Madras High Court
Swaminathan C.S. And Ors. vs Simpson & Co. Ltd. And Anr. on 4 December, 2000
Equivalent citations: [2001(88)FLR1037], (2001)ILLJ141MAD, (2001)1MLJ288
Author: V.S. Sirpurkar
Bench: V.S. Sirpurkar, M. Chockalingam
JUDGMENT V.S. Sirpurkar, J.
1. This writ appeal challenges the judgment of the learned single Judge whereby, the learned single Judge has allowed the writ petition filed by the employer quashing the order passed in a claim petition made by the employees under the provisions of Section 33-C(2) of the Industrial Disputes Act.
2. The appellant-employees are admittedly the workmen of the respondent-employer Simpson and Company Limited. The employer, for the accounting year June 1981 - May 1982, declared a bonus of 20% on the annual earnings of the employees under the Payment of Bonus Act. It was claimed that though all the petitioners were drawing a salary of Rs. 1000/- and more and even after calculating the deductions on account of their absence on loss of pay, their salary was more than Rs. 750/- per month. They further claimed that the calculation by the employer of their bonus was wholly incorrect inasmuch as instead of deducting the amount attributable to their absence or loss of pay from the total wages, the employer sought to deduct it from Rs. 750/-, which was then the maximum limit provided by Section 12 of the Payment of Bonus Act. They pointed out that this could not be done and that they were entitled to the bonus calculating their salary to be Rs. 750/- because they had admittedly earned more than that even after deducting the amount on account of leave on loss of pay.
3. This claim was opposed by the employer firstly on the ground that the claim petition under Section 33-C(2) of the Industrial Disputes Act was not tenable and secondly that the calculation made by the company was correct.
4. The Labour Court did not accept the case of the employer and came to the conclusion that the petition under Section 33-C(2) of the Industrial Disputes Act was in order and that it had jurisdiction to entertain the same. As regards the calculation of bonus, the Labour Court held that the calculation made by the employer and more particularly the exercise by the employer of deducting the amount on account of the leave on loss of pay not from the total wages earned by the employees but from the amount of Rs. 750/- which was the limit provided by Section 12 of the Payment of Bonus Act, was wholly incorrect. The claims were, therefore, granted. The learned single Judge of this Court, however, predominantly relying upon a decision in Major D. Aranha 's case 1975-I-LLJ-254 (Mad-DB) as also on Sivagnanam 's case 1980 I MLJ 441 and some other cases held that the claim under Section 33-C(2) was not maintainable and that the employees should have proceeded only by way of an industrial dispute in terms of Section 22 of the Payment of Bonus Act, 1965. The employees now challenge the dismissal of their petition or, the tenability before us.
5. Mr. N.G.R. Prasad, learned counsel appearing on behalf of the appellants vehemently argued that the scope of Section 33-C(2) of the Industrial Disputes Act was no more res Integra and was decided even on the backdrop of Section 22 of the payment of Bonus Act. His contention was that the dispute as referred to in Section 22 of the Payment of Bonus Act would take into its fold only the question of liability of payment of bonus but, according to the learned counsel, where the payment of bonus or even the percentage at which it was to be paid were not in dispute, there would be no question of there being any dispute respecting the bonus payable under the Act. He argues that in the present case, there was no question of the applicability of the Act and the dispute did not touch to that aspect. He further argued, where the employer had agreed to pay the bonus at the rate of 20% of the wages earned then, the relevance of Section 12 of the Act would be only so far as the calculation of the bonus was concerned. He, therefore, argues that the calculation could always be made under the provisions of Section 33-C(2) of the Industrial Disputes Act.
6. On the other handy Mr. Reddy, learned counsel appearing on behalf of the employer strenuously argued that the law laid down in Major D. Aranha's case, cited (supra), was consistent and was followed even in Sivagnanam's case, cited (supra) and further in the case of Ashok Leyland 1992-II-LLJ-128 (Mad-DB). He therefore, submits that this was not the question merely of the calculation but the principles on which the calculation could be made. The learned counsel, therefore, says that there was a dispute well covered under Section 22 of the Act, and, therefore, it was bound to he held that a claim under Section 33-C(2) of the Industrial Disputes Act was not maintainable.
