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TMI Blog1959 (5) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... known. The local Governments of those provinces referred these industrial disputes for adjudication: this resulted in some regional awards which came to be known in Bombay as the Divatia Award, in the United I Provinces as the B B. Singh Award and in Bengal as the Gupta, Chakravarty and Sen Awards. Notwithstanding these awards, the general unrest amongst Bank employees continued and there was a clamor for control of the banking industry by the Central Government. On April 30, 1949, was passed the Industrial Disputes (Banking and Insurance Companies) Ordinance (Ordinance VI of 1949) under the provisions of which all banking companies having branches or other establishments in more than one province came under the jurisdiction of the Central Government for the purposes of the Industrial Disputes Act, 1947 (XIV of 1947). By a notification dated June 13, 1949, the Central Government constituted an ad hoc Tribunal consisting of Shri K. C. Sen, a retired Judge of the Bombay High Court, as Chairman, with two other persons as members to adjudicate upon an industrial dispute between several banking companies and their workmen. On the same day, the industrial dispute was referred to the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matters specified in sch. 11, but shall presently refer to those items only with which we are concerned in these appeals. The Sastry Tribunal made its award which was published on April 20, 1953. This award came up for consideration of a Special Bench of the Labour Appellate Tribunal on appeals preferred by the employees of banks all over India and of the Banks themselves. The decision of the Labour Appellate Tribunal was given on April 28, 1954. Some of the Banks moved this Court for special leave to appeal from the decision dated April 28, 1954, of the Labour Appellate Tribunal and such leave was granted on October 4,1954. The same order which granted special leave also directed that the appeals be consolidated. These seven appeals on behalf of different Banks against their workmen have been filed in pursuance of the aforesaid leave granted by this Court. In Civil Appeal No. 56 of 1957 in which the Imperial Bank (now substituted as the State Bank of India) is the appellant, a preliminary objection has been taken on behalf of the respondent workmen of the Bank to the effect that the appeal is incompetent. We shall presently consider this preliminary objection, but before we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the question. It may yet be open to the concerned parties where there is a real grievance to approach the Government to get a suitable reference for the future as well as for the account years 1949, 1950 and 1951." What the Sastry Tribunal did was to consider the question whether there could be a bonus scheme for future years and whether it should be made to apply retrospectively to all Banks and for all years; and as to the guiding principles for the ascertainment of bonus, the Sastry Tribunal suggested certain lines of approach and recommended them for the earnest consideration of both the parties. The Labour Appellate Tribunal, however, came to, a different conclusion with regard to the scope of item 5 and held that it embraced the claims to bonus for the relevant years. Accordingly, it said :- " It follows, therefore, that the claims to bonus made for the relevent years have not yet been adjudicated upon and that the terms of the reference have not been exhausted. The ad hoe Tribunal to which this reference was made is no longer in existence and some other Tribunal will have -to decide what bonus, if any, is payable by the Banks to its employees for the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the possible effect of the decision of the Labour Appellate Tribunal on the working of a few typical banks which were parties to the dispute. On a study of the evidence so collected, the Central Government concluded that it; was inexpedient on public grounds to give effect to parts of the decision. Consequently, the Labour Appellate Tribunal's decision was modified by them by an order dated August 24, 1954. This decision was debated in Parliament and ultimately Government announced their decision to appoint a Commission (known as Bank Award Commission) to help them assess more fully the effect of the award. The Commission submitted its report on July 25, 1955, and with regard to the claim for bonus it said: " In regard to the claim for bonus, no general principles can be invoked and the case of each individual bank would have to be considered on its merits. Since this dispute has not been resolved so far, it is likely that it may have to be dealt with in the near future. The claim for bonus is not within the terms of my reference and I do not wish to trespass in the area of this dispute. I am, however, referring incidentally to this aspect of the matter because the fixati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and can be worked out by another Tribunal. This submission we think is correct. In the Industrial Disputes Act, 1947, an 'award' means an interim or final determination by an Industrial Tribunal of any industrial dispute or of any question relating thereto. The dispute between the parties in the present case related to bonus: on behalf of the banks it was contended (a) that item 5 of sch. 11 did not include claims of bonus for particular years in respect of particular banks but related to a general scheme of bonus including qualifications for eligibility and method of payment, and (b) that even a general scheme cf bonus could not be made by reason of the provisions of s. 10 of the Banking Companies Act, 1949; on behalf of the Bank employees it was contended that (a) item 5 included claims for bonus for particular years in respect of particular banks and (b) s. 10 of the Banking Companies Act, 1949, did not stand in the way of such claims. These rival contentions led to an industrial dispute which the Labour Appellate Tribunal determined by its decision dated April 28, 1954. We do not see why that decision is not an 'award' within the meaning of the Industrial Disputes Act, 1947. