The Central Bank of India Vs. Their
Workmen [1959] INSC 82 (12 May 1959)
DAS, S.K.
DAS, SUDHI RANJAN (CJ) IMAM, SYED JAFFER
WANCHOO, K.N.
HIDAYATULLAH, M.
CITATION: 1960 AIR 12 1960 SCR (1) 200
CITATOR INFO :
R 1960 SC 653 (4) R 1961 SC 853 (7) RF 1962
SC 171 (9) D 1962 SC1221 (22) R 1964 SC 864 (19) R 1969 SC 530 (2A) R 1986
SC1760 (35) R 1987 SC2310 (11) RF 1988 SC 782 (29,40)
ACT:
Industrial Dispute-Bonus-Banking
Companies-Bank Employees Whether disentitled to bonus-" Remuneration
" meaning of -Banking Companies (Amendment) Act, 1956 (95 of 1956),
amended s. 10, whether retrospective-Banking 'Companies Act, 1949, (1O Of
1949), s. 10.
HEADNOTE:
Section 10(1)(b)(11) of the Banking Companies
Act, 1949 provided:" No banking company shall employ any person whose
remuneration or part of whose remuneration takes the form ... of a share in the
profits of the company." The dispute between the appellant Banks and their
employees related, inter alia, to the question whether the provisions of the
Banking Companies Act, 1949, prohibit the grant Of bonus to bank employees. The
Labour Appellate Tribunal took the view that s. 10 of the Act did not stand in
the way of granting bonus to bank employees, because bonus according to it was
not a share in the profits of the company. On appeal, it was contended for the
appellant Banks that bonus as awarded by the Industrial Courts is remuneration
within the meaning of s. 10 201 read with s. 2 of the Banking Companies Act,
1949, and that it was also a share in profits, and therefore, the express
provisions of s. 10 read with S. 2 override the provisions of the Industrial
Disputes Act, 1947, so far as banking companies are concerned, and prohibit the
award of bonus to employees of Banks.
Held : (1) that the expression " shall
employ any person in s. 10 of the Banking Companies Act, 1949, means and
includes " shall have in employment any person " and that in this
respect the amendment of 1956, merely makes clear what was already meant by the
section ;
(2) that the word " remuneration "
in s. 10 of the Act has been used in the widest sense and includes bonus ;
(3) that bonus in the industrial sense comes
out of the available surplus of profits, and when paid, it fills the gap,
wholly or in part, between the living wage and the actual wage. It is labour's
share in the profits, and as it is a remuneration which takes the form of a
share in profits, it comes within the mischief of s. 10 of the Act;
(4) The Banking Companies (Amendment) Act,
1956, is not a declaratory Act, and except in the small matter of the
expression " shall continue to employ " in sub-s. (1), it does not
purport to explain any former law or declare what the law has always been.
Consequently, though s. 10 as amended by the Act Of I956 does not stand in the
way of the grant of industrial bonus, for the period relating to the present
appeals, the amended section had no retrospective effect.
Accordingly, s. 10 of the Banking Act, prior
to the amendment of 1956, prohibited the grant of industrial bonus to bank
employees inasmuch as such bonus is remuneration which takes the form of a
share in the profits of the banking company.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 56 to 62 of 1957.
Appeals by special leave from the judgment
and order dated April 28. 1954 of the Labour Appellate Tribunal of India
(Special Bench-Banks), Bombay,in Appeals Nos. 122, 129, 130, 142, 144, 145,
152, 153, 154, 155, 162, 169, 217 & 218 of 1953.
N. A. Palkhiwala, J. B. Dadachanji and S. N.
Andley, for the appellants in C. As, Nos. 56 & 60 of 1957.
M. C. Setalvad, Attorney-General for India,
J. B. Dadachanji and S. N. Andley, for the appellants in C. As. Nos. 57, 58, 59
& 61 of 1957, 6 202 M. C. Setalvad Attorney-General for India and Naunit
Lal, for the appellant (Punjab National Bank) in C. A. No. 62 of 1957.
N. V. Phadke, T. S. Venkataraman, K. R.
Sharma and K. R. Choudhury, for respondent No. 1 in C. A.
No.' 56 of 1957.
N. C. Chatterjee, Sadhan Chandra Gupta,
Janardan Sharma, M. K. Ramamurthi and M. R. K. Pillai, for respondents in C.
As. Nos. 57 to 61 of 1957 (Represented by All
India Bank Employees Association) B. P. Maheshwari, for respondent No. 3
(Association of the Punjab National Bank Employees) in C. A. No. 62 of 1957.
B.P. Maheshwari, for Surat Bank Employees
Union.
B. C. Ghose, and I. S. Sawhney, for All India
Central Bank Employees' Association.
1959. May 12. The Judgment of the Court was
delivered by S. K. DAS J.-These are seven appeals on behalf of different Banks
working in this country, some incorporated in India and some outside India. It
is necessary that we should very briefly state the background of the industrial
dispute which has given rise to these appeals. It is now well-known that there
was a sharp rise in the prices of commodities during and after World War No.
11. This rise in prices very seriously affected salaried employees belonging to
the middle class including such employees in the banking industry. In or about
the year 1946 trade unions of bank employees presented demands for higher
salaries and allowances and better conditions of service. In some cases notices
of threatened strike were also served on the employers. The unrest became
particularly acute in the provinces of Bombay, the United Provinces, and Bengal
as they were then known.
The local Governments of those provinces
referred these industrial disputes for adjudication: this resulted in some
regional awards which came to be known in Bombay as the Divatia Award, in the
United I Provinces as the B B. Singh 203 Award and in Bengal as the Gupta,
Chakravarty and Sen Awards. Notwithstanding these awards, the general unrest amongst
Bank employees continued and there was a clamor for control of the banking
industry by the Central Government.
On April 30, 1949, was passed the Industrial
Disputes (Banking and Insurance Companies) Ordinance (Ordinance VI of 1949)
under the provisions of which all banking companies having branches or other
establishments in more than one province came under the jurisdiction of the
Central Government for the purposes of the Industrial Disputes Act, 1947 (XIV
of 1947). By a notification dated June 13, 1949, the Central Government
constituted an ad hoc Tribunal consisting of Shri K. C. Sen, a retired Judge of
the Bombay High Court, as Chairman, with two other persons as members to
adjudicate upon an industrial dispute between several banking companies and
their workmen. On the same day, the industrial dispute was referred to the
Tribunal by a separate order. The dispute covered several items, and some more
were added from time to time. For the sake of convenience, we shall hereafter
refer to this Tribunal as the Sen Tribunal and its award as the Sen Award.
After a very exhaustive enquiry, the Sen Tribunal made its award which was
published on August 12, 1950. Some of the leading Banks being dissatisfied with
the award applied to Supreme Court and obtained special leave to appeal against
the said award, as it had been specially exempted from the jurisdiction of the
Labour Appellate Tribunal constituted under the Industrial Disputes (Appellate
Tribunal) Act, 1950 (XLVIII of 1950). This Court ultimately held that the award
of the Sen Tribunal was void in to for want of jurisdiction, but did not go
into the merits of the award With regard to any of the matters dealt with
therein. The consequence of this decision was that the dispute in the banking
industry remained unresolved. Soon after there were some strikes consequent on
certain action taken by some of the Banks.
The result was that the Central Government
had to take steps afresh to settle this long standing dispute. Attempts were at
first made through the machinery of 204 conciliation to settle the dispute, but
these attempts failed. On June 26, 1951, was enacted the Industrial Disputes
(Amendment and Temporary Provisions) Act, 1951 (XL of 1951) which had the
effect of temporarily freezing some of the gains of labour under the Sen Award.
In July 1951 the Central Government made a fresh reference to an Industrial
Tribunal consisting of Shri H. V. Divatia, a retired Judge as. Chairman and two
other members, but the Chairman and the members resigned within a short time.
