S.E.P.R. Employees Association and ors. Vs. National Productivity Council and ors. - Court Judgment

Excerpt:
labour and industrial - bonus - sections 2, 31 a and 32 of payment of bonus act, 1965 and section 18 of industrial disputes act, 1947 - whether petitioners entitled to bonus for concerned year over and above 20% of earnings received by them during that year - expression 'employees' used in section 31 a cannot have restricted meaning or be confined to persons who come within definition of term under section 2 (13) - section 31 a applicable to employees as workmen of industry engaged by employer - prohibition contained in section 31 a to be applied in case of employer strictly - situation cannot be comprehended where provision applies to one party alone - this may lead to undesirable results - employer disabled from paying bonus in excess of 20% even if bonus linked with productivity. - labour & services appointment: [v.k. bali, ch, p.r. raman & s. siri jagan, jj] post of pharmacist in homeopathy subordinate service - special rules for kerala homeopathy subordinate service rules, 1999 introducing new qualifications vacancy arising subsequent to coming into force of the said special rules held, vacancies have to be filled up only in accordance with special rules, 1999. unfilled vacancy that had arisen prior to amendment cannot be filled up by candidate not possessing amended qualifications prescribed by special rules. state government has the power to frame or amend the special rules with or without retrospective effect. mohanan k.r. & anr vs director of homeopathy, kerala homeopathy services, trivandrum & ors. - 11. it has also to be noticed that steps taken by a private entrepreneur like the third respondent for recovering the overpayment is now subjected to challenge. considering the good relation the employer and employees maintaining, i hope that the employer may effect recovery only in instalments, on the pattern offered by exhibit p4.m. ramachandran, j.1. the issue that has been canvassed by the petitioners is about their entitlement to bonus for the year 2002-2003 over and above 20% of the earnings received by them during the relevant year. as an interim measure, in fact an excess amount of bonus had been paid and steps are being taken for recovery of such excess amounts paid. the establishment concerned is a factory in private sector. i may briefly state the relevant facts which might be necessary for deciding the matter.2. by a conciliation settlement arrived at in the presence of the additional labour commissioner, thiruvananthapuram (1st respondent) dated december 5, 2003, the petitioners, who were representatives of the employees of the s.e.p.r. refractories india limited (3rd respondent), has agreed that a fresh scheme for productivity linked bonus (p.l.b.) could be evolved and the decision as given by the agency will be accepted and adopted. the management had agreed to pay an amount of rs. 7,750/- to each workman in the nature of an advance, and this amount was agreed to be adjusted depending upon the decision of the p.l.b. scheme. such scheme was to be valid and applicable till a long term settlement was signed.3. the national productivity council, (npc) was the expert body which the parties had in their mind. in the unit of the third respondent, even before the relevant year, namely 2002-2003, bonus was being paid linked on production and productivity. the kerala state productivity council had been earlier entrusted with the duty and the workmen felt that the scheme prepared by the said body did not reflect the correct position. they had even a doubt that the admissible bonus to the employees was consistently being curtailed because of an unscientific approach by them. it was also a reason therefore for the unions to pressurise the management to seek the help of an altogether different expert body.4. in terms of the settlement as above, the second respondent-national productivity council, chennai had conducted a study in january-february, 2004. by exhibit p4 dated march 16, 2004, the third respondent-management had advised the workmen that in view of the final report given by the npc, a copy of which had already been issued to the unions, the bonus payable for the year 2002-2003 comes to 20% and the management was prepared to pay such bonus. however, it had but been indicated that an excess payment stood paid consequent to settlement dated december 5, 2003, and such excess amount necessarily deserved to be recovered in five equal instalments starting from march, 2004 onwards.5. according to the petitioners, the study report submitted by the npc was improper and unacceptable. a copy of the report is exhibit p2. they wished to avoid a recovery and had taken up the matter before the additional labour commissioner by exhibit p3 and wanted him to conciliate thereon and cure the illegal defects in the scheme. they had also gone to an extent that the settlement itself was not fair and reasonable. the officer had not taken any consequent action. the present request therefore is for a writ to be issued to the additional labour commissioner to hear all parties on exhibit p3, hold that the ceiling on payment of bonus which had been proposed was illegal and of course forebearing the management from proceeding in any manner for recovering the amounts allegedly paid as excess towards bonus.6. a counter