TMI Blog1976 (3) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... kmen. This heavy density of undertakings and workers naturally produced an association of employers and a Union of workmen, each recognising the other, for the necessary convenience of collective bargaining. Apparently, these hardware merchants huddled together in the small area, were getting on well in their business and in their relations with their workmen, and this goodwill manifested itself in ex-gratia payments to them of small amounts for a number of years prior to 1965, when trouble began. Although rooted in goodness and grace, the annual repetition of these payments ripened, in the consciousness of the workers, into a sort of right-nothing surprising when we see in our towns and temples a trek of charity-seekers claiming benevolence as of right from shop-keepers and pilgrims, especially when this kindly disposition has been kept up over long years. The compassion of yesterday crystallises as the claim of today, and legal right begins as that which is humanistically right. Anyway, the hardware merchants of Nag Devi, made of sterner stuff, in the year 1965, abruptly declined to pay the goodwill sums of the spread-out past and the frustrated workmen frowned on this stoppag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Union, representing the workers in the mass, has assailed the findings of the Tribunal, the reasonings he has adopted and the misdirection he has allegedly committed. The Tribunal did not enter the merits of the claim but dismissed it in limine on the score that the demand for bonus was barred by res judicata the arbitral board's decision negativing the bonus for 1965 being the basis of this holding. The second ground for reaching the same conclusion was that the Bonus Act was a comprehensive and exhaustive law dealing with the entire subject of bonus and its beneficiaries. In short, in his view, the Bonus Act was a complete Code and no species of bonus could survive outside the contours of that statute. Admittedly, here the claim for bonus for the relevant four years was founded on tradition or custom or condition of service and in that light, the Tribunal made short shrift of the workmen's plea in these words: In my opinion, the demand pertaining to the practice or custom prevailing in the establishments before 1965 is not such a matter as has to be adjudicated and it also does not fall under the provisions of Bonus Act. I, therefore, find that the reference in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such circumstances, fade away. We are not dealing with a civil litigation governed by the Civil Procedure Code but with an industrial dispute where the process of conflict resolution is informal, rough-and-ready and invites a liberal approach. Procedural prescriptions are handmaids, not mistresses of justice and failure of fair play is the spirit in which Courts must view processual deviances. Our adjectival branch of jurisprudence, by and large, deals not with sophisticated litigants but the rural poor, the urban lay and the weaker societal segments for whom law will be an added terror if technical mis-descriptions and deficiencies in drafting pleadings and setting out the cause-title create a secret weapon to non-suit a party. Where foul play is absent, and fairness is not faulted, latitude is a grace of processual justice. Test litigations, representative actions, pro bono publico and like broadened forms of legal proceedings are in keeping with the current accent on justice to the common man and a necessary disincentive to those who wish to bypass the real issues on the merits by suspect reliance on peripheral procedural short-comings. Even Art. 226, viewed in wider perspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon to visualize the difficult situations counsel for the respondents invited us to do, where a plurality of unions pollute workers' unity and create situations calling for investigation into the representative credentials of the party appearing before the Tribunal or court. It is enough, on the facts of this case, for us to take the Union as an abbreviation for the totality of workmen involved in the dispute, a convenient label which, for reasons of expediency, converts a lengthy party array into a short and meaningful one, group representation through unions being familiar in collective bargaining and later litigation. We do not expect the rigid insistence on each workman having to be a party eo nomine. The whole body of workers, without their names being set out, is, in any case, sufficient, according to the counsel for the respondents, although strictly speaking, even there an amount of vagueness exists. For these reasons, we decline to frustrate this appeal by acceptance of a subversive technicality. We regard this appeal as one by the workmen compendiously projected and impleaded through the Union. Next we come upon the plea of res judicata, as a roadblock in the way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith merits. A short cut is a wrong cut often times and the Tribunal's easy recourse to dismissal on preliminary grounds may well lead-and it has, as will be presently perceived-to a re-opening of the case many years later if the higher Court reverses the legal findings. Be that as it may, let us test the validity of the plea that only a profit based bonus has been claimed by the workers. The demands referred by the State Government under s. 10(1)(d) specifically speak of payment of bonus by the employers which 'has become custom or usage or a condition of service in the establishments'. The subsidiary or rather consequential point covered by the reference is 'if so, what should be the basis on which employers should make payment of bonus to their workmen for the years. . .'