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Wheel and Rim Company of India Ltd. Vs. Government of Tamil Nadu and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1971)IILLJ299Mad
AppellantWheel and Rim Company of India Ltd.
RespondentGovernment of Tamil Nadu and anr.
Cases ReferredIn Seatford Court Estates Limited v. Asher
Excerpt:
- - after all bonus can only be shared by these workers who promote the stability and well-being of the industry and not those who positively display disruptive tendencies. bonus certainly carries with it the obligation of good behaviour which helps sustain in the industry. nevertheless, the courts are very reluctant to substitute words in a statute or to add words to it and it has been said that they will only do so where there is a repugnancy to good sense. unfortunately, the government failed to consider this contention before they issued the impugned order......of the payment of bonus act, 1965, (hereinafter referred to as the act), is disentitled to receive bonus payable only for the accounting year in which the order of dismissal is passed or is disentitled to receive whatever bonus was remaining unpaid on the date of the order of dismissal. the relevant facts are these. chandran, the second respondent was under the employment of the petitioner-company as cashier. on the allegation that he was guilty of theft, fraud and dishonesty in connection with the business and property of the company, he was dismissed from service with effect from 11th november, 1969. for the year 1966, the petitioner-company declared a bonus of 27 per cent. that was declared by reason of the settlement dated 14-10-1967 entered into between the petitioner and the.....
Judgment:
ORDER

Palaniswamy, J.

1. The short question that arises for consideration in this case is whether an employee, dismissed from service on any one of the grounds enumerated in Section 9 of the Payment of Bonus Act, 1965, (hereinafter referred to as the Act), is disentitled to receive bonus payable only for the accounting year in which the order of dismissal is passed or is disentitled to receive whatever bonus was remaining unpaid on the date of the order of dismissal. The relevant facts are these. Chandran, the second respondent was under the employment of the petitioner-company as cashier. On the allegation that he was guilty of theft, fraud and dishonesty in connection with the business and property of the company, he was dismissed from service with effect from 11th November, 1969. For the year 1966, the petitioner-company declared a bonus of 27 per cent. That was declared by reason of the settlement dated 14-10-1967 entered into between the petitioner and the Simpson and Group Company Staff and Workers Union. Alleging that he was entitled to bonus under that settlement, the second respondent preferred a claim under Section 33C(2) of the Industrial Disputes Act, 1947, before the Labour Court, Madras. The petitioner company resisted that claim contending inter alia that the second respondent was not a member of the union, that the criminal charge of misappropriation was pending against him in the Court of the VII Presidency Magistrate, Madras, and that the second respondent was, therefore, disentitled to claim the bonus. Rejecting these contentions the Labour Court found that the second respondent was entitled to Rs. 1,312.86. This order was passed on 10-9-1969. On 18-9-1969 the second respondent addressed the State Government for the issue of a certificate under Section 33C(1) of the Industrial Disputes Act for the purpose of realising the aforesaid amount. The petitioner-company informed the Government, by letter dated 15-11-1969, that the second respondent had since been dismissed from service for theft, fraud and dishonesty, that the said dismissal disqualified the second respondent from receiving any bonus due to him at the time of dismissal and that, therefore, no action should be taken on the basis of the request of the second respondent. Without dealing with this contention of the petitioner-company the Government, the first respondent, issued an order on 18-12-69 stating that the amount fixed by the Labour Court was due to the second respondent and that the sum shall be recovered as an arrear of land revenue from the petitioner-company. The Collector of Madras was instructed to take necessary steps for the recovery of the said sum and for disbursement of the same to the second respondent. It is to quash this order that this writ petition is filed.

2. The contention urged on behalf of the petitioner is that since the passing of the order on 10-9-69 by the Labour Court, the second respondent has been dismissed from service on 11-11-69 on a charge of theft, fraud and dishonesty, that on account of this dismissal, the second respondent is not entitled to recover any amount, that the order passed by the Labour Court thus ceased to have any legal effect and that the impugned order of the Government is, therefore, unsustainable. The second respondent contends in his counter-affidavit that the accounting year being 1966 for which bonus has been computed by the Labour Court, the order of termination of his service passed in November 1969 cannot affect his right to get bonus for 1966, that Section 9 of the Act does not, therefore, bar his right and that the order of the Government is, therefore, competent.

