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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P.D. DINAKARAN
Ashok Leyland Limited, Ennore - Appellant
Versus
Industrial Tribunal, Madras and Another - Respondents
W.P. No. 7072/1993
Decided On : 09 July 1999
PAYMENT OF BONUS ACT, 1965 - SECTION 2(1), 2(13), 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 17, 18, 19, 22, 31-A, 34 - INDUSTRIAL DISPUTES ACT, 1947 - SECTION 10(1)(D), 18(1) - SETTLEMENT - AMENDMENT - APPLICABILITY - INTERPRETATION - BONUS FOR THE YEAR 1984 - ELIGIBILITY - CEILING LIMIT - QUANTUM - DISPUTE - REFERENCE FOR ADJUDICATION - AWARD - CHALLENGE - WRIT PETITION - HIGH COURT.
Fact of the Case:
The petitioner, a management, challenged the award of the Industrial Tribunal, which held that the amended provisions of the Payment of Bonus Act, 1965 (Bonus Act) have created fresh right for the respondent employees' union in determining their eligibility to bonus, to reopen the bonus claim for the accounting year 1984 and thus overrides the settlement dated April 10, 1985.
Finding of the Court:
The High Court held that the amended provisions of the Bonus Act would prevail over and override the terms of the settlement dated April 10, 1985, but the respondent employees' union is not entitled for the maximum bonus of 20% of the salary or wage earned by the employees for the year 1984 as per the terms of the settlement dated April 10, 1985.
Issues: Whether the amended provisions of the Bonus Act have created any fresh right for the respondent employees' union, who have already entered into a settlement under Section 18(1) of the Industrial Disputes Act, 1947 (ID Act) on April 10, 1985, which had been accepted and acted upon by the petitioner-Management and the respondent employees' union, with regard to payment of bonus for the year 1984 notwithstanding the terms of the said settlement dated April 10, 1985 and, if so, to what extent?
Ratio Decidendi: 1. The settlement dated April 10, 1985, entered under Section 18(1) of the ID Act read with Section 22 of the Bonus Act and therefore has the effect of an award in settling the dispute relating to payment of bonus for the year 1984, without any conflict or any inconsistency with any of the provisions of the Bonus Act as on April 10, 1985, still in view of the legal fiction created by the deeming provisions in the amendment, the respondent employees' union are still entitled for the benefits of the amendment as the said amendment was deemed to be in force as on April 10, 1985 because the Bonus Act being a labour welfare legislation, the same has to be interpreted in favour of the beneficiaries thereunder, viz. labour force, which shall certainly prevail over the settlement dated April 10, 1985 entered under Section 18(1) of the ID Act, by applying the ratio laid down by the Apex Court in Narcotics Control Bureau v. Kishan Lal, (supra). 2. The provisions of the Bonus Act shall have the overriding effect on the terms of any award, agreement, settlement or contract of service that are inconsistent with the provisions of the Bonus Act. In the instant case, admittedly, the settlement dated April 10, 1985, entered u/S. 18(1) of the ID Act read with Section 22 of the Bonus Act was in strict compliance of Section 34 of the Bonus Act that was in force as on April 10, 1985. The said settlement, which was a package deal arrived at between the petitioner-Management and the respondent employees' union, got executed and acted upon by the parties to the settlement to attain the industrial peace and harmony on the basis of give and take approach, but not with reference to the provisions of Sections 4 to 7, 10 to 15 and 18 of the Bonus Act that are applicable for adjudicating the bonus dispute by the Tribunal.
Final Decision: The writ petition was partly allowed and the matter was remitted to the Industrial Tribunal to adjudicate the rate of bonus payable by the petitioner-Management to the respondent employees' union in the light of the amended provisions of Section 2(13) of Sec. 12 of the Bonus Act. The Tribunal was directed to take into consideration the bonus already paid to the employees in terms of the settlement dated April 10, 1985 and pass appropriate award within six months from the date of receipt of copy of the order.
The Order of the Court was as follows :
The petitioner seeks a writ of Certiorari, to call for the records relating to the award dated November 30, 1992 made in I.D. No. 13 of 1988 on the file of the first respondent-Industrial Tribunal, and to quash the same.
The above writ petition relates to the payment of bonus for the accounting year 1984 by the petitioner-Management to the 2nd respondent employees' Union, working under the petitioner-Management, as per the provisions of the Payment of Bonus Act, 1965 (hereinafter referred to as the "Bonus Act").
Section 2(1) of the Bonus Act defines the term "accounting year"; Section 2(13) defines the term "employee" with reference to ceiling on wages to claim bonus; Section 4 provides for computation of gross profit; Section 5 provides for computation of available surplus; Section 6 prescribes the sums deductible from gross profit and Section 7 provides for the calculation of direct tax payable by the employer.
Section 10 of the Bonus Act prescribes the payment of minimum bonus which shall be 8.33% of the salary or wages earned by the employee during the accounting year or one hundred rupees, whichever is higher; Section 11 prescribes the payment of maximum bonus, which shall be 20% of salary or wages; Section 12 provides for the calculation of bonus with respect to certain employees; Sec. 13 deals with the proportionate reduction in bonus in certain cases; Section 14 deals with the computation of number of working days; Section 15 deals with the set on and set off of allocable surplus; Section 17 deals with adjustment of customary or interim bonus payable under the Act; Section 18 deals with the deduction of certain amounts from bonus payable under the Act and Section 19 prescribes the time-limit for payment of bonus.As per Section 22 of the Bonus Act, where a dispute arises between an employer and his employees with respect to the bonus payable under the Act or with respect to the application of the Act to an establishment in public sector, then such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947 (hereinafter referred to as the I.D. Act), or of any corresponding law relating to investigation and settlement of the industrial dispute in force in a State and the provisions of that. Act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly.
Section 31-A of the Bonus Act provides for a special provision for the payment of bonus linked with production or productivity, which reads as follows :
"Notwithstanding anything contained in this Act, -
(i) where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of Bonus (Amendment) Act,
(ii) where the employees enter into an agreement or settlement with their employer after the commencement of the Act, -
for payment of an annual bonus I Banked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive bonus due to them under such agreement or settlement, as the case may be :
Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under Sec. 10 &hall be null and void insofar as it purports to deprive them of such right :
Provided further that such employees shall not be entitled to be paid such bonus in excess of twenty per cent of the salary or wage earned by them during the relevant accounting year.Section 34 of the Bonus Act deals with the effect of laws and agreements inconsistent with the Act. Section 34 reads as follows :"
Subject to the provisions of Sec. 31-A, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of, service.
"The First Schedule prescribes the metho
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