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication for a particular year in respect of a particular bank, we believe that the kind of disputes regarding bonus that have been referred to us are disputes of a general nature, e.g., questions regarding 'qualifications for eligibility and method of payment'." Thus it is clear that the Sen Tribunal also understood the item as a reference, of a dispute of a general nature which did not include demands for bonus for particular years in respect of particular banks. The Central Government which made the reference to the Sastry Tribunal by the notification dated January 5, 1952, had before it the interpretation which the Sen Tribunal had made in respect of the self-same item. Having that interpretation before it, the Central Government used identical language to express the dispute which it referred to the Sastry Tribunal in item 5 of sch. 11. This, in our opinion clearly shows that item 5 of sch. 11 of the notification relating to the Sastry Tribunal has the same meaning as item 6 of sch. 11 of the notification relating to the Sen Tribunal as interpreted by that Tribunal. The various items in sch. 11 of the relevant notification are not items in legislative lists, but are item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot include within itself claims of bonus for particular years in respect of particular banks. The Sastry Tribunal further pointed out that there were specific references with regard to the claims for bonus in respect of some Banks. Those reference did not, however, come within item 5 of sch. 11. If they did, it was completely unnecessary to make separate and specific references with regard to such claims. Item 5 was not the only item which raised a general question. There were many other items of a similar nature, such as items 3, 6, 9 etc. The Labour Appellate Tribunul itself realised the difficulty of deciding under item 5 of sch. 11 the particular claims for bonus for particular years. The Sastry Tribunal pointed out that there were 129 banks before it and no evidence was given to substantiate the claims for bonus for particular years in respect of particular banks. The Sastry Tribunal said:- "We cannot assume that, for all these 129 banks before us and for all these years there were live disputes about this matter which the Government had considered fit and proper to be referred to us after applying their minds to the problem whether such a reference should be made to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r banks is merely a circumstance to be taken into consideration. It cannot be decisive on the question of determinination the true scope and effect of item 5 of sch. 11. On a consideration of all relevant circumstances and having regard to the context and the words in which item 5 of sch. 11 has been expressed, we are of the view that the Labour Appellate Tribunal was wrong in its conclusion that the reference had not been worked out and that individual claims for bonus in respect of particular banks must be determined by another tribunal on the basis of the reference made in 1952. We now proceed to a consideration of the more important question, as to the effect of s. 10 of the Banking Companies Act, 1949. We have stated earlier that s. 10 of the Banking Companies Act, 1949, hereinafter called the Banking Act, was amended in 1956. We shall first read the unamended section, the provisions whereof were in force at the time relevant to these appeals. We shall later read also the amended section in connection with an arguement presented on behalf of the Bank employees that the Banking Companies (Amendment) Act, 1956 (XCV of 1956) was not remedial in nature but was declaratory of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encement of the Indian Companies (Amendment) Act, 1944, employ or be, managed by a managing agent, or any person whose remuneration or part of whose remuneration takes the form of commission or a share in the profits of the company, or any person having a contract with the company for its management for a period exceeding five years at any one time ; Provided that the period of five years shall, for the purposes of this section, be computed from the date on which this section comes into force; Provided further that any such contract may be be renewed or extended for a further period not exceeding five years at a time if and so often as the directors think fit." Obviously, the most undesirable feature in the structure and management of banking companies which the section tried to remedy was the appointment of managing directors or managers on long term contracts on payment of remuneration by commission or a share in the profits. However, the section was not confined to a managing agent or manager only, though by a reference to the statement of objects and reasons in relation to the amendment of 1944 it was suggested on behalf of the respondents that the section was so confin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature. The argument on both sides hinges on the two key expressions: I remuneration' and' share in profits'. The meaning of these expressions we shall consider in some detail. But it is convenient at this stage to get rid of some minor points. Section 10 in its operative part says that 'no banking company shall employ any person etc.' The amendment of 1956 says that I no banking company shall employ or continue the employment of any person'. The question has been mooted before us if the expression 'shall employ' means and includes, prior to the amendment of 1956, 'shall continue the employment of'. We think it does; otherwise the very purpose of the section is defeated. Take, for example, the case of an insolvent. The section says that no banking company shall employ any person who is or at any time has been adjudicated insolvent. Suppose that at the time the bank employs a person, he has not incurred any of the disqualifications mentioned in s. 10; but subsequently, there is an order of adjudication against him and he is adjudicated an insolvent, The section obviously means that such a person can no longer be employed by the bank. If subsequent disqualification is not within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in connection with s. 13 of the Workmen's Compensation Act, 1906, which enacted that a workman did not include a person employed otherwise than by way of manual labour whose " remuneration " exceeded pound, 50 ; and in Skiles v. Blue, Anchon Line, Ltd.