Dishergarh Power Supply Company Ltd.,
Calcutta & ANR Vs. Workmen of Dishergarh Supply Co. Ltd. & Ors [1986] INSC
128 (15 July 1986)
ERADI, V. BALAKRISHNA (J) ERADI, V.
BALAKRISHNA (J) KHALID, V. (J)
CITATION: 1986 AIR 1486 1986 SCR (3) 184 1986
SCC (3) 450 JT 1986 207 1986 SCALE (2)23
ACT:
Payment of Bonus Act, ,1965, sections 5, ,10
and 34(3)- Bonus- Payment of-Obligation of employer to pay higher bonus than
the minimum prescribed by the Act-When arises- Settlement before Conciliation
officer-Effect of-Power of Industrial Court to impose new obligations on
parties before it-Limitations-What are.
HEADNOTE:
A dispute regarding bonus payable to the
workmen- respondents of the two companies-appellants for the year 1971-72 was
referred to conciliation under section 12(1) of the Industrial Disputes Act,
1947. The workmen contended before the Conciliation officer that they were
entitled to bonus equivalent to three months' basic wages as on 31st March,
1972 as customary bonus or in any event as bonus payable under the provisions
of the Act. The appellant- companies, on the other hand, argued that the
workmen were entitled to only minimum bonus as provided under the Act.
The said dispute was ultimately settled
before the Conciliation officer on the terms: (a) that each eligible work man
will be paid an amount equal to three months' basic wages as on 31.3.1970; and
(b) that the demand of the Union for bonus this year will be referred to a Tribunal
for adjudication. Accordingly, the Government referred the dispute for
adjudication to the ninth Industrial Tribunal of West Bengal.
After a detailed discussion of the evidence
produced before the Tribunal, it found (i) that the workmen had failed to make
out the claim of customary bonus or that they were entitled to maximum bonus of
20 per cent as provided under the Act; and (ii) that there was no available
surplus during the year in question and that only the minimum bonus was payable
under the provisions of the Act. However, after having recorded the aforesaid
findings, it proceeded to hold that it was legally open to it to substitute for
the agreement entered into between the 185 parties before the Conciliation
officer a new contract and pass an award on that basis, if such a step would be
conducive to industrial peace. On this basis the Tribunal, held that there
would not be material alteration in the financial liability of the companies in
case the agreement was modified by substituting for the words "that the
workmen will be paid the amount equal to three months' basic wages as on
31.3.1970" by the words "an amount equal to basic wages as on
31.3.1372" and accordingly it passed an award in those terms.
In appeal to the Supreme Court, the appellants-
companies challenged the legality of this award.
Allowing the appeal, ^
HELD: 1. The impugned award passed by the
Ninth Industrial Tribunal is not legally sustainable and has to be set aside.
The rights of the workmen for payment of bonus for the year in question will be
governed by the terms of the agreement entered into before the Conciliation
officer on October 9, 1972. [190F]
2. The rights and liabilities of the parties
regarding profit bonus are governed by the provisions of the payment of Bonus Act,
1965 which are exhaustive on the subject and the adjudication had to be
conducted by the Tribunal strictly in accordance with those provisions.
[189C-D] In the instant case, the Tribunal has categorically found that there
was no "available surplus" in respect of the two companies for the
year in question on a computation made under section 5 of the Act. The
settlement entered into before the Conciliation officer constituted an
agreement under section 34(3) of the Act and but for the said agree- ment, the
liability of the appellants under the provisions of the Act would have been
only to pay minimum bonus under section 10 of the Act. [189E-F] Sanghi Jeevraj
Chewar Chand and Ors. v. Secretary Madras Chillies, Grains Kirana Merchants
Workers' Union and Anr., [ 1969] 1 SCR 366 and Mumbai Kamgar Sabha. Bombay v.
M/s Abdulbhai Faizullabhai & Ors., [
1976] 3 SCR 591 referred to.
It is certainly open to an Industrial Court
in an appropriate case to impose new obligations on the parties before it or
modify contracts in the interest of industrial peace or give awards which may
have the effect 186 of extending the agreement or making new one, but this
power is conditioned by the subject matter with which it is dealing and also by
the existing industrial law and it would not be open to it while dealing with a
particular matter before it to overlook the industrial law relating to that
matter as laid down by the legislature. " [190B-D] The New Maneck Chowk
Spinning and Weaving Company Ltd.
Ahmedabad and others v. The Textile Labour
Association, Ahmedabad, [1961] 3 SCR 1 relied upon.
In the instant case, in view of the finding
recorded by the Tribunal that the result of the working of the companies during
the concerned year was a loss and there was no available surplus, the Tribunal
could not have legally proceeded to make an award directing payment of bonus at
any rate higher than the minimum bonus specified hl section 10 of the Act.
