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CASE NO.: Appeal (civil)  4330 of 2000

PETITIONER: A.P. Foods

RESPONDENT: S. Samuel & Ors.

DATE OF JUDGMENT: 04/07/2006

BENCH: ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J.  

Appellant calls in question legality of the judgment  rendered by learned Single Judge of the Andhra Pradesh High  Court which was affirmed by a Division Bench in Writ Appeal  by the impugned judgment.

Background facts in a nutshell are as follows :

Appellant is run by Andhra Pradesh Nutrition Council  and is owned and controlled by the Government of Andhra  Pradesh. The Nutrition Council is registered under the Andhra  Pradesh (Telengana Area) Public Societies Registration Act,  1350 (Act 1 of 1350 Fasli).  The principal object is to provide  and supply nutritious foods to school and pre-school children,  pregnant women and lactating mothers and such other  categories of beneficiaries as the Government from time to  time decide within the general framework of the Government  social welfare programmes. It is claimed to be a non-profit  motive establishment.  It does not sell or distribute its product  either in public or to outsiders except those selected by the  Government of Andhra Pradesh under its programmes. In  April, 1982 a question arose regarding demand of payment of  bonus under the Payment of Bonus Act, 1965 (in short the  ’Act’) to the employees of the appellant, and it approached the  Commissioner of Labour, inter alia, stating that the (a) regular  production of the factory was handed over to the State  Government by the CARE Organisation (b) that the factory is a  non-commercial venture and (c) that, therefore, it falls outside  the ambit of the Act. By order dated 21.1.1983 the  Commissioner of Labour, Andhra Pradesh held that the  provisions of the Act have no application to the factory of the  appellant.  In November 1984 appellants sanctioned ex-gratia  payment to the workers as per GOMs.319 for the year 1983-84  in view of the fact that the Act is not applicable to the  appellant and eligibility for the ex-gratia was on the lines being  given in some other public sector undertakings.  In January,  1986, the Executive Committee of the Nutrition Council  decided to sanction ex-gratia of one month’s salary each year  in lieu of bonus to the employees. On the basis of this  decision, ex-gratia payment of one month’s salary from the  year 1984-85 was given on the lines of certain other public  sector undertakings. GOMs. No. 366 dated 29.10.1993 was  issued by the Government of Andhra Pradesh, Finance and  Planning Department, pending final decision by the  Government directing its various Organisations not to pay ex- gratia until further orders.  Appellant issued directions by its

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Circular dated 24.11.1993 that payment of ex-gratia to the  employees shall stand withdrawn until further orders.   Employees of the appellant-establishment sent representations  to the Minister of Labour regarding stoppage of ex-gratia  payment.  Ministry of Labour by communication in December,  1995 indicated that employees are not entitled to ex-gratia  with effect from November, 1993 onwards in view of the  guidelines issued by the Government.  A Writ Petition was filed  by 243 employees making grievance that the stoppage of ex- gratia/bonus was unauthorized and contrary to law.  Said writ  Petition was allowed by a learned Single Judge. It was  submitted that the question whether the employees were  entitled to bonus is an industrial dispute and the writ petition  should not be entertained.  Learned Single Judge turned down  the contentions of the present appellant that the Act does not  apply to it in view of Section 20 and Section 22 of the Act.  With reference to certain documents he came to the  conclusion that the stand of the appellant that it was working  without profit motive is factually wrong.  In any event, Section  22 of the Act would not stand in the way of entertaining the  writ petition.  The appellant filed a writ appeal before the High  Court which maintained the order of learned Single Judge by  the impugned judgment.

Learned counsel for the appellant submitted that on a  combined reading of Sections 20, 22 and 32(v)(c) of the Act,  the inevitable conclusion is that the writ petition should not  have been entertained. Further Section 22 clearly stipulates  that the dispute raised is an industrial dispute under the  Industrial Disputes Act, 1947 (in short the ’ID Act’).  Since  disputed questions of fact were involved, the writ petition  should not have been entertained.

In response, learned counsel for the writ petitioners- respondents submitted that in view of the established factual  position, the High Court was justified in entertaining the writ  petition and deciding in favour of the writ petitioners.

Sections 20, 22 and 32(v)(c) read as follows :

"Section 20: Application of Act to  establishments in Public Sector in certain  cases :  

(1)     If in any accounting year an  establishment in public sector sells any  goods produced or manufactured by it or  renders any services, in competition with  an establishment in private sector and  the income from such sale or services or  both is not less than twenty per cent of  the gross income of the establishment in  public sector for that year, the, the  provisions of this Act shall apply in  relation to such establishment in public  sector as they apply in relation to a like  establishment in private sector.

(2)     Save as otherwise provided in sub-section  (1), nothing in this Act shall apply to the  employees employed by any  establishment in public sector.

Section 22 :    Reference of disputes under the  Act

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        Where any dispute arises between an  employer and his employees with respect to  the bonus payable under this Act or with  respect to the application of this Act to an  establishment in public sector, then, such  dispute shall be deemed to be an industrial  dispute within the meaning of the Industrial  Disputes Act, 1947, or of any corresponding  law relating to investigation and settlement of  industrial disputes in force in a State and the  provisions of that Act or, as the case may be,  such law, shall, save as otherwise expressly  provided, apply accordingly.

Sector 32: Act not to be applied to certain  classes of employees:

(v)     Employees employed by \026

(c )    Institutions (including hospitals,  chambers of commerce and social welfare  institutions) established not for purposes  of profit;"

In a catena of decisions it has been held that writ petition  under Article 226 of the Constitution of India, 1950 (in short  ’the Constitution’) should not be entertained when the  statutory remedy is available under the Act, unless exceptional  circumstances are made out.