(') it was observed that remuneration was not the same thing as salary or cash payment by the employer but involved the same considerations as earnings. This was a case in which the purser of a ship received, in addition to his regular wages, at the end of each voyage, at a fixed rate per month, a bonus or extra wages; he also made a profit by the sale on board ship of whisky in nips. The majority of Judges held that both the bonus and the profit on the whisky ought to be taken into account in estimating the purser's remuneration. In an earlier decision, Penn v. Spiers and Pond Limited (2), the gratuities and tips which the deceased workmen, employed as a waiter on a restaurant car, received from passengers using the restaurant car were held to be I earnings in the employment of the same employer'. The decision in Penn v. Spiers and Pond, Limited (supra) (2) was approved by the House of Lords in Great Western Railway v. Help ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture made the-prohibition dependent on the terms of employment. It is submitted that the adjudication of an industrial tribunal in awarding bonus does not create any obligation by act of parties, and even if it imports some kind of implied term, it is de hors the contract of employment and is the result of a judicial verdict under the industrial law. The argument is attractive but does not in our opinion stand the test of close scrutiny. Lot us look a (1) (1957) V.R. 466 (also 1957 Australian Law Reports 1097). little more closely to s. 10 of the Banking Act. It says inter alia that no banking company shall employ or be managed by a managing agent or shall employ a person who is or has been convicted by a criminal court of an offence involving moral turpitude etc; see el. (b)(1). It is obvious that when the section says 'shall employ', it means 'shall have in the employment of. It is not suggested that the disqualifications mentioned in cl. (b) (1) refer only to the contract of employment. If that were so, the section would hardly serve the purpose for which it must have been meant. We may take another example which brings out the meaning of the section even more clearly. Let us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 'remuneration' in the widest sense, and r. 5 and Form I are to that extent in consonance with the section. Shri Phadke appearing for some of the respondents has urged a somewhat different contention. He has argued that assuming that the word 'remuneration' has been used in the widest sense in s. 10 and therefore includes bonus, r. 5 and Form 1, show that payment of bonus is permissible: this is intelligible only on the footing that the provisions of s. 10 are restricted in their application to such employees of a banking company as are employed in a managerial or administrative capacity; they do not apply to 'workmen' as defined in the Industrial Disputes Act, 1947. We find it difficult to accept this argument. The section says that 'no banking company shall employ any person', and we do not see how the expression 'any person' can be restricted to those on the managerial or administrative staff only. We cannot arbitrarily cut down the amplitude of an expression used by the legislature. It is necessary to refer here to the decision in Wrottesley v. Regent Street Florida Restaurant ([1951] 2 K.B. 277) on which learned counsel for the respondent workmen has placed great reliance. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , when a customer gives a tip to a waiter the money becomes the property of the latter." We think that the decision itself shows that the word remuneration' must be given its meaning with reference to the context in which the word occurs in the statute. In the context of the Catering Wages Act, 1943, it meant the net payment after certain deductions from wages paid by the employer; and in the Workmen's Compensation Acts, it meant the amount of a man's earnings in an employment. We have pointed out that in the Banking Act with which we are concerned, the word I remuneration' has been used in the widest sense. In that. sense, it undoubtedly includes bonus. We proceed now to a consideration of the second key expression for our purpose, viz., 'takes the form of a share in the profits of the company'. The conception of industrial bonus (that is, profit bonus claimed by employees and granted amicably, through conciliation or as a result of an industrial award) has had a chequered development. In some of the earlier Bombay decisions of Industrial Adjudicators, it was held that the grant of bonus was entirely a matter of grace and not of right; some decisions characterized bonus as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w understand it, is a share in the profits of the company; it is labour's share of the contribution which it has made in the earning of the profits. The two grounds on which it has been contended that bonus is not a share in the profits are (1) that it is not a fixed or certain percentage of the available surplus of profits and (2) it partakes of the (nature of a contingent, supplementary wage. These two grounds weighed considerably with the majority of members of the Labour Appellate Tribunal who expressed the view that s. 10 of the Banking Act did not stand in the way of granting bonus to bank employees, because bonus according to them was not a share in the profits of the company. We do not think that either of these two grounds is valid. The first ground arises out of a confusion between the expression 'takes the form of a share in profits' and the expression 'profit sharing' used in a narrow, technical sense. It is undoubtedly true that the bonus formula does not lay down any fixed percentage which should go to labour out of the available surplus. The share of labour will depend on a number of circumstances; but once the amount which should go to labour has been determined, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other