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PETITIONER: BALA SUBRAHMANYA RAJARAM

       Vs.

RESPONDENT: B.C. PATIL AND OTHERS

DATE OF JUDGMENT: 19/03/1958

BENCH: BOSE, VIVIAN BENCH: BOSE, VIVIAN IMAM, SYED JAFFER SUBBARAO, K.

CITATION:  1958 AIR  518            1958 SCR 1504

ACT: Wages-If  include bonus awarded by Industrial  Court-Payment of Wages Act (IV of 1936), S. 2(vi), 15.

HEADNOTE: The  Industrial Court, Bombay, awarded bonus equal to 4  1/2 months’  wages to the operatives of the Tata Mills Ltd.  and directed  that  those operatives who were no longer  in  the service  of the Mills should be paid the bonus in  one  lump sum  by  a fixed date and in such cases  claims  in  writing should be made to the Manager of the Mills.  The  operatives who  made a claim before the date fixed were duly  paid  but payment  was  refused to operatives who applied  after  that date.   The  operatives who had been  refused  payment  made applications  to  the Authority under the Payment  of  Wages Act.   The  Mills  contended  that  the  Authority  had   no jurisdiction   to   entertain  the  application,   but   the contention  was rejected.  The Mills filed a  writ  petition before the Bombay High Court which was dismissed by a Single judge and an appeal against that decision was also dismissed by a Division Bench: Held, that the bonus awarded by the Industrial Court was not wages within the meaning of S. 2(Vi) of the Payment of Wages Act  and  as  such  the Authority  had  no  jurisdiction  to entertain  the  applications made to it under s. I5  of  the Act.   Though  such  bonus  was  remuneration  it  was   not remuneration  payable on the fulfilment of the terms of  the contract  of employment, express or implied, as required  by S. 2(vi). F.   W. Heilgers & Co. v. N. C. Chakravarthi, [1949]  F.C.R. 356, followed.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 35 & 36  of 1954. 1505 Appeals from the judgments and order dated August 28,  1952, of the Bombay High Court in Appeals Nos. 34 and 35 of  1952, arising  out  of the orders dated January 24, 1952,  of  the

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said  High Court exercising its Civil Original  Jurisdiction in Misc.  Applications Nos. 302 of 1951 and 303, 304 and 305 of 1951 respectively. R.   J. Kolah, B. Narayanaswami, J. B. Dadachanji, S.  N. Andley and Rameshwar Nath, for the appellant. H.   N.  Sanyal,  Addl.  Solicitor-General of India,  N.  P. Nathwani and R. H. Dhebar, for respondent No.     3 in C.  A 35 & No. 5 in C. A. 36. D. H. Buch and Naunit Lal, for respondent No. 2 in C. A.  35 & Nos. 2-4 in C. A. 36. 1958.  March 19.  The Judgment of the Court was delivered by BOSE  J.-These  appeals arise out of petitions made  to  the Bombay High Court under Art. 226 for writs of certiorari. The  appellant  is the manager of the  Tata  Mills  Limited, which  carries  on business in the manufacture and  sale  of textile  goods in Bombay and as such is responsible for  the payment of wages under the Payment of Wages Act, 1936. The first respondent was the Authority under the Payment  of Wages Act at the times material to these appeals.  The sixth respondent  is  the  present Authority.   The  Authority  is entrusted with the duty of deciding cases falling within the purview of the Act. The   second,  third,  fourth  and  fifth  respondents   are employees in the Mills. A dispute arose about a claim made by the operatives of  the Mills  for a bonus for the year 1948.  This was referred  to the Industrial Court at Bombay which made an award on  April 23, 1949, and awarded a bonus equivalent to four and a  half months’  wages subject to certain conditions of  which  only the sixth is material here.  It runs as follows: " Persons who are eligible for bonus but who are 1506 not  in the service of the Mill on the date of  the  payment shall be paid in one lump sum by the 30th November 1949.  In such cases, claims in writing should be made to the  Manager of the Mill concerned." Those  operatives  who made a claim before  the  date  fixed above  were duly paid but payment was refused to  the  third respondent,  who applied much later, on the ground that  the condition  subject  to  which the award  was  made  was  not fulfilled. The  third respondent thereupon made an  application  before the  first  respondent, the Authority under the  Payment  of Wages Act. Similar  claims  were made by the second, fourth  and  fifth respondents for a bonus for the year 1949.  The,  Industrial Court awarded a bonus equal to two months’ wages and in  the sixth condition put the date as December 31, 1950. By this time Labour Appellate Tribunals came into existence, so both sides filed appeals against the award to the  Labour Appellate  Tribunal of Bombay.  The appeals failed  and  the award was upheld. After   that,   the  matter  followed  the   same   pattern. Respondents  2,  4  and  5 applied  for  their  bonus  after December  31,  1950.   The Mills refused to  pay  and  these respondents  applied to the first respondent, the  Authority under the Payment of Wages Act. The  two  sets of claims, that is to say, the claim  of  the third  respondent  for  a bonus for the year  1948  and  the claims  of  the  second, fourth and  fifth  respondents  for bonuses for the year 1949, were heard together. The  appellant contested these applications on two  grounds. He questioned the jurisdiction of the Authority to entertain the  petitions made to it.  He also contended that,  in  any event, as the condition subject to which the award was made,

