Andhra HC (Pre-Telangana)
Andhra Pradesh Co-Operative Central ... vs Andhra Pradesh Co-Operative ... on 8 July, 1992
Equivalent citations: 1992(3)ALT88
JUDGMENT D.J. Jagannadha Raju, J.
1. This is an appeal filed by the respondent in Writ Petition No. 5816 of 1984. The writ petition has been filed by the employees working in the Agricultural Development Banks in the State of Andhra Pradesh. The petitioners claim two reliefs. The first relief is to issue a writ of mandamus to direct the respondentbank, namely, Andhra Pradesh Co-operative Central Agricultural Development Bank (hereinafter called 'the Central Bank' for brevity sake) to continue to pay bonus to all the centralised cadre employees at the same rate at which their employees in the Head Office and Regional Offices were paid during the years 1981-82,1982-83 and for all subsequent years. The second relief prayed for is for a declaration that Annexure 'A' i.e., circular letter No. 2/F'A/ACCI/84-85 dated 4th January, 1985 of the respondent-bank is illegal, arbitrary and violative of Articles 14 and 16 of the Constitution of India. The learned single judge, by judgment dated 6th September, 1988, allowed the writ petition and directed the respondent to make payment of bonus at 20% from 1981-82 to May 22,1985 and also quashed the Annexure 'A' dated 4th January, 1985, as illegal.
2. The facts pertinent for decision of the writ appeal are as follows: The appellant-Central bank is the A.P. Co-operative Central Agricultural Development Bank which is a co-operative society registered under the A.P. Co-operative Societies Act, 1964. It was originally constituted under A.P. Cooperative Central Land Mortgage Bank (Formation) Act, 1961, which is a registered co-operative society. The Co-operative Agricultural Development Banks in the State of Andhra Pradesh are registered co-operative societies under A.P. Co-operative Societies Act, 1964. They were admitted as members of the appellant-bank. For the sake of brevity, the Co-operative Agricultural Development Banks will be called "P.A.D. Banks" in this judgment. Originally the P.A.D. Banks had the power of appointment and disciplinary control over their employees. Subsequently centralised cadres were created. Under Section 114-A of the Co-operative Societies Act, the Board of Directors of the Central Agricultural Development Bank was given the power to constitute a centralised service in P.A.D. Banks for certain posts, namely, Managers or Secretaries, Engineering Supervisors, Assistant Managers or Assistant Secretaries and Executive Officers and the Board had the power of appointment, transfer and disciplinary action in respect of the centralised cadre. Subsequently a centralised cadre was created for all other categories of employees also. This was done by virtue of a settlement under Section 18(1) of the Industrial Disputes Act. The centralised cadres came into existence on 1-7-1981. By virtue of this, all former employees of the primary banks came under the centralised cadre and the Board of the Central Bank had administrative and disciplinary control. Subsequently the centralised cadre was abolished except for the employees mentioned in Section 114-A of the Co-operative Societies Act. This was done under Section 114-B of the Co-operative Societies Act. During the relevant period 1981-82 onwards upto 1985, the employees, who are the petitioners, belonged to the centralised cadre. It is also an admitted fact that for the years 1979-80,1980-81, the appellant-Central Bank paid bonus at the rate of 20% to all the centralised employees of the P.A.D. Banks. When it came to the question of paying the bonus for the years 1981-82,1982-83 and 1983-84, the appellant-Bank issued Circular letter now indicated as Annexure-A on 4-1-1985 advising the P. A.D. banks to pay bonus to all the employees working in the P. A.D. Banks as per the Payment of Bonus Act. On the very same day i.e., 4-1-1985, the appellant-bank issued Annexure-B stating that the employees in the HeadOffice and Regional Offices of the Central Bank are entitled to bonus at 20%. Feeling aggrieved by Annexure-A and the failure of the Central Bank to pay the bonus, the present writ petition is filed.
3. The main contention of the writ petitioners is that in view of the centralised cadres created, the employees are employees of the Central Bank and therefore they are entitled to be paid bonus by the Central Bank. They claim that the Central Bank is the employer and they are the employees of the Central Bank and that they are rendering service in P.A.D. Banks on behalf of the Central Bank. It is their claim that for their services in the P. A.D. Banks, the Central Bank is reimbursed by the P.A.D. Banks.
