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PETITIONER: DISHERGARH POWER SUPPLY COMPANY LTD.,CALCUTTA & ANR.

       Vs.

RESPONDENT: WORKMEN OF DISHERGARHSUPPLY CO. LTD. & ORS.

DATE OF JUDGMENT15/07/1986

BENCH: ERADI, V. BALAKRISHNA (J) BENCH: ERADI, V. BALAKRISHNA (J) KHALID, V. (J)

CITATION:  1986 AIR 1486            1986 SCR  (3) 184  1986 SCC  (3) 450        JT 1986   207  1986 SCALE  (2)23

ACT:      Payment of Bonus Act, ,1965, sections 5, ,10 and 34(3)- Bonus- Payment of-Obligation of employer to pay higher bonus than  the   minimum  prescribed   by  the  Act-When  arises- Settlement before  Conciliation officer-Effect  of-Power  of Industrial Court to impose new obligations on parties before it-Limitations-What are.

HEADNOTE:      A dispute  regarding  bonus  payable  to  the  workmen- respondents of  the two  companies-appellants for  the  year 1971-72 was  referred to conciliation under section 12(1) of the Industrial Disputes Act, 1947. The   workmen   contended before the  Conciliation officer  that they were entitled to bonus equivalent  to three  months’ basic  wages as  on 31st March, 1972  as customary  bonus or  in any  event as  bonus payable under  the provisions  of the  Act.  The  appellant- companies, on  the other  hand, argued that the workmen were entitled to  only minimum  bonus as  provided under the Act. The  said   dispute  was   ultimately  settled   before  the Conciliation officer  on the  terms: (a)  that each eligible work man will be paid an amount equal to three months’ basic wages as  on 31.3.1970; and (b) that the demand of the Union for bonus  this year  will be  referred to  a  Tribunal  for adjudication.  Accordingly,   the  Government  referred  the dispute for adjudication to the ninth Industrial Tribunal of West Bengal.      After a  detailed discussion  of the  evidence produced before the  Tribunal, it  found (i)  that  the  workmen  had failed to make out the claim of customary bonus or that they were entitled  to maximum  bonus of  20 per cent as provided under the  Act; and (ii) that there was no available surplus during the  year in question and that only the minimum bonus was payable  under the provisions of the Act. However, after having recorded the aforesaid findings, it proceeded to hold that it  was legally  open  to  it  to  substitute  for  the agreement entered into between the 185 parties before  the Conciliation  officer a new contract and pass an  award on  that basis,  if  such  a  step  would  be conducive to  industrial peace.  On this basis the Tribunal,

