Judgment

Bhargava, J.-The appellant, Messrs. Alloy Steel Project, is an undertaking owned, controlled and managed by a Government Company, viz., Messrs. Hindustan Steel Ltd. Alloy Steel Project was started in the year 1961 and it went into production in the year 1964-65. No profit was earned at least right up to the year 1967-68. The workmen, however, claimed bonus at the minimum rate prescribed under the Payment of Bonus Act No. 21 of 1965 (hereinafter referred to as "the Act") in respect of the year 1965-66 on the plea that this Alloy Steel Project was a part of the Hindustan Steel Ltd. and could not be treated as a new establishment for purposes of Section 16 of the Act. Hindustan Steel Ltd. was itself an establishment which had been in existence for a long period and had been even earning profits, so that exemption could not be granted to this Company in respect of payment of bonus under Section 16 of the Act, This claim of the workmen was resisted by the Company on the plea that Alloy Steel Project was a separate establishment in respect of which separate balance-sheets and profit and loss accounts were maintained, so that no bonus was payable until either this Project itself earned profits, or from the sixth accounting year following the year 1964-65 when this Project went into production. The dispute between the workmen and the Company could not be resolved amicably and, consequently, a reference was made under the Industrial Disputes Act, 1947 which came up before the Ninth Industrial Tribunal, West Bengal. The Tribunal held that Alloy Steel Project could not be treated as a separate establishment because, under the Act, a Company is itself an establishment, so that all units of a Company like Hindustan Steel Ltd. will constitute one establishment. Since this project had not been earning any profits, the Tribunal directed payment of bonus at the minimum rate of 4 per cent. of wages prescribed by the Act. Aggrieved by this award of the Tribunal, the Company has come up in this appeal to this Court by special leave, though the name of the appellant is shown as Alloy Steel Project, because it was under this name that the reference was dealt with by the Tribunal.

2. The main basis of the decision of the Tribunal is that "the word establishment has been used in this Act to indicate a Company as called in common parlance". It was on this view that the Tribunal further proceeded to consider whether this Alloy Steel Project could be held to be an establishment separate from Hindustan Steel Ltd., or it had to be treated as a part of the parent establishment, viz., Hindustan Steel Ltd. In this approach, it is clear that the Tribunal committed an obvious error, as it ignored the indications which are manifest from the language used in the Act. In Section 2, sub-sections (15) and (16), establishments have been divided into two classes and their meaning has been defined. In clause (16), "establishment in public sector" is defined as meaning an establishment owned, controlled or managed by-

(a) a Government company as defined in Section 617 of the Companies Act, 1956;

(b) a corporation in which not less than forty per cent. of its capital is held (whether singly or taken together) by-

(i) the Government; or

(ii) the Reserve Bank of India; or

(III) a corporation owned by the Government or the Reserve Bank of India.

In clause (15) of Section 2, "establishment in private sector" is defined to mean any establishment other than an establishment in public sector. Thus, between these two clauses, all establishments are covered. If an establishment is in public sector, it is covered by the definition in clause (16). If the establishment is not in public sector, it will be covered by the definition of "establishment in private sector" in clause (15). The significant words are those contained in clause (16) which show that an establishment in a public sector has to be owned, controlled or managed by a Government company, or by a corporation of th