Skip to content


National TIn Manufacturing Co. Vs. the Presiding Officer, Labour Court, Delhi and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtDelhi High Court
Decided On
Case NumberLeave Application No. 280 of 1971
Judge
Reported inILR1972Delhi25
ActsPayment of Bonus Act, 1965 - Sections 1(3); Constitution of India - Article 226
AppellantNational TIn Manufacturing Co.
RespondentThe Presiding Officer, Labour Court, Delhi and ors.
Advocates: D.N. Vohra,; Urmila Kapoor and; Kamlesh Bansal, Advs
Cases ReferredHindustan Steels Limited v. A. K. Roy
Excerpt:
.....the principles laid down by the supreme court and even if its decision was affirmed by the learned single judge, the high court was bound to interfere with that decision. - - this is precisely how the labour court 'had worked out as the amount of bonus for the year 1964-65 and its decision was confirmed by the learned single judge. in para 18 their lordships had clearly stated: the labour court as well as the learned single judge held that this statement was not worthy of reliance as even on dates on which the workmen had worked they were shown to be absent and on holidays also they were marked absent. neither the learned single judge nor we would interfere with the decision of the labour court, but we have been taken by the counsel for the appellant through the order made by the..........on its roll. the accounting year of the firm is april 1964 to march 1965. (4) in march 1966, mohd. arfin, who was imp leaded as respondent no. 2 and was an employee of the firm, filed a claim that due to accident he had l'een permanently disabled and should be paid compensation for disablement. he was accordingly paid rs. 866.00 by an order of the commissioner under the workmen's compensation act, 1923. shri mohd. arfin was meanwhile given one month's notice of termination of his services on 15-3-1966. (5) the services of mohd. unis and jalil ahmed who were imp leaded as respondents 3 and 4 were terminated with effect from 15-4-1966 by giving them one month's notice under section 30 of the delhi shops & establisnments act. these notices too were served on them on 15-3-1966. (6) on.....
Judgment:

Hardayal Hardy, C.J.

(1) This appeal under Clause 10 of the Letters Patent is directed against the judgment of a learned Single Judge of this Court in Civil Writ No. 1694 of 1967 whereby the award made by the Labour Court on 15-7-1967 was confirmed by the learned Judge.

(2) Some of the facts leading to this appeal were no doubt disputed by the parties but as the questions arising for determination in this appeal are based on un-disputed facts, we shall set out only those facts as to which the parties are in agreement.

(3) The appellant. National Tin Manufacturing Company, is an establishment which is engaged in the manufacturing of tins and is registered under the Delhi Shops & Establishments Act, 1954. In March 1966 there were only six employees on its roll. The accounting year of the firm is April 1964 to March 1965.

(4) In March 1966, Mohd. Arfin, who was imp leaded as respondent No. 2 and was an employee of the firm, filed a claim that due to accident he had l'een permanently disabled and should be paid compensation for disablement. He was accordingly paid Rs. 866.00 by an order of the Commissioner under the Workmen's Compensation Act, 1923. Shri Mohd. Arfin was meanwhile given one month's notice of termination of his services on 15-3-1966.

(5) The services of Mohd. Unis and Jalil Ahmed who were imp leaded as respondents 3 and 4 were terminated with effect from 15-4-1966 by giving them one month's notice under Section 30 of the Delhi Shops & Establisnments Act. These notices too were served on them on 15-3-1966.

(6) On September 19, 1966 Delhi Administration referred the disputes regarding payment of bonus and termination of services of these three employees to the Labour Court. Before the Labour Court these employees were represented by the Engineering Employees' Union.

(7) The parties closed their evidence and the Labour Court gave an award inter alias allowing the three employees bonus for one month. The employees we'e also ordered to be re-instated in service with full back wages

(8) The appellant being aggrieved by the award made by the Labour Court filed a writ petition in this Court which was allowed by the learned Single Judge and has now led to the filing of the present appeal.

(9) Two questions have been raised on behalf of the appellant on both of which the learned Single Judge has repelled the objections filed by the appellant. The first question relates to the payment of bonus, while the second question relates to re-instatement of the respondents with full back wages. It may be mentioned here that in the appeal before us the question of re-instatement of Jalil Ahmed was not raised and the controversy was confined to the other two employees Mohd. Arfin and Mohd. Unis.