3. The Payment of Bonus Act was enacted to provide for the payment of bonus to persons employed in certain establishments and for matters connected therewith. It was enacted to give effect to the decisions taken by the Government of India on a consideration of the report of the Bonus Commission appointed by the Government of India in December, 1961. The Commission was appointed to consider, in a comprehensive manner, the question of payment of bonus based on profits to employees employed in establishments and to make recommendations to the Government. With a view to implement the recommendations of the Commission, as accepted by the Government, the Payment of Bonus Ordinance, 1965, was promulgated on 29th May, 1965. This ordinance was replaced by the Act. Three sections of the Act require examination in this case, and they are Sections 8, 9 and 18.

8. Eligibility for bonus,--Every employee shall be entitled to be paid by his employer, in an accounting year, bonus in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.

9 Disqualification for bonus.--Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for--

(a) fraud; or

(b) riotous or violent behaviour while in the premises of the establishment; or

(c) theft, misappropriation or sabotage of any property of the establishment.

18. Deduction of certain amounts from bonus payable under the Act.--Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any.

Section 8 deals with eligibility for bonus, whereas Section 9 deals with disqualification for bonus. In an 'accounting year which is defined in Section 2(1) an employee should have worked for a minimum of thirty days to qualify him to get bonus for that year. In enacting Sections 9 and 18, the Legislature has provided for consequences of two kinds of misconduct on the part of the employee. In the case of a misconduct of an employee causing any financial loss to the employer what should be done is provided for in Section 18. If such loss is caused, it is lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under the Act in respect of that accounting year only, and the employee shall be entitled to receive the balance, if any. Thus, this section deals with what may be called minor misconduct causing financial loss to the employer. But in enacting Section 9, the Legislature has taken note of more serious acts of misconduct such as fraud, riotous or violent behaviour while on the premises of the establishment or theft, misappropriation or sabotage of any property of the establishment. If, for any of these acts of misconduct, an employee is dismissed from service, Section 9 says that he shall be disqualified from receiving bonus under the Act notwithstanding anything contained in the Act. It is contended for the petitioner that, by virtue of this section, an employee who may be dismissed from service, for any of those acts of misconduct would be totally disqualified from receiving any bonus, not only the bonus payable in the accounting year in which he is dismissed from service, but also all other bonus which may be remaining unpaid on that date. On the other hand, the contention of the second respondent is that the disqualification under Section 9 would apply only to the bonus payable in the accounting year in which the employee is dismissed and would not apply to any other bonus that might have become payable earlier but might not have been paid actually.

4. Whereas Section 18 explicitly says that the amount of loss caused to the employer by the misconduct of the employee should be deducted from the bonus payable by the employer to the employee under the Act in respect of the accounting year only, no such limitation is placed in Section 9 with regard to the period for which the bonus is payable. To find out what the intention of the Legislature was in making this distinction, it is necessary to examine the circumstances under which these provisions were enacted. Paragraphs 19-14 to 19-18 of the report of the Bonus Commission, 1964 set out the circumstances under which the Bonus Commission made the recommendation for the incorporation of these two provisions. They read thus:

19-14. Having considered the matter carefully we are of the view that there should be a minimum period of 30 days' work in the year for qualifying for bonus. In the profit sharing systems in other industrialised countries there is usually minimum qualifying period. A minimum qualifying period is, on principle, desirable. It would also avoid administrative difficulties caused to companies by having to keep records of attendance of casual and temporary workers who may have worked at any time during the year and to verify that bonus payments claimed are made to the right persons.

19-15. The next question for consideration is whether a dismissed employee should be eligible for bonus payment. There is nothing anomalous in continuing stoppage with dismissal--because such cases warrant severity in order to act as a deterrant. After all bonus can only be shared by these workers who promote the stability and well-being of the industry and not those who positively display disruptive tendencies. Bonus certainly carries with it the obligation of good behaviour which helps sustain in the industry.

19-16. It is, however, necessary that the authorities administering it must not do so lightly. They should be doubly careful when they resort to this extreme course. The basic ingredients of misconduct are not in doubt; they are categorically defined in the standing orders which deal with various types of conduct for which dismissal is permissible and in the case of wrongful dismissal, workmen are not without a remedy. Why should, therefore, there be any exemption ?