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namely,  an application on or before November 30, 1949,  was not fulfilled, the claim for a bonus did not lie. The  first  respondent held that it  had  jurisdiction  and, after hearing the parties on the merits, decreed the various claims. 1507 The  appellant  thereupon filed writ petitions in  the  High Court.  They were heard and dismissed by Coyajee J. An appeal was then filed in the same High Court and heard by the  Chief  Justice  and  Bhagwati J.  They  held  that  the questions  raised  were covered by an  earlier  decision  of theirs in another case dated March 11, 1952, and,  following that decision, dismissed the appeals without hearing further arguments,  as counsel on both sides agreed that the  matter was  covered  by the earlier decision.  The  appellant  then applied  for a certificate for leave to appeal  here.   This was  granted  by Chagla C. J. and Dixit J.  on  February  2, 1953. The  first  question that we have to decide is  whether  the first respondent had jurisdiction to entertain the petitions made to him as the Authority under the Payment of Wages Act. This  depends on whether these bonuses are " wages "  within the meaning of the definition in s. 2(vi) of the Act. The  scope of the Authority’s jurisdiction is set out in  s. 15 of the Act.  It is to bear and decide (1)all claims arising out of deduction from wages, and  (2) all claims regarding delay in the payment of wages. Therefore,  unless  these bonuses are " wages "  within  the meaning of the Act, the Authority will have no jurisdiction. The  definition of " wages " in s. 2(vi) of the Act is  long and complicated but leaving aside the clauses in it that are not material for our present purpose, it runs- "  ’Wages’ means all remuneration............. which  would, if  the  terms  of the contract of  employment,  express  or implied,  were fulfilled, be payable, whether  conditionally upon  regular  attendance,  good work or  conduct  or  other behaviour of the person employed, or otherwise, to a  person employed  in  respect of his employment or of work  done  in such employment, and includes any bonus or other  additional remuneration 191 191 1508 of  the nature aforesaid which would be so payable  and  any sum  payable to such person by reason of the termination  of his employment, but does not include............... and then five matters that are not included are set out. Now  consider  this clause by clause.  "’ Wages’  means  all remuneration."  Is  bonus a remuneration ?  We think  it  is Remuneration  is only a more formal version of "  payment  " and payment is a recompense for service rendered. Now  it is true that bonus in the abstract need not  be  for services   rendered  and  in  that  sense  need  not  be   a remuneration; for example, there is a shareholder’s bonus in certain  companies, and there is a life insurance bonus  and so  forth.  But that is not the kind of  bonus  contemplated here  because the kind of remuneration that  the  definition contemplates is one that is payable "  in  respect  of his employment or of work  done  in  such employment." Therefore,  the  kind  of bonus that  this  definition  con- templates is one that is remuneration for services  rendered or work done.  Accordingly, it is a " remuneration " and  as the  definition  includes all remuneration  of  a  specified kind, we are of opinion that bonus of the kind  contemplated

