Sanghvi Jeevraj Ghewar Chand: Indian Telephone Industries LTD. vs Secretary, Madras Chillies, Grains And Kirana Merchants Workers Union: Workmen

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1968 Supreme(SC) 168

SUPREME COURT OF INDIA
M/s. Sanghvi Jeevraj Ghewar Chand and others, Appellants v. Secretary, Madras Chillies, Grains and Kirana Merchants Workers Union and another, Respondents;
Indian Telephone Industries Ltd., Appellant
Versus
The Workmen, Respondents.
Civil Appeals Nos. 1630 and 1721 of 1967,
D/- 16-7-1968.
(1) In Civil Appeal No. 1630 of 1967
(2) In Civil Appeal No. 1721 of 1967.
(A) Payment of Bonus Act (21 of 1965), Pre. - Interpretation - Reference to history of bonus and the background of the Act.
Advocates appeared
M/s. E. C. Agrawala, Champat Rai and Miss Santosh Gupta, Advocates, for Appellants; M/s. M. K. Ramamurthy and M. V. Goswami, Advocates, for Respondent No. 1.
In C. A. No. 1721 of 1967.
Mr. C. K. Daphtary, Attorney-General for India, (M/s. G. B. Pal and S. K. Dholakia, Advocates and Mr. O. C. Mathur, Advocate of M/s. J. B. Dadachanji and Co. with him), 533 for Appellants; Mr. H. R. Gokhale, Senior Advocate (Mr. M. K. Ramamurthi, Mrs. Shyamala Pappu and Mr. Vineet Kumar, Advocates, with him), for Respondents.

Advocates:
C.K.DAFTARY, CHAMPAT RAI, E.C.AGARWAL, G.B.PAI, H.R.GOKHALE, M.K.RAMAMURTHY, M.V.GOSWAMY, O.G.MATHUR, S.K.DHOLAKIA, SANTOSH GUPTA, SHYAMALA PAPPU, VINIT KUMAR

Headnote:
Payment of Bonus Act, 1965 - Section 20 , 1 (3) , 32 (x), 1 (3), 2 (6), 2 (4), 5, 2 (15), (16), 22, 39 and 32 (vii) - C. P. and Berar Industrial Disputes Act, 1947 - Section 2 (14) – Constitution of India, 1950 - Article 286, 252 (1), 30 (1) and 30 - Prize Competitions Act, 1955 - Section 2 (d) - Bombay Lotteries and Prize Competitions Control and Tax Act, 1948 - Banking Companies Act, 1949 - Section 10 (1) (b) - Aligarh Muslim University (Amendment) Act,1951 - Aligrah Muslim University Act, 1920 - Industrial Disputes Act, 1947 - Sections 7, 7-A and 7-B - Companies Act, 1956 - Section 617 - Agricultural Income Tax Act, 1962 - Coal Mines Provident Fund and Bonus Schemes Act, 1948 - Insurance Act, 1936 - Insurance (Amendment) Act, 1950 - Merchant Shipping Act, 1958 - Section 159 (9) - Company - Workmen - Bonus - Whether in view of non-applicability of Act to establishments, not being factories and which employ less than 20 persons - Whether employees had established any enforceable claim, customary, legal or equitable - Whether there should be lower limits irrespective of loss in particular establishment and upper limits for distribution in one year - Whether they were workmen as defined in Industrial Disputes Act, 1947 - Whether establishment in question has during a particular accounting year made profit or not - Whether in view of Section 20 an establishment in public sector is liable to pay bonus – Held, Formula it has evolved and statutory liability it provides in Act shall apply only to certain establishment and not to all - Since there was no such statutory obligation under any previous Act, there would not be any question of Parliament having to delete either such obligation or right - In such circumstances, since Parliament is providing for such a right and obligation for first time there would be no question also of its having to insert in Act an express provision of exclusion - It appears to Court at exemption is enacted with a deliberate object, viz., not to subject such establishments to burden of bonus which are conducted without any profit motive and are run for public benefit - Exemption in Sec. 32 (x) is, however, a limited one, for, under Section 20 if a public sector establishment were in any accounting year to sell goods produced or manufactured by it in competition with an establishment in private sector and income from such sale is not less than 20 per cent of its gross income, it would be liable to pay bonus under Act - Once again it is clear that in exempting public sector establishments, Parliament had a definite policy in mind – Court is also not impressed by contention that fact that Section 39 provides that provisions of this Act are in addition to and not in derogation of Industrial Disputes Act or any other corresponding law shows that Parliament did not wish to do away with right to payment of bonus altogether to those who cannot either by reason of exclusion or exemption from Act claim bonus under Act - Considering history of legislation, background and circumstances in which Act was enacted, object of Act and its scheme, it is not possible to accept construction suggested on behalf of respondents that Act is not an exhaustive Act dealing comprehensively with subject-matter of bonus in all its aspects or that Parliament still left it open to those to whom Act does not apply by reason of its provisions either, as to exclusion or exemption to raise a dispute with regard to bonus through industrial adjudication under Industrial Disputes Act or other corresponding law – Court is, therefore, of view that construction given to Act by Tribunals was not correct and orders passed by them have to be set aside - Appeals allowed.

