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Competitions in which success depended substantially on skill could not have been in the minds of the legislatures which passed those resolutions. PRE |
Those competitions had not been the subject of any controversy in Court. PRE |
They had not done any harm to the public and had presented no problems to the States and at no time had there been any legislation directed to regulating them". PRE |
Though the Court refused to look at the statement of objects and reasons for the, purpose of construing sec 2(d), it held that "having regard to the history of the legislation, the declared object thereof and the wording of the statute" the words had to be, given a restricted meaning. PRE |
In Central Bank of India vs Their Workmen (2 the Court in construing sec 10(1) (b) of the Banking Companies Act, 10 of 1949, again looked at the legislative history to ascertain Jr the object of passing the Act and the mischief it sought to remedy,but declined to use the statement of objects and reasons to construe the... |
In section Azeez Basha & Ors.vs Union of India(4), the, petitioners challenged the validity of the Aligarh Muslim University (Amendment) Act, 62 of 1951 and the Aligarh Muslim University (Amendment) Act, 19 of 1965 as violating article 30(1) of the Constitution. Ratio |
this Court went into the history of the establishment of the University to ascertain whether it was set up by the Muslim minority and as such entitled to rights under article 30 and held that it was not set up by the minority but in fact established by the Government of India by passing the of Crawford on Statutory Con... |
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 ... |
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. Ratio |
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. Ratio |
The practice of paying bonus as an ex gratia payment had its early roots in the textile industry in Bombay and Ahmedabad. Ratio |
In 1917 and 1918 an increase of 10 and 15% of wages was granted as War bonus to the textile workers by the employers. Ratio |
In October, 1920, a Committee appointed by the Bombay Millowners recommended to the member mills payment of bonus equal to one month 's pay. Ratio |
Similarly bonus was declared in 1921 and 1922. Ratio |
It appears that trading conditions in the industry having deteriorated, the mill owners declared in July 1923 that they would be unable to pay bonus for 1923. Ratio |
Thereupon a strike began which became general towards the end of January 1924. Ratio |
In February 1924, a bonus dispute Committee was appointed by the Government of Bombay to consider the nature of, the conditions and the basis of bonus which had been granted to the employees in the textile mills and to declare whether the employees had established any enforceable claim, customary, legal or equitable. R... |
The Committee held that they had not established any enforceable claim, customary, legal or equitable, to an annual payment of bonus which could be upheld in a court. Ratio |
The years that followed were years of depression and no major dispute about bonus arose, although bonuses were given on ad hoc basis by a few industrial undertakings. Ratio |
During the Second World War, managements of textile mills paid cash bonus equivalent to a fraction of the surplus profit but this was also voluntary payment to keep labour contented. Ratio |
Disputes for payment of bonus for the years 1948 and 1949 arose in the Bombay textile industry. Ratio |
On the said dispute having been referred to the Industrial Court, that Court expressed the view that since both labour and capital contributed to the profits of the 373 industry both were entitled to a legitimate return out of the profits and evolved a formula for charging certain prior liabilities on the gross profits... |
The Industrial Court excluded the mills which had suffered loss from the liability to pay bonus. Ratio |
In appeals against the said awards, the Labour Appellate Tribunal approved broadly the method of computing bonus as a fraction of the surplus profit. Ratio |
According to this formula, which has since been referred to as the Full Bench formula, the surplus available for distribution is to be determined after debiting certain prior charges from gross profits, viz. (1) provision for depreciation (2) reservation for rehabilitation (3) return of 6% on paid up capital, and (4) r... |
In Muir Mills Company vs Suti Mills Mazdoor Union, Kanpur(1), Baroda Borough Municipality vs Its Workmen(2), The Shree Meenakshi Mills Ltd. vs Their Workmen(3) and The State of Mysore vs The Workers of Gold Mines(4) this Court laid down (1) that bonus was not a gratuitous payment nor a deferred wage, and (2) that where... |
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. Ratio |
These questions came to be examined for the first time in Associated Cement Companies Ltd. vs Its Workmen(5) where the said formula was generally approved. Ratio |
Since that decision, this Court has accepted in several cases the said formula. Ratio |
The principal feature,,, of the formula are that each year for which bonus is claimed is a self contained unit, that bonus is to be computed on the profits of the establishment during that year, that the gross profits are to be determined after debiting the wages and dearness allowance paid to the employees and other i... |
The formula was not based on any legal right or liability, its object being only to distribute profits after reasonable allocations for the aforesaid charges. Ratio |
Attempts were thereafter made from time to time to have the said formula revised but they were rejected first in A.C.C. 's case(5) and again in The Ahmedabad Miscellaneous Industrial Workers Union vs The Ahmedabad Electricity Co. Ltd. (6) where it was observed that the plea for revision raised an issue which affected a... |
The Court, therefore, suggested that the question of revising the formula should be "comprehensively considered by a high powered Commission". Ratio |