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held that  there would  not be  material alteration  in  the financial liability  of the  companies in case the agreement was modified by substituting for the words "that the workmen will be  paid the  amount equal to three months’ basic wages as on  31.3.1970" by  the words  "an amount  equal to  basic wages as on 31.3.1372" and accordingly it passed an award in those terms.      In  appeal   to  the  Supreme  Court,  the  appellants- companies challenged the legality of this award.      Allowing the appeal, ^      HELD:  1.  The  impugned  award  passed  by  the  Ninth Industrial Tribunal is not legally sustainable and has to be set aside.  The rights  of the  workmen for payment of bonus for the  year in  question will  be governed by the terms of the agreement  entered into  before the Conciliation officer on October 9, 1972. [190F]      2. The  rights and liabilities of the parties regarding profit bonus  are governed  by the provisions of the payment of Bonus  Act, 1965  which are exhaustive on the subject and the  adjudication  had  to  be  conducted  by  the  Tribunal strictly in accordance with those provisions. [189C-D]      In the  instant case,  the Tribunal  has  categorically found that  there was  no "available  surplus" in respect of the two  companies for the year in question on a computation made under section 5 of the Act. The settlement entered into before the  Conciliation officer  constituted  an  agreement under section  34(3) of  the Act and but for the said agree- ment, the  liability of  the appellants under the provisions of the  Act would  have been only to pay minimum bonus under section 10 of the Act. [189E-F]      Sanghi Jeevraj  Chewar  Chand  and  Ors.  v.  Secretary Madras Chillies,  Grains Kirana Merchants Workers’ Union and Anr., [  1969] 1  SCR 366 and Mumbai Kamgar Sabha. Bombay v. M/s Abdulbhai  Faizullabhai  &  Ors.,  [  1976]  3  SCR  591 referred to.      It is  certainly open  to an  Industrial  Court  in  an appropriate case  to impose  new obligations  on the parties before it  or modify contracts in the interest of industrial peace or give awards which may have the effect 186 of extending the agreement or making new one, but this power is conditioned  by the  subject  matter  with  which  it  is dealing and also by the existing industrial law and it would not be  open to  it while  dealing with  a particular matter before it  to overlook  the industrial  law relating to that matter as laid down by the legislature. " [190B-D]      The New Maneck Chowk Spinning and Weaving Company Ltd. Ahmedabad and  others v.  The  Textile  Labour  Association, Ahmedabad, [1961] 3 SCR 1 relied upon.      In the instant case, in view of the finding recorded by the Tribunal that the result of the working of the companies during the  concerned year  was a  loss  and  there  was  no available surplus,  the  Tribunal  could  not  have  legally proceeded to make an award directing payment of bonus at any rate higher  than the  minimum bonus specified hl section 10 of the  Act. Therefore,  the  impugned  award  made  by  the Tribunal is  clearly inconsistent with the provisions of the Payment of  Bonus Act which contemplate the imposition of an obligation for  payment of  only the minimum bonus where the employer  has   no  allocable   surplus  in   the  concerned accounting  year.   However,  inasmuch   as  the  appellant- companies  had   entered  into  the  settlement  before  the Conciliation Officer  agreeing to pay bonus at a rate higher than the minimum bonus, the said settlement would constitute

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an agreement  under section  34 of  the Act and the terms of the settlement  will govern  the liability for bonus for the year in question. [190D-E]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal  No.  1935 (NL) of 1974.      From the  Award dated  8.5.1974 of the Ninth Industrial Tribunal of West Bengal, Durgapur in Case No. X-4 of 1973.      Dr. Shankar Gkosh and D.N. Gupta for the Appellants.      S.K. Nandy for the Respondents.      The Judgment of the Court was delivered by      BALAKRISHNA ERADI,  J. This appeal by Special Leave has been preferred  against the  Award dated May 8, 1974 made by the Ninth  Industrial Tribunal  of West  Bengal, Durgapur in Case No.  X-4 of  1973 on  its file.  The appellants are two companies incorporated 187 under the Indian Companies Act, 1913 having their registered office in  Calcutta. Both  the appellants are engaged in the business of  generation, transmission, distribution and sale of electricity  in certain  areas of  Bengal and Bihar under licences granted by the concerned Governments. Appellant No. 1 has  a power station at Dishergarh and Appellant No. 2 has its power  station at  Sibpore.  In  connection  with  their aforesaid business  the two  appellants were  having at  the relevant time  400 and  250  workmen  respectively  employed under them.      For the  years 1965-66 to 1970-71 (inclusive) bonus was paid to  the workmen on the basis of agreements entered into each year  under Section  34(3) of the Payment of Bonus Act, 1965 (hereinafter  referred to as the ’Act’). Concerning the bonus payable  for the year 1971-72, a dispute was raised by the workmen  of the  two companies  and it  was referred  to conciliation under  Section 12(1) of the Industrial Disputes Act,  1947.   The  contention  of  the  workmen  before  the Conciliation officer  was that  they were  entitled to bonus equivalent to  three months’ basicwages as on March 31, 1972 as customary  bonus or  in any  event as bonus payable under the provisions  of the Act. The appellant- companies, on the other hand, contended that the workmen were entitled to only minimum bonus  as provided  under the  Act on  a computation being made  in the  manner laid  in the  said Act.  The said dispute  was  ultimately  settled  before  the  Conciliation officer inter alia on the following terms:           "(1) Subject  to usual adjustments made in 1969-70                and 1970-71,  each eligible  workmen will  be                paid an  amount equal  to three months’ basic                wages as on 31.3.1970 .           (2)   A  sum  of  Rs.20,000  will  be  distributed                equally among  all workmen  who were  on  the                rolls on  15.8.1972 and  have worked  for  at                least 30  days. This  will be ’Silver Jubilee                Year’ payment.           (3)   The demand  of the Union for bonus this year                will  be   referred  to   as   Tribunal   for                adjudication.           (4)   The payment  should be  made  by  12.10.1971                Eligible  workmen   under  terms(1)  of  this                settlement                (a)   Permanent  and  probationers.  Rest  of                     workmen will  be paid  bonus  under  the                     Payment of Bonus Act."

