Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
CASE NO.:
Appeal (civil) 4330 of 2000
PETITIONER:
A.P. Foods
RESPONDENT:
S. Samuel & Ors.
DATE OF JUDGMENT: 04/07/2006
BENCH:
ARIJIT PASAYAT & TARUN CHATTERJEE
JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT, J.
Appellant calls in question legality of the judgment
rendered by learned Single Judge of the Andhra Pradesh High
Court which was affirmed by a Division Bench in Writ Appeal
by the impugned judgment.
Background facts in a nutshell are as follows :
Appellant is run by Andhra Pradesh Nutrition Council
and is owned and controlled by the Government of Andhra
Pradesh. The Nutrition Council is registered under the Andhra
Pradesh (Telengana Area) Public Societies Registration Act,
1350 (Act 1 of 1350 Fasli). The principal object is to provide
and supply nutritious foods to school and pre-school children,
pregnant women and lactating mothers and such other
categories of beneficiaries as the Government from time to
time decide within the general framework of the Government
social welfare programmes. It is claimed to be a non-profit
motive establishment. It does not sell or distribute its product
either in public or to outsiders except those selected by the
Government of Andhra Pradesh under its programmes. In
April, 1982 a question arose regarding demand of payment of
bonus under the Payment of Bonus Act, 1965 (in short the
’Act’) to the employees of the appellant, and it approached the
Commissioner of Labour, inter alia, stating that the (a) regular
production of the factory was handed over to the State
Government by the CARE Organisation (b) that the factory is a
non-commercial venture and (c) that, therefore, it falls outside
the ambit of the Act. By order dated 21.1.1983 the
Commissioner of Labour, Andhra Pradesh held that the
provisions of the Act have no application to the factory of the
appellant. In November 1984 appellants sanctioned ex-gratia
payment to the workers as per GOMs.319 for the year 1983-84
in view of the fact that the Act is not applicable to the
appellant and eligibility for the ex-gratia was on the lines being
given in some other public sector undertakings. In January,
1986, the Executive Committee of the Nutrition Council
decided to sanction ex-gratia of one month’s salary each year
in lieu of bonus to the employees. On the basis of this
decision, ex-gratia payment of one month’s salary from the
year 1984-85 was given on the lines of certain other public
sector undertakings. GOMs. No. 366 dated 29.10.1993 was
issued by the Government of Andhra Pradesh, Finance and
Planning Department, pending final decision by the
Government directing its various Organisations not to pay ex-
gratia until further orders. Appellant issued directions by its
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
Circular dated 24.11.1993 that payment of ex-gratia to the
employees shall stand withdrawn until further orders.
Employees of the appellant-establishment sent representations
to the Minister of Labour regarding stoppage of ex-gratia
payment. Ministry of Labour by communication in December,
1995 indicated that employees are not entitled to ex-gratia
with effect from November, 1993 onwards in view of the
guidelines issued by the Government. A Writ Petition was filed
by 243 employees making grievance that the stoppage of ex-
gratia/bonus was unauthorized and contrary to law. Said writ
Petition was allowed by a learned Single Judge. It was
submitted that the question whether the employees were
entitled to bonus is an industrial dispute and the writ petition
should not be entertained. Learned Single Judge turned down
the contentions of the present appellant that the Act does not
apply to it in view of Section 20 and Section 22 of the Act.
With reference to certain documents he came to the
conclusion that the stand of the appellant that it was working
without profit motive is factually wrong. In any event, Section
22 of the Act would not stand in the way of entertaining the
writ petition. The appellant filed a writ appeal before the High
Court which maintained the order of learned Single Judge by
the impugned judgment.
Learned counsel for the appellant submitted that on a
combined reading of Sections 20, 22 and 32(v)(c) of the Act,
the inevitable conclusion is that the writ petition should not
have been entertained. Further Section 22 clearly stipulates
that the dispute raised is an industrial dispute under the
Industrial Disputes Act, 1947 (in short the ’ID Act’). Since
disputed questions of fact were involved, the writ petition
should not have been entertained.
In response, learned counsel for the writ petitioners-
respondents submitted that in view of the established factual
position, the High Court was justified in entertaining the writ
petition and deciding in favour of the writ petitioners.
Sections 20, 22 and 32(v)(c) read as follows :
"Section 20: Application of Act to
establishments in Public Sector in certain
cases :
(1) If in any accounting year an
establishment in public sector sells any
goods produced or manufactured by it or
renders any services, in competition with
an establishment in private sector and
the income from such sale or services or
both is not less than twenty per cent of
the gross income of the establishment in
public sector for that year, the, the
provisions of this Act shall apply in
relation to such establishment in public
sector as they apply in relation to a like
establishment in private sector.
(2) Save as otherwise provided in sub-section
(1), nothing in this Act shall apply to the
employees employed by any
establishment in public sector.
Section 22 : Reference of disputes under the
Act
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
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, 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.
Sector 32: Act not to be applied to certain
classes of employees:
(v) Employees employed by \026
(c ) Institutions (including hospitals,
chambers of commerce and social welfare
institutions) established not for purposes
of profit;"
In a catena of decisions it has been held that writ petition
under Article 226 of the Constitution of India, 1950 (in short
’the Constitution’) should not be entertained when the
statutory remedy is available under the Act, unless exceptional
circumstances are made out.
In U.P. State Bridge Corporation Ltd. and Ors. v. U.P.