side there is the claim of employees for a share in the profits. Which claim has a greater urgency at a particular time is really a matter for the legislature to say. We may refer here by way of contrast to S. 31A of the Insurance Act, 1938. - That section' is in terms similar to S. 10 of the Banking Act, but has some marked differences. Firstly, it specifically mentions bonus, along with a share in profits, in cls. (b) and (c) of sub-S. (1); secondly, it has a proviso which says inter alia that nothing in subS. (1) shall prohibit the payment of bonus in any year on a uniform basis to all salaried employees I etc., or such bonus which in the opinion of the Central Government is reasonable having regard to the circumstances of the case. This merely shows that it is for the legislature to decide how to adjust the claim of employees with the safety and security of the business in which the employees are in employment. The learned Attorney-General has relied on a number of decisions in support of his contention that bonus comes within the expression 'takes the form of a share in profits'. In re Young, Ex Parte Jones (1) it was held (1) [1896]2Q.B.484. that a contract tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in that case was not a share in profits but an additional sum for wages determined by the amount of the gross earnings. Lord Cozens Hardy, M. R., expounded the ratio of the decision in the following words :- " The question is whether, having regard to the circumstances, that can be said in the present case. It seems that by the custom of this firm and by the understanding and arrangement between the parties, if the vessel made pound, 100 the skipper was entitled to pound 1, and in that particular case each member of the crew was entitled to half a crown. If the vessel made more the skipper and crew were entitled to larger sums. Now what was the effect .of that? The bonus was not, as it seems to me any part of the profits, nor was it a share in the gross earnings of the vessel. There was an obligation on the part of the owners of the trawler to pay the half a crown (to take that as one instance) in a certain event, which event was to be determined by the gross earnings of the vessel. I see no ground for holding that it was in any sense of the word a share of the gross earnings of the working of the vessel any more than the actual wages which were payable to the seamen could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce prevailing in banking business ; or (iii)whose remuneration is, in the opinion of the Reserve Bank, excessive; or (c) ........................................................ Explanation.- For the purpose of sub-clause (iii) of clause (b), the, expression "remuneration", in relation to a person employed or continued in employment, shall include salary, fees and perquisites but shall not include any allowances or other amounts paid to him for the purpose of reimbursing him in respect of the expenses actually incurred by him in the performance of his duties. (2)................................ (3)If any question arises in any particular case wither the remuneration is excessive within the meaning of subclause (iii) of clause (b) of subsection (1), the decision of the Reserve Bank thereon shall be final for all purposes." It will be noticed that the amended section has a proviso which makes it clear that nothing in the relevent clause in subs-s. (1) shall apply to the payment of any bonus by any banking company in pursuance of a settlement or award arrived at or made under any law relating to industrial disputes or in accordance with any scheme framed by such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estions, (1) and (2), which directly fall for decision in these seven appeals. Contrary to the findings of the Labour Appellate Tribunal, we have come to the conclusion that (1) the scope of item 5 of sch. II of the relevant notification is not what the Labour Appellate Tribunal thought it to be and the reference of 1952 is not pending for determining the quantum of bonus for the relevant years in respect of particular banks and (2) in any event, s. 10 of the Banking Act, prior to the amendment of 1956, prohibited the grant of industrial bonus to bank employees inasmuch as such bonus is remuneration which takes the form of a share in the profits of the banking company. We do not think that the other two questions, (3) and (4), require any decision at this stage. It is to be remembered that we are exercising our appellate jurisdiction in these seven appeals and not our advisory jurisdiction. These seven appeals stand completely disposed of on the findings which we have given on the two questions already discussed. On our findings the dispute as to bonus referred to the Industrial Tribunal in 1952 has come to an end. The reference is no longer pending and in the view which we have e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -raised before us on behalf of the parties concerned with regard to questions (3) and (4). A few words regarding Civil Appeal No. 62 of 1957 before we conclude. Besides the question of bonus two other questions were raised in this appeal: (1) whether the Labour Appellate Tribunal had jurisdiction to order cancellation and refund of cash deposits and (2) whether the Tribunals below were wrong in holding that the taking of cash deposits etc., should be restricted to workmen of three categories only. When it was pointed out that the cash deposits had already been refunded in accordance with the decision of the Labour Appellate Tribunal the learned Attorney-General who appeared for the appellant in Civil Appeal No. 62 of 1957 (The Punjab National Bank, Limited) did not press those points. Therefore, in Civil Appeal No. 62 of 1957 also the only surviving question is the question of bonus on which we have already given our decision. Shri Sadhan Chandra Gupta appeared on behalf of the respondents in Civil Appeal No. 62 of 1957 and made his submissions on the question of bonus. He has taken a stand on s. 2 of the Banking Act and has contended that even if bonus is remuneration which ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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