4. The learned single judge came to the conclusion that the "establishment" is the Central Bank and that the people brought under the centralised cadres are the employees of the Central Bank and hence the Central Bank, which is the "employer", is liable to pay the bonus to all the employees in the centralised cadre on par with the employees in the Head Office and Regional Offices of the Central Bank. The learned single judge rejected the contention that bonus can be paid only as per provisions of the Payment of Bonus Act and that in view of the provisions of the Payment of Bonus Act, the employees of the P. A.D. Banks, who are brought under the centralised cadre, are not the employees of the Central Bank. They can only claim bonus from their employer, namely, P.A.D. Banks. The learned judge also came to the conclusion that 'establishment' is not defined under the Payment of Bonus Act and hence the definition of 'establishment' in the analogous and allied Acts should be taken into consideration and when so viewed, there is the jural relationship of employer and employee between the Central Bank and the employees in the centralised cadres. The learned single judge rejected the contention that a claim for bonus is a matter which can be adjudicated by an Industrial Tribunal by reason of Section 22 of the Payment of Bonus Act and that a writ petition does not lie.
5. In this writ appeal, Sri E. Manohar, appearing for the appellant-Central Bank, contends that the learned single judge failed to appreciate the fact that the Payment of Bonus Act is a complete code in itself and that there is no relationship of employer and employee between the Central Bank and the employees of the centralised cadres. Section 8 of the Payment of Bonus Act, which deals with the eligibility for bonus, clearly lays down that unless an employee has worked in the establishment for not less than 30 working days in a year, he would not be entitled to bonus. Here the employees of the P.A.D. Banks have worked in the P. A.D. Banks only and though they belong to the centralised cadre, they never worked in the establishment of the Central Bank. Their claim for bonus can be made only against the establishment in which they are working, namely, the P.A.D. Banks. He also contends that every P.A.D. Bank is a body corporate in view of Section 9 of the Co-operative Societies Act and it has its own balance sheet. It is an establishment as per the provisions of the Payment of Bonus Act and hence the petitioners ae only entitled to claim Bonus from their respective P.A.D. Banks. Mr. Manohar further contends that there can be no claim for bonus de hors the Payment of Bonus Act. The court is not entitled to invoke the concepts under the Co-operative Societies Act for granting bonus. It cannot also invoke the principles of equity and good conscience. Creation of centralised cadres only gives certain powers of control over the employees to the Central Bank, but it does not give the Central Bank the ultimate control over the affairs of the establishment, namely, P.A.D. Banks. The test to be applied is whether the employer has ultimate control over the affairs of the establishment and not whether the employer has certain administrative and disciplinary control over the employees. The learned counsel submits that the learned single judge overlooked this subtle distinction. He also contends that in view of Section 22 of the Payment of Bonus Act, the writ petition is not maintainable.
6. On behalf of respondents, Sri K. Narasimham contended that by virtue of centralisation of cadres, the Central Agricultural Development Bank has become the employer and the employees of the Central Bank are working on behalf of the Central Bank in the P. A.D. Banks. The question of jural relationship of employer and employee has been considered elaborately by the learned single judge and there is no justification to upset the conclusion arrived at by the learned single judge. When the Central Bank has power of appointment, transfer and disciplinary action, it is crystal clear that it is the employer. He also contends that there is no clear cut definition of 'establishment' in the Payment of Bonus Act and hence the definitions given in Sections 2(15) and 2(16) of the Payment of Bonus Act do not give us any guidance and hence the learned judge is perfectly justified in taking into consideration the definition of 'establishment' in allied and akin legislations. He contends that there is the jural relationship between the Central Bank and the employees in the centralised cadres. Here, as there is no dispute regarding the quantum of bonus to be paid and the applicability of the Payment of Bonus Act to the petitioners, there is no necessity for the petitioners to raise an industrial dispute as contemplated under Section 22 of the Payment of Bonus Act. He contends that the judgment of the learned single judge is in consonance with the law and that it is also in consonance with the earlier stand taken by the Central Bank which has paid bonus for the years 1979-80 and 1980-81. He also contends that the Central Bank is estopped from raising the present contentions by virtue of its prior conduct.
