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The Management of J.K. Paper Mills Vs. Workmen and 2 ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtOrissa High Court
Decided On
Judge
Reported in(1973)ILLJ518Ori
AppellantThe Management of J.K. Paper Mills
RespondentWorkmen and 2 ors.
Cases ReferredJalan Trading Co. v. Mill Mazdoor Sabha
Excerpt:
.....accused of forest offence. such a concept is totally not conceivable from any provision in the act, 1972 or the act, 1951. [air 2002 orissa 130 overruled]. - 1) submitted a charter of demands which included claim for bonus for the years 1964 to 1970. it also served a strike notice on 19-2-1971. conciliation proceedings followed which, however, ended in failure......disputes act of an intended strike. a charter of demands was also furnished along with it. payment of bonus was one of the items included in the said charter of demands.3. on 12-9-1969, two settlements were reached between the management and the employees' union, one relating to several disputes and the other specifically relating to payment of bonus. it is the case of the petitioner that the union was interested in a long term settlement regarding payment of bonus for the convenience of workmen. accordingly both the pending disputes of past years relating to bonus and claim upto 1971 formed the subject-matter of settlement.4. the relevant portion of the settlement relating to bonus was as follows:1. (d)(i)-for the years 1964 to 1967 (both years inclusive) the payment will be.....
Judgment:

R.N. Misra, J.

1. The management of the the J. K. Paper Mills is petitioner in this application under Articles 226 and 227 of the Constitution of India.

2. The company (J.K. Paper Mills) which is a concern of Messrs, Straw Products Limited commenced business at Jaykaypur near Rayagada in the district of Koraput in 1962. In 1964, the J. K. Paper Mills Employees' Union was registered under the Trade Unions Act and worked as sole representative union of workmen employed in the Mills. Dispute relating to bonus for the years 1964 and 1965 between the employer and the workmen was referred under the Industrial Disputes Act to the Tribunal and was registered as Industrial Dispute Case No. 20 of 1966. Similarly a dispute relating to bonus for the year 1966 was referred to the Tribunal in Industrial Dispute Case No. 24 of 1968. The J.K. Paper Mills had been declared as a public utility service as defined in Section 2(n) of the Industrial Disputes Act. Notice was given by the union on 26-8-1969 under Section 22(1) of the Industrial Disputes Act of an intended strike. A charter of demands was also furnished along with it. Payment of bonus was one of the items included in the said charter of demands.

3. On 12-9-1969, two settlements were reached between the management and the employees' union, one relating to several disputes and the other specifically relating to payment of bonus. It is the case of the petitioner that the union was interested In a long term settlement regarding payment of bonus for the convenience of workmen. Accordingly both the pending disputes of past years relating to bonus and claim upto 1971 formed the subject-matter of settlement.

4. The relevant portion of the settlement relating to bonus was as follows:

1. (d)(i)-For the years 1964 to 1967 (both years inclusive) the payment will be made at the rate of 4% (four per cent) of total wages/salaries (basic plus dearness allowance) earned for each year to the employees inclusive of seven days' basic wages/ salaries in respect of the accounting year 1964; seven days' basic wages/ salaries in respect of the accounting year 1965 ; fifteen days' basic wages/ salareis in respect of the accounting year 1966 and fifteen days' basic wages/salaries in respect of the accounting year 1967 already paid on 24th August, 1965, 22nd August, 1966 23rd September, 1967 and 22nd August, 1968, respectively...

(ii) The parties shall file joint petition of compromise before the Industrial Tribunal, Orissa, stating that the union and the workmen have withdrawn their claims for bonus for the years 1964, 1965, and 1966, since the dispute in relation to such claims has been settled in accordance with the present terms of settlement and praying the Tribunal that as the claim for bonus has been settled mutually for the years 1964, 1965, 1966, a compromise award in terms of this settlement or 'No Dispute Award be passed in respect of Issue No. 4 of Industrial Dispute Case No. 20 of 1966 and Issue No. 4 of Industrial Dispute Case No. 24 of 1968 pending before the said Tribunal.

(d-i)-It is further agreed between the parties that bonus for the accounting years 1968, 1969, 1970 and 1971 shall be paid by the management and accepted by the workmen in full and y final settlement of claim of bonus for the said years under Section 34(3) of the Payment of Bonus Act, 1965, as follows:

(1) For the accounting year 1968, 8% (eight per cent) of total wages/ salaries earned inclusive of 4% (four per cent) already paid.

