TMI Blog1968 (7) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... at though the Act did not apply, in the first case by reason of sec. 1(3) and in the other by reason of sec. 32(x), the employees were entitled to claim bonus and awarded their claims in C.A. No. 1630 of 1967. The appeals by special leave challenge the correctness of the view taken by the Tribunals as to the scope and nature of the Act. The question for decision in both the appeals is whether in view of the non-applicability of the Act to establishments, not being factories and which employ less than 20 persons therein as the appellants in appeal No. 1630 of 1967 are, and the exemption of employees in an establishment in public sector though employing more than 20 persons as the appellant-company in appeal No. 1721 of 1967 is under sec. 32(x) of the Act, the employees in both these establishments could claim bonus, dehors the Act. The question depends upon the true view of certain provisions and the scope of the Act. But before we take upon ourselves the burden of construing these, provisions, it is necessary to refer briefly to the history of the question of bonus, the back- ground and the circumstances in which the Act was passed. This Is Permissible for the limited purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the personal services which do not depend on the employment of labour force . Similarly in R. M. D. Chamarbaugwalla v. The Union of India (1957 S.C.R. 930), the question arose whether looking to the general words used in sec. 2(d) of the Prize Competitions Act, 42 of 1955 the words 'prize competition' included not merely competitions of a gambling nature but also those in which success depended to a substantial degree on skill. In construing the said definition, the Court gave a restricted meaning to the words prize competition as meaning only competitions as were of a gambling` nature. In doing so, the Court approved the principles of construction stated in the case of the Bengal Immunity Ltd.( 1955] 2 S.C.R. 603) and held that in interpreting an enactment the Court should ascertain the intention of the legislature not merely from a literal meaning of the words used but also from such matters as the history of the legislation, its purpose and the mischief it seeks to suppress . For considering the intention of Parliament not merely from the literal meaning of the definition in sec. 2(d) but also from the history of the legislation the Court looked into the Bombay Lot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nority and as such entitled to rights under Art. 30 and held that it was not set up by the minority but in fact established by the Government of India by passing the Aligarh Muslim University Act, 1920 of. Crawford on Statutory Construction (3rd Ed.) pages 482-483]. There is thus sample authority justifying the Court in looking into the history of the legislation, not for the purpose of construing the Act but for the limited purpose of ascertaining the background, the conditions and the circumstances which led to its passing, the mischief it was intended to prevent and the remedy it furnished to prevent such mischief. The, statement of objects and reasons also can be legitimately used for ascertaining the object which the legislature had in mind, though not for construing the Act. What were the conditions prevailing at the time when the Act was passed and what was the object which Parliament had in mind in passing it ? Bonus was originally regarded as a gratuitous payment by an employer to his employees. The practice of paying bonus as an ex gratia payment had its early roots in the textile industry in Bombay and Ahmedabad. In 1917 and 1918 an increase of 10 and 15% of wages was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital at a rate lower than the one on the paid-up capital. In Muir Mills Company v. Suti Mills Mazdoor Union, Kanpur([1955] 1 S.C.R. 991), Baroda Borough Municipality v. Its Workmen([1957] S.C.R. 33), The Shree Meenakshi Mills Ltd. v. Their Workmen([1958] S.C.R. 878) and The State of Mysore v. The Workers of Gold Mines([1959] S.C.R. 895 ) this Court laid down (1) that bonus was not a gratuitous payment nor a deferred wage, and (2) that where wages fall short of the living standard and the industry makes profit part of which is due to the contribution of labour, a claim for bonus may legitimately be made by the workmen. The Court, however, did not examine the propriety nor the order of priorities as between the several charges and their relative importance nor did it examine the desirability of making any alterations in the said formula. These questions came to be examined for the first time in Associated Cement Companies Ltd. v. Its Workmen(5) where the said formula was generally approved. Since that decision, this Court has accepted in several cases the said formula. The principal feature,,, of the formula are that each year for which bonus is claimed is a self-contained unit, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered to viz. determination of bonus as a percentage of gross profits reduced by the following prior charges, viz. normal depreciation allowable under the Indian Income Tax including multiple shifting allowance, income tax and super tax at the current standard rate applicable for the year for which tax is to be calculated but not super profits tax, return on paid up capital raised through preference shares at the actual rate of dividend payable, on other paid-up capital at 7% and on reserves used as capital at 4%. The Commission did not recommend provision for rehabilitation. 