On January 5, 1952, two notifications were made. By one notification a new
Tribunal was constituted to be called the All India Industrial Tribunal (Bank
Disputes). The Chairman of this Tribunal was Shri Panchapagesa Sastry, another
retired Judge. The other two members were Shri M. L. Tannan and Shri V. L.
D'Souza. Hereafter we shall refer to this Tribunal as the Sastry Tribunal. By
another notification of the same date the Central Government referred the
matters specified in such. II of the notification, which'.. were the matters in
dispute between the employers and workmen of the banking companies specified in
sch. 1, to the Tribunal for adjudication. We need not set out here the matters
specified in sch. 11, but shall presently refer to those items only with which
we are concerned in these appeals.
The Sastry Tribunal made its award which was
published on April 20, 1953. This award came up for consideration of a Special
Bench of the Labour Appellate Tribunal on appeals preferred by the employees of
banks all over India and of the Banks themselves. The decision of the Labour
Appellate Tribunal was given on April 28, 1954. Some of the Banks moved this
Court for special leave to appeal from the decision dated April 28, 1954, of
the Labour Appellate Tribunal and such leave was granted on October 4,1954. The
same order which granted special leave also directed that the appeals be
consolidated. These seven appeals on behalf of different Banks against their
workmen have been filed in pursuance of the aforesaid leave granted by this
Court.
In Civil Appeal No. 56 of 1957 in which the
Imperial Bank (now substituted as the State Bank of India) is 205 the
appellant, a preliminary objection has been taken on behalf of the respondent
workmen of the Bank to the effect that the appeal is incompetent. We shall
presently consider this preliminary objection, but before we do so, it will be
convenient to indicate the principal questions which arise for consideration in
these seven appeals.
These questions have been formulated under
four heads :
(1) what is the scope of item 5 of schedule
II of the notification dated January 5, 1952, the item being expressed in the
following words-" Bonus, including the qualifications for eligibility and
method of payment ";
(2) does s. 10 of the Banking Companies Act,
1949 (prior to its amendment by Act 95 of 1956) prohibit the grant of bonus to
Bank employees;
(3) whether an industrial tribunal is
entitled in law to compel Banks to disclose " secret reserves " and
" other necessary provisions" made by them, for the purpose of
adjudication;
(4) whether the Full Bench formula laid down
by the Labour Appellate Tribunal in Mill Owners' Association, Bombay v.
Rashtriya Mill Mazdoor Sangh, Bombay (1) for
the payment of bonus to employees in the textile industry is applicable to
Banks.
Of the aforesaid four questions, the first
two directly fall for decision in the appeals before us. For reasons which we
shall presently give, we consider that questions (3) and (4) do not call for
any decision at the present stage.
We shall now state how the Sastry Tribunal
and the Labour Appellate Tribunal dealt with the first two questions. We have
stated that item 5 of sch. II of the notification dated January 5, 1952,
referred to the claim of bonus by Bank employees. We have also quoted earlier
the words in which item 5 was expressed. The Banks contended before the Sastry
Tribunal that the dispute referred to in item 5 did not contemplate the
determination of the quantum of bonus payable by (1) [1952] L.A.C. 433.
206 any of the Banks for any particular year,
but the item merely referred to the question of bonus in general with special
reference to qualifications for eligibility and method of payment. This
contention of the Banks was upheld by the Sastry Tribunal which said:
" The primary duty is on the Government
to be satisfied subjectively whether a reference should be made or not. In the
circumstances aforesaid, we hesitate to hold that we are concerned with the
question of quantum of benefits for particular banks and for particular years
in the past in the light of profits of such banks durina those periods. We
ruled out a request that evidence should be taken for determination of the
question. It may yet be open to the concerned parties where there is a real
grievance to approach the Government to get a suitable reference for the future
as well as for the account years 1949, 1950 and 1951." What the Sastry
Tribunal did was to consider the question whether there could be a bonus scheme
for future years and whether it should be made to apply retrospectively to all
Banks and for all years; and as to the guiding principles for the ascertainment
of bonus, the Sastry Tribunal suggested certain lines of approach and
recommended them for the earnest consideration of both the parties. The Labour
Appellate Tribunal, however, came to, a different conclusion with regard to the
scope of item 5 and held that it embraced the claims to bonus for the relevant
years. Accordingly, it said :" It follows, therefore, that the claims to
bonus made for the relevent years have not yet been adjudicated upon and that
the terms of the reference have not been exhausted.
The ad hoe Tribunal to which this reference
was made is no longer in existence and some other Tribunal will have -to decide
what bonus, if any, is payable by the Banks to its employees for the relevant
years. " The correctness of this part of the judgment of the Labour
Appellate Tribunal has been seriously contested before us on behalf of the
appellants and this is the first question which we have to decide.
207 On the second question, namely as to the
interpretation of s. 10 of the Banking Companies Act, 1949 (prior to its
amendment in 1950) there was again a difference between the Sastry Tribunal and
the Labour Appellate Tribunal. The Chairman of the Sastry Tribunal was of the
view that s. 10 of the Banking Companies Act, 1949, did not stand in the way of
a grant of bonus to Bank employees, but the other members of the Sastry
Tribunal apparently felt that the matter was not free from doubt and the
Tribunal as a whole recommended to Government that the alleged legal difficulty
by reason of s. 10 of the Banking Companies Act, 1949, should be removed by
suitable -legislation. Perhaps, it was as a result of this recommendation that
s. 10 of the Banking Companies Act, 1949, was amended in 1956. The Labour
Appellate Tribunal, however, by a majority of 2 to I came to the conclusion
that s. 10 was no bar to a claim for bonus by Bank employees.
One member of the Appellate Tribunal, Shri
D.E. Reuben, recorded a note of dissent in which he held that by reason of s.
10 of the Banking Companies Act, 1949, as it stood at the relevant time, the
Industrial Courts could not grant bonus to the workmen of a Bank. On behalf of
the appellants it has been contended that the view of the majority of the
Labour Appellate Tribunal with regard to s. 10 of the Banking Companies Act,
1949, is not correct. This is the second question for our decision. As we are
not deciding the other two questions, no useful purpose will be served by
setting out the findings of the Tribunals below with regard to them.
We now proceed to consider the preliminary
objection taken on behalf of the respondent workmen in Civil Appeal No. 56 of
1957. Some more facts must be stated with reference to this preliminary
objection. After the decision of the Labour Appellate Tribunal and before it
could be implemented, several Banks appealed to Government to set aside the
decision of the Labour Appellate Tribunal as they felt that the total burden
imposed by it was entirely beyond their capacity to bear. Therefore, the
Reserve Bank of India, under directions of the Central Government 208 carried
out a rapid survey of the possible effect of the decision of the Labour
Appellate Tribunal on the working of a few typical banks which were parties to
the dispute. On a study of the evidence so collected, the Central Government
concluded that it; was inexpedient on public grounds to give effect to parts of
the decision. Consequently, the Labour Appellate Tribunal's decision was
modified by them by an order dated August 24, 1954. This decision was debated
in Parliament and ultimately Government announced their decision to appoint a
Commission (known as Bank Award Commission) to help them assess more fully the
effect of the award. The Commission submitted its report on July 25, 1955, and
with regard to the claim for bonus it said:
" In regard to the claim for bonus, no
general principles can be invoked and the case of each individual bank would
have to be considered on its merits. Since this dispute has not been resolved
so far, it is likely that it may have to be dealt with in the near future. The
claim for bonus is not within the terms of my reference and I do not wish to
trespass in the area of this dispute. I am, however, referring incidentally to
this aspect of the matter because the fixation of a wage structure is likely to
have an effect on employees' claim for bonus." (see paragraph 51 at page
34 of the Commission's report).
Thereafter, the Industrial Disputes (Banking
Companies) Decision Act, 1955 (XLI of 1955) was passed to provide for the
modification of the decision of the Labour Appellate Tribunal in accordance
with the recommendations of the Commission. This Act in so far as it is
relevant for our purpose said in s. 3 thereof that the decision of the Labour
Appellate Tribunal shall have effect as if the modifications recommended in Ch.
