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Kundara Factory Workers' Union and Ors. Vs. Lakshmi Starch Limited and Ors. (26.08.1976 - KERHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1977)ILLJ452Ker
AppellantKundara Factory Workers' Union and Ors.
RespondentLakshmi Starch Limited and Ors.
Cases ReferredCalcutta D.L. Board v. Employers
Excerpt:
..... m12long team settlement agreed upon by the workmen and the mangement, they bad evolved in 1968 a bonus formula linked to production. if that be bo, the 'agreement' or 'settlement' envisaged section 32(vii)(b) and the 'agreement' contemplated by section 34(3) of the payment of bonus act, 1965 cannot be an 'arbitration award' under s 10a of the industrial disputes act, 1947. the arbitrators have, therefore, no jurisdiction 'o envolve any bonus formula or any portion thereof, be it as regards the rate or as regards any other matter, under section 34(3) of (be payment of bonus act, 1965. the only formula an outside agency can impose upon the parties to the dispute is the one in accordance with the provisions of the payment of bonus act, 1965. 7. it is by now well-settled that the..........fixed under issue 13. and the management impugns the lame award to far as it relates to the annual bonus formula arrived at under issue 3, the decision on special annual bonus to existing beneficiaries under issue 6 and the determination of the question of annual bonus for 1969-70 and 1970-71 under issue 11. the award on issue 4: minimum production standard and production bonus scheme, is under attack by both sides. the earlier petition is by the workmen, and the other by the management. in both petitions the arbitration-award is marked as ext. pi.2. under issue 1 the existing da of 17 paise per point above 400 points of the cost of living index was raised to 20 paise by the majority-award, while the chairman who formed the minority, as per his award laid that it should be raised to 25.....
Judgment:

George Vadakkal, J.

1. The workmen seek to quash the arbitration award under Section 10A of the Industrial Disputes Act, 1947, so fas as it concerns the D A. dealt with under issue 1 and the date of implementation of the award fixed under issue 13. and the management impugns the lame award to far as it relates to the annual bonus formula arrived at under issue 3, the decision on special annual bonus to existing beneficiaries under issue 6 and the determination of the question of annual bonus for 1969-70 and 1970-71 under issue 11. The award on issue 4: minimum production standard and production bonus scheme, is under attack by both sides. The earlier petition is by the workmen, and the other by the management. In both petitions the arbitration-award is marked as Ext. PI.

2. Under issue 1 the existing DA of 17 paise per point above 400 points of the cost of living index was raised to 20 paise by the majority-award, while the Chairman who formed the minority, as per his award laid that it should be raised to 25 paise. It is the case of the workmen that the minority award which is more favourable to them ought to be preferred, it is said that the evidence would support the minority decision. There is no case that the majority has not considered relevant evidence. I do not think that I would be justified in re-appreciating the evidence and in deciding the question as to whether the majority properly and correctly assessed the evidence in making the award relating to D.A.

3. Issue 31 As per Ext.M12long team settlement agreed upon by the workmen and the mangement, they bad evolved in 1968 a bonus formula linked to production. It is the case of the workmen that this formula was agreed upon by them under the expectation that the production would go upon account of certain factors such as installation of higher capacity-machinery, but that this expectation was beiled by actual production. The result was, according to them, they were not getting even the bonus they to get under the formula of the earlier settlement of 1961, Ext. M8. Unrest appears to have set in and this led to the submission to arbitration under S 10A of the Industrial Disputes Act, 1947. Overruling the contention of the management that the arbitrators can evolve only a bonus, formula in accordance with the provisions of the Payment of Bonus Act, 1V65 and that they art, not competent to vary the for mala agreed upon by both parties as per Ext.M 12 settlement, even if such variation be in respect of only the agreed rates, both the Chairman and the other two arbitrators held that they are competent to vary the rates in Ext. M 12 settlement. So holding the chairman revised the rates in one way and the majority, in another manner. This question of competency is raised before me on behalf of the management. It is also contended that the majority-award on issue 3 is not supported by any reason. Besides, relying on S. 31A of the Payment of Bonus Act, 1965 introduced by the Payment of Bonus (Amendment) Act. 1976, and en Section 34 as now obtained since the substitution of that provision by the same Amending Act, it is submitted, that the formula as regards bonus evolved by the award is violative of those provisions.

4. Section 34(3) of the Payment of Bonus Act, 1965, obtained prior to the amendment of that Act in 1976 enabled employees and employers to agree upon a bonus formula different from that provided for by that Act, and Section 32(vii)(b) of that Act as it stood then exempted all employees who have entered into an agreement with their employers for payment of an annual bonus linked with production or productivity in lieu of bonus payable under that Act, from the operation of that Act. The award proceeds on the basis that Ext. M 12 is an agreement of that nature. The main question for consideration is whether such an agreement can be revised by the arbitrators, even if the revision be only of the rates for the various levels of production and does not amount to making of a different type of bonus-formula.