Therefore, the impugned award made by the Tribunal is clearly inconsistent with
the provisions of the Payment of Bonus Act which contemplate the imposition of
an obligation for payment of only the minimum bonus where the employer has no
allocable surplus in the concerned accounting year. However, inasmuch as the
appellant- companies had entered into the settlement before the Conciliation
Officer agreeing to pay bonus at a rate higher than the minimum bonus, the said
settlement would constitute an agreement under section 34 of the Act and the
terms of the settlement will govern the liability for bonus for the year in
question. [190D-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
1935 (NL) of 1974.
From the Award dated 8.5.1974 of the Ninth
Industrial Tribunal of West Bengal, Durgapur in Case No. X-4 of 1973.
Dr. Shankar Gkosh and D.N. Gupta for the
Appellants.
S.K. Nandy for the Respondents.
The Judgment of the Court was delivered by
BALAKRISHNA ERADI, J. This appeal by Special Leave has been preferred against
the Award dated May 8, 1974 made by the Ninth Industrial Tribunal of West Bengal,
Durgapur in Case No. X-4 of 1973 on its file. The appellants are two companies
incorporated 187 under the Indian Companies Act, 1913 having their registered
office in Calcutta. Both the appellants are engaged in the business of
generation, transmission, distribution and sale of electricity in certain areas
of Bengal and Bihar under licences granted by the concerned Governments.
Appellant No.
1 has a power station at Dishergarh and
Appellant No. 2 has its power station at Sibpore. In connection with their
aforesaid business the two appellants were having at the relevant time 400 and
250 workmen respectively employed under them.
For the years 1965-66 to 1970-71 (inclusive)
bonus was paid to the workmen on the basis of agreements entered into each year
under Section 34(3) of the Payment of Bonus Act, 1965 (hereinafter referred to
as the 'Act'). Concerning the bonus payable for the year 1971-72, a dispute was
raised by the workmen of the two companies and it was referred to conciliation
under Section 12(1) of the Industrial Disputes Act, 1947. The contention of the
workmen before the Conciliation officer was that they were entitled to bonus
equivalent to three months' basicwages as on March 31, 1972 as customary bonus
or in any event as bonus payable under the provisions of the Act. The
appellant- companies, on the other hand, contended that the workmen were
entitled to only minimum bonus as provided under the Act on a computation being
made in the manner laid in the said Act. The said dispute was ultimately
settled before the Conciliation officer inter alia on the following terms:
"(1) Subject to usual adjustments made
in 1969-70 and 1970-71, each eligible workmen will be paid an amount equal to
three months' basic wages as on 31.3.1970 .
(2) A sum of Rs.20,000 will be distributed
equally among all workmen who were on the rolls on 15.8.1972 and have worked
for at least 30 days. This will be 'Silver Jubilee Year' payment.
(3) The demand of the Union for bonus this
year will be referred to as Tribunal for adjudication.
(4) The payment should be made by 12.10.1971
Eligible workmen under terms(1) of this settlement (a) Permanent and
probationers. Rest of workmen will be paid bonus under the Payment of Bonus Act."
188 Although the said settlement was an agreement under section 34(3) of the
Act since under its very terms as incorporated in clause (3), the parties had
stipulated for a reference of the question for adjudication by a Tribunal. The
issue was accordingly referred by the Government of West Bengal for
adjudication to the Ninth Industrial Tribunal of West Bengal by an order of
reference dated January 15, 1973.
In the written statement filed by the workmen
before the Ninth Industrial Tribunal they claimed three months' basic wages as
on March 31, 1972 as customary bonus or in the alternative 20 per cent of the
salary or wages as bonus payable under the Act. The appellants reiterated
before the Tribunal the same contentions which they had put forward before the
Conciliation officer. The Tribunal allowed the parties to adduce evidence.
