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Bala Subrahmanya Rajaram Vs. B.C. Patil and ors. - Court Judgment

LegalCrystal Citation
SubjectMedia and Communication;Labour and Industrial
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1958SC518; (1958)60BOMLR943; (1958)ILLJ773SC; (1958)IIMLJ121(SC); [1958]1SCR1504
ActsPayment of Wages Act, 1936 - Sections 2 and 15
AppellantBala Subrahmanya Rajaram
RespondentB.C. Patil and ors.
Cases ReferredCo. v. N. C. Chakravarthi
Excerpt:
.....per act. - - the appeals failed and the award was upheld. ..which would,if the terms of the contract of employment, express or implied, were fulfilled,be payable, whether conditionally upon regular attendance, good work or conductor other behavior of the person employed, or otherwise, to a person employedin respect of this employment or of work done in such employment, and includesany bonus or other additional remuneration of the nature aforesaid which wouldbe so payable and any sum payable to such person by reason of the terminationof his employment, but does not include. 22. if we equate 'bunus' with 'remuneration,'thedefinition says clearly enough that the bonus must be such that it is payable'if the terms of the contract are fulfilled,'that is to say, it willnot be payable if..........included are set out. 18. now consider this clause by clause.''wages' means allremuneration.' is bonus a remuneration? we think it is. remuneration isonly a more formal version of 'payment' and payment is a recompensefor service rendered. 19. now it is true that bonus in the abstract need not be for servicesrendered and in that sense need not be a remuneration; for example, there is ashareholder's bonus in certain companies, and there is a life insurance bonusand so forth. but that is not the kind of bonus contemplated here because thekind of remuneration that the definition contemplates is one that is payable. 'in respect of his employment or of work done insuch employment.' therefore, the kind of bonus that this definitioncontemplates is one that is remuneration for services rendered.....
Judgment:

Bose, J.

1. These appeals arise out of petitions made to the Bombay High Court underArt. 226 for writs of certiorari.

2. The appellant is the manager of the Tata Mills Limited, which carries onbusiness in the manufacture and sale of textile goods in Bombay and as such isresponsible for the payment of wages under the Payment of Wages Act, 1936.

3. The first respondent was the Authority under the payment of Wages Act atthe times material to these appeals. The sixth respondent is the presentAuthority. The Authority is entrusted with the duty of deciding cases fallingwithin the purview of the Act.

4. The second, third, fourth and fifth respondents are employees in theMills.

5. A dispute arose about a claim made by the operatives of the Mills for abonus for the year 1948. This was referred to the Industrial Court at Bombaywhich made an award on April 23, 1949, and awarded a bonus equivalent too fourand a half months wages subject to certain conditions of which only the sixthis material here. It runs as follows :

'Persons who are eligible for bonus but who are notin the service of the Mill on the date of the payment shall be paid in one lumpsum by the 30th November 1949. In such cases, claims in writing should be madeto the Manager of the Mill concerned.'

6. Those operatives who made a claim before the date fixed above were dulypaid but payment was refused to the third respondent, who applied much later,on the ground that the condition subject to which the award was made was notfulfilled.

7. The third respondent thereupon made an application before the firstrespondent, the Authority under the Payment of Wages Act.

8. Similar claims were made by the second, fourth and fifth respondents fora bonus for the year 1949. The Industrial Court awarded a bonus equal to twomonths' wages and in the sixth condition put the date as December 31, 1950.

9. By this time Labour Appellate Tribunals came into existance, so bothsides filed appeals against the award to the Labour. Appellate Tribunal ofBombay. The appeals failed and the award was upheld.

10. After that, the matter followed the same pattern. Respondents 2, 4 and 5applied for their bonus after December 31, 1950. The Mills refused to pay andthese respondents applied to the first respondent, the Authority under thePayment of Wages Act.

11. The two sets of claims, that is to say, the claim of the thirdrespondent for a bonus for the year of 1948 and the claims of the second,fourth and fifth respondents for bonuses for the year 1949, were heardtogether.

12. The appellant contested these applications on two grounds. He questionedthe jurisdiction of the Authority to entertain, the petitions made to it. Healso contended that, in any event, as the condition subject to which the awardwas made, namely an application on or before November 30, 1949, was notfulfilled, the claim for a bonus did not lie.

The first respondent held that it had jurisdiction and, after hearing theparties on the merits, decreed the various claims.

13. The appellant thereupon filed writ petitions in the High Court. Theywere heard and dismissed by Coyajee J.

14. An appeal was then filed in the same High Court and heard by the ChiefJustice and Bhagwati J. They held that the questions raised were covered by anearlier decision of theirs in another case dated March 11, 1952, and, followingthat decision, dismissed the appeals without hearing further arguments, ascounsel on both sides agree that the matter was covered by the earlierdecision. The appellant then applied for a certificate for leave to appealhere. This was granted by Chagla C.J., and Dixit J., on February 2, 1953.