2. That 60% of the available surplus should be distributed as bonus and excess should be carried forward and taken into account in the next year; the balance of 40% should remain with the establishment into which should merge the saving in tax on bonus and the aggregate balance thus left to the establishment should be used for payment of gratuity, other necessary reserves, rehabilitation in addition to the provision made by way of depreciation in the prior charges, annual provision required for redemption of debentures, etc. 3. That the distinction between the basic wages and dearness allowance for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinance was replaced by the present Act published on September 25, 1965, it is unnecessary to examine its provisions. Thus, bonus which was originally a voluntary payment acquired under the Full Bench formula the character of a right to share in the surplus profits enforceable through the machinery of the Industrial Disputes Act, 1947 and other corresponding Acts. Under the Act liability to pay bonus has now become a statutory obligation imposed on the employers. From the history of the legislation it is clear (1) that the Government set up a Commission to consider comprehensively the entire question of bonus in all its aspects; and (2) that the Commission accordingly Considered the concept of bonus, the, method of computation, the machinery for enforcement and a statutory formula in place of the one evolved by industrial adjudication. We proceed next to examine some, of the provisions of the Act and its scheme. The preamble of the Act states that it is to provide for payment of bonus in certain establishments and for matters connected therewith. Section 1(3) provides that it shall apply save as otherwise provided in the Act to (a) every factory and (b) every other establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force or in terms of any award, agreement, settlement or contract of service made before May 29, 1965. Sec. 35 saves the provisions of the Coal Mines, Provident Fund and Bonus Schemes Act, 1948 or any scheme made thereunder. Sec. 35 empowers an appropriate Government having regard to the financial position and other relevant circumstances of any establishment or class of establishments if it is of opinion that it would not be in public interest to apply all or any of the provisions of the Act thereto, to exempt for such period as may be specified by it such establishment or class of establishments from all or any of the provisions of the Act. Sec. 39 provides as follows :- Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947 or any corresponding law relating to investigation and settlement of industrial disputes in force in a State . It will be noticed that sec. 22 provides that where a dispute arises between an employer and his employees (1) with respect to the bonus payable under the Act, or (2) with respect to the application of the Act, such a dispute shall be deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parliament had to make a provision for investigation and settlement thereof. Though such a dispute would not be an industrial dispute as defined by the Industrial Disputes Act or other corresponding Act in force in a State, sec. 39 by providing that the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act or such corresponding law makes available the machinery in that Act or the corresponding Act available for investigation and settlement of industrial disputes thereunder for deciding the disputes arising under this Act. As already seen sec. 22 artificially makes two kinds of disputes therein referred to industrial disputes and having done so applies the provisions of the Industrial Disputes Act and other corresponding law in force for their investigation and settlement. But what about the remaining disputes ? As the Act does not provide any machinery for their investigation and settlement, Parliament by enacting sec. 39 has sought to apply the provisions of those Acts for investigation and settlement of the remaining disputes, though such disputes are not industrial disputes as defined in those Acts. Though, the words in force in a S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al provision in the Act depriving the employees of factories and establishments not covered by or otherwise saved in the Act of bonus which they would be entitled to under any other law; 4. That being so, the employees of establishments to which the Act is not made applicable would still be entitled to bonus under a law other than the Act although they are not entitled to the benefit of the Act; 5. Parliament was aware of the fact that employees in establishments other than those to which, the Act aplies were getting bonus under adjudication provided by the Industrial Disputes Act and other similar Acts. If it intended to deprive them of such bonus surely it would have expressed so in the Act; 6. Sec. 39 in clear terms saves the right to claim bonus under the Industrial Disputes Act or any corresponding law by providing that the provisions