7. The points that arise for consideration in this appeal are:
(1) Whether the appellant is the employer of the employees of the P.A.D. Banks who come under the centralised cadre?
(2) Whether a writ petition is maintainable for claim of bonus in view of Section 22 of the Payment of Bonus Act?
(3) Whether the present appellant is estopped from raising the present contentions by reason of the prior conduct?
8. Point No. 3: It should be remembered that though the appellant paid the bonus for the years 1979-80 and 1980-81 due to a mistaken impression, or a wrong understanding of the law, there cannot be any estoppel against a statute. The petitioner-respondents have to seek their rights and remedies in accordance with the provisions of the Payment of Bonus Act. We hold this point against the respondents.
9. Points 1 and 2: A reading of the elaborate judgment of the learned single judge clearly shows that all the arguments now raised by the appellant's counsel in this appeal have been raised before the learned single judge. Most of the judgment deals with the provisions of the Co-operative Societies Act and the other allied enactments. It should be remembered that it is now well established that the Payment of Bonus Act is a complete code in itself and there can be no claim for bonus de hors the provisions of the Payment of Bonus Act. Santhvijeevraj v. M.C.G. & K.M.W. Union, which is-one of the earliest and leading decisions on the Payment of Bonus Act has elaborately dealt with the history of the bonus and then considered the provisions of the Payment of Bonus Act, 1965, in great detail. The Supreme Court in paragraph 3 at page 537 observed as follows:
"Thus, bonus which was originally a voluntary payment acquired under the Full Bench formula the character or a right to share surplus profits enforceable through the machinery of the Industrial Disputes Act, 1947 and other corresponding Acts. Under the Act liability to pay bonus has now become a statutory obligation imposed on the employers."
After examining the provisions of the Payment of Bonus Act, the court observed in paragraph 6 at page 539 as follows:
"Therefore, there is no question of a right to bonus under the Industrial Disputes Act or other corresponding Acts having been retained or saved by Section 39. Neither the Industrial Disputes Act nor any of the other corresponding laws provides for a right to bonus. Item 5 in Schedule 3 to the Industrial Disputes Act deals with jurisdiction of tribunals set up under Sections 7,7-A and 7-B of that Act, but does not provide for any right to bonus. Such a right is statutorily provided for the first time by this Act."
After a very exhaustive discussion, the court repelled the contention that the Payment of Bonus Act is not a complete code in itself and observed at page 543 in paragraph 18 as follows:
"Considering the history of the legislation, the background and the circumstances in which the Act was enacted, the object of the Act and its scheme, it is not possible to accept the construction suggested on behalf of the respondents that the Act is not an exhaustive Act dealing comprehensively with the subject-matter of bonus in all its aspects or that Parliament still left it open to those to whom the Act does not apply by reason of its provisions either as to exclusion or exemption to raise a dispute with regard to bonus through industrial adjudication under the Industrial Disputes Act or other corresponding law."
Kohinoor Tobacco Products v. labour Court, 1986 Labour and Industrial Cases, P. 1055 lays down that the Payment of Bonus Act is a complete code in respect of right to bonus. We have to judge the claim of the writ petitioners bearing in mind the above principles.
10. When the Payment of Bonus Act is a complete code in itself, it is not open to the courts to introduce the concepts under other enactments and the definitions given in allied enactments while interpreting the provisions of the Payment of Bonus Act. Section 1(3) of the Payment of Bonus Act clearly lays down that this Act applied to every factory and every other establishment in which twenty or more persons are employed on any day during an accounting year. The proviso gives power to the appropriate Government to apply the provisions of the Act. to establishments or factories which employ such number of persons less than twenty as may be specified in the notification. Section 2(13) of the Act defines "employee". There is no difficulty in understanding the definition of "employee". Section 2(14) defines "employer". It reads as follows:
"(14) "employer" includes-
(i) in relation to an establishment which is a factor)', the owner or occupier of a factory including the agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as a manager of the factory under clause (f) of Sub-section (1) of Section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and
(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, mananging director or managing agent."
