The State Government has the power under Section 114(2) of the Bombay Industrial Relations Act, 1946, to direct that an award passed under Section 115A should be applied to employers who were not parties to the dispute, even if the employer has made no trading profits.

JUDGMENT :

M.C. CHAGLA, J.

1. This appeal raises a rather important question as to the powers of the Government to direct u/s 114(2) of the Bombay Industrial Relations Act, 1946, that an award passed under the provisions of Section 115A should be applied to certain employers who were not parties to the dispute. There was an industrial dispute between the Rashtriya Mill Mazdoor Sangh and the Textile Mills on the question of bonus, and a reference was made to the Industrial Court u/s 73A. Petitioner No. 1 company, which was also a party to that dispute, represented to the Tribunal that its case should be separately considered from the case of other mills inasmuch as it has been making losses from 1950 onwards, and as far as it was concerned no question of paying bonus to the employees could arise. The reference, therefore, was separated with regard to petitioner No. 1 company. While the reference was pending, the Rashtriya Mill Mazdoor Sangh and the Mill Owners Association entered into an agreement and they fixed the basis of the bonus that was to be paid to the employees, and in this award there was a reference to those mills which had been making loss and the provision was that with a view to creating better relations between the workers and the industry and for continuing peace in the industry but without creating a precedent, the mills which fell in that category should pay to their employees a minimum bonus equivalent to 4.8 per cent, of the basic wages earned by them during the year. Petitioner No. 1 company was not a party to this agreement, and an award was passed in terms of the agreement u/s 115A and it became binding upon those mills which had subscribed to that agreement.

2. The Government subsequently proceeded u/s 114(2) of the Act and gave notice to petitioner No. 1 company, and after hearing the company directed that the award shall be binding upon the various mill companies among which was petitioner No. 1 company. This was done by a Notification of July 81, 1936. The result of this Notification was that petitioner No. 1 company was as much bound by the award as the mill companies which were parties to the agreement, and further the important consequence that flowed from this notification issued by the Government was that petitioner No. 1 company became liable to pay bonus to its employees in terms of the agreement, to which a reference has just been made. This Notification was challenged by petitioner No. 1 company before Mr. Justice Tendolkar on various grounds. The learned Judge dismissed the petition and the petitioners have now come in appeal before us.

3. What is strenuously urged by Mr. Bhatt is that the Supreme Court in a recent decision in Muir Mills Co. Ltd. vs. Suti Mills Mazdoor Union, Kanpur, AIR 1955 SC 170 : (1955) 1 LLJ 1 : (1955) 1 SCR 991 has held to the following effect (p. 999):

It is therefore clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits. If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus. Bonus is not a deferred wage. Because if it were so it would necessarily rank for precedence before dividends. The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees. If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year.

Taking that view, the Supreme Court set aside the decision of the Industrial Tribunal which had awarded bonus when the employer had made no trading profits. Mr. Bhatt says that here we have a case where admittedly petitioner No. 1 company has made no trading profits, that there is no su