Judgment

SHELAT, J.: In Civil Appeal No. 1630 of 1967, workmen engaged by certain chillies and kirana shops in Madras and who were members of the respondent Union made a demand on December 13, 1965 for bonus for the year 1964-65 equivalent to four months wages. Conciliation proceedings having failed, the dispute was referred to the Industrial Tribunal, Madras. In Civil Appeal No. 1721 of 1967, the appellant company is admittedly an establishment in public sector to which Section 20 of the Payment of Bonus Act, 21 of 1965 (hereinafter referred to as the Act) does not apply. In both these cases, the Tribunals held that though the Act did not apply, in the first case by reason of Section 1 (3) and in the other by reason of Section 32 (x), the employees were entitled to claim bonus and awarded their claims in C. A. No. 1630 of 1967. These appeals by special leave challenge the correctness of the view taken by the Tribunals as to the scope and nature of the Act.

2. The question for decision in both the appeals is whether in view of the non-applicability of the Act to establishments, not being factories and which employ less than 20 persons therein as the appellants in appeal No. 1630 of 1967 are, and the exemption of employees in an establishment in public sector though employing more than 20 persons as the appellant company in appeal No. 1721 of 1967, is under Section 32 (x) of the Act, the employees in both these establishments could claim bonus dehors the Act. The question depends upon the true view of certain provisions and the scope of the Act. But before we take ourselves the burden of construing upon provisions, it is necessary to refer briefly to the history of the question of bonus, the background and the circumstances in which the Act was passed. This is permissible for the limited purpose of appreciating the mischief Parliament had in mind and the remedy which it wanted to provide for preventing that mischief and not for tire purpose of aiding us in construing the provisions of the Act.

2A. As early as 1584, in Hevdon s case, (1584) 76 ER 637 it was said that "for the sure and true interpretation of all statutes in general" four things are to be considered: (i) What was the common law before the making of the Act, (ii) What was the mischief and defect for which the common law did not provide, (iii) What remedy the Parliament hath resolved and appointed to cure the disease of the Commonwealth, and (iv) the true reason of the remedy. In Bengal Immunity Company Limited v. The State of Bihar, (1955) 2 SCR 603 this Court approved the rule in Hevdon s case, (1584) 76 ER 637 (supra) and in construing Article 286 of the Constitution observed at p. 633 (of SCR) as follows:-

"In order to properly interpret the provisions of that Article it is, therefore, necessary to consider how the matter stood immediately before the Constitution came into force, what the mischief was for which the old law did not provide and the remedy which has been provided by the Coustitution to cure that mischief."

In The Corporation of the City of Nagpur v. Its Employees, (1960) 2 SCR 942 the question was as to the meaning of the word "industry" in Section 2 (14) of the C. P. and Berar Industrial Disputes (Settlement) Act (23 of 1947). This Court said that "if the word were to be construed in its ordinary sense every calling, service, employment of an employee or any business, trade or calling of an employer would be an industry. But such a wide meaning appears to overreach the object for which the Act was passed. The Court, therefore, found it necessary to limit the scope of the said word having regard to the aim, scope and the object of the Act. Relying on the four tests laid down in Heydon s case, (1584) 76 ER 637 the Court considered the fundamental basis of the definition of industry, viz., relationship between employees and employers, the long title an the preamble of the Act showing the object of passing the Act, the historical background for passing it

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