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Chandrasekhar (S.) Vs. Abdullah (H.) and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 297 of 1961
Judge
Reported inILR1963KAR85; (1963)IILLJ675Kant; (1963)1MysLJ309
ActsPayment of Wages Act, 1936 - Sections 2, 15 and 15(2); Industrial Law
AppellantChandrasekhar (S.)
RespondentAbdullah (H.) and ors.
Excerpt:
.....acquired a characteristic of a right in industrial law and it is now well-recognized that the claim for bonus can be entertained either by an agreement with the employer or by adjudication and will thus become a legally enforceable claim. at that moment this amount becomes 'wages' due to the employee and any failure in the payment of that wages can be recovered under the payment of wages act. 2(vi) of the payment of wages act, 1936, as it stood at the relevant time, read 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..........designated under s. 15 of the act to hear and decide claims under the act took the view that the bonus claimed did not come under the definition 'wages' under the amended act which was in operation at the time the application was filed and that even assuming that the act as it stood before amendment applied to the case the claim could not be sustained as there was no ascertained sum declared as bonus when the applicant was in the service of the present petitioner. for the latter position he relied upon the decision of the kerala high court reported in william goodacre v. mathan [1957 - i l.l.j. 515]. he also held that, as the applicant had been dismissed for misconduct he was not entitled to the bonus. he further took the view that the application was time-barred, since the year of.....
Judgment:
ORDER

Nittoor Sreenivasa Rau, C.J.

1. This writ petition arises from an application filed by respondent 1 for recovery of two months' bonus in respect of the year ending 31 March, 1956, under S. 15 of the Payment of Wages Act from the present petitioner whose employee he was. The petition was resisted on various grounds the most important of them being that bonus by way of an ex gratia payment was not recoverable under S. 15 of the Payment of Wages Act. Other contentions raised were that S. 15 having been amended by the time the application was filed, it was the amended provision which excluded such a claim that was applicable and he was not entitled to the bonus and that the application was barred by limitation.

2. The District Magistrate of South Kanara who was the authority designated under S. 15 of the Act to hear and decide claims under the Act took the view that the bonus claimed did not come under the definition 'wages' under the amended Act which was in operation at the time the application was filed and that even assuming that the Act as it stood before amendment applied to the case the claim could not be sustained as there was no ascertained sum declared as bonus when the applicant was in the service of the present petitioner. For the latter position he relied upon the decision of the Kerala High Court reported in William Goodacre v. Mathan [1957 - I L.L.J. 515]. He also held that, as the applicant had been dismissed for misconduct he was not entitled to the bonus. He further took the view that the application was time-barred, since the year of service ended on 31 March, 1956, and the application was filed on 20 December, 1956, i.e., beyond the period of six months prescribed under S. 15(2) of the Act. On appeal the learned District Judge reversed the decision. He held that the bonus claimed came under the term 'wages' as defined in the Act. Though he did not explicitly state in his view it was the amended or the unamended definition of the term 'wages' which applied to the case, the tenor of his order would indicate that he thought that it was the unamended Act which was applicable since the period of service in relation to which the bonus amount was claimed by the employee was prior to the amendment. He also held that the claim was not barred by time as it was made within the period allowed after it became payable in June 1956, i.e., in consequence of the declaration of bonus made by the employer. He took the view that the employee's dismissal for misconduct did not affect his claim for bonus as it was not shown that the employer had suffered any loss in consequence of that misconduct.

3. In this writ petition by the employer the main contention urged is that the bonus declared by him being in the nature of an ex gratia payment it does not come within the definition of 'wages.' The other contentions urged before the authorities below are also urged here. But since the question whether the bonus claimed comes within the definition of 'wages' under the Act touches the question of jurisdiction, we shall proceed to deal with it.

4. It may at once be stated that in our view it is the definition as it stood prior to the amendment by virtue of Act 63 of 1957 that is applicable to the case. As mentioned above, the period of service in relation to which the bonus is claimed was from 1 April, 1955 to 31 March, 1956, and even the declaration of bonus by the employer was in June 1956, that is, long prior to the amendment. Even the application claiming the bonus was made prior to the amendment. It is difficult to see how in these circumstances the claim can be governed by the amended definition of the term 'wages.' It is, therefore, unnecessary for us to consider whether the amendment of the definition makes any difference in respect of a claim of the nature under consideration.

5. The learned District Judge seems to take the view that even though bonus is an ex gratia payment offered by the employer, it comes under the Act and is recoverable. This is what he says on this aspect of the matter :

'The learned counsel for the respondent contended firstly as the appellant had been dismissed from service due to misconduct, he is not entitled to claim bonus. Secondly, that the bonus is not payable under any term of contract but is an ex gratia payment offered by the employer in order to keep his employees contented and cannot be legally recoverable. These contentions have no force at the present day in view of the vast changes that had taken place in the relationship between the employer and the employee. It has been held that

'though bonus in common parlance would mean a gift or gratuitous payment over and above the normal remuneration, it had gradually acquired a characteristic of a right in industrial law and it is now well-recognized that the claim for bonus can be entertained either by an agreement with the employer or by adjudication and will thus become a legally enforceable claim.''