XI of the report of the Commission dated July 25, 1955, had actually been made
therein and the appellate decision as so modified shall be the decision of the
Appellate Tribunal within the meaning of the Industrial Disputes (Appellate
Tribunal) Act, 1950 and the award shall have effect accordingly. It is clear
that the Commission did not make any recommendation in 209 respect of the bonus
claim and the Industrial Disputes (Banking Companies) Decision Act, 1955, does
not affect the present appeals; that Act merely gave effect to the
modifications recommended by the Commission, but did not give the decision of
the Labour Appellate Tribunal any higher sanctity as a statutory enactment.
Now, the preliminary objection taken on behalf of the respondent workmen is
that the decision of the Labour Appellate Tribunal merely says that the claims
to bonus for the relevant years have not been adjudicated and therefore the
terms of the reference have not been fully worked out; it is contended that
this means that some other Tribunal -"-ill have to decide what bonus, if
any, is payable by the Banks to their employees, and no sucr Tribunal having
been so long appointed, there is at the present stage no enforceable award within
the meaning of the Industrial Disputes Act 1947, and the appeal accordingly is
premature and incompetent. We are unable to accept this contention as correct.
On behalf of the appellant Banks it has been submitted that the Labour
Appellate Tribunal misconceived the scope of item 5 of sch. 11 of the relevant
notification and on that misconception it came to the conclusion that the terms
of reference had not been exhausted, a conclusion the correctness of which the
appellants are entitled to challenge by way of appeal or else they will be
bound by the decision that the reference is still pending and can be worked out
by another Tribunal. This submission we think is correct. In the Industrial
Disputes Act, 1947, an 'award' means an interim or final determination by an
Industrial Tribunal of any industrial dispute or of any question relating
thereto. The dispute between the parties in the present case related to bonus:
on behalf of the banks it was contended (a) that item 5 of sch. 11 did not
include claims of bonus for particular years in respect of particular banks but
related to a general scheme of bonus including qualifications for eligibility
and method of payment, and (b) that even a general scheme cf bonus could not be
made by reason of the provisions of s. 10 of the Banking 27 210 Companies Act,
1949; on behalf of the Bank employees it was contended that (a) item 5 included
claims for bonus for particular years in respect of particular banks and (b) s.
10 of the Banking Companies Act, 1949, did
not stand in the way of such claims. These rival contentions led to an
industrial dispute which the Labour Appellate Tribunal determined by its
decision dated April 28, 1954. We do not see why that decision is not an
'award' within the meaning of the Industrial Disputes Act, 1947. In our
opinion, in no sense can the appeals be said to be premature or incompetent. It
is worthy of note that these appeals have been filed in pursuance of special
leave granted by this Court tinder Art. 136 of the Constitution. That Article
enables this Court to grant, in its discretion, special leave to appeal from
any judgment, decree, determination, sentence or order in any cause or matter
passed or made by any court or tribunal in the territory of India. The powers of
this Court under the said Article are wide and are subject to such
considerations only as this Court has laid down for itself for the exercise of
its discretion. The argument before us is not that these appeals do not come,
within those considerations and special leave should not have been granted; but
the argument is that they are incompetent for other reasons. Even those
reasons, we think, are not sound. Learned counsel for the respondent workmen
has cited before us some decisions, one Australian 'In re the Judiciary Acts,
etc. (1)); and another American (David Muskrat v. United States (2)) in support
of his contention. We consider, however, that the point is so clear and beyond
doubt that it is unnecessary to embark on an examination of decisions which
relate to entirely different facts. There is, in our opinion, no substance in
the preliminary objection which must be overruled.
Now, we proceed to consider the true scope of
item 5 of sch. 11 of the notification dated January 5, 1952. Schedule 11 of the
notification dated June 13, 1949, by which a reference was made to the Sen
Tribunal contained an identical item which was item 6. That (1) (1921) 29
C.L.R. 257.
(2) (1910) 219 U.S. 346 ; 55 L. Ed. 246.
211 item was expressed exactly in the same words
as item 5 of sch. 11 of the notification under our consideration. The Sen
Tribunal dealt with the scope of that item and said that a large number of demands
had been made by the unions for bonus for particular years in respect of
particular banks. The Sen Tribunal then said:" We have been unable to deal
with such individual demands, except such matters as were pending in the
different States at the time of our appointment and have been specifically
referred to us under the provisions of s. 5 of Ordinance VI of 1949 or Act LIV
of 1949. Apart from the great deal of time that we should have to spend on such
questions, had we to hear and dispose of every application for a particular
year in respect of a particular bank, we believe that the kind of disputes
regarding bonus that have been referred to us are disputes of a general nature,
e.g., questions regarding 'qualifications for eligibility and method of
payment'." Thus it is clear that the Sen Tribunal also understood the item
as a reference, of a dispute of a general nature which did not include demands
for bonus for particular years in respect of particular banks. The Central
Government which made the reference to the Sastry Tribunal by the notification
dated January 5, 1952, had before it the interpretation which the Sen Tribunal
had made in respect of the self-same item. Having that interpretation before
it, the Central Government used identical language to express the dispute which
it referred to the Sastry Tribunal in item 5 of sch. 11. This, in our opinion clearly
shows that item 5 of sch. 11 of the notification relating to the Sastry
Tribunal has the same meaning as item 6 of sch. 11 of the notification relating
to the Sen Tribunal as interpreted by that Tribunal. The various items in sch.
11 of the relevant notification are not items in legislative lists, but are
items in an administrative order and it would not be right to apply the same
canon of interpretation to the items in an administrative order as is applied
to items in a legislative list. It is worthy of note that some of the items in
212 the Sen reference were modified when the subsequent reference was made to
Sastry Tribunal. Item 38 of the Sen reference read as follows:In what manner
and to what extent do the decisions of the Tribunal require modification in the
case of employees of banks in liquidation or moratorium ?" This item was
dealt with by the Sen Tribunal at pp. 157 to 160 of its award and it pointed
out certain defects in the wording of the item. When a similar item was
referred to the Sastry Tribunal, necessary changes were made in the wording of
the item to remove the defects pointed out by the Sen Tribunal (see item 11 of
sch. 11 of the notification relating to the Sastry Tribunal. Another example of
a similar character is item 5 of sch. 11 of the Sen reference, an item which
related to " other allowances " payable to bank employees including
conveyance allowance for clerks for journeys to and from the clearing house. A
point taken before the Sen Tribunal was that by conveyance allowance was meant
an allowance for journeys to and from the place of work. The Sen Tribunal
confined conveyance allowance to expenditure incurred for going out on the
Bank's work while the Bank employee was on duty. The scope of the reference was
made clearer by changing the phraseology of the item when the subsequent
reference to the Sastry Tribunal was made; see in this connection the
phraseology of item 28 of sch. 11 of the notification relating to the Sastry
Tribunal.
It would thus appear that we have two kinds
of examples: (1) in some cases the phraseology of the items is changed when the
subsequent reference is made taking into consideration the criticisms made by
the Seti Tribunal and (2) there are other cases where no change in phraseology
is made even though the Sen Tribunal has understood a particular item in a
particular sense. Judged in the light of these examples, it seen-is to us that
the true scope of item 5 of -,ch. 11 is what the Sastry Tribunal understood it
to be, namely., whether bonus was payable to Bank employees and, if so, what
were the qualifications for eligibility and method of 213 payment. The
reference in item 5 of schedule 11 did not include within itself claims of
bonus for particular years in respect of particular banks. The Sastry Tribunal
further pointed out that there were specific references with regard to the
claims for bonus in respect of some Banks. Those reference did not, however,
come within item 5 of sch. 11.
If they did, it was completely unnecessary to
make separate and specific references with regard to such claims. Item 5 was
not the only item which raised a general question.
There were many other items of a similar
nature, such as items 3, 6, 9 etc.
