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Workmen of Indian Telephone Industries Ltd. Vs. Indian Telephone Industries Ltd. - Court Judgment

LegalCrystal Citation
SubjectLabor and Industrial
CourtKarnataka High Court
Decided On
Case NumberA.I.T. No. 29 of 1966
Judge
Reported in(1967)IILLJ888Kant
ActsPayment of Bonus Act - Sections 4, 20, 32, 34 and 39; ;Industrial Disputes Act, 1947 - Sections 25C; Employees' State Insurance Act, 1948 - Sections 31A
AppellantWorkmen of Indian Telephone Industries Ltd.
RespondentIndian Telephone Industries Ltd.
Excerpt:
.....it is the appellant who has deserted her. - i find nothing in the payment of bonus act which takes away or by necessary implications the legal rights enjoyed by the establishments not covered by the payment of bonus act. that right which party 1 enjoyed is still in force in spite of the payment of bonus act......payment of bonus act does not affect the pre-existing rights of employees to claim profit-sharing bonus in establishments exempted from the operation of the payment of bonus act (3) whether the labor appellate tribunal formula is applicable to this case and if so, whether it is outside the terms of reference ?' 3. the workmen claimed profit-sharing bonus for the years 1964-65 and 1965-66 at the rate of 15 percent and 20 percent of their average annual earnings in addition to their existing production bonus and the reference is whether that claim is justifiable in accordance with the payment of bonus act and if not, what is the amount of profit-sharing bonus the workmen are entitled to. it is not dispute that, in the years 1964-65 and 1965-66, the payment of bonus act was in force, but.....
Judgment:
ORDER

[On issues (10), (11) and (12)]

1. The Government of Mysore have referred two points of dispute between the workmen and the management of the Indian Telephone Industries, Ltd., Bangalore-16. They are :

'(1) Are the workmen of the Indian Telephone Industries, Ltd., Dooravaninagar, Bangalore-16, justified in demanding 15 percent and 20 percent of their annual average earnings as profit-sharing bonus for the years 1964-65 and 1965-66 respectively in addition to the then existing production bonus, in accordance with the Payment of Bonus Act, 1965

(2) If not, what is the amount of profit-sharing bonus the workmen are entitled to ?'

2. The parties filed the claim statement and the rejoinder respectively and other issues were settled arising out of those pleadings. Three of those issues were argued as those relate to questions of law and no questions of facts are involved. They are as follows :

'(1) Whether this tribunal can go into the applicability of Art. 14 of the Constitution, and if so, does it apply to this case

(2) Whether the Payment of Bonus Act does not affect the pre-existing rights of employees to claim profit-sharing bonus in establishments exempted from the operation of the Payment of Bonus Act

(3) Whether the Labor Appellate Tribunal formula is applicable to this case and if so, whether it is outside the terms of reference ?'

3. The workmen claimed profit-sharing bonus for the years 1964-65 and 1965-66 at the rate of 15 percent and 20 percent of their average annual earnings in addition to their existing production bonus and the reference is whether that claim is justifiable in accordance with the Payment of Bonus Act and if not, what is the amount of profit-sharing bonus the workmen are entitled to. It is not dispute that, in the years 1964-65 and 1965-66, the Payment of Bonus Act was in force, but the contention put forward by the learned counsel for party 1 is that the Act does not apply to the public sector undertakings and admittedly the Indian Telephone Industries, Ltd., Bangalore, is a public sector undertaking. There is a specific provision under the Payment of Bonus Act under S. 32 that nothing in the Payment of Bonus Act shall apply to employees employed by any establishment in public sector, save as otherwise provided under this Act. The saving section is S. 20 under which the provisions of the Payment of Bonus Act will apply to the public sector establishments if that establishment sells any goods produced or manufactured by it or renders any service, in competition with an establishment in private sector and the income from such sale or services or both is not less than 20 percent of the gross income of the establishment for that years. Hence it follows that ordinarily a public sector establishment is not covered by the Payment of Bonus Act unless in certain particular circumstances referred to under S. 20. The learned counsel for party 1 argued that non-competitive public sector industrial undertakings are not covered by the Payment of Bonus Act, and therefore, the industrial law relating to bonus will apply to them. He mentions that in this case it will not be necessary to go into the applicability of S. 20 of the Payment of Bonus Act and that the bonus payable to the employees of party 2 may be determined on the basis of the industrial law prevailing today other than the Payment of Bonus Act.