It is clear from the language of this definition that it is an inclusive definition and according to clause (ii), in relation to an establishment, which is not a factory, the employer is the person or authority which has the ultimate controi over the affairs of the establishment. The stress is on the words "ultimate control over the affairs of the establishment." The definition does not indicate that person exercising control over the employees will be treated as an employer. The definition clearly indicates that where the affairs are entrusted to a manager, or managing director or managing agent, such person becomes an employer for the purpose of the Act. The learned single judge in the judgment under appeal construed the power of administrative control and disciplinary control as synonymous with "ultimate control over the affairs of the establishment". This is neither correct nor a proper approach.
11. Section 2(15) of the Payment of Bonus Act defines "establishment in private sector". Section 2(16) defines "establishment in public sector". According to the language of Section 2(15), "establishment in private sector" means any establishment other than an establishment in public sector. When the definitions given in Sections 2(15) and 2(16) are read together, it is quite clear that the two definitions put together give the definition for "establishment" for purposes of the Act. The learned author Sri K.D. Srivastava in his book "Payment of Bonus Act, 1965" 7th Edition analysing Sections 2(15) and 2(16) comments as follows:
"Section 2(16) defines 'establishment in public sector'. That definition is exhaustive; excluding these establishments all other establishments would fall within the compass of 'establishment in private sector'."
Section 3 lays down that "establishments" would include departments, undertakings and branches. Section 3 reads as follows:
"3. Establishments to include Departments/ undertakings and Branches:
Where an establishment consists of different departments or undertakings or has branches, whether situated in the place, or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act:
Provided that where for any accounting year a separate balancesheet and profit and loss account are prepared and maintained in respect of any department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus."
The proviso in this Section is very important. By reason of the proviso, where for any accounting year, a separate balance-sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch, then such department or undertaking or branch shall be treated as a separate establishment for purposes of computation of bonus under this Act for that year. It should be remembered that P.A.D. Banks are not branches of the Central Bank. They are independent entities. Under the provisions of the Cooperative Societies Act, the P.A.D. Banks which are registered under the Cooperative Societies Act are separate body corporates. Chapter XIII of the Cooperative Societies Act deals with Agricultural Development Banks. While Section 84(b) of the Co-operative Societies Act defines "Central Agricultural Development Bank, Section 84(c) defines "Agricultural Development Bank" and it clearly indicates that it means a co-operative society registered as such or deemed to be registered under the Act. Section 85 makes it clear that the provisions of Chapter XIII shall apply to the Agricultural Development Banks. Thus it is clear mat the Cental Agricuotural Development Bank and the Agricultural Development Banks are separate and distinct entities. It is an admitted fact that the writ petitioners are persons who are employed in the Primary Agricultural Development Banks. They receive their salaries and wages from the P.A.D. Banks. By virtue of creation of a centralised cadre, the history of which has been set out in great detail in the judgment under appeal, the Board of the Central Bank was given the power of appointment, transfer and disciplinary action over the employees. Under Section 114-B, the centralised cadre for the employees, who have come forward with the writ petition, has been abolished by the A.P. Co-operative Societies Amendment Act, 1985. Under Section 115 of the Co-operative Societies Act, the Central Bank is given the power of supervision over the Agricultural Development Banks including the power of appointment, transfer and disciplinary action in respect of the employees of the Agricultural Development Banks. The Central bank is also given the power to make Regulations with the prior approval of the Registrar of Co-operative Societies. Except the power of supervision and the power of administrative and disciplinary control over the employees, the Bank does not have ultimate control over the affairs of the Agricultural Development Banks. A harmonious interpretation of the provisions of the Co-operative Societies Act and the provisions of the Payment of Bonus Act clearly indicates that there is no conflict between these provisions and it cannot be construed that there is a jural relationship of employer and employee between the Central Bank and the employees of the P. A.D. Banks which were brought under the centralised cadre. The constitution of centralised service did not make the Central Agricultural Development Bank an employer for the persons working in the numerous P.A.D. Banks in the State. It should also be remembered that the employees of the P.A.D. Banks work in and for the benefit of the P,A.D. Banks. They are remunerated by the P.A.D. Banks which are corporate bodies by reason of Section 9 of the Co-operative Societies Act. Every P.A.D. Bank has its own separate balance sheet. By virtue of this, also as contemplated under proviso to Section 3 of the Payment of Bonus Act they cannot be considered to be the employees of the Central Bank. Section 3 of the Payment of Bonus Act indicates that even separate departments of the same establishment and branches of the same establishment can be treated as separate establishments for purposes of the Act if separate balance-sheets are maintained. In such a background, there is absolutely no possibility for the employees of the P. A.D. Banks being treated as employees of the Central Bank simply because they belong to the centralised cadre.