The Labour Appellate Tribunul itself realised
the difficulty of deciding under item 5 of sch. 11 the particular claims for
bonus for particular years. The Sastry Tribunal pointed out that there were 129
banks before it and no evidence was given to substantiate the claims for bonus
for particular years in respect of particular banks. The Sastry Tribunal said:"We
cannot assume that, for all these 129 banks before us and for all these years
there were live disputes about this matter which the Government had considered
fit and proper to be referred to us after applying their minds to the problem
whether such a reference should be made to an industrial tribunal. There is
also this additional circumstance that there had been two special and specific
references by the Govern cut in relation to the payment of bonus by the central
bank of India, the Allahabad Bank and the, Unitted commercial Bank for the
years 1951 and 1951. Moreover, even apart from the general character of the
various heads of of disputes in the reference to us individual cases
pertaining) only to Some banks Wherever the Government wanted to make such a
reference have been particularised and set out, e.g, absorption of Bharat Bank
employees-itein 31 in schedule It of the, notification. . . . It may be
mentioned that the claim before us in connection with the bonus payable I)v the
Imperial Bank of India for the years 1948, lb49, 1950 and 1951 would involve a
payment of very nearly a crore of rupees over and above the 214 payments
already made for these years. It is not possible for us to affirm what the
attitude of the Government would have been on the question of referring a
dispute of this character to us under s. 10 of the Industrial Disputes Act, 1947.
" Faced with the difficulty referred to by the Sastry Tribunal, the Labour
Appellate Tribunal also said that it could not deal with individual claims for
bonus in the present proceedings. The Labour Appellate Tribunal said that it
would be acting in vacuo if it attempted to decide individual claims for bonus
without having before it specific cases of bonus, particularly when there were
no materials on the record on which the Tribunal could make a decision as to
the quantum of bonus payable by a particular bank for a particular year. This
difficulty instead of leading the, Labour Appellate Tribunal to give a proper
interpretation to the true scope of item 5 of sch. 11 led it to the conclusion
that item 5 of sch. 11 embraced within itself individual claims for bonus for
particular years and those claims must be dealt with by another tribunal on the
footing that the reference had not been completely worked out. We consider this
to be a complete non sequitur. Item 5 of sch. IL must be interpreted as an item
in an order of reference in the context in which the item has been used, the
words in which it has been expressed and against the background in which the
dispute has arisen.
The practical difficulty which may arise in
deciding individual claims for bonus in respect of particular banks is merely a
circumstance to be taken into consideration. It cannot be decisive on the
question of determine nation the true scope and effect of item 5 of sch. 11.
On a consideration of all relevant circumstances
and having regard to the context and the words in which item 5 of sch. 11 has
been expressed, we are of the view that the Labour Appellate Tribunal was wrong
in its conclusion that the reference had not been worked out and that
individual claims for bonus in respect of particular banks must be determined
by another tribunal on the basis of the reference made in 1952.
215 We now proceed to a consideration of the
more important question, as to the effect of s. 10 of the Banking Companies
Act, 1949. We have stated earlier that s. 10 of the Banking Companies Act,
1949, hereinafter called the Banking Act, was amended in 1956. We shall first
read the un-amended section, the provisions whereof were in force at the time
relevant to these appeals. We shall later read also the amended section in
connection with an argument presented on behalf of the Bank employees that the
Banking Companies (Amendment) Act, 1956 (XCV of 1956) was not remedial in
nature but was declaratory of the law as it always was.
Section 10 of the Banking Act prior to its
amendment in 1956, was in these terms" S. 10. (1) No banking Company(a)
shall employ or be managed by a managing agent or, (b) shall employ any person(i)who
is or at any time has been adjudicated insolvent, or has suspended payment or
has compounded with his creditors, or who is or has been convicted by a
criminal court of an offence involving moral turpitude; or (ii)whose
remuneration or part of whose remuneration takes the form of commission or of a
share in the profits of the company; or (iii)whose remuneration is, according
to the normal standards prevailing in banking business, on a scale
disproportionate to the resources of the Company; or (c) shall be managed by
any person:(1)who is a director of any other company, not being a subsidiary
company of the banking company; or (ii)who is engaged in any other business or
vocation ; or (iii)who has a contract with the company for its management for a
period exceeding five years at any one time:
216, Provided that the said period of five
years shall in relation to contracts subsisting on the 1st day of July, 1944,
be computed from that date Provided further that any contract with the company
for its management may be renewed or extended for a further period not exceeding
five years at a time if and so often as the directors so decide.
(2)If any question arises in any particular
case whether the remuneration is, according to the normal standards prevailing
in banking business, on a sctle disproportionate to the resources of the
company for the purpose of subclause (iii) of clause (b) of subsection (1), the
decision of the Reserve Bank thereon shall be final for all purposes.
" Before we proceed to a consideration
of the construction of the section, a little history may not be out of place.
The Companies (Amendment) Act, 1936 introduced a new Ptrt XA in the Indian
Companies Act, 1913 (VIl of 1913). Part XA contained certain special provisions
applicable to banking companies only. The section with which we are concerned was
s. 277HH, and that section was introduced by an amending Act of 1944. It was
the precursor of s. 10 of the Banking Act and it may, perhaps, be advisable to
read s. 277HH in so far as it is relevant for our purpose:
" 277HH. No banking company...... shall,
after the expiry of two years from the commencement of the Indian Companies
(Amendment) Act, 1944, employ or be, managed by a managing agent, or any person
whose remuneration or part of whose remuneration takes the form of commission
or a share in the profits of the company, or any person having a contract with
the company for its management for a period exceeding five years at any one
time ;
Provided that the period of five years shall,
for the purposes of this section, be computed from the date on which this
section comes into force;
217 Provided further that any such contract
may be renewed or extended for a further period not exceeding five years at a
time if and so often as the directors think fit." Obviously, the most
undesirable feature in the structure and management of banking companies which
the section tried to remedy was the appointment of managing directors or
managers on long term contracts on payment of remuneration by commission or a
share in the profits. However, the section was not confined to a managing agent
or manager only, though by a reference to the statement of objects and reasons
in relation to the amendment of 1944 it was suggested on behalf of the
respondents that the section was so confined. The statement of objects and reasons
is not admissible, however, for construing the section; far less can it control
the actual words used. The section in express terms said that 'no banking
company . . . . shall employ any person whose remuneration or part of whose
remuneration takes the form of . . . a share in the profits of the company'.
Then, in 1949 came the Banking Act. As its
long title and preamble indicate, it is an Act to consolidate and amend the law
relating to banking companies. It repealed the whole of Part XA of the Indian
Companies Act, 1913 including s. 277HH referred to above, but s. 2 said:
" S. 2. The provisions of this Act shall
be in addition to, and riot, save as hereinafter expressly provided, in
derogation of the Indian Companies Act, 1913, and any other law for the time
being in force." The Indian Companies Act, 1913 itself stood repealed by
the Indian Companies Act, 1956 (I of 1956).
We now come back to s. 10, the proper
interpretation of which is the immediate problem before us. Shorn of all such
details as are unnecessary for our purpose, the section says that no banking
company shall employ any person, whose remuneration or part of whose
remuneration takes the form of a share in the profits of the company. The
section opens with a negative, 218 and says that no banking company shall
employ any person;
the expression 'any person' is followed by
the adjectival clause descriptive of the person who shall not be employed.
The adjectival clause says that the person,
who shall not be employed, is one whose remuneration or part of whose
remuneration takes 'the form of a share in the profits of the company. Two
questions at once confront us: (1) is I bonus remuneration; and (2) is it a
share in the profits of the company. The argument on behalf of the appellant Banks
is that I bonus' as awarded by Industrial Courts is remuneration within the
meaning of s. 10 and it is also a share in profits; therefore. the express
provisions of s. 10 read with s. 2 of the Banking Act override the provisions
of the Industrial Disputes Act, 1947 so far as banking companies are concerned,
and prohibit the award of bonus to employees of Banks. On behalf of the Bank
employees the argument is that bonus as awarded by Industrial Courts is not
'remuneration' within the meaning of s. 10 of the Banking Act, nor is it a
share in profits in its true nature. The argument on both sides hinges on the
two key expressions: I remuneration' and' share in profits'. The meaning of these
expressions we shall consider in some detail. But it is convenient at this
stage to get rid of some minor points.