(2) For the accounting year 1%9, 9% (nine per cent) of the total wages/ salaries earned.

(3) For the accounting year 1970, 10% (ten per cent) of total wages/salaries earned.

(4) For the accounting year 1971, 10% (ten per cent) of total wages/salaries earned.

The payment of further four per cent bonus for the year 1968 shall be made along with payment for the years 1964 to 1967 as per Clause l(c) of this settlement.

(d-iii)- The management will calculate the actual amount of bonus payable under the provisions of Sections 4, 5, 6, 7, 10 and 11 of the said Act, on the basis of the profit and loss account and balance sheet of J. K. Paper Mills and the difference between the amounts so payable and the amounts actually paid under Clause (1)(d-i) above shall be set on or set off as the case may be until the year 1971 and will be taken into consideration for bonus payable for the year 1972 onwards and the union and the workmen shall accept the calculations made by the company on this basis.

(e)It is agreed that the union or workmen shall not, under any circumstances put forth any further demand for the payment of bonus in respect of the years 1964 to 1971 (both years inclusive).

2. It is agreed that the union or workmen shall not raise any industrial dispute on any of the issues finalised in this settlement during the operation of this settlement.

5. It is agreed between the parties to the settlement that it shall come into effect immediately and shall be operative and binding upon the parties till 31st August, 1972, and will further be continued to be binding upon the parties till it is terminated by either of the parties by giving 2 (two) months' notice in accordance with the provisions of Industrial Disputes Act, 1947.

To this settlement arrived at in the presence . of the conciliation officer, the works manager, works secretary, personnel officer and assistant secretary on behalf of the management and the president, vice-president, general secretary and joint secretary of the union were signatories. This settlement was duly notified to all concerned as required under the law.

5. There is no dispute between the parties that effect was given to this settlement in the two pending industrial disputes before the Tribunal relating to the bonus rates of 1964, 1965 and 1966 by orders dated 25-9-1969 in the two cases.

6. In March, 1970, the Rayagada Kagaza-kala Sramik Sangha came into existence. On 19-1-1971, this Sangha (opposite party No. 1) submitted a charter of demands which included claim for bonus for the years 1964 to 1970. It also served a strike notice on 19-2-1971. Conciliation proceedings followed which, however, ended in failure. On 25-11-1971, the appropriate Government referred three disputes to the Tribunal, one whereof was to the following effect:

Whether the employees of Straw Products (J. K. Paper Mills), Rayagada, are entitled for bonus at the rate of 20yo of their annual wages in accordance with the Payment of Bonus Act, for the accounting years, 1967, 1968, 1969 and 1970 If not, what would be the quantum of bonus payable under the said Act?.

Industrial Dispute Case No. 34 of 1971 was duly registered. On 28-12-1971, the management filed its written statement and challenged the maintainability of the dispute over the claim of bonus on the footing that the settlement dated 12th of September, 1969, was binding on all workmen, even those who are members of the opposite party No. 1-Sangha. The management called upon the Tribunal to decide the following as a preliminary issue :

In view of the settlement dated 12th September, 1969, pertaining to bonus, whether any industrial dispute for the years from 1964 to 1971 and whether the reference relating to bonus, is maintainable.

7. On 10th of March, 1972, the Tribunal gave an interim award by which the preliminary question was also disposed of. The following findings were given :

(1) The settlement dated 12-9-1969 was genuine.

(2) The union had not gone against the workers' interest.

(3) The agreement for bonus relating to 1964 to 1967 was valid and binding.

(4) The agreement for bonus for the years 1968 to 1971 (it may be noted that for the year 1971, the matter was not pending adjudication) was not valid and binding.

Against this interim award, two writ applications were filed, one on behalf of the Sangha mainly contending that the decision of the Tribunal was not an interim award, but a disposal of a preliminary question. There was no provision for disposing of a dispute piecemeal. That writ application (O.J.C. 561 of 1972) has in the meantime been dismissed. The management has come up with this writ application challenging the finding of the Tribunal that the settlement in regard to payment of bonus for the years 1968 to 1971 was not valid in law and binding on the parties.

