K.C. P. Employees' Association, Madras
Vs. Management of K. C. P. Ltd., Madras  INSC 14 (24 January 1978)
CITATION: 1978 AIR 474 1978 SCR (2) 608 1978
SCC (2) 42
R 1982 SC 78 (8)
Payment of Bonus Act (Act 21), 1965, s. 3,
proviso to--Applicability of.
Management-respondent is a public limited
company carrying on three business adventures viz., manufacture of sugar, of
cement and of heavy engineering machinery, at three different places. In
respect of the workers of, the engineering unit known as Central Workshops and
which was financially ill, the management demurred the payment of bonus under
the Act for the years 1964-65 and 1965-66 on the ground that the central
workshop was a separate undertaking to which the proviso to Section 3 applied
and consequently the claim for bonus on the basis of a single establishment
within the meaning of the main s. 3 was untenable. The Labour Tribunal,
however, upheld the claim of the workmen for both the years. When the said two
awards were challenged by a writ petition, a single Judge of Madras High Court
upheld the award for 1964-65. In further appeal by the management, the Division
Bench set aside both the awards for 1964-65 and 1965-66 and directed the
Tribunal to correct certain errors.
Dismissing the appeals by special leave with
directions for expediting and completing the lis within three months, the Court
HELD : 1. In Industrial law, interpreted and
applied in the perspective of Part IV of the Constitution, the benefit of
reasonable doubt on law and facts, if there be such doubt, must go to the
weaker section, labour. [610 B-C] 2.In the instant case : (a) Proviso to s. 3
Separate balance sheet and profit and loss
accounts have been prepared and maintained in the past and during the relevant
years of accounting also and (b) The High Court is right in directing the
Tribunal to re-enquire, rectify the balance sheets and profit and loss accounts
for the years in question taking due note of the requirements of the Act.
[609 G-H, 610 A] Alloy Steel Project v. The
Workmen,  3 SCR 620 (ratio inapplicable)
CIVIL APPELLATE JURISDICTION : Civil Appeal
Nos. 2142-2143 of 1970.
Appeal from the Judgment and Order dated
3-9-1970 of the Madras High Court in Writ Appeals Nos' 350/68 and 76 of 1969.
M. K. Ramamurthi, M. P. Dhar and Vineet Kumar
for the Appel- lant.
V. M. Tarkunde and Naunit Lal for Respondent
B. P. Singh for Respondent No. 2.
For Respondent No. 3 in CA 2142 and RR 3-6 in
C.A. 2143/70 ex-parte.
The Judgment of the Court was delivered by
KRISHNA IYER, J.-Affirming judgments need not speak elaborately, and so, in
these two appeals where we do not disagree with the High Court, only a brief
statement of reasons is called for.
The subject matter is a bonus dispute between
the management respondent and the workmen union revolving round the
applicability 609 of the proviso to Section 3 of the Payment of Bonus Act, 1965
(hereinafter referred to as the Act) for the years 1964-65 and 1965-66. A
thumbnail sketch of the facts :
The K. C. P. Limited, a public limited
company, carries on three business adventures, viz., 'manufacture of sugar, of
cement and of heavy engineering machinery. The concerned factories are in three
different places in South India and employ workmen on different terms in three
We are directly concerned with the
engineering unit known at the Central Workshops run at Tiruvottiyur, Madras.
When the Payment of Bonus Act, 1965 came into force the workmen of this unit,
which was financially faring ill unlike the other two sister units, demanded
bonus on the footing that the three different undertakings must be treated as
one composite establishment and on the basis of the overall profits, bonus must
be reckoned as provided in the Act. The respondent demurred on the ground that
the Central workshop was a separate undertaking to which the proviso to Section
3 applied and consequently the claim for bonus on the basis of a single
establishment was untenably over-ambitious.
Although the concerned unit was perhaps a
losing proposition for the relevant years, (we do not know for certain) the
Tribunal upheld the claim of the workmen for both the years, but the two awards
were challenged, by Writ Petition, in the High Court. The award relating to
1964-65 was upheld by a Single Judge of the High Court who took the view that
since all the three units, though divergent and located in different places,
were owned by the same company and, therefore, without more, were covered by
the main part of Section 3 and the proviso stood repelled. Two other questions,
which had engaged the attention of the Tribunal, were scantily dealt with, the
findings, if one may call them so, being adverse to the workmen. The management
duly carried an appeal before a Division Bench of that Court which also called
up and heard the Writ Petition against the award relating to the year 1965-66. Both
the awards were set aside, the holdings on the substantial points being adverse
to the workmen. However, certain follow-up inquiry had to be done by the
Tribunal to correct errors, for which limited purpose there was a direction by
the High Court.
The matter stood at that stage and the two
appeals in this Court are aimed against the decision of the Division Bench of
the High Court.
The first point that appealed to the learned
Single Judge, but failed before the Division Bench, has admittedly no merit in
the light of this Court's direct ruling on the point.
The second point urged by Shri M. K.
Ramamurthy that the Central Workshop has had no 'separate, viable balance-sheet
and profit and loss accounts in respect of' that undertaking, and that such is
the finding of fact by the Tribunal, does not appeal to us. Nor is there life
in the third limb of this argument that the respondent has failed to show that
the Workshop has not been treated as part of the common establishment for the
purpose of computation of bonus. We agree with the appellate judgment that the
proviso is attracted. Separate balance sheet and profit and loss accounts have
been prepared and maintained in the past and during the relevant years of
accounting also, although 610 there is much force in the contention that they
have not been' properly maintained. Some items which may help enhance the bonus
have, perhaps, been omitted and the High Court is right in directing the
Tribunal to re-enquire, rectify the balance-sheets and profit and loss accounts
for the years in question taking due note of the requirements of the Act as
mentioned in the judgment of the Division Bench vis-a-vis Central Workshop. We
are in respectful agreement with the decision in Alloy Steel Project v. The
Workmen(1) but do not regard the ratio of that case as applicable to the
present case on the facts.
In Industrial Law, interpreted and applied in
the perspective of Part IV of the Constitution, the benefit of reasonable doubt
on law and facts, if there be such doubt, must go to the weaker section,
labour. The Tribunal will dispose of the case making this compassionate
approach but without over-stepping the proved facts, correct the balance-
sheets and profit and loss accounts of the Central Workshop to the extent
justified by the Act and the evidence and finish the lis within three months of
receipt of this order.
The appeals are dismissed. No costs.
(1)  (3) S.C R. 629.