Section 10 in its operative part says that
'no banking company shall employ any person etc.' The amendment of 1956 says
that I no banking company shall employ or continue the employment of any
person'. The question has been mooted before us if the expression 'shall
employ' means and includes, prior to the amendment of 1956, 'shall continue the
employment of'. We think it does; otherwise the very purpose of the section is
defeated. Take, for example, the case of an insolvent. The section says that no
banking company shall employ any person who is or at any time has been
adjudicated insolvent. Suppose that at the time the bank employs a person, he
has not incurred any of the disqualifications mentioned in s. 10; but
subsequently, there is an order of adjudication against him and he is
adjudicated an insolvent, The section 219 obviously means that such a person
can no longer be employed by the bank. If subsequent disqualification is not
within the mischief of the section, then the very purpose of the section which
must be the safety and well-being of the bank will be rendered nugatory. We
must, therefore, hold that the expression 'shall employ a person' in s. 10
means and includes 'shall have in employment' and in this respect the amendment
of 1956 merely makes clear what was already meant by the section.
We may also dispose of here an argument based
on s. 2. When an industrial dispute as to bonus between an employer and his
workmen is referred to a tribunal for adjudication, the tribunal has the power
to resolve the dispute by an award.
Such an award may grant bonus to workmen, if
certain conditions are fulfilled. The argument before us is that the provisions
of the Banking Act are not to be interpreted in derogation of the provisions of
the Industrial Disputes Act, 1947, but in addition thereto. This argument,
however, ignores an essential qualification embodied in s. 2-namely, the
qualification in the clause 'save as hereinafter expressly provided'. If s. 10
expressly provides that no banking company shall employ a person whose
remuneration or part of whose remuneration takes the form of a share in
profits, and I bonus' is both remuneration and a share in profits, then s. 2
can be of no assistance to the respondents. The express provisions of s. 10
must then override any other law for the time being in force, so far as banking
companies are concerned.
This brings us back to the two key
expressions remuneration' and 'share in profits'. We take the expression
'remuneration' first. The dictionary meaning of the word is reward, recompense,
pay for service rendered (see the Concise Oxford Dictionary) ; and that is the
ordinary meaning of the word. The word was judicially noticed in a very early
decision (R. v. Postmaster General (1); and on appeal (2); Blackburn, J., said:
" I think the word ' remuneration.......... means,, a quid pro quo. If a
man gives his services. whatever consideration lie gets for giving his services
seems to (1) (1876) 1 Q.B.D. 658.
(2) (1878) 3 Q.B.D. 428.
220 me a remuneration for them. Consequently,
I think if a person was in receipt of a payment, or in receipt of a percentage,
or any kind of payment which would not be an actual money payment, the amount
he would receive annually in respect of this would be remuneration." The word
was again noticed in several English decisions in connection with s. 13 of the
Workmen's Compensation Act, 1906, which enacted that a workman did not include
a person employed otherwise than by way of manual labour whose "
remuneration " exceeded pound, 50 ; and in Skiles v. Blue, Anchon Line,
Ltd.(') it was observed that remuneration was not the same thing as salary or
cash payment by the employer but involved the same considerations as earnings.
This was a case in which the purser of a ship received, in addition to his
regular wages, at the end of each voyage, at a fixed rate per month, a bonus or
extra wages; he also made a profit by the sale on board ship of whisky in nips.
The majority of Judges held that both the bonus and the profit on the whisky
ought to be taken into account in estimating the purser's remuneration. In an
earlier decision, Penn v. Spiers and Pond Limited (2), the gratuities and tips
which the deceased workmen, employed as a waiter on a restaurant car, received
from passengers using the restaurant car were held to be I earnings in the
employment of the same employer'. The decision in Penn v. Spiers and Pond,
Limited (supra) (2) was approved by the House of Lords in Great Western Railway
v.
Helps (a). In his speech Lord Dunedin
repelled the argument addressed for the appellants of that case that the
meaning of the expression " earnings " should be limited to what the
workman gets from direct contract from his employer by saying that the simple
answer to the argument was that the statute did not say so; it used the general
term I earnings' (in our case the general term `remuneration) instead of the
term " wages" or the expression " what he gets from his employer
". It is, we think, unnecessary to multiply decisions. In a recent
Australian decision, Conally v.
Victorian -Railways (1) [1911] 1 K.B36o. (2)
[1908] 1 K.B. 766.
(3)[1918] A.C. 141.
221 Commissioners (1) the matter has been
tersely put as follows: " It (the word remuneration) should be given its
natural meaning unless there is reason to do otherwise." This is a
salutary rule of construction and should, we think, be adopted in the present
case.
Is there anything in the Banking Act to give
the word 'remuneration' a restricted meaning? Three meanings have been
canvassed before us. The widest meaning for which the learned Attorney-General
appearing for some of the banks has contended is the natural meaning of the
word 'remuneration' in the sense of any recompense for services rendered,
whether the payment is voluntary or under a legal obligation. The second
meaning, which is intermediate between the widest and the narrowest, is that it
means what is payable under any legal obligation, whether under a contract,
statute, or an award. The narrowest meaning for which Shri N.C. Chatterjee,
learned counsel for the respondent workmen, has canvassed is that remuneration
in s. 10 of the Banking Act means contractual wages, viz., what is payable
under the terms of the contract of employment only.
He has put his argument in the following way:
section 10, when it says that I no banking company shall employ a person etc.',
refers to the contractual relationship of employer and employee created by an
act of parties, and its purpose is to put a, ban on one kind of employment of a
person who is to be paid a particular remuneration under the terms of his
employment. It is stated that the prohibition is against any remuneration in
the nature of profit sharing being fixed under a contract of service between
the bank and its employees and it is contended that the legislature made
the-prohibition dependent on the terms of employment. It is submitted that the
adjudication of an industrial tribunal in awarding bonus does not create any
obligation by act of parties, and even if it imports some kind of implied term,
it is de hors the contract of employment and is the result of a judicial
verdict under the industrial law.
The argument is attractive but does not in
our opinion stand the test of close scrutiny. Lot us look a (1) (1957) V.R. 466
(also 1957 Australian Law Reports 1097).
222 little more closely to s. 10 of the
Banking Act. It says inter alia that no banking company shall employ or be
managed by a managing agent or shall employ a person who is or has been
convicted by a criminal court of an offence involving moral turpitude etc; see
el. (b)(1). It is obvious that when the section says 'shall employ', it means
'shall have in the employment of. It is not suggested that the
disqualifications mentioned in cl. (b) (1) refer only to the contract of
employment. If that were so, the section would hardly serve the purpose for
which it must have been meant. We may take another example which brings out the
meaning of the section even more clearly. Let us suppose that the Bank employs
a manager on a contract of service which makes no mention of bonus or
commission. On the argument of learned counsel for the respondents, s. 10 does
not stand in the way of the bank to pay voluntarily and ex gratia any amount to
the manager by way of commission or bonus, as long as the contract of service
does not contain any term as to such payment. This, in our opinion, makes
nonsense of the section. Learned counsel for the respondents had himself
suggested in the course of his arguments that having regard to the legislative
history of the enactment, the section was intended to prevent banks from having
managers, by whatever name they might be called, who were paid by commission or
a share in the profits; and yet the Bank can make such payment if it adopts the
subterfuge of not saying anything about such payment in the contract of
service.
There are, in our view, clear indications in
the section itself that the word 'remuneration' has been used in the widest
sense. Firstly, cl. (b) (iii) also uses the word remuneration. It says-"
whose remuneration is, according to normal standards prevailing in banking
business, on a scale disproportionate to the resources of the company ".