Taking up the aforesaid suggestion, the Government of India appointed a: Commission, by its resolution dated December 6, 1961, the terms of reference whereof were, inter alia, 1. to define the concept of bonus and to consider in relation to industrial employment the question of payment of bonus based on profits and rec... |
After an elaborate enquiry, the Commission made the following amongst other recommendations : 1.That bonus was paid to the workers as share in the prosperity of the establishment and that the basic scheme of the bonus formula should be adhered to viz. determination of bonus as a percentage of gross profits reduced by t... |
The Commission did not recommend provision for rehabilitation. Ratio |
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 shou ld merge the saving in tax on bonus and the aggre 375 gate balance thus left to the establishment should ... |
That the distinction between the basic wages and dearness allowance for the purpose of arriving at the bonus quantum should be done away with and bonus should be related to wages and dearness allowance taken together; 4. Ratio |
That minimum bonus should be 4% of the total basic wage and dearness allowance paid during the year or Rs. 40 to each employee, whichever is higher, and in the case of children the minimum should be equivalent to 4% of their basic wage and dearness allowance, or Rs. 25 whichever is higher; 5. Ratio |
That the maximum bonus should be equivalent to 20% of the total basic wage and dearness allowance paid during the year; 6. Ratio |
That the bonus formula proposed should be deemed to include bonus to employees drawing a total basic pay and dearness allowance up to Rs. 1600 p.m. regardless of whether they were workmen as defined in the or other corresponding Act provided that quantum of bonus payable to employees drawing total basic pay and allowan... |
That the formula should not apply to new establishments until they recouped all early losses including arrears of normal depreciation subject to the time limit of 6 years; and 8. Ratio |
That the scheme should be applied to all bonus matters relating to the accounting year ending on any day in the calendar year 1962 except in those matters in which se ttlements had been reached or decisions had been given. Ratio |
The fact that the Government of India accepted the majority of the Commission 's recommendations is clear from the Statement of objects and reasons attached to Bill No. 49 of 1965 which they sponsored in Parliament. Ratio |
The Statement, inter alia, states that a "tripartite Commission was set up by the Government of India by resolution dated 6th December 1961 to consider in comprehensive manner the question of payment of bonus based on profits to employees employed in establishments and to make recom 37 6 mendations to the Government. R... |
The Commission 's report con taining the recommendations was received by the Government on 24th January, 1964. Ratio |
By resolution dated 2nd September, 1964, Government announced acceptance of the Commission 's recommendations subject to a few modifications as were mentioned therein". Ratio |
To implement these recommendations the Payment of Bonus Ordinance, 1965 was promulgated on May 29, 1965. Ratio |
Since the Ordinance was replaced by the present Act published on September 25, 1965, it is unnecessary to examine its provisions. Ratio |
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 and other corresponding Acts. Ratio |
Under the Act liability to pay bonus has now become a statutory obligation imposed on the employers. Ratio |
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 form... |
We proceed next to examine some, of the provisions of the Act and its scheme. Ratio |
The preamble of the Act states that it is to provide for payment of bonus in certain establishments and for matters connected therewith. Ratio |
Section 1(3) provides that it shall apply "save as otherwise provided in the Act" to (a) every factory and (b) every other establishment in which 20 or more persons are employed on any day during the accounting year. STA |
We may note that this subsection is in consonance with one of the Commission 's recommendations, viz. that its bonus formula should not be applied to small shops and establishments which are not factories and which employ less than 20 persons. Ratio |
Having made clear that the Act is to apply only to those establishments mentioned in sub. sec.(3), sub. sec.(4) provides that the Act shall have effect in respect of the accounting year 1964 and every subsequent year. Ratio |
"Allocable surplus" under section 2(4) means 67% in cases falling under cl.(a) and 60% in other cases of the available surplus. STA |
2(6) defines 'available surplus ' to mean available surplus as computed under sec defines "establishment in private sector" to mean any estab lishment other than an establishment in public sector. STA |
2(16) defines "establishment in public sector" as meaning (a) a Government company as defined in section 617 of the , and (b) a Corporation in which not less than 40% of it capital is held by Government or the Reserve Bank of India or a Corporation owned by Government or the Reserve Bank of India. STA |
"Gross profits" a , defined by sec.2(18) means gross profits cal 377 culated under sec.4 and 5 provide for computation of gross profits and available surplus after deducting therefrom the sums referred to in sec.6 viz., depreciation admissible under 32(1) of the Income Tax Act or the relevant Agricultural Income Tax Ac... |
7 deals with calculation of direct tax. STA |
8 and 9 deals with eligibility of and disqualification from receiving bonus. STA |
10 to 15 deal with minimum and maxi mum bonus and the provisions for 'set off ' and 'set on '. STA |
18, 19, and 21 to 31 deal with certain procedural and allied matters. STA |
20 deals with certain establishments in public sector to which the Act is made applicable in certain events. STA |
32 exclude from the application of the Act certain categories of employees and certain establishments therein specified. STA |
34 provides for the overriding effect of the Act notwithstanding anything incon sistent therewith contained in any other law for the time being in force or in terms of any award, agreement, settlement or contract of service made before May 29, 1965. STA |