5. Though the submission under Section 10A of the Industrial Dispute, Act, 1947, is consensual, and the award is not that of a Court for a Tribunal, an arbitrator functioning under that section is 'in a loose sense, a statutory arbitrator'-Engin ering Mazdoor Sabha v. Hard Cycles [1962-II L.L.J 760]. In this case the Supreme Court laid that the arbitrator is clothed with certain powers, his procedure is regulated by certain rules, and the award pronounced by hip is given by statutory provision a certain validity and a binding character far a specified period'. The arbitrator has to submit the award, under S. 10A(4) to the appropriate Government who shall have to publish it in such manner as it thinks fit (Section 17) within a period of 30 days from the date of receipt of it. It becomes enforceable on the expiry of 30 days from the date of its publication, as an award on a compulsory reference does, on the expiry of the same period after its publication. And the provisions of the Arbitration Act, 1940 have not application to arbitration order S 10A. In short, therefore, the arbitration award under this provision derives its force, not from the submission or agreement to refer, but as in the case of an award on compulsory reference from the statutory provisions contained in the Industrial Disputes Act, 1947 and due compliance of those provisions consensual settlement, on the other hand, will come into operation, under Section 19(1). on a date agreed upon, and if no such date is fixed, on the date when it is signed by the parties to the dispute, and will continue to be in force for such period as is agreed upon by them, and thereafter till the notice mentioned in Section 19(1) is given. Section 17 has no operation so far as such a settlement is concerned. The efficacy or the settlement is the bilateral agreement, and that alone.

6. Under Section 2(b) of the Industrial Disputes Act, 1947, and under S. 2(7) of the Payment of Bonus Act. 1965. an 'award' means also an arbitration award. Both, an award on compulsory reference and an award on an arbitration, are treated by the two statutes as different from a settlement or agreement. If that be BO, the 'agreement' or 'settlement' envisaged Section 32(vii)(b) and the 'agreement' contemplated by Section 34(3) of the Payment of Bonus Act, 1965 cannot be an 'arbitration award' under S 10A of the Industrial Disputes Act, 1947. The arbitrators have, therefore, no jurisdiction 'o envolve any bonus formula or any portion thereof, be it as regards the rate or as regards any other matter, under Section 34(3) of (be Payment of Bonus Act, 1965. The only formula an outside agency can impose upon the parties to the dispute is the one in accordance with the provisions of the Payment of Bonus Act, 1965.

7. It is by now well-settled that the arbitrator appointed under Section 10A of the Industrial Disputes Act. 1947 is amenable to the writ jurisdiction of the High Court under Article 26 of the Constitution. The Engineering Mazdoor Sabha case already referred to is authority for that proposition. this Court followed the Supreme Court decision mentioned above in Koru v. Standard Tile Works I.L.R. 1963 (2) Kerala 131 and in A.D.S.S.C. of, Association v. T.C.F.W. Uuion, (1965) KLT. 214. If the arbitration award is liable to be examined by this Court as aforesaid, it goes without saving that it should be a speaking order.' The majority award does not give any reason for the decision on issue 3. It is submitted that the reasons are stated in the minority decision. However, there is noting in the majority award which will go to show that the majority was aware of those reasons and that it has adopted the same as its reasons. On the other hand the impression one gets in a reading of Ext. P1 award as a while is that the majority decision was earlier in point of time, that the minority agreed on several points decided by the majority and wherever it differed from the majority decision it sought to support its decision thereon stating its reasons.

8. The Payment of Bonus Act. 1965 was amended in 1976 retrospectively from 25-9-1975, that is, from a date after the publication of the award on 2.9.1975 bat before the expiry of 30 days thereafter. A new section, Section 31A, was introduced where under as per an agreement for payment to bonus linked with production or production the workmen are entitled to bonus on utpo 70% of their salary or wage. Section 34 was substituted by a new provision, and Section 2(vii)(b) was amended. It is, therefore, argued on behalf of the management that the bonus-formula as determined in Ext. PI award is violative of Section 31A. The learned Counsel for the workmen com end that that is a question to be considered only when steps are taken for recovery of bonus on the basis of Ext. P1 award under Section 33C of the Industrial Disputes Act, 1947. Since, for the reasons already discussed, the arbitrators will have to decide issue 3 afresh I do not propose to consider the question raised on the basis of Section 31A of the Payment of Bonus Act, 1965.

9. Exhibit M 12 agreement provided that it product on reached 35 tons, the permanent workers mentioned in Annexure I to that agreement would be entitled to 10% bonus. The workmen claimed this bonus irrespective of any condition and retrospectively from 1-12-1968. This dispute formed the subject matter of issue 6. The award did not disturb the provision in Ext M12. However, in view of the fact that the question or annual bonus formula has to be considered afresh in the light of what is staled above, I am of the view that the decision on issue 6 has also to be set aside and the arbitrator directed to decide that issue also afresh.