Subsection (2)-unamended-states inter alia that if any question arises in any
particular case whether the remuneration is according to the normal standards
prevailing in banking business on a scale disproportionate to the resources of
the company etc., the decision of the Reserve Bank 223 shall be final. It is
clear that in cl. (b) (iii) of sub-s.
(1) and also in sub-s. (2), the word remuneration
has been used in the widest sense. We may invite attention in this connection
to r. 5 of the Banking Companies Rules, 1949 (which are statutory rules) which
requires a banking company to send periodically to the principal office of the
Reserve Bank a statement in Form I showing the remuneration paid during the
previous calendar year to officers of the company etc. Form I has a footnote
which says: " Remuneration includes salary, house allowance, dearness
allowance, . . . . bonus . . . fees and allowances to directors etc." We
do not say that a statutory rule can enlarge the meaning of s. 10; if a rule
goes beyond what the section contemplates, the rule must yield to the statute.
We have, however, pointed out earlier that s.
10 itself uses the word 'remuneration' in the widest sense, and r. 5 and Form I
are to that extent in consonance with the section.
Shri Phadke appearing for some of the
respondents has urged a somewhat different contention. He has argued that
assuming that the word 'remuneration' has been used in the widest sense in s.
10 and therefore includes bonus, r. 5 and Form 1, show that payment of bonus is
permissible: this is intelligible only on the footing that the provisions of s.
10 are restricted in their application to such employees of a banking company
as are employed in a managerial or administrative capacity; they do not apply
to 'workmen' as defined in the Industrial Disputes Act, 1947. We find it
difficult to accept this argument. The section says that 'no banking company
shall employ any person', and we do not see how the expression 'any person' can
be restricted to those on the managerial or administrative staff only. We
cannot arbitrarily cut down the amplitude of an expression used by the
legislature.
It is necessary to refer here to the decision
in Wrottesley v. Regent Street Florida Restaurant (1) on which learned counsel
for the respondent workmen has placed great reliance. It is necessary to refer
to the (1) [1951] 2 K.B. 277.
224 facts of the case, which are stated in
the head note. The waiters employed at an unlicensed restaurant, by an oral
agreement amongst themselves and between them and their employers, paid into a
pool all the tips received by them during the course of their employment. The
tips were placed in a locked box, and the contents were distributed weekly in
shares calculated in accordance with the agreement. The total weekly sum
received by each waiter including the share of the tips exceeded, but the
weekly wage paid by the employers was itself less than, the minimum wage
prescribed by the Wages Regulations (Unlicensed Place of Refreshment) Order,
1949. The proprietors of the restaurant were prosecuted for failing to pay the
minimum wage. It was held that the sums paid from the pool were riot
remuneration, and the earlier decisions relating to the calculation of the
earnings of a waiter in connection with the Workmen's Compensation Acts were
distinguished. Lord Goddard, C.J., thus explained the distinction:
" The amount of a man's earnings in an
employment and the amount of remuneration which his employer pays to him are
not necessarily the same thing. The section creating the offence, and under
which the proceedings are taken, is s. 9, sub-s. 2, of the Catering Wages Act,
1943. That section provides that, if an employer fails to pay to a worker to
whom a wages regulation order applies remuneration not less than the statutory
minimum remuneration clear of all deductions, he shall be guilty of an offence.
Section 10 contains somewhat elaborate provisions for the computation of
remuneration. Not only the short title but the structure of the Act -setting up
a wages commission, permitting the establishment of wages boards, and providing
for wage regulation orders-clearly indicates that it is with wages that the Act
is intended to deal. The use of the word " remuneration " in both s.
9 and s. 10 and, indeed, in other sections, is probably because there are
certain deductions from wages which are authorized by s. 10, so that
remuneration is an apt word to indicate the net payment, 225 What we have to
decide is whether, when a waiter, receives a payment from the electronic in the
manner found in the case, that sum can be regarded as remuneration paid to him
by, or as remuneration obtained by him in cash from, his employer. In our
opinion, when a customer gives a tip to a waiter the money becomes the property
of the latter." We think that the decision itself shows that the word
remuneration' must be given its meaning with reference to the context in which
the word occurs in the statute. In the context of the Catering Wages Act, 1943,
it meant the net payment after certain deductions from wages paid by the
employer; and in the Workmen's Compensation Acts, it meant the amount of a
man's earnings in an employment. We have pointed out that in the Banking Act
with which we are concerned, the word I remuneration' has been used in the
widest sense. In that. sense, it undoubtedly includes bonus.
We proceed now to a consideration of the
second key expression for our purpose, viz., 'takes the form of a share in the
profits of the company'. The conception of industrial bonus (that is, profit
bonus claimed by employees and granted amicably, through conciliation or as a
result of an industrial award) has had a chequered development. In some of the
earlier Bombay decisions of Industrial Adjudicators, it was held that the grant
of bonus was entirely a matter of grace and not of right; some decisions
characterized bonus as a gift, a sort of bakshis or pourboire (see D. G.
Damle's Labour Adjudications in India.
p. 408). By 1948, however, the conception had
crystallised, and it was judicially recognised that the claim of profit bonus
could not any longer be regarded as an ex gratia payment. In Millowner's
Association, Bombay v. Rashtriya Mill Mazdoor Sangh Bombay (1) the Full Bench
of the Labour Appellate Tribunal evolved the formula for determining the
quantum of bonus, and the general principles governing the claim of bonus were
also laid down. These are,: (1) as both capital (1) 1950 L.L.J. 124.
29 226 and labour contribute to the earnings
of the industrial concern, it is fair that labour should derive some benefit,
if there is a surplus after meeting prior or necessary charges; (2) the claim
of bonus would only arise if there should be a residue after making provision
for (a) prior charges and (b) a fair return on paid up capital and on reserves
employed as working capital .and (3) bonus is a temporary satisfaction, wholly
or in part, of the needs of the employee where the capacity of the industry
varies or is expected to vary from year to year, so that the industry cannot
afford to pay 'living wages'. The Labour Appellate Tribunal recognised that
where the goal of living wages had been attained, bonus like profit sharing in
the technical, narrow sense would represent more the cash incentive to greater
efficiency and production. The conception of the living wage itself is a
growing conception, and the goal has been reached in very few industries, if
any, in this country. The general principles laid down by the aforesaid Full
Bench decision of the Labour Appellate Tribunal were generally approved by this
Court in Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur (1), and have
been fully considered again and approved in Civil Appeals Nos. 459 and 460 of
1957 (Associated Cements) in which judgment was delivered on May 5, 1959.
We have to consider the expression I takes
the form of a share in the profits of the company' in the context of the
meaning of the word bonus' as explained above. It is necessary to state that we
are not considering here the question of production bonus or Puja bonus, which
may not necessarily come out of profits and these stand on a different footing.
There can be now no doubt, however, that profit bonus, in the industrial sense
in which we now understand it, is a share in the profits of the company; it is
labour's share of the contribution which it has made in the earning of the
profits. The two grounds on which it has been contended that bonus is not a
share in the profits are (1) that it is not a fixed or certain percentage of
the available surplus of profits and (2) it partakes of the (1) [1955] 1 S.C.R.
991 227 nature of a contingent, supplementary wage. These two grounds weighed
considerably with the majority of members of the Labour Appellate Tribunal who
expressed the view that s. 10 of the Banking Act did not stand in the way of
granting bonus to bank employees, because bonus according to them was not a
share in the profits of the company. We do not think that either of these two
grounds is valid. The first ground arises out of a confusion between the
expression 'takes the form of a share in profits' and the expression 'profit
sharing' used in a narrow, technical sense. It is undoubtedly true that the
bonus formula does not lay down any fixed percentage which should go to labour
out of the available surplus. The share of labour will depend on a number of
circumstances; but once the amount which should go to labour has been
determined, it is easy enough to calculate what proportion it bears to the
whole amount of available surplus of profits. There is thus no difficulty in
identifying bonus as a share in the profits of the company. It is true that the
International Congress on Profit-sharing held in Paris in 1889 adopted the
definition of 'profit sharing' in the technical, narrow sense. That definition
said that profit sharing was an agreement (formal or informal) freely entered
into, by which the employees receive a share, fixed in advance, of the profits
" (see Encyclopaedia of the Social Sciences, Seligman and Johnson, Vol.