. It is plain that the subject matter of the dispute, as referred by the Government, deals with bonus based on custom or condition of service. The Tribunal is therefore bound to investigate this question, the terms of reference being the operational basis of its jurisdiction. The workmen, in their statement, have asserted that bonus had been paid for several years and what transpired at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also submitted that the Sabha's demand that a sample scrutiny of the Accounts of the firms should be made by the Tribunal is irrelevant in this respect since the demand is not based on the profits or the financial results of the employers but is based on custom. More over the ex gratia payments for the pre-Bonus Act period are admitted by the respondents. They seek sanctuary on the counterplea that free acts of grace, even if repeated, can neither amount to a custom, usage or condition of service. In sum, a study of the pleadings, the terms of reference and the surrounding circumstances supports the only conclusion that, peripheral reference to the profits of the establishments notwithstanding, the core of the cause of action or the kernel of the claim for bonus is custom and/or term of service, not sounding in or conditioned by profits. Shri G. B. Pai did urge that the precedents of this Court have linked custom-based bonus with some festival or other and that bonus founded on custom de hors some festival is virtually unknown to case law on the point. From this he argues that since the bonus has not been related by reference to any festival by the workmen in their plead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several decisions cited before us by Shri Tarkunde make out and s. 17(a) of the Bonus Act, in a way, recognizes such a root of title. In Churakulam Tea Estate(1) this Court surveyed the relevant case law at some length. Ispahani(2) implied as a term of the contract the payment of bonus from an unbroken, long spell. Vaidialingam J., in Churakulam(1) referring to some of the precedents, observed: In Ispahani's case(2) this Court had to consider a claim for Puja bonus, in Bengal, and the essential ingredients, for sustaining such a claim when it is based on an implied agreement. After stating that the claim, for Puja Bonus, can be based either as a matter of implied agreement between the employers and employees, creating a term of employment for payment of Puja bonus, or that even where no implied agreement can be inferred, it may be payable as a customary bonus, this Court, in the said decision, specifically dealt with a claim for payment of bonus as an implied condition of services. This Court further accepted as correct the tests laid down by the Appellate Tribunal in Mahalaxmi Cotton Mills Ltd., Calcutta v. Mahalaxmi Cotton Mills Workers' Union (1952 L.A.C. 370) for in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omary and traditional in the particular concern. It will be seen that these tests are in substance more stringent than the tests applied for proof of puja bonus as an implied term of employment. It will be seen from the above extract that an additional circumstance has also been insisted upon, in the case of customary or traditional bonus, that the payment must have been at a uniform rate throughout to justify an inference that the payment at such and such a rate had become customary and traditional in the particular concern. In Bombay Co.(1) this Court, after pointing out the distinction in the ingredients of customary and contractual bonus, affirmed the existence of categories like customary bonus which are different from and unconnected with profit- based bonus. The learned Judge discussed Jardine Henderson and other rulings, but the judicial chorus of legally claimable customary or contractual bonus is not marred by and discordant note. It may be otiose to refer to holdings of High Courts when this Court has laid down the law. Even so, two decisions, one of Patna and the other of Calcutta, deserve mention. One of us, (Untwalia J., as he then was) speaking for the Divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one. All this is the indirect bonanza of Part IV of the Constitution which bespeaks the conscience of the nation, including the community of employers. Law is not petrified by the past, but responds to the call of the changing times. So too the social consciousness of employers. Of course, Labour has its legal-moral duty to the community of a disciplined contribution to the health and wealth of the Industry. Law is not always an organiser of one-way traffic. This general survey of the case-law conclusively makes out that Labour's claim for bonus is not inflexibly and solely pegged to profit as the one and only right. Bonus is a word of many generous connotations and, in the Lord's mansion there are many houses. There is profit-based bonus which is one specific kind of claim and perhaps the most common. There is customary or traditional bonus which has its emergence from long, continued, usage leading to a promissory-and-exceptancy situation materialising in a right. There is attendance bonus, production bonus and what not. An examination of the totality of pertinent materials drives us to the inevitable result that what has been claimed by the workmen in the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B. Pai has raised what he regards as a lethal infirmity in the claim of the Sabha. In his submission the Bonus Act is a complete Code and what is not covered by its provisions cannot be awarded by the Tribunal. It is true that if the Bonus Act is a complete Code and is exhaustive of the subject, whatever the species of bonus, there may be a bar, but it is quite conceivable that the codification may be of everything relating to profit bonus in which case other types of bonus are left untouched. Merely calling a statute a Code is not to silence the claimant for bonus under heads which have nothing to do with the subject matter of the Code. On listening to the intricate argument about implicit codification of the law of bonus by this Act, one is reminded of Professor Gilmore who put the case against codification thus : The law, codified, has proved to be quite as unstable, unpredictable, and uncertain-quite as mulishly unruly-as the common law, uncodified, had ever been. The rules of law, purified, have remained the exclusive preserve of the lawyers; the people are still very much in our toils and clutches as they ever were- if not more so. The argument of the Bonus Act being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he social philosophy of Part IV has preference. In Jalan Trading Co. Shah J. (as he then was) gave a synopsis of the development of the branch of industrial law relating to bonus from the days of the First World War to the Report of the Bonus Commission culminating in the Bonus Act, 1965. The story of 'war bonus', the Full Bench formula and this Court's view that 'bonus is not