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Sreedharan Nair Vs. Sanku Sreedharan and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1969)ILLJ627Ker
AppellantSreedharan Nair
RespondentSanku Sreedharan and ors.
Cases ReferredMuhammed Qasim Larry v. Muhammad Samsuddin and Anr.
Excerpt:
.....in 1957, the definition 'wages 'was amended to include additional remuneration payable under the terms of employment, whether it be bonus or other like payment. the supreme court felt that the change in the definition by which bonus of a certain type has been expressly included in the concept of wages 'would have been unnecessary bad the law been otherwise under the old definition. 431-432): it is now well-settled that unlike ordinary civil court which are bound by the terms of contract between the parties when they deal with disputes arising between them in respect of the said terms, industrial adjudication is not bound to uphold the terms of contract between the employer and the employees .the development of industrial law during the last decade bears testimony to the fact that on..........in 1958-i l.l.j. 773 (vide supra). their lordships of the patna high court were of opinion that bonus payable under the terms of a statute, even though the quantification depended upon the interpretation of an award of an industrial tribunal was part of wages within the definition in section 2(6) of the act even before its amendment. the supreme court had another occasion to consider this question and their decision is in muhammed qasim larry v. muhammad samsuddin and anr. 1964-ii l.l.j. 430. the question there related to a period prior to the amendment of the act but their lordships however, observed that (at p. 431):.the subsequent amendment expressly provides by section 2(vi)(a) that any remuneration payable under any award or settlement between the parties ...would be included in.....
Judgment:
ORDER

V.R. Krishna Ayyar, J.

1. The failure to take a closer look at the law toy counsel at the earlier stages of a case, particularly when the application of the law depends on determination of question of fact, is almost decisive of the fate of a case in many instances. The present revision petition is perhaps, an instance in point; for, out of three points raised., two are pure questions of fact and have been concurrently negatived by the original and appellate authorities and the third, which is a question of law affecting jurisdiction but turning on factual findings has not been considered by either tribunal at the lower level obviously because it has not been raised before them. May be-I am inclined to think, clearly because-there is no merit or point on the facts.

2. The revision-petitioner is the opposite party before the Payment of Wages Authority, being the contractor of toddy shop No. 28 in Pampadi village under whom the respondents tappers, had been employed. The claim put forward by the tappers was that there had been delay in payment of certain items of wages due to them in the latter half of 1962-63. A substantial part of the claim put forward has been upheld and the toddy shop contractor has chosen to come up in revision. He contends that the entire claim had been settled at Rs. 300 when there was a strike by the tappers and the Excise Inspector intervened to end the strike. His further case is that this amount of Rs. 300 which has been actually paid off by C. P. W. 2, was the only amount that could be claimed or decreed, even if the plea of payment was not accepted. The tappers, on the other hand, agree that there was some sort of a settlement but do not agree that it was at Rs. 300 that the claim was settled and stoutly deny any payment. The appellate authority who affirmed the findings of the labour court (which is the authority under the Payment of Wages Act-hereinafter referred to as the Act), held that it was ' well-nigh impossible to believe ' the story of payment without a voucher, and on the alternative case that even if the amount had not been paid nothing more than Rs. 300 was claimable, the learned District Judge observed as follows:

In the absence of cogent and reliable proof regarding the settlement and the terms thereof, I am unable to accept; the argument that the substance of the settlement was an unconditional settlement at Rs. 300 and that payment of this amount was left to the sweet will and pleasure of O.W. 1.

3. Both these points are pure questions of fact and however strenuous the submission may be regarding the misappreciation of the evidence, it is not possible for me to accede to the invitation to reopen findings of fact under Section 115 of the Civil Procedure Code, I, therefore, decline the invitation to lift the veil and look beneath to ascertain whether the findings of fact are stricken with gross errors.

4. The learned District Judge proceeds to state that ' no other point was urged, ' but the learned counsel for the revision-petitioner has pressed before me a point put forward in his grounds, couched in the following terms:

The Payment of Wages Authority and the lower appellate Court ought to have found that bonus and preparation charges of trees cannot form the subject of an application under Section 15 of the Payment of Wages Act (4 of 1936) and to that extent the Courts below had exceeded the jurisdiction vested in them by law.