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here  falls  within  the  clause that  says  it  must  be  " remuneration ". Next  comes a clause that limits the kind  of  remuneration, for,  though the opening words are " all remuneration "  the words  that follow limit it to all remuneration of the  kind specified in the next clause, that is, to remuneration "  which  would be payable if the terms of the  contract  of employment, express or -implied, were fulfilled.  " Now  the question is whether the kind of bonus  contemplated by  this  definition must be a bonus that is  payable  as  a clause  of the contract of employment.  We think it is,  and for this reason. If we equate " bonus " with " remuneration ", the 1509 definition  says clearly enough that the bonus must be  such that  it  is  payable  "if the terms  of  the  contract  are fulfilled",  that is to say, it will not be payable  if  the terms are not fulfilled. Now,  we can understand a position where a statute  declares that  whenever the terms of the contract of  employment  are fulfilled  the  bonus  shall be  payable;  equally,  we  can envisage  a situation in which an employer engages to pay  a bonus  should  the terms of the contract  of  employment  be fulfilled,  by a separate and independent agreement that  is riot  part of the contract of employment.  In  either  case, the  matter  could be said to fall within this part  of  the definition.   But we can see no way in which a bonus can  be said to be payable if and when the terms of the contract  of employment  are fulfilled outside these two  cases  (namely, legislation, or a separate contract that is not part of  the contract of employment), except when it is payable by reason of a term, express or implied, in the contract of employment itself.  In any event, if there are such cases, the  present is  not one of them, for the bonus here is payable under  an award of an Industrial Court and has nothing to do with  the fulfilment  or  otherwise of the terms of  the  contract  of employment, except indirectly. It was argued that as an Industrial Court can direct payment of bonus should an industrial dispute arise in that  behalf, the  matter falls within the definition.  But does it ?  One of  the  matters that an Industrial Court  might  take  into consideration  before  awarding a bonus is whether  all  the terms of the contract of employment have been duly fulfilled and it is possible that such a Court might refuse to award a bonus  in cases where the terms were not fulfilled,  but  it would not be bound by such a consideration and its right  to make an award of bonus is not conditional on the  fulfilment of  the terms of the contract of employment, whereas,  under the definition, that is an essential ingredient.  Therefore, even  if  due  fulfilment of the terms of  the  contract  of employment  was to be one of the reasons for the award,  the bonus  so awarded would not be payable because the terms  of the contract 1510 had been fulfilled but because of an industrial dispute  and because in order to settle it, the Court awarded the bonus. It  is not necessary to analyse the definition  any  further (except  for  one  clause) because, even if  all  the  other ingredients are present, the clause we have just  considered would  exclude a bonus of the kind we have here, that is  to say, a bonus awarded by an Industrial Court. The  clause we have yet to examine is this: " and includes any bonus or other additional remuneration of the nature aforesaid which would be so payable." It  was contended that the words " and includes any bonus  "