affidavit has been filed by the third respondent opposing the application. the learned government pleader was heard on behalf of the first respondent-additional labour commissioner.7. at the out set, i have to observe that the reliefs prayed for in the writ petition are misconceived. a settlement in conciliation had been arrived at between the parties, and under section 18 of the industrial disputes act, it binds them. as flowing from the settlement, the parties had agreed for evolving a fresh p.l.b. scheme. such a scheme had been prescribed by an expert body, by way of exhibit p2. it was a specific term of the settlement that the payments made as advance were to be adjusted depending upon the decision of the p.l.b. therefore, what is contemplated by the third respondent is enforcement of the settlement, and as simple as that. the objections as raised and the demands as put in are totally unsustainable and it has to be presumed that the writ petition itself is experimental in nature. but, they have been successful in the initial round by securing an interim order prohibiting deduction as authorised by the terms of the settlement.8. it may not be possible for a party to wriggle out of a conciliation settlement, when they ultimately found that the resultant position is not palatable to them. in this view, the request made to the additional labour commissioner to conciliate on the issues and any conciliation settlement itself would have been irregular. they have no right to enforce any such claims or rights legally or morally. the emerging position will be that the first-respondent is disabled from holding any conciliation proceedings on an issue which already stands settled.9. mr. chitambaresh, counsel for the petitioner, refers to the circumstances that in the factory even after voluntary separation of sizable number of workmen during the year concerned, there was enhanced production and the benefit arising out of such fortune should not have been denied to the workmen. the effort was to point out that the study conducted might not have been proper or on acceptable parameters. 10. a perusal of exhibit p2, however, indicate that all the relevant aspects have been gone through in a meticulous manner. hearing had been held and local inspection had been carried out to appreciate and examine the nature and functioning of the establishment, at the time of study. direct observation of the production activities had been conducted in the first phase; discussions were held with the management and the representatives of the trade unions during the second phase, and thereafter the plan developed by the expert body was cross checked with the actual utilization in the shop floor. the observations codified in the annexures indicate that the utilization of the operatives as per long term settlement is 65.3% and the average furnace utilisation per month was 63%. it has therefore been observed that there was really scope for increasing the tonnage and production. in fact standard output in tonnage should have been much higher than what was existing. thus, in spite of the claims of the petitioners, the actual situation available is that the output fell below the optimum levels. it is evident that the parameters for the enquiries and the findings have been appropriately employed. one may perhaps disagree with the general observations in paragraphs 9.2, 9.5 and 9.6, which are extracted herein below:'9.2 the annual productivity linked bonus scheme will be in lieu of profit sharing bonus under the payment of bonus act and therefore, the employees will not be entitled to any other bonus payable under the act.xx xx xx xx xx9.5 salary or wage limit for calculation of annual productivity linked bonus and maximum bonus payable will be as contained in section 12 and section 11 respectively of the payment of bonus act, 1965 or any amendment thereof.9.6 the employees may not be paid bonus for any act of omission and commission as given under:a) workmen who have caused any financial loss resulting in dismissal for misconduct, after due enquiry shall not qualify to receive payment under this scheme.b) falsified records and reports maintained by the company for calculation of performance index/bonus.c) does not operate or maintain plant/machines/equipments according to the standard procedures and instructions prescribed by the company.'this might not have come within the purview of the examination of the second respondent, but it may not be ultimately relevant vis-a-vis the recommendations made by them. in spite of the finding that the productivity was below than that was expected, the recommendation was that bonus may be paid at 20% in order to protect the earnings under the old plan of bonus payment. this was notwithstanding an observation that if the study results was applied, as they were, the entitlement for bonus is only 16.88%. the recommendations therefore are really to the advantage of the workmen.11. it has also to be noticed that steps taken by a private entrepreneur like the third respondent for recovering the overpayment is now subjected to challenge. a writ petition will not be maintainable as against the third respondent and in this view also, i see no justification for entertaining the petition.12. the next contention of the learned counsel for the petitioners was that restrictions of bonus at 20% was not called for, since it was a