Andhra HC (Pre-Telangana)
The Thandava Cooperative Sugars ... vs The Thandava Cooperative Sugars ... on 11 November, 2003
Equivalent citations: 2004(1)ALT171, (2004)ILLJ927AP
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy, K.C. Bhanu
JUDGMENT B. Sudershan Reddy, J.
1. These two writ petitions may be disposed of by a common order since the question that falls for consideration in both the writ petitions is one and the same, viz., whether the employees of the respondent. The Thandava Cooperative Sugars Limited (for short 'the Factory') are entitled to the payment of bonus as provided for under Section 10 of the Payment of Bonus Act, 1965 (for short 'the Act').
2. In both the writ petitions, the Unions of the workmen are the petitioners espousing the cause of its members to receive the bonus as provided by Section 10 of the Act.
3. The case set up by the petitioners is that the respondent-Society is covered by the provisions of the Act. As per Section 10 of the Act, every employer is liable to pay a minimum bonus of 8.33% of the salary or wage earned by the employees during the accounting year or one hundred rupees, whichever is higher, irrespective of the profits in its business.
4. The gravamen of the complaint in the instant writ petitions relates to the inaction on the part of the respondent-Factory to pay bonus to its employees for which they are legitimately entitled to under the provisions of the Act. It was contended that the respondent-Factory is under statutory duty and obligation to pay a minimum bonus of 8.33% to all its employees irrespective of the profits in its business. It was also contended that, in fact, the respondent-Factory made huge profits during the relevant years and in spite of the same refused to pay the bonus.
5. The defence set up by the respondent-Factory is that production incentive at the rate of 8.25% was paid to the workers for the financial year 1999-2000 since production results had been shown to be satisfactorily during that year. It is also stated that the factory sustained losses due to various factors. It is admitted that from the financial year 2000-2001 onwards no statutory bonus or production incentive could be paid in view of the acute financial loss suffered by the Factory raising accumulated loss to Rs. 12.76 crores for the year ending 31st March, 2001.
6. The respondent-Factory has relied upon the order issued by the Government of Andhra Pradesh in G.O.Ms. No. 366, Finance and Planning, dated 29-10-1993 wherein instructions have been issued to all the Cooperative Sugar Factories, which have been incurring losses, not to pay the bonus to its employees until further orders.
7. The sheet anchor of the case set up by the respondent-Factory is that it is bound to implement the directions issued by the Government vide G.O.Ms.No. 366, dated 29-10-1993 and accordingly did not pay the minimum bonus of 8.33% to its employees. The fact remains that the respondent-factory did not pay the minimum bonus of 8.33% to its employees.
8. The short question that falls for consideration is as to whether the defence set up by the respondent-Factory relying upon G.O.Ms. No. 366, dated 29-10-1993 is a valid defence? Whether the employees of the respondent-Factory are entitled for payment of a minimum bonus of 8.33% as provided for under Section 10 of the Act?
9. The said question is not res integra, but squarely covered by an authoritative pronouncement of this Court in W.A. No. 92 of 1997, dated 8-2-1997.
10. In the said writ appeal, the writ appellate Court confirmed the view taken by a learned single Judge of this Court in S. Samuel v. State of A.P., whereunder the learned Judge took the view that employer cannot stop the payment of bonus to its employees for which they are legitimately entitled to as provided under Section 10 of the Act under the instructions of the Government issued in G.O.Ms.No. 366 dated 29-10-1993.
11. Admittedly, the Government of Andhra Pradesh did not issue G.O.Ms.No. 366, dated 29-10-1993 in purported exercise of the power under Section 36 of the Act, which enables the appropriate Government to pass orders exempting any establishment or class of establishments from the provisions of the Act, if it having regard to the financial position and other relevant circumstances comes to the conclusion that it would not be in public interest to apply all or any of the provisions of the Act. The appropriate Government may exempt any establishment or class of establishments from the operation of the provisions of the Act for such period as may be specified therein and subject to such conditions as it may think fit to impose in the circumstances.
12. It is brought to our notice that in respect of the respondent-factory so far no such notification has been issued. G.O.Ms.No. 366, dated 29-10-1993 is of no consequence and the directions issued therein directing certain establishments not to pay minimum bonus to the employees cannot be given effect to in the absence of requisite notification issued by the State Government in exercise of the power conferred under Section 36 of the Act. This position appears to be fairly well settled by the decision of this Court in W.A.No. 92 of 1997, dated 8-2-1997 supra.
13. That another Division Bench of this Court by its judgment dated 3-2-2003 while disposing of W.P.No. 16214 of 1994 and Batch directed the petitioners therein to represent their plea with regard to payment of bonus to the appropriate authority and avail the remedies available to them under law. The Bench did not go into the question as to the effect of G.O.Ms.No. 366, dated 29-10-1993. Therefore, the said judgment is not an authority for the proposition that the respondent-factory herein is not liable to pay bonus to its employees relying upon G.O.Ms.No. 366 dated 29-10-1993.
14. In W.A.No. 1184 of 2000 dated 30-7-2002, a Division Bench of this Court observed:
"No doubt under Section 10 of the Act every employer is bound to pay to every employee a minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year or one hundred, whichever is higher, whether or not the employer has any allocable surplus in the accounting year......However, under Section 36 of the Act, the appropriate Government is conferred with power of exemption and that in exercise of that power, the Government of A.P. have issued G.O.Ms.No. 285, dated 21-9-1999. Therefore, the statutory instrument issued by the State Government should be given effect."
15. The learned single Judge against whose order the said writ appeal was preferred ignored this vital aspect of the matter relating to the grant of exemption under Section 36 of the Act by the State Government and accordingly issued appropriate directions directing the employer therein to pay a minimum bonus of 8.33% and the writ appellate Court having taken note of the notification issued by the Government in purported exercise of the power under Section 36 of the Act reversed the said order.
16. An analysis of the judgments referred to hereinabove clearly reveals that unless the Government issues a notification exercising its power under Section 36 of the Act, the employer is bound to pay a minimum bonus of 8.33% to its employees irrespective of the profits in its business as is provided under Section 10 of the Act.
17. During the course of hearing of these writ petitions, the learned Additional Advocate General, Sri D. Prakash Reddy, however, contended that it is always open to the Government to exercise its power under Section 36 of the Act and issue notification exempting the factory in question from payment of a minimum bonus of 8.33% to its employees. The learned Additional Advocate General suggested that liberty must be given to the State Government to issue appropriate notification. We do not find any difficulty to accept the submission made by the learned Additional Advocate General to grant leave and liberty to the State Government to exercise its power under Section 36 of the Act, if it so intends.
18. The position as it stands is clear that the respondents herein cannot be permitted to deprive the employees of the respondent-factory of their legitimate right to receive a minimum bonus of 8.33% from its employer irrespective of the profits earned in its business.
19. In the result, the writ petitions are disposed of declaring that the employees of the respondent-factory are entitled for payment of a minimum bonus at 8.33% of the salary or wage earned by them during the accounting years 1997-98 onwards in terms of Section 10 of the Act. The respondent-factory is accordingly directed to pay a minimum bonus at 8.33% to its employees for the accounting years 1997-98 onwards. There shall be no order as to costs.
20. This order, however, shall not preclude the State government to issue appropriate notification in exercise of the power under Section 36 of the Act, if it so intends.