7. In support of his contention, Mr. Prasad, heavily relied on the Full Bench judgment of the Bombay High Court, reported in AIR 1986 Bom. 340 K.T.P. Pvt. Ltd. v. Presiding Officer, Nagpur where the Full Bench held that every dispute relating to the minimum bonus payable under Section 10 of the Payment of Bonus Act does not fall within the ambit and scope of Section 22; it depends upon what the actual controversy between the parries was. Holding further that where there is no dispute about the payment of bonus, the Full Bench held that the proceedings under Section 33-C(2) of the Industrial Disputes Act would be available.
8. Mr. Prasad, drew our attention particularly to paragraph 14 of the Full Bench judgment where the decision in Aranha's case, cited (supra), was considered by the Full Bench. The Bench has also made a reference in that judgment to the cases of Anand Oil Industries 1979 Lab IC NOC 87 and Allahahad Labour Agency 1970 Mah LJ 9. The Bench answered the questions that every dispute relating to minimum bonus payable under Section 10 of the Payment of Bonus Act does not fall within the ambit and scope of Section 22 of the Act and depends upon what the actual controversy between the parties is. The Full Bench also held that the Payment of Bonus Act is a complete Code so far as the right to bonus is concerned but, it is not a complete Code as far as the remedies are concerned and the application under Section 33-C(2) of the Industrial Disputes Act for claiming minimum bonus under Section 10 of the Payment of Bonus Act is maintainable under the given circumstances.
9. Mr. Reddy questions the correctness of this judgment and points out that it was only the minimum bonus under Section 10 of the Payment of Bonus Act had fallen for consideration. He also points out that in the present case the question was not that of the minimum bonus and, in fact, the employer had agreed to pay 20% bonus.
10. In our considered opinion, the moment it is conceded that the employer had agreed to pay 20% bonus, that should be the end of the matter because then the liability to pay the bonus no more remains in question. In our opinion, where the employer agrees to pay bonus, which is even more than the minimum bonus under Section 10 of the Payment of Bonus Act or where there is a clear-cut settlement between the parties as regards the percentage of bonus then, the two cases, viz. i) payment of minimum bonus and (ii) payment of settled bonus or agreed bonus become identical cases at least in so far as Section 22 of the Payment of Bonus Act is concerned. The rationale is clear to see that this is a case where the employer agrees to pay bonus at a particular percentage and the employees have no grudge about either the payment of bonus or its rate. What then remains is the "calculation of bonus". In our opinion, therefore, the law laid down by the Full Bench in K.T.P. Pvt. Ltd. case, cited (supra), would apply to the present case also since this is a case where the bonus is "agreed bonus". That takes us to the consideration of much debated decision in Aranha 's case, cited (supra).
11. There is no doubt that in Aranha's case, cited (supra), the observations in paragraph 4 are almost of the sweeping nature. The learned Judges say:
"But, in our opinion, the words any dispute ..... with respect to bonus payable under the Act are wide enough to cover not merely questions relating to entitlement but also the quantum and a plea of discharge."