6. Later on he refers to the decision of the Supreme Court in Bala Subrahmanya v. B. C. Patil [1958 - I L.L.J. 773] in the following context :

'It is therefore not correct to insist on the terms of the contract at the commencement of the employment. We have to consider what were the terms of the contract between the employer and the employee at any particular time. At the time the bonus was declared the contract which could be legally enforced between the employer and the employee was that every one of the employees who has done service to the employer during the year in question was legally entitled to a particular ascertained sum payable immediately after the declaration of the bonus. At that moment this amount becomes 'wages' due to the employee and any failure in the payment of that wages can be recovered under the Payment of Wages Act. That has been recognized in a Supreme Court decision in Bala Subrahmanya v. B. C. Patil [1958 - I L.L.J. 773] (vide supra).'

7. It may be noticed that while in the earlier part the learned District Judge seems to think that even bonus by way of ex gratia payment comes under the definition of 'wages,' in the latter part he says that when the bonus was declared the contract which could be legally enforced between employer and employee was that every one of the employees who has done service to the employer during the year in question was legally entitled to particular ascertained sum payable immediately after the declaration of the bonus. He also says :

'In the instant case the employer engaged (sic) to pay bonus should the terms of contract of employment be fulfilled.'

8. Not only is there no basis for this statement but it is contrary to what the employment himself stated in the course of his deposition. For, he says in clear terms that there was no agreement for the payment of bonus and that the employer declared the bonus on his own accord. It must be taken, therefore, that the bonus in the case on hand was intended to be an ex gratia payment by the employer.

9. The word 'wages' as defined in S. 2(vi) of the Payment of Wages Act, 1936, as it stood at the relevant time, read 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.'

10. The latter portion consisting of excluded claims is not extracted as it is not relevant for the purpose of this case.

11. It will be noticed that for any bonus or any other additional remuneration to come under the definition of 'wages' it must be 'of the nature aforesaid,' i.e., it must be remuneration capable of being expressed in terms of money and it should be 'so' payable, i.e., payable if the terms of the contract of employment expressed or implied were fulfilled. It may be that even ex gratia 'bonus' which is voluntarily paid by the employer may be regarded as satisfying the first requirement, namely, that it is intended to be remuneration, though voluntarily paid, and that it is capable of being expressed in terms of money when the bonus declared is definitely ascertainable in terms of money. But the second requirement shows that it should be payable only if the terms of the contract of employment, expressed or implied, are fulfilled. This matter has been placed beyond controversy by the decision of the Supreme Court in Bala Subrahmanya v. Patil [1958 - I L.L.J. 773] (vide supra) (referred to by the learned District Judge, as mentioned above) where citing with approval the decision in Heigers & Co. v. Nagesh Chandra [1949 L.L.J. 493] it is clearly laid down that unless a claim for bonus results from the fulfilment of the terms of the contract it cannot be paid or enforced under the provisions of the Payment of Wages Act. It is no doubt true that in that case the question arose for consideration in the context of the enforcement of an award of bonus made by an industrial court and the matter for consideration was whether such a claim could be enforced by an application to the Authority under the Payment of Wages Act, as its provisions stood before amendment.

12. But that makes no difference to the applicability of the principles laid down in that decision to a case like the present one.

13. As regards the enforceability of a claim for a bonus by way of ex gratia payment under the provisions of the Payment of Wages Act the learned District Judge appears to think that as vast changes have taken place in the relationship of the employer and the employee a claim for such bonus necessarily comes under the provisions of the Act. It need hardly be stated that even such changes as are referred to by the learned Judge must be looked for in the provisions of the Act itself and no relief can be granted outside the terms of those provisions.

14. As observed in the Supreme Court decision referred to above, bonus may become payable by the very terms of the contract or by an independent agreement which makes bonus payable in the event of the terms of the original contract being fulfilled or by the requirement of some statutory provision which makes bonus payable if the terms of the contract are fulfilled. It is difficult to think of any other contingency in which bonus becomes payable in consequence of the fulfilment of the terms of the contract between the employer and the employee. Obviously an ex gratia declaration of bonus does not come under any of the above categories. Hence if follow that neither the original nor the appellate authority had any jurisdiction to entertain or consider the claim. In this view it becomes unnecessary to consider the other contentions. This petition is accordingly allowed and the order of the District Judge is set aside. In the circumstances of the case there will be no order as to costs.


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