12. It should also be remembered that under Section 8 of the Payment of Bonus Act which deals with the eligibility for bonus, an employee who has worked in the establishment for not less than 30 working days in a year alone is eligible for the bonus. Payment of bonus is based upon the principle of a person contributing to the profits earned by the establishment and then taking a share in the profits earned. The employees of the P.A.D. Banks have not contributed for the profits earned by the Central Bank nor did they work in the Central Bank and hence they cannot claim, by way of bonus, a share in the profits of the Centra! Bank. They have worked for the P.A.D. Banks earning profits and so they are eligible to claim bonus in the profits earned by the P.A.D. Banks.
13. Section 22 of the Payment of Bonus Act reads as follows:
"22. Reference of Disputes under the Act: Where any dispute arises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the) meaning of the Industrial Disputes Act, 1947 (14 of 1947) or of any corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly."
A careful reading of the Section clearly indicates that where any dispute arises between an employer and his employees with respect to (1) the bonus payable under the Act or, (2) with respect to the application of this Act to an establishment in public sector, such a dispute is deemed as an industrial dispute. In the present case on hand, it is the contention of the appellant that the employeeswrit petitioners are not entitled to bonus from the appellant-Central Bank. If they are aggrieved by Annexure-A dated 4-1-1985, the employees should have raised an industrial dispute and had the matter referred for adjudication by the Industrial Tribunal. Simply because Annexure-A was issued after the Bank wrongly or under a mistaken impression or a mistaken understanding of the law paid the bonus for two years, it does not mean that there is no dispute regarding bonus. The learned single judge, dealing with this aspect of the case, at page 12 of the judgment observed as follows:
"But the immediate question is whether there is any dispute in this regard and if so, what is the quantum of bonus to which the workmen are entitled.... But this question is obviated in view of the admitted fact that the Board had already decided to pay bonus at the rate of 20% to a centralised cadre. Now it is held that the centralised cadre is its employees. Admittedly the centralised cadre consists of more than twenty. The question of working for thirty days as provided under subsection (3) of Section 1 with Primary Agricultural Development Bank does not arise as they are working on deputation on allotment by operation of the statutory provisions of the Co-operative Societies Act on behalf of its employer under Section 114-A of Act 51 of 1976."
In our considered view, the learned judge is not correct. As indicated earlier, the mistaken payment of the bonus earlier cannot operate as an estoppel. There cannot be an estoppel against statute. The fundamental question is whether under the Payment of Bonus Act the writ petitioners are entitled to be paid bonus by the Central Bank or whether they are entitled to claim bonus against the P. A.D. Banks in which they are working. If under statute, they have no right to claim bonus, they are not entitled to the relief of a writ of mandamus. The writ of mandamus can be issued only when there is a legal right for the person seeking the relief of mandamus. In the present case on hand, applying the provisions of the Payment of Bonus Act, the writ petitioners are not entitled to claim bonus against the Central Bank. If they had any grievance against the order issued in Annexure-A, then they should have agitated the matter under Section 22 of the Payment of Bonus Act and got the matter adjudicated by the Industrial Tribunal. They cannot come forward with the writ petition for issuance of a writ of mandamus.
14. For the various reasons indicated above, we hold points 1 and 2 against the writ petitioners and in favour of the respondent in the writ petition, the present appellant.
15. In the result, the writ appeal is allowed. The judgment of the learned single judge is reversed and consequently the writ petition stands dismissed.
16. In the peculiar circumstances of this case, each party is directed to bear its own costs. Advocate's fee is fixed at Rs. 300/-.