| SooperKanoon Citation | sooperkanoon.com/815992 |
| Subject | Labour and Industrial |
| Court | Chennai High Court |
| Decided On | Jun-28-1996 |
| Case Number | W.P. No. 3496 of 1993 |
| Judge | A.R. Lakshmanan and;K.A. Swami, JJ. |
| Reported in | 1996(2)CTC442; (1996)IILLJ606Mad; (1996)IIMLJ566 |
| Acts | Payment of Bonus Act - Sections 8, 9, 18, 19 and 31A; Industrial Disputes Act, 1947 - Sections 18(1) |
| Appellant | Pandian Roadways Corporation Ltd., Madurai-16 |
| Respondent | The Presiding Officer, Principal Labour Court, Madurai and anr. |
| Cases Referred | Land Development Bank Ltd. Coimbatore v. A. Shanmugham |
A.R. Lakshmanan, J.
1. The petitioner is a Govt. of Tamil Nadu Undertaking engaged in passenger transport. The 2nd respondent was working as a Conductor under the petitioner. While so, on January 12, 1984, he re-issued two tickets already sold in the previous trip and thus mis-appropriated a sum of Re. 1.60. Hence, a charge memo was issued to him and he submitted his explanation. His explanation was found to be unsatisfactory and therefore, a full-fledged enquiry was conducted.
2. The Enquiry Officer submitted his finding wherein he found that the charge levelled against the 2nd respondent, was proved. Hence, by an order dated October 21, 1984, the 2nd respondent was dismissed from service for the proved charge of fraud and misappropriation.
3. Aggrieved by the order of dismissal, the 2nd respondent raised a dispute and on failure of conciliation, the same was referred for adjudication and taken on file by the 1st respondent as I.D No. 5 of 1986. During the pendency of the above case, by virtue of a settlement under Section 18(1) of the Industrial Disputes Act (hereinafter referred to as the Act), the 2nd respondent was appointed as a fresh entrant by a settlement dated March 6, 1989 and accordingly, he reported for duty with effect from March 16, 1989. As per clause 3 of the settlement it was agreed by the 2nd respondent that he will not claim any benefit or approved privileges, for the period of his service before dismissal, i.e., for the period from January 1, 1977 to October 21, 1984.
4. Thereafter, the 2nd respondent preferred a Claim Petition under Section 33(c)(2) of the Act claiming bonus for the period from 1983-84 and 1984-85 amounting to Rs. 1,842/-. The claim of the 2nd respondent was based on Section 9 of the Payment of Bonus Act. According to the petitioner, in the case of a dismissal from service on grounds of fraud of theft or misappropriation, the employee forfeit his bonus and he is disqualified in receiving any bonus under the Payment of Bonus Act. The judgment of K.S. Palaniswamy, J. reported in Wheel & Rim Company of India v. Govt. of Tamil Nadu : (1971)IILLJ299Mad which was followed by the Patna High Court in the decision reported in M/s. Sriram Bearings Ltd. v. The Presiding Officer, Labour Court, Ranchi : (1986)IILLJ459Pat was relied on. However, the Bombay High Court has taken a different view.
5. The Labour Court, relying upon the judgment of the Bombay High Court reported in Bankeshwardhar K. Dubey v. New Standard Engineering Co. Ltd. 1984 II LLN 594 allowed the claim of the 2nd respondent. Aggrieved by the said order, the petitioner has approached this court under Article 226 of the Constitution for the issue of a writ of certiorari.
6. It is submitted by the learned counsel for the petitioner that by virtue of the judgment of this Court as well as the Patna High Court, the 2nd respondent is disqualified from receiving bonus even if the bonus is in respect of a year other than the accounting year in which the 2nd respondent/employee is found guilty of misconduct causing financial loss to the petitioner/employer. According to him, there is a clear distinction of Sections 9 and 18 of the Payment of Bonus Act and this distinction was not noticed by the 1st respondent/Labour Court. It is, therefore, submitted that the 2nd respondent is not entitled to any bonus and hence, the order of the 1st respondent is illegal, erroneous and liable to be set aside.
7. Mr. Vijay Narayan further submitted that the 1st respondent ought to have noted that the 2nd respondent himself has entered into a settlement wherein he has given up his right to claim any benefit for the prior period of service and it was on this ground that he was taken as a fresh entrant. The 1st respondent has not considered the terms of the settlement which disentitled the 2nd respondent to receive any bonus in respect of the prior period of service. The award of the 1st respondent is, therefore, liable to be set aside.
8. It is then submitted by the learned counsel for the petitioner, that the 1st respondent ought to have seen that a claim for bonus in the circumstances stated above could not be entertained under Section 33(c)(2) of the Act and the employee would have to raise a dispute to have his claim adjudicated before he could enforce computation of amount under Section 33(c)(2) of the Act. Therefore, the order of the 1st respondent is in excess of jurisdiction and is liable to be set aside
9. For all the aforesaid reasons, the writ petition was filed to issue a writ of certiorari, calling for the records of the 1st respondent in C.P. No. 160 of 1990 dated June 22, 1992 and to quash the same.