5. Although a contention vaguely on the same lines has been indicated in the statement of the opposite party he has not let in acceptable evidence nor has he pressed such a contention before the labour court and the District Court Whether ' preparation charges ' and ' bonus ' could be components in the concept of wages as defined in Section 2(6) of the Payment of Wages Act (4 of 1936) very much depends on whether these two claims are payable, expressly or impliedly under the terms of employment. Essentially, the foundation has to be sought on the facts of each case for the application of the definition. In this case, no such foundation has been built and the contention must, therefore, fail.

6. Section 2(6) of the Act has undergone an amendment in 1957 (the amending Act 68 of 1957 which came into force on 1 April 1958). Before the amendment it ran as follows:

wages' means all remuneration ...which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable ...to a person employed in respect of his employment ...and includes any bonus or other additional remuneration of the nature aforesaid which would be so payable....

7. After the amendment, the accent on the contract of employment was apparently removed and the wider expression 'the terms of employment' was substituted and the new definition is what we are concerned with in this case. ' Any additional remuneration payable under the terms of employment ' (whether called a bonus or by any other name) is expressly made part of wages. Equally so, ' any remuneration payable under any award or settlement between the parties or order of a Court' is also part of wages. Indeed, even on the basis of the earlier definition the Supreme Court held:

Now consider this clause by clause, ' wages' means ' all remuneration.' Is bonus a remuneration We think it is. Remuneration is only a more formal version of ' payment' and payment is a recompense for service rendered.

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

in respect of his employment or of work done in such employment. Therefore, the kind of bonus that this definition contemplates is one that is remuneration for services rendered or work done. Accordingly, it is a ' remuneration ' and as the definition includes all remuneration of a specified kind, we are of opinion that bonus of the kind contemplated here falls within the' clauses that says it must be ' remuneration.'

If we equate ' bonus' with ' remuneration,' the definition 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 will not be payable if the terms are not fulfilled. Now, we can understand a position where a statute declares that whenever the terms of the contract of employment are fulfilled the bonus shall be payable; equally, we can envisage a situation in which an employer engages to pay a bonus should the terms of the contract of employment be fulfilled, by a separate 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 the definition. But we can see no way in which a bonus can be said to be payable if and when the terms of the contract of employment are fulfilled outside these two cases (namely, legislation, or a separate contract that is not part of the contract of employment), except when it is payable by reason of a term, express or implied, in the contract of employment itself. In any event, if there are such cases, the present is not one of them, for the bonus here is payable under an award of an industrial court and has nothing to do with the fulfilment or otherwise of the terms of the contract of employment, except indirectly.' [See Rajaram (B.S.) v. Patil (B.C.) and Ors. 1958-I L.L.J. 773.

8. Their lordships held that bonus awarded by an industrial court was not payable under the terms of the contract of employment and therefore could not be treated as wages. The emphasis on payability under a contract of employment placed by the Federal Court in the ruling in F.W. Heilgers & Co. v. Nagesh Chandra Chakravarti and Ors. 1949 L.L.J. 493 was accepted as correct by the Supreme Court in the ruling aforesaid. Their lordships, however, added (at p. 777):.We are concerned with the old definition here and not the amended one, so the present case is, in our opinion, covered by that authority,....

9. In 1957, the definition ' wages ' was amended to include additional remuneration payable under the terms of employment, whether it be bonus or other like payment. Of course, bonus which was not part of remuneration payable under the terms of employment was excluded. The Supreme Court felt that the change in the definition by which bonus of a certain type has been expressly included in the concept of wages ' would have been unnecessary bad the law been otherwise under the old definition.' The head note of the All India Report, which was read to me by the learned counsel for the revision petitioner, reads as if bonus is not wages

within the meaning of the Payment of Wages Act as it stood before its amendment in 1957 and also after its amendments.

This appears to be a wrong summary ; for the Supreme Court really relied on the fact of the amendment long after the Federal Court ruling as a ground for holding that the earlier law did not take in bonus as part of wages.