15. The first question that we have to decide is whether the firstrespondent had jurisdiction to entertain the petitions made to him as theAuthority under the Payment of Wages Act. This depends on whether these bonusesare 'wages' within the meaning of the definition in s. 2(vi) of theAct.

16. The scope of the Authority's jurisdiction is set out in s. 15 of theAct. It is to hear and decide

(1) all claims arising out ofdeduction from wages, and

(2) all claims regarding delay inthe payment of wages.

16. Therefore, unless these bonuses are 'wages' within the meaningof the Act, the Authority will have no jurisdiction.

17. The definition of 'wages' in s. 2(vi) of the Act is long andcomplicated but leaving aside the clauses in it that are not material for ourpresent purpose, it runs -

''Wages' means all remuneration..... which would,if the terms of the contract of employment, express or implied, were fulfilled,be payable, whether conditionally upon regular attendance, good work or conductor other behavior of the person employed, or otherwise, to a person employedin respect of this employment or of work done in such employment, and includesany bonus or other additional remuneration of the nature aforesaid which wouldbe so payable and any sum payable to such person by reason of the terminationof his employment, but does not include.......'

and then five matters that are not included are set out.

18. Now consider this clause by clause.''Wages' means allremuneration.' Is bonus a remuneration? We think it is. Remuneration isonly a more formal version of 'payment' and payment is a recompensefor service rendered.

19. Now it is true that bonus in the abstract need not be for servicesrendered and in that sense need not be a remuneration; for example, there is ashareholder's bonus in certain companies, and there is a life insurance bonusand so forth. But that is not the kind of bonus contemplated here because thekind of remuneration that the definition contemplates is one that is payable.

'In respect of his employment or of work done insuch employment.' Therefore, the kind of bonus that this definitioncontemplates is one that is remuneration for services rendered or work done.Accordingly, it is a 'remuneration' and as the definition includesall remuneration of a specified kind, we are of opinion that bonus of the kindcontemplated here falls within the clause that says it must be'remuneration.'

20. Next comes a clause that limits the kind of remuneration, for, thoughthe opening words are 'all remuneration' the words that follow limitit to all remuneration of the kind specified in the next clause, that is, toremuneration

'which would be payable if the terms of thecontract of employment, express or implied, were fulfilled.'

21. Now the question is whether the kind of bonus contemplated by thisdefinition must be a bonus that is payable as a clause of the contract ofemployment. We think it is, and for this reason.

22. If we equate 'bunus' with 'remuneration,' thedefinition says clearly enough that the bonus must be such that it is payable'if the terms of the contract are fulfilled,' that is to say, it willnot be payable if the terms are not fulfilled.

23. Now, we can understand a position where a statute declares that wheneverthe terms of the contract of employment are fulfilled the bonus shall bepayable; equally, we can envisage a situation in which an employer engages topay a bonus should the terms of the contract of employment be fulfilled, by aseparate and independent agreement that is not part of the contract of employment.In either case, the matter could be said to fall within this part of thedefinition. But we can see not way in which a bonus can be said to be payableif and when the terms of the contract of employment are fulfilled outside thesetwo cases (namely, legislation, or a separate contract that is not part of thecontract of employment) except when it is payable by reason of a terms, expressor implied, in the contract of employment itself. In any event it there aresuch cases, the present is not one of them, for the bonus here is payable underan award of an Industrial Court and has nothing to do with the fulfilled orother wise of the terms of the contract of employment, except indirectly.

24. It was argued that as an Industrial Court can direct payment of bonusshould an industrial dispute arise in that behalf, the matter falls within thedefinition. But does it? One of the matters that an Industrial Court might takeinto consideration before contract of awarding a bonus is whether all the termsof the contract of employment of have been duly fulfilled and it is possiblethat such a Court might refuse to award a bonus in case where the terms werenot fulfilled, but it would not be bound by such a consideration and its rightto make an award of bonus is not conditional on fulfilment of the terms of thecontract of employment, whereas under the definition that is an essentialingredient. Therefore, even if due fulfilment of the terms of the contract ofemployment was to be one of the reasons for the award, the bonus so awardedwould not be payable because the terms of the contract had been fulfilled butbecause of an industrial dispute and because in order to settle it, the Courtawarded the bonus.

25. It is not necessary to analyse he definition any further (except for oneclause) because, even if all the other ingredients are present, the clause wehave just considered would exclude a bonus of the kind we have here, that it isto say, a bonus awarded by an Industrial Court.