4. The serious question that arises for consideration is whether bonus is claimable by any establishment other than under the Payment of Bonus Act, i.e., under any industrial law relating to bonus. The rule of law prior to the Payment of Bonus Act with regard to payment of bonus was what was generally known as 'Labor Appellate Tribunal formula' and the tribunals have granted bonus to all establishments applying that formula. Indeed the tribunals have held that the payment of bonus is a legal right to which the workmen are entitled and it arises when two conditions are fulfilled : firstly when the actual wage earned by the workmen fell short of the living wage or need-based wage necessary to maintain a decent standard of living and secondly when the particular establishment has made profits during any year as a result of the contribution made by labor towards that profit. Bonus is no longer considered as a gratuitous payment or as deferred wages. It is a legal right recognized by the Supreme Court in various decisions and the non-payment of bonus, if demanded by workmen, leads to an industrial dispute which attracts the provisions of the Industrial Disputes Act, 1947.

5. The argument advanced by the learned counsel for party 1 is that to the establishment not covered by the Payment of Bonus Act, the industrial law relating to bonus will still apply. The contention of the learned counsel for the management is that the Payment of Bonus Act is a comprehensive legislation setting at rest all controversies with regard to bonus under the provisions of industrial law and that bonus can be claimed only under the Payment of Bonus Act and not under any other law. In other words, the argument put forward by the management is that unless the workmen of party 1 prove that they are attracted by the provisions of S. 20 of the Payment of Bonus Act, they are not entitled to any bonus whatsoever.

6. The Payment of Bonus Act itself states in the preamble that it is an Act to provide for the payment of bonus to persons employed in certain establishments and for matters connected therewith. It is obvious, therefore, that the Act does not apply to all establishments and as pointed out before under S. 32, it does not apply to the employees employed by any establishment in public sector, if the establishment is a non-competitive one. It is, therefore, in my view, not correct to say that the Payment of Bonus Act covers all establishments. It is a specific Act confined only to certain establishments and so far as other establishments not covered by the Payment of Bonus Act are concerned, the industrial law will still continue to apply unless there is something in the Act which expressly or by necessary implication takes away legal rights to which those establishments are entitled. I find nothing in the Payment of Bonus Act which takes away or by necessary implications the legal rights enjoyed by the establishments not covered by the Payment of Bonus Act. On the contrary, the Payment of Bonus Act recognizes other rights of the employees in establishments not covered by the Act. Under S. 39 of the Payment of Bonus Act, save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State. There was undoubtedly a law relating to investigation and settlement of the demand for bonus under the Industrial Disputes Act because the demand for bonus is an industrial dispute. That right which party 1 enjoyed is still in force in spite of the Payment of Bonus Act. It seems to me, therefore, that whatever rights party 1 had, has not been taken away by the Payment of Bonus Act as they are not covered under S. 32 of the Payment of Bonus Act.

7. The problem can be locked at from another angle. The Payment of Bonus Act does not claim to be a codified law on the subject. It is a special law applicable to the special establishments. It is not a universal law applicable to all establishments. That could be spelled out not only from the preamble, but also from the entire scheme of the Act. If the legislature intended that the Payment of Bonus Act is the only machinery under which bonus can be claimed, it would have specifically stated so. It is not as if the legislature is unaware of the prevailing industrial law relating to bonus. Even the Bonus Commission Report does not seek to interfere with the existing rights of other establishments not covered by the Payment of Bonus Act. We might consider certain other Acts in order to find out the intention of the legislature in framing the Bonus Act. I would take, for example, the Hindu Marriage Act (25 of 1955). The preamble of that Act reads as an Act to amend and codify the law relating to marriage among Hindus, and there is a specific section in that Act, S. 4, in which it is stated that the Act overrides any text, rules or interpretation of Hindu Law or any custom or usage as part of that law in force immediately before the commencement of this Act. If the intention of the legislature is analogous with that expressed in S. 4 of the Hindu Marriage Act, nothing prevents the legislature from stating expressly that the Payment of Bonus Act overrides any law or interpretation prevailing with regard to bonus before the commencement of the Act. In the absence of those specific provisions, it must be deemed that the Payment of Bonus Act does not override any other law relating to establishments to which the Payment of Bonus Act does not apply. Similarly in the Special Marriage Act, 1954, which is also an Act to provide a special form of marriage in certain cases, it is stated that it does not affected the validity of any marriage nor solemnization under the provisions, nor shall this Act directly or indirectly affect the validity of any mode of contracting marriage. In my view, the Payment of Bonus Act is to bonus as the Special Marriage Act is to marriages and both are not comprehensive legislations in respect of bonus and marriage, respectively.