19-17. Our colleagues representing labour are having misgivings regarding its implementation. In their experience management have not yet developed that stability of judgment or conscientiousness as to translate it into practice in the manner envisaged by us. They further consider that in accordance with the existing practice of Tribunals, bonus should be withheld only in the case of misconduct causing financial loss to the company to the extent of the loss. It is recognised that the evil of genuine misconduct should be eliminated; but they consider that the time is inopportune for extending the scope further to cases of dismissal for misconduct as they apprehend that the labour is apt to react adversely to any change.

19-18. Having regard to these apprehensions we all feel inclined to fall in the line with them; and we recommend that for the present, the existing practice may continue, but with the addition that bonus may be withheld for dismissal only in cases of riotous or violent behaviour on the work premises, theft, fraud, misappropriation or sabotage of property of the concern; and further extension may be deferred to a more propitious moment.

5. In the Bill, to which were added notes on clauses, as regards Clause 8. corresponding to Section 8, it is stated:

Under the clause, an employee should have worked in the establishment at least for thirty working days in an accounting year to be entitled to be paid bonus. This provision is based on the recommendation of the Commission made in paragraph 19-14 of its report.

As regards Clause 9, which corresponds to Section 9 this is what is observed in the notes:

The clause provides that an employee who has been dismissed from service for fraud, riotous or violent behaviour, theft, etc., shall not be entitled to receive bonus from the employer. The clause is based on the recommendation of the Commission made in paragraph 19-18 of its report.

The notes on Clause 18, corresponding to Section 18, read thus:

The clause provides that where in any accounting year an employee is found guilty of misconduct causing financial loss to the employer, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee. A recommendation to this effect has been made by the Commission in paragraph 19-17 of its report.

It would be seen from the foregoing that no specific reason was thought of for not incorporating in Section 9 any provision as regards the period for which bonus is not payable, in contrast with the specific provision made in Section 18 regarding the particular accounting year in which financial loss may be caused to the employer by the misconduct of the employee, by reason of which right is given to the employer to deduct the amount of loss from the bonus payable by him to the employee in respect of that accounting year only. The question is, was it the intention of the Legislature, in enacting the disqualification in Section 9, that the employee, if he gets dismissed from service for any of the misconducts specified therein, should forego whatever amount was payable to him under the Act by way of bonus, or, was it the intention of the Legislature that only that amount of bonus which was payable to him during the accounting year in which he is dismissed is alone not payable. Section 8 specifies the eligibility for bonus, and immediately following it, Section 9 lays down the disqualification for bonus, On account of the close sequence of these two provisions, it is argued for the second respondent that Section 9 is in the nature of a proviso to Section 8. Because of the absence of a provision in Section 9 as regards the period for which bonus is not payable on account of the disqualification arising out of dismissal, it is argued that because Section 9 closely follows Section 8 it was perhaps thought not necessary to expressly state in Section 9 that the disqualification for receiving bonus is to be restricted to the bonus payable for the year in which the order of dismissal is passed. If this argument were to prevail, it would mean that we must construe Section 9 in such a way as to give that meaning by recasting the words 'from receiving bonus under this Act if he is dismissed' as from 'receiving bonus under this Act in respect of that accounting year in which he is dismissed.' Before dealing with this argument, let us see whether Section 9 is in the nature of a proviso to Section 8. The language used in Section 9 is wide and not restricted in its application to Section 8. If the disqualification laid down in Section 9 is intended to apply only to the receiving of bonus for the accounting year in which the employee is dismissed, the proper words would be 'notwithstanding anything contained in Section 8'. But the expression used in Section 9 is 'notwithstanding anything contained in this Act'. Section 19 fixes the time limit for payment of bonus; provision is made in that section for two contingencies:

i. Where there is a dispute relating to the bonus, in which case the time-limit is one month from the date on which the award become enforceable or the settlement comes into operation; and

ii. in all other cases, the period being eight months from the close of the accounting year.