We feel that this judgment, which has also been noticed by the Division Bench in the later judgment in Sivagnanam 's case, cited (supra), would lose its rigour in view of the following observations in Sivagnanam's case, cited (supra). We would choose to quote rather than comment on it. In paragraph 5, the learned Judges have referred to Aranha's case, cited (supra) and ultimately observed in paragraph 6 as follows:
"As far as the claim for minimum bonus is concerned, it is possible to say that it could be agitated in an application under Section 33-C(2) of the Industrial Disputes Act as it is a statutory right and there is no necessity to have it either established or declared by raising an industrial dispute or otherwise. It is true the decision in Major D. Aranha v. Universal Radiators, Coimbatore 1975-I-LLJ-254 (Mad- DB) proceeded on the basis that even an individual dispute relating to bonus between an employer and an individual workman will become an industrial dispute under Section 22 of the Payment of Bonus Act, while a Full Bench of the Andhra Pradesh High Court took the view that it is only the collective dispute with respect to bonus that will become an industrial dispute under Section 22 of the Payment of Bonus Act, 1965 and not an individual dispute between an employer and an employee with respect to the bonus payable to that particular employee. However, we feel it unnecessary to go into this controversy and to resolve one way or the other the said question as to whether Section 22 of the Payment of Bonus Act, 1965 will take in an industrial dispute with respect to bonus, as we are of the view that this case can be disposed of without reference to that question. The case before the Division Bench in Major D. Aranha Universal Radiators, Coimbatore 1975-I-LLJ-254 related to a claim for bonus payable to the employees for the year, 1965-66. The management contended that no bonus has been declared so far for that year and therefore, the workman cannot claim bonus and that in the event the employee having received a consolidated sum of Rs. 3000 towards all the benefits due to him inclusive of bonus for the year 1965-66 he cannot claim any further amount as bonus. It is in the light of these pleadings, the Court held that the claim cannot be agitated under the provisions contained under Section 33-C(2) of the Industrial Disputes Act. We are of the view that the actual decision rendered by time Division Bench of this Court in Major D. Aranha v. Universal Radiators, Coimbatore 1975-I-LLJ-254 cannot be taken exception to."
12. We have deliberately highlighted the observations to suggest that the controversy in Aranha's case, cited (supra), was entirely different. It was as regards the "liability to pay the bonus". According to the Management, the bonus was already paid in the consolidated sum of Rs. 3000/- while, according to the workmen, the bonus was not paid. Here, the question is entirely different. In this case, it is admitted that the bonus was "agreed to be paid at the rate of 20%". We would, therefore, only say that the law laid down in Aranha's case, cited (supra), would have to be read in the light of the facts in that case where the payment of bonus was a disputed affair while the liability to pay the bonus was not a disputed affair in the present case.
13. In Sivagnanam's case (supra) again, the Division Bench went on to hold that since the claim of the employees was 30% and since it did not spring from any settlement or award nor did it spring from the statute and, therefore, the workmen could not straightaway proceed under Section 33-C(2) of the Industrial Disputes Act. In our opinion, the rigour of Aranha's case, cited (supra) has been sufficiently watered down in the second mentioned Division Bench judgment in Sivagnanam's case (supra) by holding that Aranha's case (supra) was decided on the basis of the facts of that case.
14. Our attention was invited to a Division Bench decision of Kerala High Court in Pappu and Anr. v. Raja Tile & Match Works 1989-I-LLJ-14 where the Division Bench of the Kerala High Court have also taken the stock of the judgment in Aranha's case (supra) and have expressed their inability to agree with the proposition laid down therein. This is more or less a story in the Full Bench judgment of the Bombay High Court also. We only say that Aranha's case (supra) has to be read in the light of its own facts where the question of liability to pay the bonus itself was a disputed question of fact. We are of the clear opinion that the last portion of that judgment in paragraph is real in the nature of obiter and, therefore, not binding on us. This is the reason why we do not venture to make a reference in this matter. We are, therefore, of the clear opinion that since the question of liability to pay bonus is not a disputed question, we would be well advised to hold that a petition under Section 33-C(2) of the Industrial Disputes Act would be well within the jurisdiction in this case.
15. The scope of Section 33-C(2) of the Industrial Disputes Act has been time and again explained by the Apex Court and our attention was drawn by Mr. Prasad to the latest decision on the question which is reported in Fabril Gasosa v. Labour Commissioner . Though this is not a case on the backdrop of Section 22 of the Payment of Bonus Act, the observations of the Supreme Court in paragraph 19 are apposite and most relevant. The Supreme Court says:
"The distinction between Sub-section (1) and Sub-section (2) of Section 33-C lies mainly in the procedural aspect and not with any substantive rights of workmen as conferred by these two sub-sections.