8. The Tribunal has come to its conclusion mainly on accepting the view placed by the Sangha before it that the terms of settlement including the provisions of 'set off and set on' did not constitute a formula as contemplated in Section 34(3) of the Payment of Bonus Act, The Tribunal persuaded itself to come to the said conclusion by holding that the rates of payment of bonus for these years were imaginary and notional and were not based upon calculation and in fact no calculation could have been made in respect of bonus to accrue in future. The Tribunal also found that the settlement was inconsistent with Section 15 of the Act and such a settlement was against the interest of workmen.

9. An analysis of the scheme under the Payment of B anus Act, 1965, is necessary for arriving at a conclusion as to whose contention is correct-that of the management that the settlement is covered by Section 34(3) of the Act, or of the Sangha that the settlement was contrary to the Act and was void. Section 4 provides the manner for computation of gross profits. Section 6 provides the sums which are deductible from gross profits in order to arrive at the 'available surplus' provided for in Section 5. Section 2(4) defines 'allocable surplus' to mean, sixty per cent of the available surplus in an accounting year subject to other details given therein.

10. Section 8 provides for eligibility for bonus while Section 9 indicates disqualifications. Sections 10 and 11 provide for the minimum and the maximum rates of bonus. The minimum of four per cent and the maximum of twenty per cent of the salary or wage earned by the employee during the accounting year is the basis. Section 15 provides for carrying forward of the allocable surplus on a set on and set off basis subject to certain limitations, Section 17 authorises adjustment of interim bonus against bonus payable under the Act. Section 19 provides the time limit for payment of bonus. The statutory provision in this section is that if there is a dispute relating to payment of bonus pending before any authority under Section 22, bonus has to be paid within a month from the date on which the award becomes enforceable or the settlement comes into operation, and in any other case it is payable within eight months from the close of the accounting year. Section 22 provides for reference to disputes for adjudication and Section 23 provides a presumption about accuracy - of balance sheets and profit and loss accounts of companies. Section 34 with which we shall presently deal in detail declares the overriding character of the Act. Sub-section (2) provided a formula for calculation regarding payment of bonus, but in the case of Jalan Trading Co. v. Mill Mazdoor Sabha : (1966)IILLJ546SC , that subsection was declared ultra vires. Sub-section (3) gives liberty to parties to enter into arrangements for payment of bonus under a formula different from that under the Act. It, however, prohibits parties from contracting out of the liability to pay and the right to receive the minimum bonus provided for under Section 10 of the Act.

11. The formula under the Act is such that the calculation of bonus payable under the Act cannot be arrived at until balance sheets and profit and loss accounts are prepared. To that extent the Tribunal is right in holding that the settlement in regard to payment of bonus for future years is not within the usual scheme of the Act.

12. The answer to the question raised in the present dispute before us depends upon a proper interpretation of Section 34(3) of the Act.

That sub-section runs as follows:

Nothing contained in this Act shall be construed to preclude employees employed in any establishment or class of establishments from entering into agreement with their employer for granting them an amount of bonus under a formula which is different from that under this Act:Provided that any such agreement where-by the employees relinquish their right to receive the minimum bonus under Section 10 shall be null and void in so far as it purports to deprive them of such right.

Sub-section (1) of that section provides:

Save as otherwise provided in this section, the provisions of this Act shall have effect notwithstanding any thing 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 the 29th May, 1965.