After a detailed discussion of the evidence produced before it, the Tribunal
recorded a clear finding that the workmen had failed to make out the claim of
customary bonus put forward by them and that the said plea had therefore to
fail. It was further found by the Tribunal that the plea put forward by the
appellant companies that there was no available surplus during the year in
question and that only the minimum bonus was payable under the provisions of
the Act had to be upheld. The Tribunal, therefore, held that the unions
representing the workmen had failed to make out the case put forward by the
workmen that the workmen were entitled to maximum bonus of 20 per cent as
provided under the Act. After having recorded the aforesaid findings, the
Tribunal, however, proceeded to accept the contention advanced before it by the
Counsel appearing for the workmen that it was legally open to it to substitute
for the agreement entered into between the parties before the Conciliation
officer a new contract and pass an award on that basis, if such a step would be
conducive to industrial peace. On this reasoning the Tribunal proceeded to
observe:
"In my opinion, there would not be
material alteration in the financial liability of the companies in case the
agreement was modified by substituting for the words that the workmen will be
paid the amount equal to three months' basic wages as on 31.3.1970 by the words
an amount equal to basic wages as on 31.3.1972.. I am, therefore, in agreement
with this contention of the learned lawyer for the unions that the Tribunal
should create a new contract and that is pass an award of three months' basic
wage as on 31.3.1972. This is in my opinion would be con- 189 ducive to
industrial peace and it would not violate any existing industrial law." Accordingly,
the Tribunal passed an award directing the appellant companies to pay to the
workmen the balance amount by way of bonus as per the rates calculated by the
Tribunal within a month from the date of publication of the award in the
Calcutta Gazette. It is the legality of this award that is under challenge in
this appeal.
It has to be remembered that the claim of the
workmen which the Tribunal was considering while making the aforesaid
observations was one for Profit bonus only since the claim for customary bonus
had been rejected by it. The rights and liabilities of the parties regarding
Profit bonus were governed by the provisions of the Act which are exhaustive on
the subject and the adjudication had to be conducted by the Tribunal strictly
in accordance with those provisions-See Sanghi Jeevraj Ghewar Chand and Ors. v.
Secretary, Madras Chillies, Grains Kirana Merchants Workers' Union and Anr.,
[1969] 1 S.C.R. 366 and Mumbai Kamgar Sabha, Bombay v. M/s Abdulbhai
Faizullabhai & Ors., [1976] 3 S.C.R.
591.
As already noticed, the Tribunal has
categorically found on a consideration of the evidence adduced before it that
there was no "available surplus" in respect of the two companies for
the year in question on a computation made under Section S of the Act. The
settlement entered into before the Conciliation officer constituted an
agreement under Section 34(3) of the Act and but for the said agreement the
liability of the appellants under the provisions of Act would have been only to
pay minimum bonus under Section 10 of the Act. Since the parties were at
variance on the question of existence of liability for payment of customary
bonus in the establishments as well as on the question regarding the existence
of available surplus, provision was made in clause (3) of the agreement for
reference under the industrial adjudication. If the Tribunal found that the
claim for payment of customary bonus was substantiated it could have passed an
order in favour of the workmen for payment of such bonus. That claim had been
negatived. The only question which remained for determination for the Tribunal
was whether the claim of the workmen for payment of 20 per cent of the salary
or wages as bonus payable under the Act was tenable or not. That depended
essentially on the question of existence of available surplus and its quantum,
if any surplus was available. In view of the finding recorded by the Tribunal
accepting 190 the plea put forward by the appellant companies that the result
of the working of the companies during the concerned year was a loss and there
was no available surplus, the Tribunal could not have legally proceeded to make
an award directing payment of bonus at any rate higher than the minimum bonus
specified in Section 10 of the Act. As pointed out by this Court in The New
Maneck Chowk Spinning and Weaving Company Ltd. Ahmedabad and others v. The
Textile Labour Association, Ahmedabad, [1961] 3 S.C.R. 1,-while "it is
certainly open to an industrial court in an appropriate case to impose new
obligations on the parties before it or modify contracts in the interest of
industrial peace or give awards which may have the effect of extending
Agreement or making new one, but this power is conditioned by the subject
matter with which it is dealing and also by the existing industrial law and it
would not be open to it while dealing with a particular matter before it to
overlook the industrial law relating to that matter as laid down by the
legislature." It is manifest that the impugned award made by the Tribunal
is clearly inconsistent with the provisions of the Payment of Bonus Act which
contemplate the imposition of an obligation for payment of only the minimum
bonus where the employer has no allocable surplus in the concerned accounting
year. However, in as much as the appellant companies had entered into the
settlement before the Conciliation officer agreeing to pay bonus at a rate
higher than the minimum bonus, the said settlement would constitute an agreement
under Section 34 of the Act and the terms of the settlement will govern the
liability for bonus for the year in question.
It follows from the foregoing discussion that
the impugned award passed by the Ninth Industrial Tribunal is not legally sustainable.
The appeal is accordingly allowed and the Award of the Industrial Tribunal will
stand set aside. The rights of the workmen for payment of bonus for the year in
question will be governed by the terms of the agreement enterd into before the
Conciliation officer on October 9. 1972.
In view of the condition imposed by the order
of this Court dated November 21, 1974 while granting Special Leave, the
appellants are directed to pay the costs of the respondents in this appeal.
M.L.A. Appeal allowed.
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