Full Judgment Text
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PETITIONER:
DISHERGARH POWER SUPPLY COMPANY LTD.,CALCUTTA & ANR.
Vs.
RESPONDENT:
WORKMEN OF DISHERGARHSUPPLY CO. LTD. & ORS.
DATE OF JUDGMENT15/07/1986
BENCH:
ERADI, V. BALAKRISHNA (J)
BENCH:
ERADI, V. BALAKRISHNA (J)
KHALID, V. (J)
CITATION:
1986 AIR 1486 1986 SCR (3) 184
1986 SCC (3) 450 JT 1986 207
1986 SCALE (2)23
ACT:
Payment of Bonus Act, ,1965, sections 5, ,10 and 34(3)-
Bonus- Payment of-Obligation of employer to pay higher bonus
than the minimum prescribed by the Act-When arises-
Settlement before Conciliation officer-Effect of-Power of
Industrial Court to impose new obligations on parties before
it-Limitations-What are.
HEADNOTE:
A dispute regarding bonus payable to the workmen-
respondents of the two companies-appellants for the year
1971-72 was referred to conciliation under section 12(1) of
the Industrial Disputes Act, 1947. The workmen contended
before the Conciliation officer that they were entitled to
bonus equivalent to three months’ basic wages as on 31st
March, 1972 as customary bonus or in any event as bonus
payable under the provisions of the Act. The appellant-
companies, on the other hand, argued that the workmen were
entitled to only minimum bonus as provided under the Act.
The said dispute was ultimately settled before the
Conciliation officer on the terms: (a) that each eligible
work man will be paid an amount equal to three months’ basic
wages as on 31.3.1970; and (b) that the demand of the Union
for bonus this year will be referred to a Tribunal for
adjudication. Accordingly, the Government referred the
dispute for adjudication to the ninth Industrial Tribunal of
West Bengal.
After a detailed discussion of the evidence produced
before the Tribunal, it found (i) that the workmen had
failed to make out the claim of customary bonus or that they
were entitled to maximum bonus of 20 per cent as provided
under the Act; and (ii) that there was no available surplus
during the year in question and that only the minimum bonus
was payable under the provisions of the Act. However, after
having recorded the aforesaid findings, it proceeded to hold
that it was legally open to it to substitute for the
agreement entered into between the
185
parties before the Conciliation officer a new contract and
pass an award on that basis, if such a step would be
conducive to industrial peace. On this basis the Tribunal,
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held that there would not be material alteration in the
financial liability of the companies in case the agreement
was modified by substituting for the words "that the workmen
will be paid the amount equal to three months’ basic wages
as on 31.3.1970" by the words "an amount equal to basic
wages as on 31.3.1372" and accordingly it passed an award in
those terms.
In appeal to the Supreme Court, the appellants-
companies challenged the legality of this award.
Allowing the appeal,
^
HELD: 1. The impugned award passed by the Ninth
Industrial Tribunal is not legally sustainable and has to be
set aside. The rights of the workmen for payment of bonus
for the year in question will be governed by the terms of
the agreement entered into before the Conciliation officer
on October 9, 1972. [190F]
2. The rights and liabilities of the parties regarding
profit bonus are governed by the provisions of the payment
of Bonus Act, 1965 which are exhaustive on the subject and
the adjudication had to be conducted by the Tribunal
strictly in accordance with those provisions. [189C-D]
In the instant case, the Tribunal has categorically
found that there was no "available surplus" in respect of
the two companies for the year in question on a computation
made under section 5 of the Act. The settlement entered into
before the Conciliation officer constituted an agreement
under section 34(3) of the Act and but for the said agree-
ment, the liability of the appellants under the provisions
of the Act would have been only to pay minimum bonus under
section 10 of the Act. [189E-F]
Sanghi Jeevraj Chewar Chand and Ors. v. Secretary
Madras Chillies, Grains Kirana Merchants Workers’ Union and
Anr., [ 1969] 1 SCR 366 and Mumbai Kamgar Sabha. Bombay v.
M/s Abdulbhai Faizullabhai & Ors., [ 1976] 3 SCR 591
referred to.
It is certainly open to an Industrial Court in an
appropriate case to impose new obligations on the parties
before it or modify contracts in the interest of industrial
peace or give awards which may have the effect
186
of extending the agreement or making new one, but this power
is conditioned by the subject matter with which it is
dealing and also by the existing industrial law and it would
not be open to it while dealing with a particular matter
before it to overlook the industrial law relating to that
matter as laid down by the legislature. " [190B-D]
The New Maneck Chowk Spinning and Weaving Company Ltd.
Ahmedabad and others v. The Textile Labour Association,
Ahmedabad, [1961] 3 SCR 1 relied upon.
In the instant case, in view of the finding recorded by
the Tribunal that the result of the working of the companies
during the concerned year was a loss and there was no
available surplus, the Tribunal could not have legally
proceeded to make an award directing payment of bonus at any
rate higher than the minimum bonus specified hl section 10
of the Act. Therefore, the impugned award made by the
Tribunal is clearly inconsistent with the provisions of the
Payment of Bonus Act which contemplate the imposition of an
obligation for payment of only the minimum bonus where the
employer has no allocable surplus in the concerned
accounting year. However, inasmuch as the appellant-
companies had entered into the settlement before the
Conciliation Officer agreeing to pay bonus at a rate higher
than the minimum bonus, the said settlement would constitute
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an agreement under section 34 of the Act and the terms of
the settlement will govern the liability for bonus for the
year in question. [190D-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1935
(NL) of 1974.
From the Award dated 8.5.1974 of the Ninth Industrial
Tribunal of West Bengal, Durgapur in Case No. X-4 of 1973.
Dr. Shankar Gkosh and D.N. Gupta for the Appellants.
S.K. Nandy for the Respondents.
The Judgment of the Court was delivered by
BALAKRISHNA ERADI, J. This appeal by Special Leave has
been preferred against the Award dated May 8, 1974 made by
the Ninth Industrial Tribunal of West Bengal, Durgapur in
Case No. X-4 of 1973 on its file. The appellants are two
companies incorporated
187
under the Indian Companies Act, 1913 having their registered
office in Calcutta. Both the appellants are engaged in the
business of generation, transmission, distribution and sale
of electricity in certain areas of Bengal and Bihar under
licences granted by the concerned Governments. Appellant No.
1 has a power station at Dishergarh and Appellant No. 2 has
its power station at Sibpore. In connection with their
aforesaid business the two appellants were having at the
relevant time 400 and 250 workmen respectively employed
under them.
For the years 1965-66 to 1970-71 (inclusive) bonus was
paid to the workmen on the basis of agreements entered into
each year under Section 34(3) of the Payment of Bonus Act,
1965 (hereinafter referred to as the ’Act’). Concerning the
bonus payable for the year 1971-72, a dispute was raised by
the workmen of the two companies and it was referred to
conciliation under Section 12(1) of the Industrial Disputes
Act, 1947. The contention of the workmen before the
Conciliation officer was that they were entitled to bonus
equivalent to three months’ basicwages as on March 31, 1972
as customary bonus or in any event as bonus payable under
the provisions of the Act. The appellant- companies, on the
other hand, contended that the workmen were entitled to only
minimum bonus as provided under the Act on a computation
being made in the manner laid in the said Act. The said
dispute was ultimately settled before the Conciliation
officer inter alia on the following terms:
"(1) Subject to usual adjustments made in 1969-70
and 1970-71, each eligible workmen will be
paid an amount equal to three months’ basic
wages as on 31.3.1970 .
(2) A sum of Rs.20,000 will be distributed
equally among all workmen who were on the
rolls on 15.8.1972 and have worked for at
least 30 days. This will be ’Silver Jubilee
Year’ payment.
(3) The demand of the Union for bonus this year
will be referred to as Tribunal for
adjudication.
(4) The payment should be made by 12.10.1971
Eligible workmen under terms(1) of this
settlement
(a) Permanent and probationers. Rest of
workmen will be paid bonus under the
Payment of Bonus Act."
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188
Although the said settlement was an agreement under section
34(3) of the Act since under its very terms as incorporated
in clause (3), the parties had stipulated for a reference of
the question for adjudication by a Tribunal. The issue was
accordingly referred by the Government of West Bengal for
adjudication to the Ninth Industrial Tribunal of West Bengal
by an order of reference dated January 15, 1973.
In the written statement filed by the workmen before
the Ninth Industrial Tribunal they claimed three months’
basic wages as on March 31, 1972 as customary bonus or in
the alternative 20 per cent of the salary or wages as bonus
payable under the Act. The appellants reiterated before the
Tribunal the same contentions which they had put forward
before the Conciliation officer. The Tribunal allowed the
parties to adduce evidence. After a detailed discussion of
the evidence produced before it, the Tribunal recorded a
clear finding that the workmen had failed to make out the
claim of customary bonus put forward by them and that the
said plea had therefore to fail. It was further found by the
Tribunal that the plea put forward by the appellant
companies that there was no available surplus during the
year in question and that only the minimum bonus was payable
under the provisions of the Act had to be upheld. The
Tribunal, therefore, held that the unions representing the
workmen had failed to make out the case put forward by the
workmen that the workmen were entitled to maximum bonus of
20 per cent as provided under the Act. After having recorded
the aforesaid findings, the Tribunal, however, proceeded to
accept the contention advanced before it by the Counsel
appearing for the workmen that it was legally open to it to
substitute for the agreement entered into between the
parties before the Conciliation officer a new contract and
pass an award on that basis, if such a step would be
conducive to industrial peace. On this reasoning the
Tribunal proceeded to observe:
"In my opinion, there would not be material
alteration in the financial liability of the
companies in case the agreement was modified by
substituting for the words that the workmen will
be paid the amount equal to three months’ basic
wages as on 31.3.1970 by the words an amount equal
to basic wages as on 31.3.1972.. I am, therefore,
in agreement with this contention of the learned
lawyer for the unions that the Tribunal should
create a new contract and that is pass an award of
three months’ basic wage as on 31.3.1972. This is
in my opinion would be con-
189
ducive to industrial peace and it would not
violate any existing industrial law."