XII, p.487). But that is not the sense in which bonus has been understood in
our industrial law, and it is worthy of note that s. 10 of the Banking Act does
not use the technical expression 'profit-sharing' but the more general
expression I takes the form of a share in the profits etc.'.
We are unable to hold that this general
expression has a technical meaning in the sense that the share in profits must
be fixed in advance, as in technical profit-sharing;
such a meaning would, without sufficient
reason, exclude from its purview schemes under which the workers are granted
regularly a share in the net profits of industry, but in which the share to be
distributed among the workers is not fixed in advance but is decided from time
to time on ad hoc, 228 basis by an independent authority such as an industrial
court or tribunal.
The second ground also appears to us to be
equally untenable. Bonus in the' industrial sense as understood in our country
does come out of the available surplus of profits, and when paid, it fills the
gap, wholly or in part, between the living wage and the actual wage. It is an addition
to the wage in that sense, whether it be called Contingent and supplementary.
None the less, it is labour's share' in the profits, and as it is a
remuneration which takes the form of a share in profits, it comes within the
mischief of S. 10 of the Banking Act. It may be asked why should the
legislature seek to deprive bank employees, who are not on the managerial or
administrative staff, of their industrial claim to bonus when they contribute
to the prosperity of the banks? This really is a question of policy on which we
are not permitted to speculate. On the one side there is the necessity for
safeguarding the integrity and stability of the banking industry, and on the
other side there is the claim of employees for a share in the profits. Which claim
has a greater urgency at a particular time is really a matter for the
legislature to say. We may refer here by way of contrast to S. 31A of the Insurance
Act, 1938. That section' is in terms similar to S. 10 of the Banking Act, but
has some marked differences.
Firstly, it specifically mentions bonus,
along with a share in profits, in cls. (b) and (c) of sub-S. (1); secondly, it
has a proviso which says inter alia that nothing in subs.
(1) shall prohibit the payment of bonus in
any year on a uniform basis to all salaried employees I etc., or such bonus
which in the opinion of the Central Government is reasonable having regard to
the circumstances of the case.
This merely shows that it is for the
legislature to decide how to adjust the claim of employees with the safety and
security of the business in which the employees are in employment.
The learned Attorney-General has relied on a
number of decisions in support of his contention that bonus comes within the
expression 'takes the form of a share in profits'. In re Young, Ex Parte Jones
(1) it was held (1) [1896]2Q.B.484.
229 that a contract that a person shall
receive a fixed sum " out of the profits" of a business was
equivalent to a contract that he shall receive "a share of the
profits" within the meaning of sub-s. 3(d) of s. 2 of the Partnership Act,
1890. A similar question arose in Admiral Fishing Company v. Robinson (1) in
connection with s. 7, sub-s. 2, of the Workmen's Compensation Act, 1906 which
said: " This Act shall not apply to such members of the crew as are
remunerated by shares in the profits or gross earnings of the working of such
vessel." The claimant who was the engineer of a fishing smack was entitled
to one share of the net profits of the working of the vessel on the particular
voyage. The question was-was he remunerated by shares in the profits ? The
answer given was that he clearly was so remunerated. In Costello v. Owners of
Ship Pigeon (2) the claimant was employed as a boatswain on a steam fishing
trawler and was remunerated by wages, maintenance, and poundage dependent on
the profits of the fishing expedition.
The House of Lords decided by a majority that
the claimant was remunerated by a share in profits within the meaning of s. 7,
sub s. 2, of the Workmen's Compensation Act, 1906.
Shri N. C. Chatterjee has invited our
attention to Newstead v. Owners of Steam Trawler Labrador (3). That was a case
of a claim for compensation by the widow of a member of the crew of a fishing
vessel, which was lost with all hands.
The claim was resisted by the owners on the
ground that the deceased was remunerated by a share in the profits or gross
earnings of the vessel within s. 7, sub-s. 2 of the Workmen's Compensation Act,
1.906, and therefore that the Act did not apply to him. He was employed as
chief engineer on board a steam trawler at a fixed weekly wage of pound 2.
5s. It was the custom of the owners when the
gross earnings of the boat exceeded pound 100 for any one trip (each trip being
usually of about a week's duration) to allow a sum of pound 2 by way of bonus,
of which pound, I went to the captain and 2s. 6d. to each of the remaining
eight members of the crew. If the gross earnings of the (1) [1910] 1 K.B. 540. (2)
[1913] A.C. 407.
(3) [1916] 1 K. B. 166.
230 boat exceeded pound 125 the bonus was
proportionately increased and so on, but it was not further increased if the
gross earnings realised more than pound, 175. The decision proceeded on the
footing that the bonus in that case was not a share in profits but an
additional sum for wages determined by the amount of the gross earnings. Lord
Cozens Hardy, M. R., expounded the ratio of the decision in the following words
:" The question is whether, having regard to the circumstances, that can
be said in the present case. It seems that by the custom of this firm and by
the understanding and arrangement between the parties, if the vessel made
pound, 100 the skipper was entitled to pound 1, and in that particular case
each member of the crew was entitled to half a crown. If the vessel made more
the skipper and crew were entitled to larger sums. Now what was the effect .of
that? The bonus was not, as it seems to me any part of the profits, nor was it
a share in the gross earnings of the vessel. There was an obligation on the
part of the owners of the trawler to pay the half a crown (to take that as one
instance) in a certain event, which event was to be determined by the gross
earnings of the vessel. I see no ground for holding that it was in any sense of
the word a share of the gross earnings of the working of the vessel any more
than the actual wages which were payable to the seamen could be treated as
being a share of the gross earnings of the vessel, although the bonus as well
as the wages would figure in the ship's accounts as against the receipts on the
other side." It seems clear to us that the ratio of the decision does not
apply here. The bonus we are dealing with here is not additional wage
determined by the amount of profits; it is really part of the available surplus
of profits distributed to labour for its contribution to the earnings. It does
not arise out of any contract to pay, though the claim is recognised as one
based on social justice.
Shri Phadke has relied on the decision In re
The Spanish Prospecting Company Limited That (1) [1911] 1 Ch. 92.
231 decision proceeded on the meaning of the
word 'profits', of which a classic definition was given by Fletcher MOUITON, L.
J. In view of the decisions of this Court
referred to earlier, it is now beyond dispute that bonus in the industrial
Sense comes out of profits. If it does, we do not see how it can be held that
it is not a share in profits. Shri Phadke suggested that the concept of a share
in profits pre-supposes the idea of either a definite amount or a definite
proportion determined in advance. This submission we have dealt with at an
earlier stage and no useful purpose will be served by repeating what we have
said already.
We must now notice two other arguments
advanced on behalf of the respondent workmen. These arguments are based on the
amendments made in 1956. Section 10 as amended by the Banking Companies
(Amendment) Act, 1956 (XCV of 1956) reads, in so far as it is relevent for our
purposeS. 10. No Banking Company (a)shall employ or be managed by a managing
agent ; or (b) shall employ or continue the employment of any person (i) who
is, or at any time has been, adjudicated insolvent or has suspended payment or
has compounded with his creditors, or who is, or has been, convicted by a
criminal Court of an offence Involving (ii)whose remuneration or part of whose
remuneration takes the form of commission or of a share in the profits of the
company:
Provided that nothing contained in this
clause shall apply to the payment of any bonus by any banking company in
pursuance of a settlement or award arrived at or made under any law relating to
industrial disputes or in accordance with any scheme framed by such banking
company or in accordance with the usual practice prevailing in banking business
; or (iii)whose remuneration is, in the opinion of the Reserve Bank, excessive;
or ( c) ........................................................