8. The learned counsel for party 2 relied upon two decisions in support of his contention that S. 34(1) of the Payment of Bonus Act supersedes all other laws on the subject, but S. 34(1) of the Act states that save as otherwise provided in this section, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service made before May 29, 1965. It must, however, be stated that S. 34 comes into play only in cases where the Act itself is applicable to a particular establishment. When the whole Act is not applicable to any particular establishment, as in the case of non-competitive public sector undertakings, S. 34 cannot be brought to play and if there is no Act governing the payment of bonus of the employees in a non-competitive public sector undertaking, then the only recourse left to the employees is to fall back upon the law which prevailed before the enactment of the Act. The two decisions referred to by the learned counsel for party 2, in my view, have no application to the facts of the present case. In 1962 - II L.L.J. 667, a Full Bench of the Bombay High Court held that it is not open to the industrial tribunal under the Industrial Disputes Act, 1947, to award lay-off compensation to workmen employed in an industrial establishment to which S. 25C of the Act does not apply. But that case related to lay-off compensation which is provided under the Industrial Disputes Act itself. There was no other law with regard to lay-off except what is contained in S. 25C of the Industrial Disputes Act, 1947. Further the Act itself under S. 25J states that the rights and liabilities of employers and workmen in so far as they related to lay-off and retrenchment shall be determined in accordance with the provisions of this chapter. In the absence of any other law relating to lay-off and retrenchment, the tribunal is bound to decide only under the Industrial Disputes Act questions relating to lay-off and retrenchment affecting all the workers. But with regard to bonus, there is no such rule under the Industrial Disputes Act which makes it obligatory to decide that question only under the Payment of Bonus Act. Hence, in my view, S. 34(1) of the Payment of Bonus Act is no bar to investigation and settlement of the claims for bonus under the general industrial law. The other case relied upon by the learned counsel for party 2 is one in Workman of Hercules Insurance Company, Ltd., Calcutta [1961 - I L.L.J. 249]. But that case also has no bearing on the present controversy. The relevant provisions of the Insurance Act state definitely that bonus is not payable in respect of the general insurance business of the insurer. Hence the Supreme Court held that having regard to S. 31A of the Insurance Act, the reference made to the tribunal is without jurisdiction. In that case, there was an unqualified and absolute prohibition of payment of the bonus to the employees of insurance companies and view of that prohibition, it was held that there is no jurisdiction to the industrial tribunal to go into the question of bonus for the employees. But in the instant case, I find no such prohibition under the Payment of Bonus Act, and, therefore, this tribunal is entitle to go into the question of bonus with respect to those establishments to which bonus is denied under the Payment of Bonus Act.

9. My answer, therefore, to issue (11) is that the Payment of the Bonus Act does not affect the pre-existing rights of employees to claim profit-sharing bonus in establishments exempted from the operation of the Bonus Act.

10. In view of my answer to issue (11), issue (10) does not survive, because when party 1 is entitled to claim bonus, although under a different formula than contemplated under the Payment of Bonus Act, there can be no distinction or discrimination between the workmen of party 1 and other employees in other industries. Besides, this tribunal cannot go into the question of interpretation of the Constitution as under S. 228 of the Constitution of India, the High Court is made the sole interpreter of the Constitution My answer to issue (10) is that this tribunal cannot go into the applicability of Art. 14 of the Constitution and in any case, it does not apply to the facts of this dispute.

11. The only other issue is whether the applicability of the labor Appellate Tribunal formula is outside the scope of the reference. The reference no doubt speaks of bonus according to the Payment of Bonus Act, 1965, but the reference is also for the investigation and settlement of the quantum of profit-sharing bonus the workmen are entitled to if they are not entitled to bonus under the Payment of Bonus Act, 1965. It appears to me, therefore, that the reference is comprehensive enough to include the claim for bonus even in case the Payment of Bonus Act does not apply as the second point of dispute reads as,

'If not, what is the amount of profit sharing bonus the workmen are entitled to ?'

12. The words, 'if not' mean not only with regard to the quantum of bonus but also if they are not entitled to bonus under the Payment of Bonus Act, 1965, and the tribunal is called upon to decide the amount of profit-sharing bonus the workmen are entitled to and that decision can only be based on the law relating to bonus other than the Payment of Bonus Act. My answer to issue (12) is that the labor Appellate Tribunal formula is applicable to this case and it is not outside the terms of reference. The next step would be to determine the quantum of profit-sharing bonus, if any party 1 is entitled to.


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