35 saves the provisions of the Coal Mines, Provident Fund and Bonus Schemes Act, 1948 or any scheme made thereunder. STA |
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 specifi... |
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 or any corresponding law relating to investigation and settlement of industrial disputes in force in a State". STA |
It will be noticed that sec.22 provides that where a dis pute 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 an industrial dispute within the meaning of the or any corresponding law... |
An industrial dispute under the would be between a workman as defined in that Act and his employer and the dispute can be an industrial dispute if it is one as defined therein. Ratio |
But the definition of an "employee" under sec.2(13) of this Act is wider than that of a "workman" under the Industrial Disputes 378 Act. Ratio |
A dispute; between an employer and an employee, therefore, may not fall under the and in such a case the Act would not apply and its machinery for investigation and settlement would not be available. Ratio |
That being so, and in order that such machinery for investigation and settlement may be available, sec. 22 has been enacted to create a legal fiction whereunder such disputes are deemed to be industrial disputes under the or any other corresponding law. Ratio |
For the purposes of such disputes the provisions of the or such other law are made applicable. Ratio |
The effect of sec.22 thus is (1) to make the disputes referred to therein industrial disputes within the meaning of the or other corresponding law and (2) having so done to apply the provisions of that Act or other corresponding law for investigation and settlement of such disputes. Ratio |
But the application of sec.22 is limited only to the two types of disputes referred to therein and not to others. Ratio |
Section 39, on theother hand, provides that "save as otherwise expressly provided" the provisions of the Act shall be in addition to and not in derogation of the, or any corresponding law relating to investigation and settlement of industrial disputes in force in a State. STA |
Except for providing for recovery of bonus due under a settlement, award, or agreement as an arrear of land revenue as laid down in sec.21, the Act does not provide any machinery for the investigation and settlement of disputes between an employer and an employee. STA |
If a dispute, for instance, were to arise as regards the quantum of available surplus, such a dispute not being one falling under sec.22, Parliament had to make a provision for investigation and settlement thereof. Ratio |
Though such a dispute would not be an industrial dispute as defined by the 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 or such corresponding law makes available the machinery in that Act or the corresponding 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 and other corresponding law in force for their investigation and settlement. Ratio |
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... |
Though, the words "in force in a State" after the words "or any corresponding law relating to investigation and settlement of industrial disputed appear to qualify the words "any corresponding law" and not the 379 , the is primarily a law relating to investigation and settlement of industrial disputes and provides mach... |
Therefore the distinction there made between that Act and the other laws does not seem to be of much point. Ratio |
It is thus clear that by providing in section 39 that the provisions of this Act shall be in addition to and not in derogation of those Acts, Parliament wanted to avail of those Acts for investigation and settlement of disputes which may arise under this Act. Ratio |
The distinction between sec.22 and sec.39, therefore, is that whereas sec.22 by fiction makes the disputes referred to therein industrial disputes and applies the provisions of the and other corresponding laws for the investigation and settlement thereof, Sec.39 makes available for the rest of the disputes the machiner... |
Therefore, there is no question of a right to bonus under the or other corresponding Acts having been retained or saved by sec. Ratio |
Neither the nor any of the other corresponding laws provides for a right to bonus. Ratio |
Item 5 in Schedule 3 to the deals with jurisdiction of tribunals set up under sections 7, 7A and 7B of that Act, but does not provide for any right to bonus. Ratio |
Such a right is statutorily provided for the first time by this Act. Ratio |
Mr. Ramamurti and Mr. Gokhale for the respondents, however, sought to make the following points : 1.The Act applies only to certain establishments and its preamble and sec.1(3) show to which of them it is expressly made applicable; 2. Under sec.1(3), the Act is made applicable to all factories and establishments in whi... |
It means that the Act does not apply (i) to factories and establishments otherwise provided in the Act, and (ii) to establishments which have less than 20 persons employed. Ratio |
The Act, therefore, is not a comprehensive Act but applies only to factories and establishments covered by sec.1(3); 3.There is no categorical 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 othe... |
If it intended to deprive them of such bonus surely it would have expressed so in the Act; in clear terms saves the right to claim bonus under the 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. Ratio |
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 establishments in which 20 or more persons are employed. Ratio |
Sub sec.(4) of sec. 1 also provides that the Act is to have effect in relation to such factories and establishments from the accounting year commencing on any day in 1964 and every subsequent accounting year. Ratio |
But these provisions do not, for that reason, necessarily mean that the Act was not intended to be a comprehensive and exhaustive law dealing with the entire subject of bonus and the persons to whom it should apply. Ratio |
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