of this Act shall be in addition to and not in derogation of the provisions of those Acts. It is true that the preamble states that the Act is to provide for payment of bonus to persons employed in certain establishments and sec. 1(3) provides that the Act is to apply, save as otherwise provided therein, to factories and every other e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent Act. In providing such statutory liability, Parliament has laid down a statutory formula on which bonus would be calculated irrespective, of whether the establishment in question has during a particular accounting year made profit or not. It can further lay down that the formula it has evolved and the statutory liability it provides in the Act shall apply only to certain establishments and not to all. Since there was no such statutory obligation under any previous Act, there would not be any question of Parliament having to delete either such obligation or right. In such circumstances, since Parliament is providing for such a right and obligation for the first time, there would be no question also of its having to insert in the, Act an express provision of exclusion. In other words, it has not to provide by express words that henceforth no bonus shall be payable under the Industrial Disputes Act or other corresponding Acts as those Acts did not confer any statutory right to bonus. It will be noticed that though the Industrial Disputes Act confers substantive rights on workmen with regard to lay off, retrenchment compensation, etc., it does not create or confer any such st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Full Bench formula should lose that benefit. As aforesaid, Parliament was evolving for the first time a statutory formula in regard to bonus and laying down a legislative policy in regard thereto as to the classes of persons who would be entitled to bonus thereunder. It laid down the definition of an 'employee' far more wider than the definition of a 'workman' in the Industrial Disputes Act and the other corresponding Acts. If, while doing so, it expressly excluded as a matter of policy certain petty establishments in view of the recommendation of the Commission in that regard, viz., that the application of the Act would lead to harassment of petty proprietors and disharmony between them and their employees, it cannot be said that Parliament did not intend or was not aware of the result of exclusion of employees of such petty establishments. It is true that the construction canvassed on behalf of the appellants leads, as argued by counsel for the respondents, to employees in public sector concerns being deprived of bonus which they would be getting by raising a dispute under the Industrial Disputes Act and other corresponding statutes. But such a result o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic nature, and (c) their being establishments in public sector carried on in public interest. Building contractors appear to have been exempted because of their work being contract job work, the unfeasibility of applying the formula evolved in the Act and the problem of employees of such contractors being more of evolving and enforcing a proper wage structure rather than of payment of bonus to them. It seems to us that if we were to accept the contention that the. object of sec. 32 was only to exempt the establishments therein enumerated from the application of the bonus formula enacted in the Act, but that the employees of those establishments were left at liberty to claim and get bonus under the machinery provided by the Industrial Disputes Act and other corresponding Acts, them very object of enacting sec. 32 would be frustrated. Surely, Parliament could not have intended to exempt these establishments from the burden of bonus payable under the Act and yet have left the door open for their employees to raise industrial disputes and ,- ,get bonus under the Full Bench formula which it has rejected by laying down a different statutory formula in the Act. For instance, is it to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause expressly excludes such employees from claiming bonus under the Act during such period, the employees in such cases can still resort to the Industrial Disputes Act and claim bonus on the basis of the Full Bench formula ? The answer is obviously in the negative for the object in enacting cl. (vii) is to let the parties work out such an agreement or settlement. It cannot be that despite this position, Parliament intended that those employees had still the option of throwing aside such an agreement or settlement raise a dispute under the Industrial Disputes Act and claim bonus under the Full Bench formula. The contention, therefore, that the exemption under sec. 32 excludes those employees from claiming bonus under the Act only and not from claiming bonus under the Industrial Disputes Act or such other Act is not correct. This conclusion is buttressed by the provisions of sec. 36 which empower the appropriate Government to exempt for a specified period an establishment or class of establishments from the operation of the Act, if it is of. the opinion that it is not in public interest to apply all or any of the provisions of the Act to such establishment or class of establishme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