If bonus is paid within the specified time, it would be a case of the employee 'receiving bonus under this Act' within the meaning of that expression in Section 9. Suppose, the amount is not paid within the specified time. Even in such a case, whenever the amount is paid and received by the employee it would be a case of the employee 'receiving bonus under this Act' within the meaning of Section 9. Therefore, irrespective of the time of payment, whenever an employee receives any amount as bonus and payable as such under the Act, it would be a case of receiving bonus under the Act. If, prior to such receipt, the employee incurs the disqualification of dismissal under Section 9, such disqualification, disentitles him from receiving whatever is payable as bonus under the Act. What the Legislature has disqualified is the receipt of bonus and not mere the entitlement to bonus, because the expression used is 'disqualified from receiving bonus'. Receiving is a physical act of taking delivery of a thing from another either for oneself or for another.

6. The bonus pertaining to an accounting year in which a misconduct may be committed may remain unpaid even after the expiry of the time fixed under Section 19. Is the disqualification provided in Section 9 applicable to the receiving of that bonus only, or if bonus is, payable only for the accounting year in which the order of dismissal is passed, the question is, is the disqualification applicable to the receiving of that bonus only? There are no words in Section 9 to restrict the disqualification to the one or the other of these two cases. The disqualification is general and it is against receiving bonus under the Act irrespective of the period for which the bonus is payable. Therefore, the argument that Section 9 should be construed as a proviso to Section 8 is not acceptable.

7. In Section 9, there are no words of limitation as regards the period for which bonus, being payable, cannot be received by the disqualified employee. This is in vivid contrast with Section 18, which has already been extracted in paragraph 3 supra. In Section 18 the Legislature has taken care to specify that the loss which the employer is entitled to deduct on account of the misconduct of the employee is to be from the bonus amount payable by him to the employee under the Act in respect of that accounting year only. Care has been taken to use the expression 'in that accounting year' and the point is further emphasised by the use of the word 'only'. As already pointed out, Sections 9 and 18 deal with certain consequences of misconduct on the part of the employee, the former dealing with acts of misconduct, leading to dismissal and the latter dealing with acts of misconduct, causing financial loss to the employer. The acts of misconduct enumerated in Section 9 are serious from the point of view of the interest of the employer. These acts on the part of the employee in the discharge of his duties are inconsistent with and destructive of the principle of bonus. In India, bonus was originally considered as a gratuitous payment by an employer to the employee. But in course of time, in the development of industrial law, it has now acquired the meaning of annual payment which the employees may claim as a matter of right subject to certain maximum and minimum and subject to certain conditions. Bonus is payable even if the wages the employees have obtained is what is called 'living wages standard' or 'need based wage'. In one sense, the concept of bonus is sharing by the workers in the prosperity of the concern in which they are employed. Acts of fraud, theft, sabotage, etc., enumerated in Section 9 are totally destructive of this concept. Some of the acts of misconduct, for example, fraud and misappropriation, are capable of being committed undetected forthwith and in the course of a period spread over more than one accounting year. If the Legislature had, in its wisdom, thought that, if an employee is dismissed for any of those acts of misconduct, he should be completely deprived of whatever amount was outstanding as bonus, whether payable for one or more accounting years, the possible way by which that result could be achieved is by adopting the language which is used in Section 9 and without making any reference to the accounting year in which the act of misconduct might have been committed or in which the order of dismissal might be passed. That such a result could have been envisaged cannot be an unreasonable view. That view also does not in any way manifestly contradict the apparent purpose of the enactment.

8. It is contended on behalf of the second respondent that if the meaning sought to be given to Section 9 by the petitioner-company is to be accepted, it may lead to an anomaly. It is pointed out that if two men are found guilty of any of the acts of misconduct under Section 9 and one of them had already received the entire bonus due, whereas the other had not received, and if both of them are dismissed from service, the result would be that the employee who had received bonus would stand to benefit, whereas the other employee who had not received the bonus would be totally deprived of the bonus, which he could have received but did not receive. It is, therefore, contended that the Legislature could not have intended such an anomaly to occur. I do not think that this can be taken as an anomaly which is sure to occur in all cases. In the illustration given by the learned Counsel for the second respondent it has to be noted that one of the employees did not receive the bonus due to him only by accident. Therefore, it cannot be said that such an anomaly will occur in all cases.

