and ex gratia payment was also not settled. He, further, stated that it is correct to suggest that the Management has not paid ex gratia to any workmen and bonus who were not covered under the Bonus Act in Vikroli factory for the years 1994-95 and 1995-96. He stated that prior to 1992-93 whatever the bonus and ex gratia payment was made, the same was received by the workers. He, further, stated that it is correct to suggest that from the inception of the factory till 1991-92, there was no demand in respect of the bonus and ex gratia payment, because what was paid by the Management was accepted by the workers, and also that bonus and ex gratia payment was being disbursed to the workers before Deepavali every year, immediately preceding accounting year".
Therefore, the pleadings as well as the evidence discloses that the workers have received the ex gratia amount, though there was no demand by the Karmikara Sangha for payment of the same. Therefore, the finding of the Industrial Tribunal that there was no continuous payment has to be decided by appreciating evidence properly, after considering the pleadings, evidence and other documents on record. So, the learned Single Judge was correct in remanding the same, for fresh consideration by the Industrial Tribunal.
15. The learned Counsel for the Management relied on judgments in case of (1) M/s. Ispahani Limited v Ispahani Employees' Union; (2) Grahams Trading Company (India) Limited v Their Workmen; (3) M/s. Tulsi Das Khimji v Their Workmen3; and (4) Vegetable Products Limited v Their Workmen :
"The Supreme Court, in the above judgments, has held that in order to establish the claim for a customary bonus or traditional bonus or puja bonus four conditions must be fulfilled, namely: (i) that the payment has been made over an unbroken series of years; (ii) that it has been so made for a sufficiently long period; (iii) that the payment has been made at a uniform rate throughout; and (iv) lastly, that it has been paid even in years of loss and did not depend upon the earning of profits".
It is a fact that in the judgments it has been held that the customary bonus or traditional bonus is payable under the provisions of the Act as customary bonus, but not otherwise.
16. Accordingly, we do not see any ground to interfere with the order of the learned Single Judge. Writ appeals are dismissed.