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188 Although the  said settlement was an agreement under section 34(3) of  the Act since under its very terms as incorporated in clause (3), the parties had stipulated for a reference of the question  for adjudication  by a Tribunal. The issue was accordingly referred  by the  Government of  West Bengal for adjudication to the Ninth Industrial Tribunal of West Bengal by an order of reference dated January 15, 1973.      In the  written statement  filed by  the workmen before the Ninth  Industrial Tribunal  they claimed  three  months’ basic wages  as on  March 31,  1972 as customary bonus or in the alternative  20 per cent of the salary or wages as bonus payable under  the Act. The appellants reiterated before the Tribunal the  same contentions  which they  had put  forward before the  Conciliation officer.  The Tribunal  allowed the parties to  adduce evidence.  After a detailed discussion of the evidence  produced before  it, the  Tribunal recorded  a clear finding  that the  workmen had  failed to make out the claim of  customary bonus  put forward  by them and that the said plea had therefore to fail. It was further found by the Tribunal  that   the  plea  put  forward  by  the  appellant companies that  there was  no available  surplus during  the year in question and that only the minimum bonus was payable under the  provisions of  the Act  had  to  be  upheld.  The Tribunal, therefore,  held that  the unions representing the workmen had  failed to  make out the case put forward by the workmen that  the workmen  were entitled to maximum bonus of 20 per cent as provided under the Act. After having recorded the aforesaid  findings, the Tribunal, however, proceeded to accept the  contention advanced  before it  by  the  Counsel appearing for  the workmen that it was legally open to it to substitute  for  the  agreement  entered  into  between  the parties before  the Conciliation  officer a new contract and pass an  award on  that basis,  if  such  a  step  would  be conducive  to   industrial  peace.  On  this  reasoning  the Tribunal proceeded to observe:           "In  my  opinion,  there  would  not  be  material           alteration  in  the  financial  liability  of  the           companies in  case the  agreement was  modified by           substituting for  the words  that the workmen will           be paid  the amount  equal to  three months’ basic           wages as on 31.3.1970 by the words an amount equal           to basic  wages as on 31.3.1972.. I am, therefore,           in agreement  with this  contention of the learned           lawyer for  the unions  that the  Tribunal  should           create a new contract and that is pass an award of           three months’  basic wage as on 31.3.1972. This is           in my opinion would be con- 189           ducive  to  industrial  peace  and  it  would  not           violate any existing industrial law."      Accordingly, the Tribunal passed an award directing the appellant companies to pay to the workmen the balance amount by way  of bonus as per the rates calculated by the Tribunal within a  month from the date of publication of the award in the Calcutta  Gazette. It is the legality of this award that is under challenge in this appeal.      It has  to be  remembered that the claim of the workmen which  the   Tribunal  was   considering  while  making  the aforesaid observations  was one  for Profit bonus only since the claim  for customary  bonus had been rejected by it. The rights and liabilities of the parties regarding Profit bonus were governed  by  the  provisions  of  the  Act  which  are exhaustive on  the subject  and the  adjudication had  to be conducted by  the Tribunal strictly in accordance with those