       In U.P. State Bridge Corporation Ltd. and Ors. v. U.P.  Rajya Setu Nigam S. Karamchari Sangh (2004 (4) SCC 268), it  was held that when the dispute relates to enforcement of a  right or obligation under the statute and specific remedy is,  therefore, provided under the statute, the High Court should  not deviate from the general view and interfere under Article  226 except when a very strong case is made out for making a  departure. The person who insists upon such remedy can avail  of the process as provided under the statute.  To same effect  are the decisions in Premier Automobiles Ltd. v. Kamlekar  Shantarum Wadke (1976 (1) SCC 496), Rajasthan SRTC v.  Krishna Kant (1995 (5) SCC 75), Chandrakant Tukaram  Nikam v. Muncipal Corporation of Ahmedabad and Anr. (2002)  (2) SCC 542) and Scooters India and Ors. v. Vijai V. Eldred  (1998 (6) SCC 549).

       In Rajasthan SRTC case (Supra) it was observed as  follows:  

"A speedy, inexpensive and effective forum for  resolution of disputes arising between  workmen and their employers.  The idea has  been to ensure that the workmen do not get  caught in the labyrinth of civil courts with  their layers upon layers of appeals and  revisions and the elaborate procedural laws,  which the workmen can ill afford. The  procedure followed by civil courts, it was  thought, would not facilitate a prompt and  effective disposal of these disputes. As against  this, the courts and tribunals created by the  Industrial Disputes Act are not shackled by

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these procedural laws nor is their award  subject to any appeals or revisions.  Because  of their informality, the workmen and their  representatives can themselves prosecute or  defend their cases.  These forums are  empowered to grant such relief as they think  just and appropriate.  They can even  substitute the punishment in many cases.   They can make and re-make the contracts,  settlement, wage structures and what not.   Their awards are no doubt amenable to  jurisdiction of the High Court under Article  226 as also to the jurisdiction of this Court  under Article 32, but they are extraordinary  remedies subject to several self-imposed  constraints.  It is, therefore, always in the  interest of the workmen that disputes  concerning them are adjudicated in the forums  created by the Act and not in a civil court.  That is the entire policy underlying the vast  array of enactments concerning workmen.   This legislative policy and intendment should  necessarily weigh with the courts in  interpreting these enactments and the  disputes arising under them".

In  Basant Kumar Sarkar and Ors. v. Eagle Rolling Mills  Ltd. and Ors. (1964 (6) SCR 913) the Constitution Bench of  this Court observed as follows:

"It is true that the powers conferred on the  High Courts under Art. 226 are very wide, but  it is not suggested by Mr. Chatterjee that even  these powers can take in within their sweep  industrial disputes of the kind which this  contention seeks to raise. Therefore, without  expressing any opinion on the merits of the  contention, we would confirm the finding of the  High Court that the proper remedy which is  available to the appellants to ventilate their  grievances in respect of the said notices and  circulars is to take recourse to s. 10 of the  Industrial Disputes Act, or seek relief, if  possible, under sections 74 and 75 of the Act."

The inevitable conclusion, therefore, is that both learned  Single Judge and the Division Bench have failed to consider  the basic issues. In the normal course we would have left it to  the respondent to avail appropriate remedy under the Act.

The above aspects were highlighted in Hindustan Steel  Works Construction Ltd. and Anr. v. Hindustan Steel Works  Construction Ltd. Employees Union (2005 (6) SCC 725).

A bare reading of Section 22 of the Act makes the  position clear that where the dispute arises between an  employer and employees with respect to the bonus payable  under the Act or with respect to the application of the Act in  public sector then such dispute shall be deemed to be an  industrial dispute within the meaning of ID Act.

As disputed questions of fact were involved, and

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alternative remedy is available under the ID Act, the High  Court should not have entertained the writ petition, and  should have directed the writ-petitioners to avail the statutory  remedy.   

However, because of the long passage of time (the writ  petition was filed in 1996), the attendant circumstances of the  case in the background noted above and in view of the  agreement that this is a matter which requires to be referred  to the Tribunal, we direct that the appropriate Government  shall refer the following question for adjudication by the  appropriate Tribunal:   

(1)     Whether there was violation of Section 9-A of the  Industrial Disputes Act, 1947 as claimed by the  employees? (2)     Whether the withdrawal of the construction allowance  amounted to the change in the conditions of service?

Question:

       Whether the A.P. Foods was liable to pay bonus under  the Act to its employees?

The parties shall jointly move the appropriate  Government with a copy of our judgment.

       Normally, it is for the State Government to take a  decision in the matter of reference when a dispute is raised,  the direction as noted above has been given in the  circumstances indicated above.  

       In some cases, this Court after noticing that refusal by  appropriate Government to refer the matter for adjudication  was prima facie not proper, directed reference instead of  directing reconsideration.  (See Nirmal Singh v. State of  Punjab AIR 1984 SC 1619, Sankari Cement Alai Thozhilalar  Munnetra Sangam v. Management of India Cement Ltd. (1983)  1 Lab.L.J. 460, V. Veerarajan and others v. Government of  Tamil Nadu and Ors. (AIR 1987 SC 695), Sharad Kumar v.  Govt. of N.C.T. of Delhi (AIR 2002 SC 1724).    

       The parties shall be permitted to place materials in  support of their respective stands. We make it clear that we  have not expressed any opinion on the merits of the case. The  Tribunal shall make an effort to dispose of the reference within  four months of the receipt of the reference from the State  Government, which shall be done within three months from  today.  

       The appeal is allowed to the aforesaid extent with no  order as to costs.