The employees are entitled to minimum bonus under Section 10 of the Payment of Bonus Act, 1965, even if the establishment incurred loss during the relevant years.

JUDGMENT :

G.K. Misra, C.J. - The petitioner is an establishment in the private sector engaged in the manufacture of glass tumblers, jars, battles, etc., at Barang. The workmen of the petitioner's establishment, represented through the Barang Shramik Sangh, a trade union registered under the Indian Trade Union Act, are opposite party No. 2. They raised an industrial dispute claiming profit-sharing bonus for the years 1965-66, 1966-67, 1967-68 and 1968-69. The said dispute not being settled between the parties was ultimately referred to the Industrial Tribunal (opposite party No. 1) by the Government of Orissa (opposite party No. 3) on 4-1-70. The dispute referred to the Tribunal for adjudication was in the following terms:

Whether the employees of M/s. Shree Durga Glass Works, Barang, Cuttack, are entitled to profit-sharing bonus in accordance with the provisions of the Payment of Bonus Act, 1965 for the years 1965-66, 1966-67, 1967-68, and 1968-69; if so, what should be the quantum?

The Industrial Tribunal after taking evidence and hearing the parties gave his award (Annexure 1) on 8-6-71. The operative portion of the award runs thus:

Hence, I find that the employees of M/s. Shree Durga Glass Works, Barang, Cuttack are entitled to the minimum bonus of 4% of the salary or wage earned by the employees or Rs. 40, whichever is higher in accordance with the provisions of Section 10 of the Payment of Bonus Act, 1965 for the years 1965-66, 1966-67, 1967-68 and 1968-69.

After discussing the evidence given by the parties the Tribunal came to a positive conclusion that the management incurred loss during the years under reference. Despite such a finding the Tribunal, however, held that the employees are still entitled to the benefit of Section 10 of the Payment of Bonus Act, 1965 (hereinafter to be referred to as the Act). Aggrieved by the aforesaid award, the petitioner has filed this writ application under Articles 226 and 227 of the Constitution for issue of a writ of certiorari to quash the award.

2. In support of the petition Mr. Nanda pressed two contentions:

(i) As the petitioner incurred loss during the relevant years, opposite party No. 2 was not entitled to any bonus u/s 10 of the Act.

(ii) According to the terms of reference the Tribunal was to answer if profit-sharing bonus was payable to the employees under the Act. The Tribunal went beyond the scope of reference to find out if the employees were entitled to claim bonus even in case of loss which cannot be termed as profit-sharing bonus. Both the contentions require careful examination.

3. Section 10 of the Act, so far as relevant, runs thus:

10. Payment of minimum bonus,-Subject to the provisions of Sections 8 and 13, every employer shall be bound to pay to every employee in an accounting year a minimum bonus which shall be four per cent of the salary or wages earned by the employee during the accounting year or forty rupees, whichever is higher, whether there are profits in the accounting year or not:

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Mr. Nanda contends that the expression "whether there are profits in the accounting year or not" conveys the meaning that minimum bonus is payable if the establishment either earns profits or the budget is a balanced one. It would not pay any bonus if there is loss. In support of his contention he places reliance on a single Judge decision of the Allahabad High Court reported in Kumaon Motor Owners'1 Union Ltd., Kathgodam v. State of Uttar Pradesh and Ors. 1969-1 L.L.J. 809, The decision supports his contention. I am, however, unable to accept it as laying down good law.

4. Three situations emerge in an establishment in relation to profit and loss. There may be positive profit, neither profit nor loss, and loss. Even in a case of balanced budget where there is no profit or loss, if bonus is ultimately paid it would result in loss to the establishment. The expression applies even to a case where there is less. On the plain language of the section, therefore, bonus is payable unde