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Kumaon Motor Owners' Union Ltd. Vs. State of Uttar Pradesh and Ors. (13.12.1968 - ALLHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAllahabad High Court
Decided On
Judge
Reported in(1969)ILLJ809All
AppellantKumaon Motor Owners' Union Ltd.
RespondentState of Uttar Pradesh and Ors.
Excerpt:
- .....indicates that since it is not possible always to link bonus with profits in so far as in some years profits may be very large with the result that the bonus which is to be calculated at a certain percentage of the wages may not exceed a certain figure even though according to the flat formula linking it to the profits it may exceed that figure, it is only desirable to lay down maximum and minimum limits of bonus so that the bonus may not exceed the maximum howsoever large may be the profits and at the same time minimum must be paid even if there is no profit. at any rate, the plain language of section 10 of the act does not appear to admit of the interpretation that has been placed on it by opposite party 2. in that view of the matter, the impugned award cannot be sustained having.....
Judgment:

Lakshmi Prasad, J.

1. This is a petition under Article 226 of the Constitution. The workmen of the petitioner claimed bonus for the year 1964-65. The petitioner denied its liability to pay bonus on the ground that it had actually suffered loss during that particular year. The dispute thus raised by the workmen was espoused by opposite party 3. Since reconciliation could not be reached between the petitioner and opposite party 3, the State of Uttar Pradesh, opposite party 1, treating it to be an industrial dispute referred it to opposite party 2, After receiving written statements and replies of the disputants opposite party 2 framed the following issues:

(1) Whether the employer-company did not incur any loss in the year 1964-65 and whether the accounts filed are incorrect ?

(2) Whether the employer-company is not liable to pay even the minimum bonus under Section 10 of the Payment of Bonus Act, 1965?

(3) Whether the claim of the workmen for bonus was unreasonably belated, and if so, its effect ?

The tribunal, opposite party 2, gave its award on 22 July 1967, a copy of which is annexure 9 to the petition. Under issue (3) the tribunal held that the claim for bonus was not time-barred. Under issue (1) it held that the petitioner actually suffered a net loss of Rs. 20,849.55 in the year 1964-65 and that the accounts filed by the petitioner were correct. Under issue (2) it held that according to Section 10 of the Payment of Bonus Act, 1965, the petitioner was liable to pay the minimum bonus provided thereunder, notwithstanding the loss it had suffered. Accordingly opposite party 2 gave an award for the payment of bonus to the workmen of the petitioner at the minimum rate envisaged by Section 10 of the Payment of Bonus Act, 1965. This petition is directed against the aforesaid order. The case of the petitioner is that opposite party 2 made a manifest error of law in interpreting Section 10 of the Act in the manner it has done. Another ground on which the validity of the award is challenged is that on the basis of the interpretation placed by the tribunal on Section 10 of the Act it would be hit by Article 19 of the Constitution. Accordingly, the prayer is the petition is that the award (annexure 9) be quashed.

2. None has appeared to oppose the petition despite service of notice. I have heard the learned counsel for the petitioner. The main question involved in the case is if the interpretation placed by the tribunal on Section 10 of the Act is correct. Section 10 to the extant it is material provides:

Subject to the provisions of Sections 8 and 13, every employer shall be bound to pay to every employee in an accounting year a minimum bonus which shall be 4 per cent of the salary or wage earned by the employee during the accounting year or forty rupees, whichever is higher, whether there are profits in the accounting year or not.

In giving its interpretation opposite party 2 relied not only on the language of 8.10 but also on the following recommendation of the Commission which in the opinion of the opposite party 2 constituted the background of the particular piece of legislation:

There can be no doubt that bonus should be subject to a reasonable maximum....

However, if there is a maximum so that however high the profits in a year the workers cannot be given more bonus than at a certain rate expressed in terms of wages, it stands to reason that there should be a minimum also. Labour cannot be expected to accept as reasonable a formula which provides for a floor. An arrangement of minimum and maximum would have the added advantage of evening out bonus payments over the years and thus avoid the obvious disadvantages of widely fluctuating bonus, with years in which there may be no bonus at all and others in which the bonus would be very large.'

The contention raised before me is that the concluding words in Section 10 namely, 'whether there are profits in the accounting year or not ' simply mean that a minimum bonus has got to be allowed even in the total absence of profits and that these words cannot be construed be as to mean that the minimum bonus is to be allowed even in a year in which there has been positive loss. The contention does not appear to be without force. Evidently, there can be three situations, one in which there has been profit, another in which there has been no profit and yet a third in which there has been loss. The absence of profit does not necessarily mean loss. So the words ' whether there are profits in the accounting year or not' cannot possibly be construed to cover all the abovementioned three situations, though of course they are wide enough to cover two situations, namely, one in which there has been a profit and another in which there has been no profit. This interpretation of Section 10 which flows from its plain language does not appear to run counter in any manner to the recommendation referred to in the impugned award, which according to opposite party 2 constitutes the background of the particular piece of legislation. The particular recommendation only indicates that since it is not possible always to link bonus with profits in so far as in some years profits may be very large with the result that the bonus which is to be calculated at a certain percentage of the wages may not exceed a certain figure even though according to the flat formula linking it to the profits it may exceed that figure, it is only desirable to lay down maximum and minimum limits of bonus so that the bonus may not exceed the maximum howsoever large may be the profits and at the same time minimum must be paid even if there is no profit. At any rate, the plain language of Section 10 of the Act does not appear to admit of the interpretation that has been placed on it by opposite party 2. In that view of the matter, the impugned award cannot be sustained having regard to the positive finding of fact reached by opposite party 2 that the petitioner suffered substantial loss during the year in question.

3. In the end, the petition is allowed and the impugned award, annexure 9 to the petition, is quashed. I make no order as to costs since nobody has appeared to oppose the petition.


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