Rajya Setu Nigam S. Karamchari Sangh (2004 (4) SCC 268), it
was held that when the dispute relates to enforcement of a
right or obligation under the statute and specific remedy is,
therefore, provided under the statute, the High Court should
not deviate from the general view and interfere under Article
226 except when a very strong case is made out for making a
departure. The person who insists upon such remedy can avail
of the process as provided under the statute. To same effect
are the decisions in Premier Automobiles Ltd. v. Kamlekar
Shantarum Wadke (1976 (1) SCC 496), Rajasthan SRTC v.
Krishna Kant (1995 (5) SCC 75), Chandrakant Tukaram
Nikam v. Muncipal Corporation of Ahmedabad and Anr. (2002)
(2) SCC 542) and Scooters India and Ors. v. Vijai V. Eldred
(1998 (6) SCC 549).
In Rajasthan SRTC case (Supra) it was observed as
follows:
"A speedy, inexpensive and effective forum for
resolution of disputes arising between
workmen and their employers. The idea has
been to ensure that the workmen do not get
caught in the labyrinth of civil courts with
their layers upon layers of appeals and
revisions and the elaborate procedural laws,
which the workmen can ill afford. The
procedure followed by civil courts, it was
thought, would not facilitate a prompt and
effective disposal of these disputes. As against
this, the courts and tribunals created by the
Industrial Disputes Act are not shackled by
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
these procedural laws nor is their award
subject to any appeals or revisions. Because
of their informality, the workmen and their
representatives can themselves prosecute or
defend their cases. These forums are
empowered to grant such relief as they think
just and appropriate. They can even
substitute the punishment in many cases.
They can make and re-make the contracts,
settlement, wage structures and what not.
Their awards are no doubt amenable to
jurisdiction of the High Court under Article
226 as also to the jurisdiction of this Court
under Article 32, but they are extraordinary
remedies subject to several self-imposed
constraints. It is, therefore, always in the
interest of the workmen that disputes
concerning them are adjudicated in the forums
created by the Act and not in a civil court.
That is the entire policy underlying the vast
array of enactments concerning workmen.
This legislative policy and intendment should
necessarily weigh with the courts in
interpreting these enactments and the
disputes arising under them".
In Basant Kumar Sarkar and Ors. v. Eagle Rolling Mills
Ltd. and Ors. (1964 (6) SCR 913) the Constitution Bench of
this Court observed as follows:
"It is true that the powers conferred on the
High Courts under Art. 226 are very wide, but
it is not suggested by Mr. Chatterjee that even
these powers can take in within their sweep
industrial disputes of the kind which this
contention seeks to raise. Therefore, without
expressing any opinion on the merits of the
contention, we would confirm the finding of the
High Court that the proper remedy which is
available to the appellants to ventilate their
grievances in respect of the said notices and
circulars is to take recourse to s. 10 of the
Industrial Disputes Act, or seek relief, if
possible, under sections 74 and 75 of the Act."
The inevitable conclusion, therefore, is that both learned
Single Judge and the Division Bench have failed to consider
the basic issues. In the normal course we would have left it to
the respondent to avail appropriate remedy under the Act.
The above aspects were highlighted in Hindustan Steel
Works Construction Ltd. and Anr. v. Hindustan Steel Works
Construction Ltd. Employees Union (2005 (6) SCC 725).
A bare reading of Section 22 of the Act makes the
position clear that where the dispute arises between an
employer and employees with respect to the bonus payable
under the Act or with respect to the application of the Act in
public sector then such dispute shall be deemed to be an
industrial dispute within the meaning of ID Act.
As disputed questions of fact were involved, and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
alternative remedy is available under the ID Act, the High
Court should not have entertained the writ petition, and
should have directed the writ-petitioners to avail the statutory
remedy.
However, because of the long passage of time (the writ
petition was filed in 1996), the attendant circumstances of the
case in the background noted above and in view of the
agreement that this is a matter which requires to be referred
to the Tribunal, we direct that the appropriate Government
shall refer the following question for adjudication by the
appropriate Tribunal:
(1) Whether there was violation of Section 9-A of the
Industrial Disputes Act, 1947 as claimed by the
employees?
(2) Whether the withdrawal of the construction allowance
amounted to the change in the conditions of service?
Question:
Whether the A.P. Foods was liable to pay bonus under
the Act to its employees?
The parties shall jointly move the appropriate
Government with a copy of our judgment.
Normally, it is for the State Government to take a
decision in the matter of reference when a dispute is raised,
the direction as noted above has been given in the
circumstances indicated above.
In some cases, this Court after noticing that refusal by
appropriate Government to refer the matter for adjudication
was prima facie not proper, directed reference instead of
directing reconsideration. (See Nirmal Singh v. State of
Punjab AIR 1984 SC 1619, Sankari Cement Alai Thozhilalar
Munnetra Sangam v. Management of India Cement Ltd. (1983)
1 Lab.L.J. 460, V. Veerarajan and others v. Government of
Tamil Nadu and Ors. (AIR 1987 SC 695), Sharad Kumar v.
Govt. of N.C.T. of Delhi (AIR 2002 SC 1724).
The parties shall be permitted to place materials in
support of their respective stands. We make it clear that we
have not expressed any opinion on the merits of the case. The
Tribunal shall make an effort to dispose of the reference within
four months of the receipt of the reference from the State
Government, which shall be done within three months from
today.
The appeal is allowed to the aforesaid extent with no
order as to costs.