The main legal point established in the judgment is that the Payment of Bonus Act, 1965 does not apply to University employees based on the exemption under Section 32(v)(b), regardless of their profitability.

JUDGMENT :

R. SUBRAMANIAN, J.

1. The employees Union which failed in its attempt to garner the benefits of the Payment of Bonus Act, 1965 to its Members, who work as Drivers in the Transport Department of the first respondent University is on Appeal.

2. The Union raised the Industrial Dispute under Section 2(k) of the Industrial Disputes Act, seeking an award to the effect that the Payment of Bonus Act, 1965, would apply to its members, who are employed as Drivers and Technicians in the Transport Section of the first respondent University. The dispute was referred to the Conciliation Officer and before the Conciliation Officer, the respondent University claimed that it is exempt from the purview of the said enactment in view of Section 32(v)(b) of the Payment of Bonus Act, 1965.

3. The contention of the Union was that since the respondent University is collecting huge fees from the students and is running it as a business making profit out of the operation, cannot claim exemption under Section 32(v)(b) of the Payment of Bonus Act, 1965. It is also contended that the Transport Department of the University will be an establishment by itself and if the operations result in profit then the workers of the Transport Department would be entitled to Bonus. The principle that bonus is a part of the profit is also invoked by the Union.

4. Reliance was also placed on the provisions of the Motor Transport Workers Act, 1961, which applies to a Transport undertaking drawing inspiration from the said enactment which confers certain benefits on workers employed in Motor Transport undertakings, the Union attempted to contend that the Payment of Bonus Act, 1965, would apply to them dehors the exemption granted under Section 32(v)(b) of the Payment of Bonus Act, 1965. Resort was also made to the provisions of the Employees State Insurance Act, 1948 to draw a parallel and to strengthen the claim.

5. The claim of the Union was resisted by the Management of the University contending that the University being an Educational Institution is exempt from the applicability of the Payment of Bonus Act. Once the Act exempts the operations of the respondent University from the purview of the Act external aid cannot be ushered to conclude that the Act would apply.

6. Since conciliation failed the claim was referred to the Industrial Tribunal. The Industrial Tribunal concluded that since the University is a profit making Institution and a deemed to be University the exemption granted under Section 32(v)(b) of the Payment of Bonus Act, will not apply and therefore, the workman would be entitled to Bonus. The Industrial Tribunal took note of the fact that the concept of University that prevailed in 1965 when the Act was enacted is no longer relevant and today with privatisation of education and the private Universities being allowed to make certain profits, the exemption cannot be invoked by them.

7. Aggrieved the Management challenged the award in WP No. 9215 of 2017. The Writ Court, however, held that in view of the decision of the Hon’ble Supreme Court in P.A. Inamdar and Others vs. State of Maharashtra and Others, (2005) 6 SCC 537, an University though an undertaking within the meaning of the Motor Transport Workers Act, 1961, cannot indulge in profiteering and therefore, the exemption granted under Section 32(v)(b) of the Payment of Bonus Act, 1965, would apply. Rejecting the contention of the learned counsel for the Union to the effect that since an University is allowed to make a certain profits it would not fall within the exclusion or exemption, the Writ Court concluded that merely because the University makes certain amount of profit it would not be dis-entitled to the exemption automatically. The Writ Court noted the difference between an exemption provision and an applicability provision to conclude that in view of Section 32(v)(b) of the Payment of Bonus Act, the conclusion of the Industrial Tribunal that the University will not be entitled to the exemptio