(10) In regard to the first question it was common ground that the Payment of Bonus Act, 1965 did not apply to the establishment of the appellant as the number of persons employed by it was only six. The Labour Court also did not hold that the claim for bonus was admissible under the provisions of the said Act. Learned Single Judge however relied upon a decision of the Supreme Court in M/s. Sanghvi Jeevraj Ghewar Chand and others v. Secretary Madras Chillies Grains and Kirana Merchants

(11) Workers Union and another (1969(2) Labour & Industrial Cases 854C) and held that even though the Bonus Act of 1965 did not apply to the establishment, a dispute with regard to bonus for the period ending on March 31, 1965 could nevertheless be raised through industrial adjudication under the Industrial Disputes Act. 1947. In that connection the learned Judge referred to what was generally known as 'Full Bench Formula' and observed that according to that formula the surplus available for distribution was determined after debiting certain prior charges from gross profits. viz. (1) Provision for depreciation, (2) reservation for rehabilitation, and (4) return on working capital at a rate lower than the one on the paid up capital. The Labour Court had found that according. to the balance-sheet there was a profit of Rs. 2,329.32 in the year 1964-65 after deducting the expenditure. No amount of capital was shown to have been invested and as such nothing could be left out as return for the capital. No Income-tax was levied on Rs. 2,329.32. Leaving 66% for the management and 33% for the work-men, the amount that came to the share of the workmen was Rs. 759.00 which amounts to & month's wages for workers. This is precisely how the Labour Court 'had worked out as the amount of bonus for the year 1964-65 and its decision was confirmed by the learned Single Judge.

(12) It seems to us that the learned Single Judge, if we may say so with great respect did not correctly construe the judgment of the Supreme Court on this question. In para 18 their Lordships had clearly stated:-

'CONSIDERINGthe history of the legislation, the background fand the circumtances in which the Act was enacted, the object of the Act and its scheme, it is not possible to accept the construction suggested on behalf of the respondents that the Act is not an exhaustive Act dealing comprehensively with the subject-matter of bonus in all its aspects or that Parliament still left it open to those to whom the Act does not apply by reason of its provisions either as to exclusion or exemption to raise a dispute with regard to bonus through industrial adjudication under the Industrial Disputes Act or other corresponding law.'

(13) In that view of the matter, it has to be held that Payment of Bonus Act, 1965 is an exhaustive Act dealing comprehensively with the subject-matter of bonus in all its aspects and that Parliament had not left it open to those to whom the Act did not apply by reason of its provisions to raise a dispute with regard to bonus through industrial adjudication under the Industrial Disputes Act. 1947 or other corresponding law.

(14) Counsel for the respondents however submitted that although the appellant was not an establishment within the meaning of Section 1(3)(b) of the Payment of Bonus Act, 1965, it was a factory and the provisions of the Bonus Act did apply to such a factory. The argument is wholly mis-conceived as the expression 'factory' has been defined in Section 2(17) of the Bonus Act and it is stated that the expression shall have the same meaning as in clause (m) of Section 2 of the Factories Act, 1948. According to that section, factory means any premises including the precincts thereof where ten or twenty or more workers are working on any day of the preceding twelve months.

(15) Counsel for the respondents also referred to the provisions of Section 10 of the Bonus Act and submitted that subject to the provisions of Sections 8 and 13 of the Act every employer shall be bound to pay to every employee in an accounting year a minimum bonus which shall be four per cent of the salary of wage earned by the employee during the accounting yeai or Rs. 40.00 whichever is higher whether there are profits in the accounting year or not. It was urged that the said section bound the employer to pay a minimum bonus to every employee. The provisions of Section 10 arc however subject to the provisions of Sections 8 and 13 and both these sections refer to an accounting year in accordance with the provisions of the Act and if the Bonus Act itself did not apply to the establishment the question of any accounting year did not arise. Learned Single Judge thereforee appears to us to have fallen into an error in holding that respondents 2 to 4 were entitled to any bonus.

(16) The next question relates to the termination of services of the employees. The Labour Court found that Mohd. Arfin did not suffer from any permanent disablement. His actual disablement was only partial and it was found that the disability was to the extent of 27 per cent. This disablement had taken place on account of accident in February 1965 but he was continued in employment and was also given compensation under the Workmen's Compensation Act. It was only in the middle of March 1966 that a notice to terminate his services was given. The allegation against Mohd. Arfin was that he had accompanied Ishtiaq Ali another employee of the appellant to the police station where the latter had lodged a report and Mohd. Arfin was cited as a witness. The employer was stated to have made up with Ishtiaq Ali, but not with Mohd. Arfin. As regards Mohd. Unis, the allegation was that he was habitually absent. In this connection a statement marked Ex. N-8 was relied upon on behalf of the employer. The Labour Court as well as the learned Single Judge held that this statement was not worthy of reliance as even on dates on which the workmen had worked they were shown to be absent and on holidays also they were marked absent. The Labour Court had also found that the termination of services of three employees viz. Mohd. Arfin, Mohd. Unis and Jalil Ahmed were mala fide.

(17) Ordinarily this being a finding of fact. neither the learned Single Judge nor we would interfere with the decision of the Labour Court, but we have been taken by the counsel for the appellant through the order made by the Labour Court and although according to the allegations of the work-men all the three workmen were victimised for their trade union activities yet the only trade union activity attributed to them was that they demanded the bonus as well as the dispute that Ishtiaq Ali had with the management. The finding of the Labour Court is in the following terms:-

'NOdoubt Mohd. Unis has not come in the witness box, but his case has been proved from the statement of Jalil Ahmed and Mohd. Arfin. These workmen have also been dismissed because of their activities along with Mohd. Arfin in demanding bonus and siding with him as well as having stood as witness for Ishtiaq Ali. The case of all the three workmen is similar as they were dismissed alike, and all of them were victimised because these were the persons who demanded bonus and the other persons employed by the work-men were all minors which was against law. Any how as the other work-men were minors and they had not the guts as to demand bonus the management dismissed the applicants. In these circumstances, the dismisal being mala fide and an act of bad. labour practice, I award that both these workmen Mohd. Unis and Mohd. Jalil as well be re-instated with continuity of service and full back wages.'