Sub-section (1) comes into play when on the application of a workman himself or any other person assigned by him in writing in this behalf or his assignee or heirs in case of his death, the appropriate Government is satisfied that the amounts so claimed are due and payable to that workman. On, that satisfaction being arrived at, the Government can initiate action under this sub- section for recovery of the amount provided the amount is a determined one and requires no "adjudication". The appropriate Government does not have the power to determine the amount due to any workman under Sub-section (1) and that determination can only be done by the Labour Court under Sub-section (2) or in a reference under Section 10(1) of the Act."
A reference can also be made to the principles stated by the Supreme Court in Delhi Municipality case, reported in 1995 (1) LLN 395.
16. On the backdrop of these principles, it is better to see as to whether what fell for consideration in this case was a "question of liability" or was a mere question of calculation". We are of the opinion that this was a "mere question of calculation". Section 10 of the Payment of Bonus Act speaks about the right of the workmen for "a minimum bonus" while Section 11 speaks about "maximum bonus". The language of Sub-section (1) of Section 11 is liable to be (sic) seen in this behalf. Sub-section (1) reads as follows:
"(1) Where in respect of any accounting year referred to in Section 10 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 that accounting year subject to a maximum of twenty per cent of such salary or wage".
Section 12, as it then was, reads as under:
"12. Where the salary or wage of an employee exceeds seven hundred and fifty rupees per mensem, the bonus payable to such employees under Section 10 or, as the case may be, under Section 11, shall be calculated as if his salary or wage were seven hundred and fifty per mensem".
17. The conjoint reading of Sections 10, 11 and 12 would show that the bonus is basically payable on the salary or wage earned by the employees during the accounting year. That must be the basis of the calculation of the bonus. Perhaps it is because of this that when the worker loses some amount of salary or wage on account of his absence oft loss of pay, those amounts are not taken into consideration for the calculation of his bonus. However, this calculation is subject to Section 12. If his salary, after or before the deductions. is less than Rs. 750/-, there would be no question of application of Section 12 but, where, even after the deductions so made for his absence on loss of pay or otherwise, his salary exceeds the limit, given in that section yet, the bonus shall not be paid on the more salary but, shall be limited to Rs. 750/-. That is the rationale of Section 12 and that could be the only reasonable interpretation. In that sense, it can be said that Section 12 is "employer-friendly" so that whatever may be salary or wage earned by the employee, he gets his bonus only as if his per month salary/wage is Rs. 750/- though, in actual practice, he might have earned much more than that. Thus, the key words to be noted in Section 11 are highlighted by us and they are "salary or wage earned by the employee". Now, therefore, while calculating bonus, the employer would be well justified in deducting that amount from his monthly salary/wage. However, the employer cannot then turn around and tell the workmen that for the purposes of the Act their salary is Rs. 750/- and therefore, the loss which the workmen have incurred on account of their absence on loss of pay shall be deducted from that amount. This cannot be certainly a way to look at Section 12. Section 12 is very clear. Once Sections 11 and 12 are seen in this perspective, it would become clear that the judgment by the Labour Court is also correct inasmuch as it does not permit the calculation of bonus after deduction of the amount on account of absence on loss of pay from the amount, of the minimum limit prescribed in Section 12 of the Act.
18. In short, this was a question which did not cover the "entitlement" on the part of the employees or the "liability" on the part of the employer. This was a simple question of calculation. According to the employees, the calculation was wrongly made and according to the employer, the calculation was correct. Since this was merely a question of calculation and since the question of payment of bonus was not a disputed question we are of the clear opinion, that the question can be and was rightly debated under the jurisdiction of Section 33-C(2) of the Industrial Disputes Act. We do not find anything wrong with the judgment of the Labour Court. We find that the learned single Judge had not considered the cases of Aranha and Sivagnanam, cited supra in the correct light. We are also of the opinion that the facts in those two cases are also entirely different. Therefore, the appeal must succeed. The judgment of the learned single Judge is set aside and that of the Labour Court is restored.
19. In the result, the appeal is allowed but, in the circumstances there shall be no orders as tothecosts. C.M.P. No. 15475/1996 is closed.