232 Explanation.For the purpose of sub-clause
(iii) of clause (b), the, expression "remuneration", in relation to a
person employed or continued in employment, shall include salary, fees and
perquisites but shall not include any allowances or other amounts paid to him
for the purpose of reimbursing him in respect of the expenses actually incurred
by him in the performance of his duties.
(2)................................
(3)If any question arises in any particular
case wither the remuneration is excessive within the meaning of sub clause
(iii) of clause (b) of subsection (1), the decision of the Reserve Bank thereon
shall be final for all purposes." It will be noticed that the amended
section has a proviso which makes it clear that nothing in the relevent clause
in subs-s. (1) shall apply to the payment of any bonus by any banking company
in pursuance of a settlement or award arrived at or made under any law relating
to industrial disputes or in accordance with any scheme framed by such banking
company or in accordance with the usual practice prevailing in banking business.
It is clear that the amended section does not stand in the way of the grant of
industrial bonus. It was, however, not in force at the time relevent in these
appeals, and there is nothing in the Banking' Companies (Amendment) Act, 1956,
which would make it retrospective in operation. Shri N. C. Chatterjee has,
however, contended that the amending Act is declaratory of the law as it always
was, and Shri Phadke has contended that the amending Act is parliamentary
exposition of the true meaning of s. 10 of the Banking Act. We are unable to
accept any of these two contentions. The amending Act states in its long title
that it is an Act to amend the Banking Companies Act, 1949. Section 2 states:
"For section 10 of the Banking Companies Act, 1949, the following section
shall be substituted." There is nothing in the amending Act to indicate
that it was enacted to remove any doubt, explain any former statute, or correct
any omission or error, What is a declaratory Act The 233 following observations
in Craies on Statute Law, Fifth.
edition, pp. 56-57 are apposite:
" For modern purposes a declaratory Act
may be defined as an Act to remove doubts existing as to the common law, or the
meaning or effect of any statute. Such Acts are usually held to be
retrospective. The usual reason for passing a declaratory Act is to set aside
what Parliament deems to have been a judicial error, whether in the statement
of the common law or in the interpretation of statutes. Usually, if not
invariably, such an Act contains a preamble, and also the word
"declared" as well as the word 'enacted'.
A remedial Act, on the contrary, is not
necessarily retrospective; it may be either enlarging or restraining and it
takes effect prospectively, unless it has retrospective affect by express terms
or necessary intendment. We are of the view that the amending Act of 1956 is
not a declaratory Act, and except in the small matter of the expression 'shall
continue to employ' in sub-s. (1), it does not purport to explain any former
law or declare what the law has always been. It is an ordinary remedial piece
of legislation which came into effect from January 14, 1957. For the period
relating to the appeals before us, the amended section was not in force.
This brings us to ail end of the two
questions, (1) and (2), which directly fall for decision in these seven
appeals.
Contrary to the findings of the Labour
Appellate Tribunal, we have come to the conclusion that (1) the scope of item 5
of sch. II of the relevant notification is not what the Labour Appellate
Tribunal thought it to be and the reference of 1952 is not pending for
determining the quantum of bonus for the relevant years in respect of
particular banks and (2) in any event, s. 10 of the Banking Act, prior to the
amendment of 1956, prohibited the grant of industrial bonus to bank employees
inasmuch as such bonus is remuneration which takes the form of a share in the
profits of the banking company.
We do not think that the other two questions,
(3) and (4), require any decision at this stage. It is to be remembered that we
are exercising our appellate 234 jurisdiction in these seven appeals and not
our advisory jurisdiction. These seven appeals stand completely disposed of on
the findings which we have given on the two questions already discussed. On our
findings the dispute as to bonus referred to the Industrial Tribunal in 1952
has come to an end. The reference is no longer pending and in the view which we
have expressed as respects the interpretation of unamended section 10 of the
Banking Act no claim for bonus can be adjudicated on for the past relevant
years. It is, therefore, not necessary for us to decide hypothetical questions
which may arise in any future reference that may be made under the amended
section. In the exercise of its appellate powers this Court does not give
speculative opinions on hypothetical questions. It would be, contrary to
principle, inconvenient and inexpedient that opinion should be given on such questions.
If and when, they arise, they must arise in concrete cases and to use the words
of the Earl of Halsbury, L. C., in Attorney General of Ontario v. Hamilton
Street Railway (1):" It would be extremely unwise for any judicial
Tribunal to attempt beforehand to exhaust all possible cases and facts which
might occur to qualify, cut down, and override the operation of the particular
words when the concrete case is not before it." It is also to be
remembered that no evidence was allowed to be given either by the banks or the
bank employees as to the claims for bonus for particular years in respect of
particular banks. The dispute was treated, rightly in our opinion, as a dispute
relating to the general question of bonus. That general question is now disposed
of on the findings which we have already given. We are aware that if and when a
future reference as to an industrial dispute relating to bonus is made by the
appropriate Government and the amended section falls for consideration,
questions (3) and (4) may fall for decision. It would be time enough to decide
those questions when they actually arise in concrete cases and we consider that
it is not only unwise but inexpedient that we should forestall questions which
may arise in future cases and decide (1) [1903] A.C.524, 529.
235 them more or less in vacuo and in the
absence of necessary materials for the decision of those questions. These are
our reasons for holding that questions (3) and (4) should not now be decided.
It is necessary to state, however, that any observations which the Tribunals
below may have made with regard to questions (3) and (4) would be in the nature
of obiter dicta and it would be open to both parties to canvass those questions
if and when they arise in any concrete case in future. Therefore, we have not
considered it necessary to state in detail the contentions -raised before us on
behalf of the parties concerned with regard to questions (3) and (4).
A few words regarding Civil Appeal No. 62 of
1957 before we conclude. Besides the question of bonus two other questions were
raised in this appeal: (1) whether the Labour Appellate Tribunal had
jurisdiction to order cancellation and refund of cash deposits and (2) whether
the Tribunals below were wrong in holding that the taking of cash deposits
etc., should be restricted to workmen of three categories only.
When it was pointed out that the cash
deposits had already been refunded in accordance with the decision of the
Labour Appellate Tribunal the learned Attorney-General who appeared for the
appellant in Civil Appeal No. 62 of 1957 (The Punjab National Bank, Limited)
did not press those points.
Therefore, in Civil Appeal No. 62 of 1957
also the only surviving question is the question of bonus on which we have
already given our decision.
Shri Sadhan Chandra Gupta appeared on behalf
of the respondents in Civil Appeal No. 62 of 1957 and made his submissions on
the question of bonus. He has taken a stand on s. 2 of the Banking Act and has
contended that even if bonus is remuneration which takes the form of a share in
profits, s. 2 saves the power of industrial tribunals to award such bonus under
the Industrial Disputes Act, 1947, and such award, if made, will impose an obligation
on banks to pay the bonus awarded and would not make them liable to penalty
under s. 46 of the Banking Act. We have dealt with this argument at an earlier
stage and have pointed out that s. 2 is a saving provision with regard 236 to
any other law for the time -being in force, provided there is no express
provision to the contrary in the Banking Act. If, as we hold, un-amended s. 10.
of the Banking Act expressly prohibits the employment of any person by a bank
whose remuneration takes the form of a share in the profits of the company,
then s. 2 of the Banking Act is of no help and cannot permit something which is
expressly prohibited by s. 10.
For the reasons given above, we allow these
seven appeals to the extent already indicated, namely, (1) the reference of
1952 is not now pending for determining the question of bonus for the relevant
years in respect of particular banks and (2) section 10 of the Banking Act
prior to the amendment of 1956 prohibits the grant of industrial bonus to bank
employees when such bonus is remuneration which takes the form of a share in
the profits of the banking company. In the circumstances of these cases and in
view of the long drawn out nature of the dispute, we make no direction as to
costs.
Appeals allowed in part.
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