26. The clause we have yet to examine is this :

'and includes any bonus or other additionalremuneration of the nature aforesaid which would be so payable.'

27. It was contended that the words 'and includes any bonus' standby themselves and that the words that follow must be disregarded when bonus isunder consideration because they relate only to 'additionalremuneration' and not to 'bonus,'

28. Now, it may be possible to say that the words 'of the natureaforesaid' only govern the words 'additional remuneration' andthat they do not apply to 'bonus,' with the result that the inclusionclause 'and includes any bonus etc.' would refer to two separatethins, namely,

(1) bonus and

(2) other additional remunerationof the nature aforesaid. In our opinion, the clause means -

(1) 'bonus..... which wouldbe so payable,' and

(2) 'other additionalremuneration of the nature aforesaid which would be so payable.'

If that is correct, then the words 'which would be so payable'throw us back to the earlier part of the definition and we reach the positionthat the kind of bonus that is included by the inclusion clause is the kindthat would be payable 'if the terms of the contract of employment, expressor implied, are fulfilled.'

29. There is another reason for reaching this conclusion. The opening wordsof the definition make it clear that 'wages' means remuneration thatis payable when the terms of the contract of employment are fulfilled.Therefore, that is something certain. One knows ahead of time that if the termsof the contract are fulfilled, then the bonus is payable. It may be that theexact amount has yet to be determined but the fact that bonus is payable andcan be claimed as soon as the terms of the contract are fulfilled is a matterthat can be predicated before hand, that is to say, even before the terms ofthe contract are fulfill, or indeed, even before the work has started if thecontract is made that far ahead. But that is not the case when bonus is awardedby an Industrial Court, for there it is impossible to say a head of timewhether bonus will be awarded or not; indeed, at the time the contract isentered into, it would be impossible to say where such a claim could be aid atall because a difference of opinion between one worker and his employer aboutthe right to bonus would not necessarily lead to an industrial dispute. When anIndustrial Court awards a bonus, independent of any contract, it does so onlyif there is an available surplus for a distribution of bonus and the amount ofthe award would depend on the extent of the surplus available for that purpose.Therefore, the fulfilment or other wise of the terms of the contract ofemployment is not an essential ingredient of an award of an Industrial Court.

30. In F. W. Heilger &; Co. v. N. C. Chakravarthi, the learned Judges ofthe Federal Court held that a bonus not payable under a contract of employmentdoes not fall within the definition of 'wages' in s. 2(vi) of thepayment of Wages Act, as it stood before the amendment in 1957. We areconcerned with the old definition here and not the amended one, so the presentcase is, in our opinion, covered by that authority.

31. It is true that no bonus had been awarded in Heilgers'case and thattherefore there was no ascertained sum, whereas there is one in the presentcase, or rather a sum that is ascertainable, but that was one one of thegrounds on which the learned Judges proceeded. They held that in order to bringa particular payment under the definition of 'wages,' two things arenecessary -

' (1) a definite sum, and

(2) a contract indicating whichthe sum becomes payable;' and they said -

'It is obvious that unlessthere is an express provision for paying a stipulate sum, the definition willnot cover such a payment.'

32. The bonus in the present case is not payable because of a contract butbecause of the award of an Industrial Court. Therefore, according to theFederal Court, it is not 'wages' within the meaning of the Payment ofWages Act.

In 1957 the definition wasamended and the following was added :

''wages' means..... andincludes

 ..................................................................

(c) any additional remunerationpayable under the terms of employment (whether called a bons or by any othername);

but does not include -

(1) any bonus (whether under ascheme of profit sharing or otherwise) which does not form part of remunerationpayable under the terms of employment......'

33. The charge would have been unnecessary had the law been otherwise underthe old definition; not is it possible to say that the clause was added by wayor abundant caution because the Federal Court decided otherwise in 1949. Inview of this amendment, and in view of the Federal Court's decision, we do notfeel justified in taking a different view, especially as we think the decisionwas right.

34. The learned Judges of the Bombay High Court tired to distinguish theFederal Court's judgment on the ground that no bonus had been declared thereand so there was no ascertained sum but, as we have pointed out, the ratio ofthe decision covers the present case and, in any case, that is our view quiteapart from their conclusion.

35. On this view, it is not necessary to consider the points that wereargued because, if the definition of 'wages,' as it stood before theamendment, it not wide enough to included a bonus of the kind we have here,namely, one payable under an award of an Industrial Court, then, the Authorityunder the Payment of Wages Act had in jurisdiction to entertain the petitionsmade to it under s. 15 of the Act.

36. The appeals are allowed with costs. The decisions of the learned HighCourt Judges are set aside and also the decrees of the Authority under thePayment wages Act. There will be only one set of costs.

37. Appeals allowed.


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