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provisions-See Sanghi  Jeevraj  Ghewar  Chand  and  Ors.  v. Secretary, Madras Chillies, Grains Kirana Merchants Workers’ Union and Anr., [1969] 1 S.C.R. 366 and Mumbai Kamgar Sabha, Bombay v. M/s Abdulbhai Faizullabhai & Ors., [1976] 3 S.C.R. 591.      As already  noticed,  the  Tribunal  has  categorically found on  a consideration  of the evidence adduced before it that there  was no "available surplus" in respect of the two companies for  the year  in question  on a  computation made under Section  S of  the Act.  The settlement  entered  into before the  Conciliation officer  constituted  an  agreement under Section  34(3)  of  the  Act  and  but  for  the  said agreement  the   liability  of   the  appellants  under  the provisions of  Act would have been only to pay minimum bonus under Section  10 of  the Act.  Since the  parties  were  at variance on  the question  of  existence  of  liability  for payment of  customary bonus in the establishments as well as on  the   question  regarding  the  existence  of  available surplus, provision  was made  in clause (3) of the agreement for reference  under the  industrial  adjudication.  If  the Tribunal found that the claim for payment of customary bonus was substantiated it could have passed an order in favour of the workmen  for payment  of such bonus. That claim had been negatived.   The    only   question   which   remained   for determination for  the Tribunal was whether the claim of the workmen for payment of 20 per cent of the salary or wages as bonus payable  under  the  Act  was  tenable  or  not.  That depended  essentially   on  the  question  of  existence  of available surplus  and  its  quantum,  if  any  surplus  was available. In  view of  the finding recorded by the Tribunal accepting 190 the plea  put forward  by the  appellant companies  that the result of  the working of the companies during the concerned year was  a loss  and there  was no  available surplus,  the Tribunal could  not have  legally proceeded to make an award directing payment  of bonus  at any  rate  higher  than  the minimum bonus specified in Section 10 of the Act. As pointed out by  this Court  in The  New Maneck  Chowk  Spinning  and Weaving Company  Ltd. Ahmedabad  and others  v. The  Textile Labour Association,  Ahmedabad, [1961] 3 S.C.R. 1,-while "it is certainly  open to  an industrial court in an appropriate case to  impose new  obligations on the parties before it or modify contracts in the interest of industrial peace or give awards which  may have  the effect of extending Agreement or making new one, but this power is conditioned by the subject matter with  which it  is dealing  and also  by the existing industrial law  and it would not be open to it while dealing with  a   particular  matter   before  it  to  overlook  the industrial law  relating to  that matter as laid down by the legislature." It is manifest that the impugned award made by the Tribunal  is clearly inconsistent with the provisions of the Payment of Bonus Act which contemplate the imposition of an obligation  for payment  of only  the minimum bonus where the employer  has no  allocable  surplus  in  the  concerned accounting year.  However,  in  as  much  as  the  appellant companies  had   entered  into  the  settlement  before  the Conciliation officer  agreeing to pay bonus at a rate higher than the minimum bonus, the said settlement would constitute an agreement  under Section  34 of  the Act and the terms of the settlement  will govern  the liability for bonus for the year in question.      It follows  from  the  foregoing  discussion  that  the impugned award  passed by  the Ninth  Industrial Tribunal is not legally  sustainable. The  appeal is accordingly allowed

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and the  Award of  the Industrial  Tribunal will  stand  set aside. The  rights of  the workmen  for payment of bonus for the year  in question  will be  governed by the terms of the agreement enterd  into before  the Conciliation  officer  on October 9. 1972.      In view  of the  condition imposed by the order of this Court dated  November 21, 1974 while granting Special Leave, the  appellants  are  directed  to  pay  the  costs  of  the respondents in this appeal. M.L.A.                                       Appeal allowed. 191