(18) If the demand for payment of bonus was against the provisions of law, it cannot be said that these persons were victimised because they were persons who demanded bonus and had also guts to make such a demand, nor was there any act of un-fair labour practice on the part of the appellant. Similarly the A. appellant having, compromised with Ishtiaq Ali there was no reason why it should be said that an action for termination of services of Mohd. Arfin was taken because he had accompanied him to the police station.

(19) With the help of parties' counsel we have gone through Ex. N-8 and are of the view that there is no question of these persons having been marked absent on days on which they were actually present. There seems to be a mis-reading of the document by the Labour Court which in turn appears to have influenced the decision of the learned Single Judge. We have also perused the decision of the Labour Court and the judgment of the learned Single Judge and have discovered that the only ground on which the termination of services of the three respondents was held to be mala fide was that these work-men had raised a demand for bonus and also because of the dispute that Mohd. Arfin had accompanied Ishtiaq Ali to the police station despite the fact that subsequently a settlement was arrived at with Ishtiaq Ali. The Labour Court had obserbed :-

'ACCORDINGto the allegations of the workmen all the three workmen were victimised for their trade union activities as having demanded the bonus, as well as because of the dispute that Ishtiaq Ali had with the management.'

(20) Proceeding further, the Labour Court again observed :-

'THISall shows to prove beyond any shadow of doubt that the services of Mohd. Arfin and his colleagues were terminated with main fide intention and to victimise them they having demanded the bonus and the compensation for disablement.'

(21) Counsel for the appellant invited our attention to an observation at page 1169 of a decision of the Supreme Court in M/s Hindustan Steel Ltd. Rourkela v. A. K. Roy and others (1970 Labour and Industrial Cases 1166,(2) where it was said that in cases of both termination of service and dismissal, industrial adjudication is competent to grant relief, in the former case on the ground that the exercise of power was mala fide or colourable and in the latter case if it amounts to victimisation or unfair labour practice or is in violation of the principles of natural justice or is otherwise not legal or justified. In the instant case, the services of the employees were terminated and thereforee the only ground on which the Tribunal could interfere with the decision of the management is if the exercise of power was mala fide or colourable. But if the demand for bonus was illegal it cannot be said that the exercise of power was mala fide or colourable.

(22) Counsel for the appellant also invited our attention to section 30 of Delhi Shops & Establishments Act, 1954 and submitted that under that provision an employer is restrained from dispensing with the services of an employee who has been in his continuous emoloyment for not less than three months, without giving such person at least one month's notice in writing or wages in lieu of such notice; but in a case where services of such an employee are dispensed with for misconduct then his services can be dispensed with without any such notice provided he has been given an opportunity to explain the charge or charges alleged against him in writing. In the instant case the appellant acted under the substantive portion of the section and one month's notice was given to the employees concerned. Their services were also terminated and it was thereforee not a case of dismissal.

(23) Counsel for the respondents drew our attention to certain decisions of the Supreme Court beginning with a decision in the Punjab National Bank, Lid. and Their Workmen (1959(2) Llj 666X3) where the question of dismissal of workmen was considered. In the present case. we are not concerned with any of those decisions, and thereforee none of those cases has any bearing on the question before us.

(24) Counsel for the respondents however drew our attention to certain passages in a decision in the case of Hindustan Steels Limited v. A. K. Roy & others to which we have already referred. and submitted that if the Tribunal had exercised its discretion judicially and in accordance with the well recognised principles and had examined carefully the circumstances of each case, the High Court in exercise of writ jurisdiction, would not interfere with that decision, but if the Tribunal had exercised its discretion in disregard of such circumstances or the principles laid down by the Supreme Court, the High Court can interfere and cannot be content by simply saying that since the Tribunal had exercised its discretion it will not examine the circumstances of the case to ascertain whether or not such exercise was proper and in accordance with the well settled principles. If the High Court were to do so it would be a refusa'l on its part to exercise jurisdiction. A learned Judge of this Court having come to the conclusion that the Labour Court had exercised its jurisdiction properly, it was submitted that it was not open to the Letters Patent Bench to interfere with that decision.

(25) Were the situation such as was represented by the learned counsel for the respondents, we would certainly have declined to interfere with the discretion exercised by the Labour Court and affirmed by the learned Single Judge. But as we have already seen the Labour Court did not exercise its discretion, keeping in view of the principles laid down by the Supreme Court and if its decision was affirmed by the learned Single Judge, we feel bound to interfere with that decision.

(26) The result is that the appeal is accepted, but in the circumstances there will be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //