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F.W. Heilgers and Co. Vs. Nagesh Chandra Chakravarty - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai
Decided On
Case NumberCivil Appeal No. 12 of 1949
Judge
Reported in(1950)52BOMLR23
AppellantF.W. Heilgers and Co.
RespondentNagesh Chandra Chakravarty
DispositionAppeal dismissed
Excerpt:
payment of wages act (iv of 1936), sections 2, 20, 23-indiwtrial disputes act (xiv of 1947)-'wages,' definition of-agreement to grant annual or profit-sharing bonus-whether such agreement illegal.;in order to bring a particular payment under the definition of 'wages' in section 2(vi) of the payment of wages act, 1936, two things are necessary: (1) a definite sum, and (2) a contract indicating when the sum becomes payable. unless there is an express provision for paying a stipulated sum, the definition will not cover such a payment.;the employees of a mill company claimed bonus for work done by them during the period of war, the grant of annual bonus equivalent to one month's pay and the introduction of a profit-sharing scheme. the dispute was referred to an industrial tjibunal. on the..........before the expiry of the 7th or 10th day after the last day of the wage period in respect of which wages are payable. the contention of the appellant is that if under the terms of employment the bonus was payable in respect of work done during any particular period, the claim to payment of such sum would be wages under the definition of that word in that act, and as no wage period under section 4 could exceed one month, a contract to pay the bonus as claimed would be contrary to the plain words of the payment of wages act. it is pointed out that the bonus as claimed could not be ascertained till the net profits of a particular year were ascertained and therefore the sum could not be paid during the months in which it was earned. if so, it was argued, that the payment of such bonus would.....
Judgment:

Harilal Kania, Kt., C.J.

1. This is an appeal from a judgment of the High Court of Judicature at Fort William in Bengal. The appellant (petitioner) is a firm registered under the Indian Partnership Act and carries on btisiness in Calcutta inter alia as the managing agent of the Titagarh Paper Mills Company, Ltd., and other companies. At all material times the company had employed about 5,400 workmen and 370 clerks. Early in December, 1946, two trade unions of the company's employees were formed and registered under the Trade Unions Act. On March 14, 1947, there was a strike which continued up to May 23, 1947. The employees claimed from the company bonus for work done by them during the period of war. They further claimed the grant of annual bonus equivalent to one month's pay for the years 1945 and 1946 and lastly they claimed the introduction of a profit- sharing scheme, with effect from January, 1947, which will give them a profit-sharing bonus in each succeeding year. The first claim was made on the footing that there was an agreement to pay such bonus. The second claim was on the footing that the same should be considered as terms of their employment during the years 1945 and 1946. The last claim was on the footing that such a term of employment should be considered to exist for the subsequent years. On February 6, 1948, the Government of West Bengal made an order under the Industrial Disputes Act, 1947, referring the dispute for adjudication to the Industrial Tribunal consisting of Shri Nagesh Chandra Chakravarty. In spite of the protest of the appellant firm, Mr. Chakravarty intimated that he would proceed with the enquiry and the appellant thereupon filed a petition before the High Court for the issue of writs of certiorari and prohibition and for an order, in effect, under Section 45 of the Specific Relief Act.

2. Before the High Court various contentions were raised by the parties but they were not all argued before us. It appears that before the High Court it was contended that the payment of a bonus was a gratuity and therefore it could not be subject of an industrial dispute. This point was not pressed before, us. Mr. Chaudhury, who appeared for the appellant, based his whole contention on the wording of the Payment of Wages Act (Act IV of 1936). He contended that the claim to payment of all the three kinds of bonus could not be considered because it violated the provisions of Sections 20 and 23 of the Payment of Wages Act, and any attempt to order payment of such bonus would be illegal and therefore could not be within the jurisdiction of the Tribunal appointed under the Industrial Disputes Act. It was conceded that unless the claim to the bonus fell within the definition of Wages Act, the dispute between the parties was an 'industrial dispute' within the definition of that expression in the Industrial Disputes Act. It has therefore to be decided whether such claims for bonus fell under the definition of wages under the Payment of Wages Act.

3. In Section 2(pi) of that Act, 'wages' is denned as follows :

Wages means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable, whether conditionally upon the regular attendance, good work or conduct or other behaviour of the person employed, or otherwise, to a person employed in respect of his employment or of work done in such employment and includes any bonus or other additional remuneration of the nature aforesaid which would be so payable and any sum payable to such person by reason of the termination of his employment.

4. By Section 4 of the Act it is provided that every person responsible for the payment of wages under Section 3 shall fix the period in respect of which such wages shall be payable and that no wage period shall exceed one month. By Section 5(i) of the Act it is provided that such wages must be paid before the expiry of the 7th or 10th day after the last day of the wage period in respect of which wages are payable. The contention of the appellant is that if under the terms of employment the bonus was payable in respect of work done during any particular period, the claim to payment of such sum would be wages under the definition of that word in that Act, and as no wage period under Section 4 could exceed one month, a contract to pay the bonus as claimed would be contrary to the plain words of the Payment of Wages Act. It is pointed out that the bonus as claimed could not be ascertained till the net profits of a particular year were ascertained and therefore the sum could not be paid during the months in which it was earned. If so, it was argued, that the payment of such bonus would be unlawful and would amount to an offence under Section 20 of that Act. In this connection it was pointed out that Section 23 of the Act made any contract or agreement entered into by an employee of relinquishing his right under the Payment of Wages Act null and vaid in so far as it purported to deprive him of such right.

5. In our opinion this line of reasoning omits to consider the scheme of the; Payment of Wages Act and the words used in the definition of 'wages' in that Act. The scheme of the Act was clearly to prevent employers from delaying payment of the amount earned by the workmen beyond the period mentioned in the Act. But this assumes that the payment of an ascertained sum had become due and the employer had delayed payment. The definition of 'wages' properly read shows that the amount must be an ascertained sum before it falls under the definition. Indeed, it expressly includes the word bonus or other additional remuneration which would be payable under the contract of employment. In order to bring a particular payment under the definition of 'wages,' two things are necessary-(1) a definite sum, and (2) a contract indicating when the sum becomes payable. The last portion of the definition shows that payments stipulated to be made by reason of the termination of employment are also wages. That will be in the nature of damages. It is obvious that unless there is an express provision for paying a stipulated sum, the definition will not cover such a payment. Any other interpretation of the section will lead to very anomalous results. It will prevent the making of any agreement between an employer and employee under which the employees can share in the profits of the company. If the appellant's contentions were accepted; such an agreement will be illegal. In our opinion the whole scheme of the Payment of Wages Act, read along with the Industrial Disputes Act, shows that there is nothing to prevent such an agreement being made between an employer and employee, and much less to make such agreement illegal and prohibited by the Payment of Wages Act. Section 23 of the Payment of Wages Act also in our opinion does not support the argument of the appellant. It only prevents an employee from contracting away his rights which are given by the Payment of Wages Act. It does not prevent him from entering into an agreement advantageous or beneficial to him.

6. It was next contended that under Section 15 of the Payment of Wages Act specific machinery is provided to enforce payment of wages and the Tribunal set up under the Industrial Disputes Act will not have jurisdiction to deal with this matter. In our opinion this argument is unsound. It need not however be considered further because it presupposes that the claim for bonus as made by the employees falls under the definition of wages. Having regard to our conclusion on the first point about the nature of the bonus claimed, this question does not arise.

7. As no other questions were argued before us in this appeal, the appellant's contentions are rejected. The appeal fails and is dismissed. The appellant to pay the costs of respondent No. 2.


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