10. In a later ruling in Tata Iron and Steel Company, Ltd. v. Puran Singh and Ors. 1961-I L.L.J. 192, the Patna High Court considered the question of bonus in relation to wages as defined in the Payment of Wages Act and explained the true import of the ruling in 1958-I L.L.J. 773 (vide supra). Their lordships of the Patna High Court were of opinion that bonus payable under the terms of a statute, even though the quantification depended upon the interpretation of an award of an industrial tribunal was part of wages within the definition in Section 2(6) of the Act even before its amendment. The Supreme Court had another occasion to consider this question and their decision is in Muhammed Qasim Larry v. Muhammad Samsuddin and Anr. 1964-II L.L.J. 430. The question there related to a period prior to the amendment of the Act but their lordships however, observed that (at p. 431):.The subsequent amendment expressly provides by Section 2(vi)(a) that any remuneration payable under any award or settlement between the parties ...would be included in the main definition under Section 2(vi)...

Gajendragadkar, C.J., disagreed with the argument that the terms must arise out of the contract of employment and not outside the contract of employment. Of course, his lordship observed (at pp. 431-432):.It is now well-settled that unlike ordinary civil Court which are bound by the terms of contract between the parties when they deal with disputes arising between them in respect of the said terms, industrial adjudication is not bound to uphold the terms of contract between the employer and the employees ....The development of industrial law during the last decade bears testimony to the fact that on reference made under Section 10(1) of the Industrial Disputes Act, terms of employment have constantly been examined by industrial adjudication ...when an award is made and it prescribes a new wage-structure, in law the old contractual wage-structure becomes inoperative and its place is taken by the wage-structure prescribed by the award. In a sense, the latter wage-structure must be deemed to be a contract between the parties, because that, in substance, is the effect of industrial adjudication ...the said awards supplant contractual terms in respect of matters covered by them and are substituted for them ....

11. Referring to the amendment of Section 2(vi) of the Act, his lordship was pleased to state (at p. 432):. The amendment has merely clarified what, in our opinion, was included in the unamended definition itself.

12. One may sum up the present position of law regarding the concept of wages as defined in Section 2(vi) of the Act as follows. It takes in all remuneration, express or implied, payable under the terms of employment even though it may not be part of the terms of the contract of employment at the inception. Remnneration is a return for services rendered and if at say time during the year of employment bonus is made payable in return for the services rendered, at that moment such bonus becomes wages due to the employee and recoverable under the Payment of Wages Act. The emphasis is not on the terms of the original contract but on the recompense payable during the period of employment on account of any understanding, settlement or otherwise, whether it be in the shape of bonus or other species of payment. One has to examine the merits of the contention that the preparation charges and bonus claimed by the employees in this case are not part of the recompense for the services rendered by them. ' Exhibits P. 1 and P. 2 are important in this context. The conferment of the right to vend liquor has itself been conditioned by a clause in the licence (Ex. P. 1) that bonus at prevailing rates at different localities will have to be paid. The employment of the tappers was under this licence and subject to its conditions. Exhibit P. 2, again, sets out the terms of the agreement between employers and employees in the State relating to toddy-tapping and their bonus has been specifically referred to:

The employers agree to pay and the unions agree to accept ...bonus for the year 1961-62....

Exhibit P. 3 serves as a background, although it is rendered in an arbitration case relating to some employees by the Calicut Industrial Tribunal and awards preparation charges and bonus. The case of the workers, of course, is that there has been an agreement to pay preparation charges and bonus although the quantification may be done in the latter part of the year. They have also stated that for the first-half of 1962-63 bonus and preparation charges have been paid, a position not refuted by the employer. On a consideration of these facts and the evidence in the case the labour court came to its conclusion, which it recorded in the following passage:

The rate or the number of days of leave with wages or the amount of bonus due to the applicants are not disputed by the opposite party in the face of Exs. P. 1 and P. 2

13. As for preparation charges it is clearly wages. Thus, one is led to the conclusion that the demand under the various heads put forward by the workers really falls within the ambit of wages. So even on the materials available, there is no merit in the contention put forward by the revision petitioner.

14. However, it must be said that the evidence led in the case on behalf of the workmen, and their pleadings have been far from clear and none too satisfactory. This has led to what mightprobably have been an untenable contention that the bonus claimed was not even wages within the meaning of the Act. This has a bearing only on the cost to be awarded in the case and I am inclined to think that, in the circumstances of the case, while the revision petition has to be dismissed, the parties will bear their costs.


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