a gratuitous payment made by the employer to his workmen, nor a deferred wage, and 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 be legitimately made by the workmen' are set out in that decision. The Full Bench formula was based on profits and the terms of reference to the Commission put profit in the forefront as the foundation of the Scheme-'to define the concept of bonus, to consider in relation to industrial employments the question of payment of bonus based on profits and to recommend principles for computation of such bonus and methods of payment .....'A glance at the various Chapters of the Report brings home the point that bonus based on profits is its central the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis for bonus oozes through the various provisions. For instance, the idea of accounting year, gross profit and the computation thereof, the methodology of arriving at the available surplus and the items deductible from gross profits, have intimate relevance to profit bonus-and may even be irrelevant to customary or traditional bonus or contractual bonus. Similarly, the provision for set on and set off of allocable surplus and the like are pertinent to profit-based bonus. Schematically speaking, statutory bonus is profit bonus. Nevertheless, there is provision for avoidance of unduly heavy burden under different heads of bonus. For this reason it is provided in s. 17 that where an employer has paid any puja bonus or other customary bonus, he will be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him under the Act. Of course, if the customary bonus is thus recognised statutorily and, if in any instance it happens to be much higher than the bonus payable under the Act, there is no provision totally cutting off the customary bonus. The provision for deduction in s. 17, on the other hand, indicates the independent existence of customary bonus alth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nus, namely, that based on profit had alone been dealt with. The limits on contractual bonus also tends to feed our conclusions. The implications of the ceiling set by the recent amendment to the law falls outside our scope and we keep away from determining it. Sufficient unto the day is the evil thereof. It is clear further from the long title of the Bonus Act of 1965 that it seeks to provide for bonus to persons employed 'in certain establishments'-not in all establishments. Moreover, customary bonus does not require calculation of profits, available surplus, because it is a payment founded on long usage and justified often by spending on festivals and the Act gives no guidance to fix the quantum of festival bonus; nor does it expressly wish such a usage. The conclusion seems to be fairly clear, unless we strain judicial sympathy contrarywise, that the Bonus Act dealt with only profit bonus and matters connected therewith and did not govern customary, traditional or contractual bonus. The end product of our study of the anatomy and other related factors is that the Bonus Act spreads the canvas wide to exhaust profit-based bonus but beyond its frontiers is not void b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit-bonus, leaving room for non-statutory play of customary bonus. The case dealt with a bonus claim by two sets of workmen, based on profit of the business but the workmen fell outside the ambit of the legislation by express exclusion or exemption. Nothing relating to any other type of bonus arose and cannot be impliedly held to have been decided. The governing principle we have to appreciate as a key to the understanding of Ghewar Chand is that it relates to a case of profit bonus urged under the Industrial Disputes Act by two sets of workmen, employed by establishments which are either excluded or exempted from the Bonus Act. The major inarticulate premise of the statute is that it deals with-and only with-profit-based bonus as has been explained at some length earlier. There is no categorical provision in the Bonus Act nullifying all other kinds of bonus, nor does such a conclusion arise by necessary implication. The ruling undoubtedly lays down the law thus: Considering the history of the legislation, the back ground and the circumstances in which the Act was enacted, the object of the Act and its scheme, it is not possible to accept the construction suggested on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the following passage fits into the perspective we have outlined: Section 32(vii) exempts from the applicability of the Act (the Bonus Act) those employees who have entered before May 29, 1965 into an agreement or settlement with their employers for payment of bonus linked with production or productivity in lieu of bonus based on profits and who may enter after that date into such agreement or settlement for the period for which such agreement or settlement is in operation. Can it be said that in cases where there is such an agreement or settlement in operation, though this 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 F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of customary or contract bonus was urged for the year 1965 and so, in later years, such a ground is barred by the general principles of res judicata. Sections 10A, 18 and 19(3) of the Industrial Disputes Act were pressed before us to demonstrate the prior award was binding on the workers and reading it in the light of Pandurang the bar was spelt out. It is clear law, so long as the above ruling stands, that industrial litigation is no exception to the general principle underlying the doctrine of res judicata. We do entertain doubt about the extension of the sophisticated doctrine of constructive res judicata to industrial law which is governed by special methodology of conciliation, adjudication and considerations of peaceful industrial relations, where collective bargaining and pragmatic justice claim precedence over formalised rules of decision based on individual contests, specific causes of action and findings on particular issues, but we are convinced that Pandurang(1) does not apply at all to our case. There overtime wages were claimed earlier under the Factories Act and the case was rejected by the Tribunal. After this rebuff, a like claim was repeated but sustaining i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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