Thus it is clear that Sub-section (1) is itself subject to the other provisions of Section 34. Sub-section (2) was also an exception, but that having been struck down, the only provision in Section 34 which overrides Sub-section (1) is Sub-section (3) of that section. The Act came into force on 29th of May, 1965. Sub-section (1), therefore, declared that the provisions of the Act would override and anything inconsistent with the provisions of the Act would have to give way, be it contained in any award, agreement, settlement, or contract of service. A formula has been indicated in the statute regarding the payment of bonus. Provision has been made for calculating the bonus. Though it is a percentage of the salary, which has nothing to do with its profit for its calculation, its payability is conditioned by earning of profit subject, however, to the minimum provided in Section 10 of the Act. There is no force in the contention of Mr. Misra that Sub-section (3) has to be limited only to Sub-section (2) which is now non est. If that were the intention of the Parliament, in Sub-section (3) appropriate words would have been used to give full expression to such intention. On the other hand, the sub-section opens with the words 'Nothing contained in this Act'. If an agreement is reached in the matter of payment of bonus by adopting a formula different from that provided under the Act subject to Section 10, to it the other provisions of the statute are not intended to apply. If an agreement within the meaning of Sub-section (3) of Section 34 of the Act is reached by providing a formula other than that provided under the statute-and nothing in the Act is to preclude the employees from reaching such an agreement-the validity of such agreement, even if it satisfies the requirements of the proviso, cannot be tested by the provisions of the Act. The legislative intention in enlarging the field of agreement in the matter of payment of bonus is clear from the limited character of the restriction imposed in the proviso. It was open to Parliament to include other sections of the Act in the proviso if the legislative intention was that such agreement under Sub-section (3) was also to conform to all or some of the other provisions in the statute. Therefore, Mr. Misra's contention that the agreement in question (settlement of 1969) does not conform to requirements of Section 19, or unduly binds down the workmen in accepting the correctness of the balance sheets and accounts of the company does not commend itself to us. A presumption is raised about the correctness of the balance sheet and profit and loss accounts under Section 23 of the Act itself. The settlement only reiterates it. If any dispute is available to be raised under the Act to such balance sheet and profit and loss accounts, they are still open to be raised and the settlement does not take away the workmen's right to dispute the same. Section 19, or for the matter of that, all other sections in the Act excepting S. JO, have to be kept away while considering the validity of an agreement containing a different formula regarding payment of bonus.

13. The only question that remains for decision is whether what is contained in the settlement regarding payment of bonus is a formula. In tact, it is here that the Tribunal has recorded a dissent and, therefore, has decided the preliminary question against the management. We have already stated that a formula has been adopted in the Act itself regarding quantification of bonus and liberty is given in Sub-section (3) by agreement to adopt a different formula regarding such quantification keeping Section 10 of the Act in view. 'Formula' has no statutory definition and, therefore, it has to bear the commonplace meaning for interpretation of the term occurring in Sub-section (3) of Section 34. The Shorter Oxford English Dictionary gives the meaning of the word 'formula' to be :

A set form of words in which something is defined....A prescription or detailed statement of ingredients...A group of symbols and figures condensing a set of facts.

In ordinary parlance 'formula' would indeed be a method of calculation. As we have already indicated, a method is prescribed in the statute and liberty is given to adopt another method different from that under the Act by agreement. Tested in this light, the relevant provision in the settlement is indeed a 'formula' which is different from that under the Act. Broadly it provides for ad hoc rates of payment in excess of the minimum provided under Section 10 and stipulates that on the basis of the actual balance sheets and profit and loss statements, payments would be made in 1972. The statutory dues under the Act are not avoided. Instead of raising dispute at the end of each year over the claim of bonus, an agreed method has been adopted, whereby the provisions of Section 19 has been kept away and at the agreed rate ad hoc payments are allowed to be made and the balance, if any, is agreed to be received after accounting is made. This indeed is an alteration of the formula adopted under the Act and is a formula by itself. We see no justification in the view of the Tribunal that this does not amount to a formula.

14. Mr. Misra concedes that if the agreement is accepted as valid under Sub-section (3) of Section 34 of the Act, it would be binding on all workmen and is even available to be enforced under appropriate statutes. The settlement was reached in 1969 at a time when the opposite party No. 1, Sangha, had not come into existence. It is not for us to decide as to whether the union or the Sangha is more representative of the workmen. It is enough to say that a valid and binding settlement had been reached in 1969 relating to payment of bonus upto the year 1971 and on the workmen constituting the Sangha which came into existence in 1970, the same was binding. The stand taken by the management that there could be no dispute raised over the same matter at the instance of the Sangha is, therefore, justified. The solemn engagement in the settlement must be given effect to and the Sangha must not be permitted to reagitate the dispute which by a competent union of workmen had been resolved about a couple of years before. The peace brought about in the industry as a result of the settlement cannot be disturbed.

15. We would accordingly quash the finding given by the Tribunal on the preliminary issue by issuing a writ of certiorari. The dispute relating to payment of bonus was non est in view of the settlement and, therefore, that alleged dispute could not have been referred and the Tribunal shall not adjudicate the same. The writ application is allowed. There shall, however, be no costs.

B.K. Patra, J.

16. I agree.


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