case where the act did not apply to the employees, since they were drawing wages in excess of the limits, prescribed by the act and therefore did not come within the purview of employees' as per section 2(13) of the payment of bonus act. this submission is made for developing the argument of the petitioners, with reference to section 31-a of the act. the act gives liberty to the management and workmen laying down that notwithstanding anything contained in the act, where the employees enter into any agreement or settlement for payment of bonus linked with production or productivity in the place of profits to be calculated under the act, then such employees were entitled to receive bonus due to them under such settlement. according to the counsel, employees are persons defined under the act alone, and not persons represented by the union. it is submitted that when they were not employees under the act, the provision as above would not have applied. therefore, the proviso that 'such employees shall not be entitled to be paid such bonus in excess of twenty per cent of the salary or wage earned by them during the relevant accounting year' deserved to be ignored.13. however, i find it difficult to agree with these contentions. the act specially refers to class of employees to which it does not apply. such class is enumerated by section 32. the expression 'employees' used in section 31-a, according to me, cannot have a restricted meaning, or be confined to persons who come within the definition of the term under section 2(13). the definition of words or terms in the statute may be artificial. but the statute itself almost always take care to see that because of the definition, the natural meaning of the term is not altogether lost. very often they are to be understood taking note of the context. if so read, section 31-a has to be understood as a provision which is applicable to employees as workmen of the industry, engaged by the employer. in any case it cannot be disputed that the prohibition contained in section 31-a will have to be applied in the case of an employer strictly. we cannot comprehend a situation where a provision applies to one party alone. it may lead to undesirable results. an employer is disabled from paying bonus in excess of 20%, even if bonus is linked with productivity. this itself, therefore, can be the answer to the technical contention urged.14. advertence to a decision in common wealth trust (india) limited v. labour court 1997 (2) klt 345 was made by the counsel. but is does not support the case of the petitioner. a settlement had been entered into between the parties for a percentage bonus for a block of three years. it was evidently not a profit linked bonus or a bonus arrived at, adopting the calculation of available surplus or allocable surplus, spoken to by the schedules of the act. the contention of the workmen therefore was that it being not a bonus under the bonus act, other restrictions prescribed by the act also did not apply. nevertheless, the learned judge held that though the settlement was silent about the ceiling, that does not mean that the limit of the salary, provided under section 12 of the act, did not apply. the decision does not therefore support the case of the petitioners here. in mumbai kamgar sabha v. a. faizullabhai air 1976 sc 1455 : 1976 (3) scc 832 : 1976-ii-llj-186 even though the supreme court had observed that there can be bonus as between employer and employees outside the purview of the payment of bonus act, and the act spoke about profit sharing bonus alone, it has to be noticed that section 31-a had come to be incorporated by act 23/76, though with retrospective effect. the observations in the said judgment also might not be able to be canvassed by the petitioners, since what was agreed as payable was bonus as per a formula approved by the act. the general observation in workmen of kettlewell bullen & co. ltd. v. kettlewell bullen & co. ltd. and ors. air 1994 sc 1550 : 1994 (2) scc 357 : 1995-i-llj-1201 also need not therefore very seriously adverted to, as the court's attention was not invited to section 31-a of the act. evidently, no party had any intention to go to regions outside the payment of bonus act as seen from the records. notwithstanding the above discussions, it may also be relevant to notice that as early as in 1969, the supreme court in sanghvi jeevraj ghewar chand and ors. v. madras chillies, grains and kirana merchants workers' union air 1969 sc 530 : 1969-i-llj-719 had i observed as follows at p. 738 of llj:'considering the history of the legislation, the background 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 behalf of the respondents that the act is not an exhaustive act dealing comprehensively with the subject matter of bonus in all its aspects or that parliament still left it open to those to whom the act does not apply by reason of its provisions either as to exclusion or exemption to raise a dispute with regard to bonus through industrial adjudication under the industrial disputes act or other corresponding law'.though it is noteworthy that reference to the above case was not made in the earlier decisions cited.15. the writ petition is therefore dismissed. considering the good relation the employer and employees maintaining, i hope that the employer may effect recovery only in instalments, on the pattern offered by exhibit p4.