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The Patel Mills Co. Ltd. Vs. the Textile Labour Association and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtGujarat High Court
Decided On
Case NumberSpl. C.A. No. 1571 of 1969
Judge
Reported in(1972)0GLR519; (1973)ILLJ143Guj
ActsPayment of Bonus Act, 1965 - Sections 10
AppellantThe Patel Mills Co. Ltd.
RespondentThe Textile Labour Association and anr.
Cases ReferredState Trading Corporation of India v. Commercial Tax Officer
Excerpt:
- - distribution of profits which is not subject to great fluctuations year after year, would certainly conduce to maintenance of peace and harmony and would be regarded as equitable and provision for payment of bonus at the statutory minimum rate, even if the establishment has not earned profit, is clearly enacted to ensure the object of the act. distribution of profits which is not subject to great fluctuations year after year would certainly conduce to maintenance of peace and harmony and would be regarded as equitable, and provision for payment rate, even if the establishment has not earned profit, is clearly enacted to ensure the object of the act......in the same class of establishments which have made inadequate profits not justifying payment of bonus, establishments which have suffered marginal loss and establishments which have suffered heavy loss. the classification so made is not unintelligible; all establishments which are unable to pay bonus under the scheme of the act, on the result of the working of the establishment, are grouped together. the object of the act is to make an equitable distribution of the surplus profits of the establishments with a view to maintain peace and harmony between the three agencies which contribute to the earning of profits. distribution of profits which is not subject to great fluctuations year after year would certainly conduce to maintenance of peace and harmony and would be regarded as.....
Judgment:

Divan, Ag. C.J.

1. The petitioner herein is a limited company and is engaged in the business of manufacturing textiles. The petitioner's factory is situated at Ahmedabad and the petitioner is governed by provisions of the Bombay Industrial Relations Act, 1946 (Bombay Act No. 11 of 1947) (hereinafter referred to as the Act) in the matter of its relation with its employees. The respondent is a representative-union of the workers working in the petition's factory and in the matter of payment of bonus the petitioner-company is governed by the Payment of Bonus Act, 1965 (hereinafter referred to as 'the Bonus Act'),

2. In the accounting year 1967, the petitioner-company had incurred a loss of about Rs. 5,90,000 without any provision being made for depreciation and, therefore, it had not declared any bonus for its employees. The respondent-union made a demand for the payment of minimum bonus under S. 10 of the Bonus Act from the petitioner-company. As the petitioner-company did not agree to that demand, dispute was referred to the conciliation officer but no settlement was arrived at before that officer and thereafter a reference was made to the Industrial Court regarding the liability of the petitioner-company to pay the minimum bonus under S. 10 of the Act. Before the Industrial Court, the petitioner-company contended that S. 10 of the Bonus Act did not apply to a concern making a positive loss and, therefore, the petitioner-company was not liable to pay the minimum bonus to its employees. This contention of the petitioner-company was rejected by the Industrial Court and in coming to this conclusion the Industrial Court relied on its own award in another matter in Textile Labour Association, Ahmedabad v. The Fine Knitting Company Ltd. The Petitioner has thereafter filed this petition under Art. 227 of the Constitution challenging the award of the Industrial Court.

3. The petitioner has contended that S. 10 cannot apply where there is a positive loss and it has contended that if S. 10 of the Bonus Act is applicable even to establishments which are making heavy losses, then S. 10 of the Act would be ultra vires Art. 19(1)(g) of the Constitution. The petitioner has contended that S. 10 of the Bonus Act being ultra vires Art. 19(1)(g) of the Constitution is non est in law and, therefore, the Tribunal has no jurisdiction to direct payment of minimum bonus under S. 10 of the Bonus Act.

4. Mr. Nanavati, on behalf of the petitioner, has relied upon the decision of a single Judge of the Allahabad High Court (Lucknow Bench) in Kumaon motor Owners' Union Ltd., Kathgodam v. State of Uttar Pradesh & others, [1969 - I L.L.J. 809]. There it was contended that such bonus was not payable in an accounting year where the employer had suffered loss; and it was held :

'Evidently, there can be three situations, one in which there has been profit, another in which there has been no profit and yet a third in which there has been loss. The absence of profit does not necessarily mean loss. So the words 'whether there are profits in the accounting year or not' in S. 10 of the Payment of Bonus Act cannot possibly be construed to cover all the above mentioned three situations though, of course, they are wide enough to cover two situations, namely, one in which there has been profit and another in which there has been no profit. The said expression could not be construed to cover the case where the employer has suffered a positive loss in the year in question.'

With respect to the learned Judge of the Allahabad High Court, we are unable to agree with his reasoning because in our view the words : 'whether there are profits in the accounting year or not' are wide enough to include the case of an employer in whose case there has been a positive loss in the accounting year. We must not forget, as laid down by the Supreme Court, that S. 10 was enacted with a view to maintain peace and harmony between the agencies which contribute to the earning of profits. Distribution of profits which is not subject to great fluctuations year after year, would certainly conduce to maintenance of peace and harmony and would be regarded as equitable and provision for payment of bonus at the statutory minimum rate, even if the establishment has not earned profit, is clearly enacted to ensure the object of the Act.

5. When one turns to the decision in Jalan Trading Co. v. Mill Mazdoor Sabha, A.I.R. 1967 S.C. 691, one finds that the validity of the provisions of S. 10 of the Bonus Act with reference to Art. 14 and Art. 31(1) was upheld and as regards that challenge the Supreme Court has observed in para 25 at page 705 of the report :

'Examined in the light of the object of the Act and the scheme of 'set off' and 'set on', the provision for payment of minimum bonus cannot be said to be discriminatory between different establishments which are unable on the profits of the accounting year to pay bonus merely because a uniform standard of minimum rate of bonus is applied to them.

* * * Section 10 undoubtedly places in the same class of establishments which have made inadequate profits not justifying payment of bonus, establishments which have suffered marginal loss and establishments which have suffered heavy loss. The classification so made is not unintelligible; all establishments which are unable to pay bonus under the scheme of the Act, on the result of the working of the establishment, are grouped together. The object of the Act is to make an equitable distribution of the surplus profits of the establishments with a view to maintain peace and harmony between the three agencies which contribute to the earning of profits. Distribution of profits which is not subject to great fluctuations year after year would certainly conduce to maintenance of peace and harmony and would be regarded as equitable, and provision for payment rate, even if the establishment has not earned profit, is clearly enacted to ensure the object of the Act.'

We may point out that the learned single Judge of the Allahabad High Court in the case relied upon by the petitioners has not referred to this judgment of the Supreme court in Jalan Trading Co.'s case (supra).

6. As regards the challenge on the ground of Art. 19, the Supreme Court held in State Trading Corporation of India v. Commercial Tax Officer, A.I.R. 1963 S.C. 1811, that a company registered under the Indian Companies Act is not a citizen within the meaning of Art. 19 of the Constitution and cannot ask for the enforcement of fundamental rights granted to citizens under the said Article.

7. The above decision of the Supreme Court still holds the field and in the instant case the petitioner is a limited company and, therefore, it cannot ask for enforcement of its fundamental rights in the present petition.

8. The result, therefore, is that both as regards the interpretation of S. 10 and as regards the vires, (sic) this Special Civil Application is, therefore, dismissed and the rule is discharged with costs.


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