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stand  by themselves and that the words that follow must  be disregarded  when bonus is under consideration because  they relate  only  to "additional remuneration " and  riot  to  " bonus ". Now,  it  may  be possible to say that the words  "  of  the nature  aforesaid  "  only govern  the  words  "  additional remuneration  " and that they do not apply to "bonus",  with the  result  that the inclusion clause "  and  includes  any bonus etc." would refer to two separate things, namely, (1) bonus and (2)other  additional remuneration of the  nature  aforesaid. In our opinion, the clause means- (1)  "bonus.................. which would be so  payable  ", and (2)"  other additional remuneration of the nature  aforesaid which would be so payable." If  that  is  correct, then the words " which  would  be  so payable  "  throw  us  back  to  the  earlier  part  of  the definition and we reach the position that the kind of  bonus that  is included by the inclusion clause is the  kind  that would  be  payable  "  if  the  terms  of  the  contract  of employment, express or implied, are fulfilled." There  is another reason for reaching this conclusion.   The opening words of the definition make it clear that " wages " means  remuneration  that is payable when the terms  of  the contract  of employment are fulfilled.  Therefore,  that  is something certain. 1511 One  knows ahead of time that if the terms of  the  contract are  fulfilled, then the bonus is payable.  It may  be  that the exact amount has yet to be determined but the fact  that bonus is payable and can be claimed as soon as the terms  of the  contract  are  fulfilled  is  a  matter  that  can   be predicated beforehand, that is to say, even before the terms of  the contract are fulfilled, or indeed, even  before  the work  has  started if the contract is made that  far  ahead. But  that  is  not  the case when bonus  is  awarded  by  an Industrial Court, for there it is impossible to say ahead of time  whether bonus will be awarded or not; indeed,  at  the time the contract is entered into, it would be impossible to say  whether  such a claim could be laid at a II  because  a difference  of opinion between one worker and  his  employer about  the right to bonus would Dot necessarily lead  to  an industrial  dispute.   When  an Industrial  Court  awards  a bonus, independent of any contract, it does so only if there is an available surplus for a distribution of bonus and  the amount  of  the  award would depend on  the  extent  of  the surplus   available  for  that  purpose.    Therefore,   the fulfilment  or  otherwise of the terms of  the  contract  of employment is not an essential ingredient of an award of  an Industrial Court. In  F. W. Heilgers & Co. v. N. C. Chakravarthi  the  learned Judges  of the Federal Court held that a bonus  not  payable under  a  contract of employment does not  fall  within  the definition  of "wages" in s. 2(vi) of the Payment  of  Wages Act,  as  it  stood before the amendment in  1957.   We  are concerned  with the old definition here and not the  amended one, so the present case is, in our opinion, covered by that authority. It is true that no bonus had been awarded in Heilgers’  case (1) and that therefore there was no ascertained sum, whereas there  is one in the present case, or rather a sum  that  is ascertainable, but that was only one of the grounds on which the  learned Judges proceeded.  They held that in  order  to bring a particular

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(1)  [1949] F.C. R. 356, 360. 1512 payment  under  the definition of "wages",  two  things  are necessary- " (1) a definite sum, and (2)  a contract indicating when the sum becomes payable "; and they said- "  It is obvious that unless there is an  express  provision for  paying a stipulated sum, the definition will not  cover such a payment." The  bonus in the present case is not payable because  of  a contract  but because of the award of an  Industrial  Court. Therefore, according to the Federal Court, it is not " wages " within the meaning of the Payment of Wages Act. In  1957  the definition was amended and the  following  was added: "  wages’ means  and includes (c)  any additional remuneration payable under the terms  of employment (whether called a bonus or by any other name); but does not include---- (1)  any bonus (whether under a scheme of profit sharing  or otherwise) which does not form part of remuneration  payable under the terms of employment The  change  would have been unnecessary had  the  law  been otherwise  under the old definition; nor is it  possible  to say  that  the clause was added by way of  abundant  caution because  the  Federal Court decided otherwise in  1949.   In view  of this amendment, and in view of the Federal  Court’s decision,  we  do not feel justified in taking  a  different view, especially as we think the decision was right. The  learned  Judges  of  the Bombay  High  Court  tried  to distinguish the Federal Court’s judgment on the ground  that no  bonus  had  been declared there and  ,so  there  was  no ascertained  sum, but, as we have pointed out, the ratio  of the decision covers the present case and, in any case,  that is our view quite apart from their conclusion. 1513 On  this  view, it is not necessary to  consider  the  other points that were argued because, if the definition of  wages ",  as it stood before the amendment, is not wide enough  to include  a  bonus  of the kind we  have  here,  namely,  one payable  under  an award of an Industrial Court,  then,  the Authority under the Payment of Wages Act had no jurisdiction to  entertain  the petitions made to it under s. 15  of  the Act. The  appeals are allowed with costs.  The decisions  of  the learned High Court Judges are set aside and also the decrees of the Authority under the Payment of Wages Act.  There will be only one set of costs. Appeals allowed.