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IN THE HIGH COURT OF ORISSA
R.N. Misra, B.K. Patra, JJ.
THE MANAGEMENT OF J.K. PAPER MILLS - APPELLANT
Versus
WORKMEN AND OTHERS - RESPONDENT
Decided On : 25-01-1973
PAYMENT OF BONUS ACT, 1965 - SECTION 34(3) - FORMULA FOR PAYMENT OF BONUS - VALIDITY OF SETTLEMENT - INTERPRETATION OF SECTION 34(3) - AGREEMENT FOR PAYMENT OF BONUS UNDER A FORMULA DIFFERENT FROM THAT UNDER THE ACT - VALIDITY OF SUCH AGREEMENT - APPLICABILITY OF OTHER PROVISIONS OF THE ACT TO SUCH AGREEMENT - MEANING OF "FORMULA" - SETTLEMENT PROVIDING FOR AD HOC RATES OF PAYMENT IN EXCESS OF THE MINIMUM PROVIDED UNDER SECTION 10 AND STIPULATING THAT ON THE BASIS OF THE ACTUAL BALANCE SHEETS AND PROFIT AND LOSS STATEMENTS, PAYMENTS WOULD BE MADE IN 1972 - HELD TO BE A "FORMULA" DIFFERENT FROM THAT UNDER THE ACT - SETTLEMENT VALID AND BINDING ON ALL WORKMEN.
Fact of the Case:
The J.K. Paper Mills and the J.K. Paper Mills Employees' Union reached a settlement in 1969 regarding payment of bonus for the years 1964 to 1971. The settlement provided for ad hoc rates of payment in excess of the minimum provided under Section 10 of the Payment of Bonus Act, 1965, and stipulated that on the basis of the actual balance sheets and profit and loss statements, payments would be made in 1972. In 1971, the Rayagada Kagaza-kala Sramik Sangha, a new union, submitted a charter of demands which included a claim for bonus for the years 1964 to 1970. The appropriate Government referred the dispute to the Tribunal, which held that the settlement in regard to payment of bonus for the years 1968 to 1971 was not valid and binding. The management challenged the Tribunal's finding by filing a writ petition in the High Court.
Finding of the Court:
The High Court held that the settlement was valid and binding on all workmen, including those who were members of the Sangha. The Court interpreted Section 34(3) of the Payment of Bonus Act, 1965, which allows parties to enter into agreements for payment of bonus under a formula different from that under the Act, to mean that such agreements are not subject to the other provisions of the Act, except for the minimum bonus provided under Section 10. The Court found that the settlement in question contained a "formula" for payment of bonus which was different from that under the Act, and that it was therefore valid and binding.
Issues: 1. Whether the settlement reached between the management and the union in 1969 regarding payment of bonus for the years 1964 to 1971 was valid and binding on all workmen, including those who were members of the Sangha. 2. Whether the Tribunal erred in holding that the settlement was not valid and binding.
Ratio Decidendi: 1. Section 34(3) of the Payment of Bonus Act, 1965, allows parties to enter into agreements for payment of bonus under a formula different from that under the Act, provided that such agreements do not deprive the employees of their right to receive the minimum bonus under Section 10. 2. The settlement in question contained a "formula" for payment of bonus which was different from that under the Act, and it was therefore valid and binding. 3. The Tribunal erred in holding that the settlement was not valid and binding.
Final Decision: The High Court quashed the Tribunal's finding on the preliminary issue and held that the dispute relating to payment of bonus was non est in view of the settlement. The Court allowed the writ petition and directed the Tribunal not to adjudicate the alleged dispute.
JUDGMENT :
R.N. Misra, J. - The management of the the J. K. Paper Mills is petitioner in this application under Articles 226 and 227 of the Constitution of India.
2. The company (J.K. Paper Mills) which is a concern of Messrs, Straw Products Limited commenced business at Jaykaypur near Rayagada in the district of Koraput in 1962. In 1964, the J. K. Paper Mills Employees' Union was registered under the Trade Unions Act and worked as sole representative union of workmen employed in the Mills. Dispute relating to bonus for the years 1964 and 1965 between the employer and the workmen was referred under the Industrial Disputes Act to the Tribunal and was registered as Industrial Dispute Case No. 20 of 1966. Similarly a dispute relating to bonus for the year 1966 was referred to the Tribunal in Industrial Dispute Case No. 24 of 1968. The J.K. Paper Mills had been declared as a public utility service as defined in Section 2(n) of the Industrial Disputes Act. Notice was given by the union on 26-8-1969 u/s 22(1) of the Industrial Disputes Act of an intended strike. A charter of demands was also furnished along with it. Payment of bonus was one of the items included in the said charter of demands.
3. On 12-9-1969, two settlements were reached between the management and the employees' union, one relating to several disputes and the other specifically relating to payment of bonus. It is the case of the petitioner that the union was interested In a long term settlement regarding payment of bonus for the convenience of workmen. Accordingly both the pending disputes of past years relating to bonus and claim upto 1971 formed the subject-matter of settlement.
4. The relevant portion of the settlement relating to bonus was as follows:
1. (d)(i)-For the years 1964 to 1967 (both years inclusive) the payment will be made at the rate of 4% (four per cent) of total wages/salaries (basic plus dearness allowance) earned for each year to the employees inclusive of seven days' basic wages/ salaries in respect of the accounting year 1964; seven days' basic wages/ salaries in respect of the accounting year 1965 ; fifteen days' basic wages/ salareis in respect of the accounting year 1966 and fifteen days' basic wages/salaries in respect of the accounting year 1967 already paid on 24th August, 1965, 22nd August, 1966 23rd September, 1967 and 22nd August, 1968, respectively...
(ii) The parties shall file joint petition of compromise before the Industrial Tribunal, Orissa, stating that the union and the workmen have withdrawn their claims for bonus for the years 1964, 1965, and 1966, since the dispute in relation to such claims has been settled in accordance with the present terms of settlement and praying the Tribunal that as the claim for bonus has been settled mutually for the years 1964, 1965, 1966, a compromise award in terms of this settlement or 'No Dispute Award be passed in respect of Issue No. 4 of Industrial Dispute Case No. 20 of 1966 and Issue No. 4 of Industrial Dispute Case No. 24 of 1968 pending before the said Tribunal.
(d-i)-It is further agreed between the parties that bonus for the accounting years 1968, 1969, 1970 and 1971 shall be paid by the management and accepted by the workmen in full and y final settlement of claim of bonus for the said years u/s 34(3) of the Payment of Bonus Act, 1965, as follows:
(1) For the accounting year 1968, 8% (eight per cent) of total wages/ salaries earned inclusive of 4% (four per cent) already paid.
(2) For the accounting year 1%9, 9% (nine per cent) of the total wages/ salaries earned.
(3) For the accounting year 1970, 10% (ten per cent) of total wages/salaries earned.
(4) For the accounting year 1971, 10% (ten per cent) of total wages/salaries earned.
The payment of further four per cent bonus for the year 1968 shall be made along with payment for the years 1964 to 1967 as per Clause l(c) of this settlement.
(d-iii)- The management will calculate the actual amount of bonus payable under the provisions of Sections 4
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