9. If the second respondent's contention were to be accepted, namely, that the disqualification from receiving bonus under Section 9 should be restricted only to the bonus payable for the accounting year in which the order of dismissal is passed, Then we should proceed on the assumption that the Legislature had intended to incorporate in Section 9 such a restriction, but had inadvertently omitted to do so. If there is a defect in the language of a statute, the Court may be, in suitable cases, constrained to depart from the ordinary rule of interpretation of merely giving effect to the actual words found in the statute, and may even substitute or even add words. In what circumstances the Court would be justified in doing this has been pointed out at page 229 in Maxwell on Statutes, 10th Edition, thus:

Where the language of a statute in its ordinary meaning and grammatical construction leads to a manifest contradiction of the apparent purpose of the enactment or to some inconvenience or absurdity, hardship or injustice presumably not intended, the construction may be put upon it which modifies the meaning of the words and even structure of the sentence...where the main object and intention of a statute are clear it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of law except in a case of necessity or the absolute intractability of the language used. Nevertheless, the Courts are very reluctant to substitute words in a statute or to add words to it and it has been said that they will only do so where there is a repugnancy to good sense.

In Seatford Court Estates Limited v. Asher [1964] 2 A.E.R. 155, Denning L.J., said:

When a defect appears, a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament...and then he must supplement the written word so as to give 'force and life' to the intention of the Legislature.... A Judge should ask himself the question how, if the makers of the Act had themselves come to agree to this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A Judge must not alter the material of which the Act is woven. He can and should iron out the creases.

The question in this case is whether there is any defect in Section 9. Is the defect such that unless certain words are added, the ordinary grammatical meaning would lead to any manifest contradiction of the apparent purpose of the enactment Or would it lead to an absurdity or injustice presumably not intended I have already pointed out that there are sufficient reasons for the. Legislature to have intended that, if any amount remained unpaid by way of bonus, the disqualification arising out of dismissal under Section 9 should be sufficient to deprive the employee of the bonus. There are no compelling reasons to take the view that we must read into Section 9 words to convey the meaning that the disqualification of receiving bonus is applicable only to the bonus payable for the accounting year in which the order of dismissal is passed. There are weighty reasons for the view that Section 9 is intended to deprive the worker of his right to receive whatever bonus he was entitled to. The reasons are:

i. Use of the expression 'notwithstanding anything contained in this Act',

ii. Use of the expression 'disqualified from receiving bonus under this Act.'

iii. Absence of any reference to any particular accounting year in vivid contrast with the use of clear expression in Section 18 providing for deduction of the amount of the loss caused to the employer by the misconduct of the employee from out of the bonus payable to the employee in the particular accounting year only;

iv. Possibility of the criminal acts, the commission of which disqualifies, being found to have been committed in the course of more than one accounting year; and

v. The nature of the acts of misconduct enumerated in Section 9 being serious and opposed to the principle of sharing in the prosperity of the management which is one of the fundamental concepts of bonus.

For all these reasons, I am not inclined to accept the argument that Section 9 is restricted only to the receiving of bonus by the disqualified employee payable for the accounting year in which the order of dismissal is passed. On a consideration of all the circumstances, I am of the view that this disqualification is applicable to whatever bonus was payable under the Act.

10. The second respondent incurred the disqualification after the Labour Court computed the bonus. As soon as the petitioner-company came to know that the second respondent had approached the State Government for issuing a certificate under Section 33C(1) of the Industrial Disputes Act, 1947, the petitioner-company informed the Government that since the order of the Labour Court was passed, the second respondent had been dismissed for acts of fraud, theft, and misappropriation and had thereby incurred the disqualification under Section 9 and that, therefore, no certificate could be issued. Unfortunately, the Government failed to consider this contention before they issued the impugned order. In the course of arguments, Mr. Ramaswami, appearing for the second respondent, vaguely suggested that inasmuch as the Labour Court had computed the amount due to the second respondent, there was no option left with the Government except to issue the certificate under Section 33C(1) of the Industrial Disputes Act and that if the petitioner-company feels aggrieved by the order of the Government it should file a suit for a declaration that no amount is payable to the second respondent by reason of the disqualification. But it was pointed out to him that what the petitioner complains of is about the exercise of the statutory duty by the Government. There is no reason why the petitioner should be driven to the necessity of filing a suit. After some discussion, Mr. Ramaswami did not press this point further. In the result, the petition is allowed, and the impugned order of the Government is quashed. No order as to costs.


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