10. The 2nd respondent filed a counter affidavit contending as follows.
The petitioner/management resisted the claim of the 2nd respondent taking resort to Section 9 of the Payment of Bonus Act. It was the contention of the management that the termination of his service by dismissal was for misappropriation of the funds of the petitioner. The disciplinary proceedings initiated against the 2nd respondent was for an alleged misappropriation of a sum of Re. 1.60. In so far as the dismissal is concerned, the 2nd respondent would submit that by virtue of the settlement entered into under Section 18(1) of the Act, the order of dismissal stood superseded and it cannot have the effect of dismissal for misappropriation. However, the management took a stand that the 2nd respondent was not entitled to bonus for the accounting years as stated earlier. It is the admitted case that the quantum of bonus claimed by the 2nd respondent was the agreed amount paid to each one of the workman as per the agreement reached in between the management and the workman in general. It is, therefore clear that there us no dispute as regards the quantum of the claim. The only ground that the management urged before the Labour Court was that by reason of the alleged dismissal on the ground of alleged misappropriation, the 2nd respondent was disentitled to receive any bonus for the said period. The Labour Court has investigated into the claim and has held that the 2nd respondent was entitled to claim and receive the sum for the two accounting years 1983-84 and part of 1984-85. The Labour Court has followed the dictum laid down in 1984 II LLJ 549 (supra). Section 9 of the Payment of Bonus Act cannot be invoked to deny to the workmen of a right that had already accrued and settled. In the case of the 2nd respondent, the accounting year commence from 1st of April of the calendar year and ends with March 31 of the succeeding year. For the accounting year 1983-84, the bonus has accrued to the 2nd respondent and therefore, it has become a debt liable to be paid. The management cannot deny this amount. Likewise, the bonus for the period of seven months has become due and has assumed the character of debt liable to be paid. In this view, the Labour Court has computed the monetary benefit at Rs. 1,842/- as claimed by the 2nd respondent. The several grounds taken by the petitioner, as set out in paragraph 6 are untenable. It is not correct to state that the Labour Court was not aware of the distinction between Section 9 and Section 18 of the Payment of Bonus Act. It is incorrect to state that by virtue of entering into a settlement under Section 18(1) of the Act, the 2nd respondent has given up his right to claim the amount which has already accrued to him by reason of his earlier services. The management cannot deny that by virtue of the settlement under Section 18(1) of the Act, the order of the dismissal stood superseded by consent of parties and it has lost the character of dismissal of misappropriation. The other grounds taken are also unsound.
11. The matter was listed for hearing before M.S. Janarthanam, J. on March 22, 1994, who, after hearing the respective learned counsel appearing on either side, directed the Registry to place the papers before the Honourable Chief Justice for constituting an appropriate Bench for resolution of the controversy by rendering an authoritative pronouncement.
12. M.S. Janarthanam, J. after narrating the short facts and circumstances of the case leading to the filing of the writ petition has in his order of reference observed as follows :
'(9) Arguments of Mr. Vijay Narayan, learned counsel appearing for the petitioner and Mr. K.T. Palpandian, learned counsel representing the 2nd respondent were heard.
(10) During the course of arguments of learned counsel representing the parties, divergent views, as regards interpretation of Section 9 of the Bonus Act, emerging not only from other High Courts, but also from this Court, were brought to my notice and added to this fact, there is no decision on this aspect of the matter from the Apex Court of this country.
(11) If there are divergent view on any aspect of the matter between this Court and other High Courts, with no authoritative pronouncement from the Apex Court of this country, I can very well understand that the view that had been taken by this Court on an earlier occasion will have the binding effect upon this Court and the subordinate judiciary as well. But the unfortunate piquant situation obtaining, as of now is that there are divergent view as to the interpretation of Section 9 of the Bonus Act, expressed on more than one decision of this Court, creating confounding-anomalous-situation, in the sense of not making it known to the Subordinate Judiciary in which way it should react. Such a situation should not be allowed to continue for quite long and therefore, it has become necessary to resolve such a tangle and an authoritative pronouncement is to be made by an appropriate bench and for effectuating such a purpose, I now advert to the various hues of views, as expressed by learned Judges of this Court in decisions more than one, as well as decisions emerging from other High Courts.
(12) The earliest decision of this Court is referable to the Case of Wheel and Rim Company of India Ltd v. Government of Tamil Nadu, (supra) rendered by Palaniswamy, J. in which the view expressed was that on a proper construction of Section 9 of the Bonus Act, it must be held that if an employee is dismissed from service, he stands disqualified from receiving any bonus under the said Act and only for the accounting year. Such a view has been adopted by Udai Pratap Singh, J. of Patna High Court at Ranchi Bench in Sriram Bearings Ltd. v. Labour Court, (supra).