10. Issue 4: This issue falls into two pares; minim an production standard ; and, production bonus scheme.

11. Exhibit M 12 settlement fixed a minimum production standard of 28 tons per day. 1 he majority award fixed it at 25 tons per day and the minority award, at 23 to is per day. Stating that it would be unscientific to fix the average production, the standard production for the purpose of production bonus for the reason that the incentive bonus schema will be defeated, and taking the view that the standard production should be fixed at a lower level that the average production, the majority award fixed the same as a level 3 tons less than the average obtained during the previous four years. This fixation of standard production is attacked by both side as arbitrary in so far as the same is not based on any relevant material. According to the management the minimum standard production fix d id Ext. M12 ought not have been interfered with, while according to the workmen the same should have been fixed at a further lower level, and at any rate at 23 tons al done by the Chairman. I appears to me that the learned Counsel on both sides are well-founded in their submission (bat the fixation of minimum standard production was done arbitrarily.

12. The Production Bonus Scheme ID Ext M12 is to the effect that about 150 work men working in certain seed ns specified therein would be paid -'a group efficiency production bonus' of Rs 3O for every additional metrio ton over the average monthly production of 28 metric tons per day. In view of the lowering of the minimum standard production to 21 tons, the majority held that each worker directly involved is entitled to gat group efficiency bonus at the rate of 30 paise additional ton produced in excess of the minimum standard production, and each worker indirectly involved, at the rate of 15 paise per ton of additional production. The minority award fixed the same at 20 paise and 20 paise respectively. It is contended on behalf of the management that no reasons have been stated in the award for converting group efficiency production be us to a formula of individual bonus, and this appears to be so. The decision on this part of issue 4 also appears to be en arbitrary one.

13. Issue II: It appears that dispute arose as to the quantum of bonus the workers were entitled to in 1469-70 and in 1970-71. In 1969.70, according to the management, the workers were entitled to get bonus at the race of 12% of the total annual wages according to Ext. M12 settlement, while according to the workers they were entitled to at the rate of 16% This dispute was referred for adjudication by the Industrial Tribunal, Alleppey. While this dispute was pending adjudication before that Tribunal by Ext. P4. the worsen and the management agreed to refer several disputes between then, including the dispute regarding annual bonus for 1969-70 and 1970-71. for arbitration by the State Arbitration Board. It was also agreed therein that a compromise petition will be filed by parties before the Industrial Tribunal, Alleppey, as regards the dispute of annual bonus for N69 70. Such a petition was filed requesting the Tribunal to pass an award that there was no subsisting industrial dispute between the parties. The Industrial Tribunal passed Ext. P3 award 'dismissing the dispute'.

14. The arbitrators applied the formula evolved under issue 3 BO far as 196 '-70 and 1970-71 were concerned. It is submitted on behalf of the management that w a result of such an award on issue II. while Ext. M12 formula would govern 1971-72, 1972-73 and till 1-2-1973 on which date But. M12 settlement expired and from which date Ext. PI arbitration award would be operative, for 1969-70 and 19,0-71 the workers have to be given bonus in accordance with the formula determined by the arbitrators as per Ext. P1 award. It is also submitted that the dispute related only to the calculation of the bonus in accordance with Ext. Ml2 settlement. In view of the fact that as earlier held the formula decided upon by the arbitrators under issue 3 cannot be sustained, the arbitrators shall have to decide afresh issue 11 also. This they will have to do on a consideration of all aspects of the dispute and the respective contentions that may be advanced by the patties to the dispute.

15. Issue 13 : The majority award fixed the date of expiry of Ext. Ml2 settlement, 1-12-3973, as the date of implementation of the arbitration sward BO far as it concerns issues, 1, 3, 4 and 10. The minority award fixed that date of date of reference, viz., 22-5-1972 The claim of the workmen that the date of implementation should be fixed as 1-7.19/1, the date on which Ext. W 22 demand was made, was not accepted by the Chairman and the arbitrators. On behalf of the workmen it is contended that the majority decision ought to have fixed the date of implementation of the award, as was done by the Chairman as 22-5-1972.

16. The date of implementation of an award can be fixed as any date, between the date of demand and the date of the award. This involves no question of principle See Bengal C.& P. Works v. is Workmen [1969-1 LLJ 751 at 760. Workmen of N.E.W. Mills v. N.E.W. Mills [1960-II L.L.J. 782 at 791], and Workmen, Calcutta D.L. Board v. Employers, (1973-11 L.L.J. 254 at 258]. There is no substance in the contention raised by workmen as regards the date of implementation of the award as 1-12-1973.

17. In the result the arbitration award, produced as Ext. PI in these petitions, BO far as it concern issues 3, 4, 6 and 11 is set aside. The arbitrators are directed to deal with these matter afresh in the light of what is stated above after giving the parties an opportunity to present their respective oases. This common judgment disposes off the two original petitions, which are allowed to the above extent. In the circumstances of the case the parties shall suffer their costs.


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