Accordingly, the Tribunal passed an award directing the
appellant companies to pay to the workmen the balance amount
by way of bonus as per the rates calculated by the Tribunal
within a month from the date of publication of the award in
the Calcutta Gazette. It is the legality of this award that
is under challenge in this appeal.
It has to be remembered that the claim of the workmen
which the Tribunal was considering while making the
aforesaid observations was one for Profit bonus only since
the claim for customary bonus had been rejected by it. The
rights and liabilities of the parties regarding Profit bonus
were governed by the provisions of the Act which are
exhaustive on the subject and the adjudication had to be
conducted by the Tribunal strictly in accordance with those
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provisions-See Sanghi Jeevraj Ghewar Chand and Ors. v.
Secretary, Madras Chillies, Grains Kirana Merchants Workers’
Union and Anr., [1969] 1 S.C.R. 366 and Mumbai Kamgar Sabha,
Bombay v. M/s Abdulbhai Faizullabhai & Ors., [1976] 3 S.C.R.
591.
As already noticed, the Tribunal has categorically
found on a consideration of the evidence adduced before it
that there was no "available surplus" in respect of the two
companies for the year in question on a computation made
under Section S of the Act. The settlement entered into
before the Conciliation officer constituted an agreement
under Section 34(3) of the Act and but for the said
agreement the liability of the appellants under the
provisions of Act would have been only to pay minimum bonus
under Section 10 of the Act. Since the parties were at
variance on the question of existence of liability for
payment of customary bonus in the establishments as well as
on the question regarding the existence of available
surplus, provision was made in clause (3) of the agreement
for reference under the industrial adjudication. If the
Tribunal found that the claim for payment of customary bonus
was substantiated it could have passed an order in favour of
the workmen for payment of such bonus. That claim had been
negatived. The only question which remained for
determination for the Tribunal was whether the claim of the
workmen for payment of 20 per cent of the salary or wages as
bonus payable under the Act was tenable or not. That
depended essentially on the question of existence of
available surplus and its quantum, if any surplus was
available. In view of the finding recorded by the Tribunal
accepting
190
the plea put forward by the appellant companies that the
result of the working of the companies during the concerned
year was a loss and there was no available surplus, the
Tribunal could not have legally proceeded to make an award
directing payment of bonus at any rate higher than the
minimum bonus specified in Section 10 of the Act. As pointed
out by this Court in The New Maneck Chowk Spinning and
Weaving Company Ltd. Ahmedabad and others v. The Textile
Labour Association, Ahmedabad, [1961] 3 S.C.R. 1,-while "it
is certainly open to an industrial court in an appropriate
case to impose new obligations on the parties before it or
modify contracts in the interest of industrial peace or give
awards which may have the effect of extending Agreement or
making new one, but this power is conditioned by the subject
matter with which it is dealing and also by the existing
industrial law and it would not be open to it while dealing
with a particular matter before it to overlook the
industrial law relating to that matter as laid down by the
legislature." It is manifest that the impugned award made by
the Tribunal is clearly inconsistent with the provisions of
the Payment of Bonus Act which contemplate the imposition of
an obligation for payment of only the minimum bonus where
the employer has no allocable surplus in the concerned
accounting year. However, in as much as the appellant
companies had entered into the settlement before the
Conciliation officer agreeing to pay bonus at a rate higher
than the minimum bonus, the said settlement would constitute
an agreement under Section 34 of the Act and the terms of
the settlement will govern the liability for bonus for the
year in question.
It follows from the foregoing discussion that the
impugned award passed by the Ninth Industrial Tribunal is
not legally sustainable. The appeal is accordingly allowed
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and the Award of the Industrial Tribunal will stand set
aside. The rights of the workmen for payment of bonus for
the year in question will be governed by the terms of the
agreement enterd into before the Conciliation officer on
October 9. 1972.
In view of the condition imposed by the order of this
Court dated November 21, 1974 while granting Special Leave,
the appellants are directed to pay the costs of the
respondents in this appeal.
M.L.A. Appeal allowed.
191