(13) V. Rasmaswamy, J. (as he then was) a learned Judge of this Court in the case of the Peelamedu Co-op. Land Development Bank Ltd. Coimbatore v. A. Shanmugham 1980 TLNJ 237 took a contrary view. A similar view had been taken by B.C. Gadgil J. learned Judge of the Bombay High Court in the case of B.K. Dubey v. New Standard Engineering Co. Ltd. (supra).
(14) For the reasons as above, the Registry is directed to place the papers before My Lord the Honourable Chief Justice for constituting an appropriate Bench for resolution of the controversy, thereby rendering an authoritative pronouncement'.
13. Pursuant to the order of reference, the matter is listed before us for the resolution of the controversy.
14. We have heard the arguments of Mr. Vijay Narayan for the petitioner and Mr. P. Rajagopal for the contesting 2nd respondent.
15. Mr. Vijay Narayan reiterated the contentions raised in the affidavit and also cited the following decisions (for and against) Wheel and Rim Company of India Ltd. v. Government of Tamil Nadu, (supra) by K.S. Palaniswamy, J. - Madras High Court M/s. Sriram Bearings Ltd. v. The Presiding Officer, Labour Court, Ranchi, (supra) by Udai Pratap Singh, J. - Patna High Court at (Ranch) Bankeshwardhar R. Dubey v. New Standard Engineering Company Ltd. (supra) by B.C. Gadgil, J., of Bombay High Court; The Peelamedu Co-op. Land Development Bank Ltd. Coimbatore v. A. Shanmugham, (supra) by V. Ramaswamy, J., as he then was, of Madras High Court; and Himalaya Drug Co. Makali v. II Addl. Labour Court, Bangalore, : (1986)IILLJ45Kant ), by P.P. Bopanna of Karnataka High Court.
16. We have been taken through the entire pleadings, settlement under Section 18(1) of the Act, the order of the Labour Court and the judgments cited supra.
17. At the time of hearing Mr. Vijay Narayan brought to our notice about the settlement under Section 18(1) of the Act reached between the management and the 2nd respondent under which the 2nd respondent was appointed as a fresh entrant by a settlement dated March 6, 1989 and according to which the 2nd respondent reported for duty with effect from March 16, 1989. However, the settlement under Section 18(1) of the Act was not marked as a document before the Labour Court in the impugned proceedings. It is pertinent to notice that there is no dispute at all about the settlement reached under Section 18(1) of the Act and the appointment of the 2nd respondent as a fresh entrant by settlement dated March 6, 1989 and the reporting for duty with effect from March 16, 1989 by the 2nd respondent pursuant to such settlement Mr. P. Rajagopal fairly conceded that there is no dispute about the settlement and the appointment given to the 2nd respondent pursuant thereto, and the waiving of any claim or benefit or approved privileges for the period of services of the 2nd respondent. However, he submitted that by virtue of the settlement entered into under Section 18(1) of the Act, the order of dismissal stood superseded and it cannot have effect of dismissal for misappropriation.
18. The question that arises in this case is,
'Whether an employee is disqualified to receive bonus by virtue of Section 9, of the Payment of Bonus Act, 1965, only in respect of the accounting year in which the dismissal takes place or even in respect of accounting years prior to he accounting year in which the dismissal takes place, if the bonus for the prior accounting years has not been paid ?'
19. Section 8 of the Act stipulates the eligibility in an accounting year of an employee for receiving bonus and the only eligibility is that he should have worked in the establishment for not less than 30 working days in an accounting year. Section 8 reads as follows :
'8. Eligibility for bonus, - Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he had worked in the establishment for not less than thirty working days in that year'.
20. Section 9 of the Act deals with the disqualification for bonus and it is in stringent terms. It starts with the non-obstante clause and states that an employee shall be disqualified from receiving bonus if he is dismissed from service for (a) fraud; (b) riotous or violent behaviour while on the premises of the establishment; or (c) theft, misappropriation or sabotage of any property of the establishment. Section 9 reads thus :
'9. Disqualification for bonus, - notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he dismissed from service for -
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment'.
21. Section 9 of the Act is to be contrasted with Section 18 of the Act, which provides for deduction of certain amounts from the bonus payable under the Act. Section 18 reads thus :
'18. Deduction of certain amounts from bonus payable under the Act, where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any'.
22. Section 18 of the Act states than in any accounting year, if an employee is found guilty of misconduct or causes financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under the Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any.
23. An analysis of these two section viz., Sections 9 and 18 of the Act, would reveal the differing scopes of each section as follows :
a) Section 9 contains a total disqualification for bonus whereas Section 18 enables the employer to deduct the amount of loss from the amount of bonus payable.
b) Section 9 can be invoked only if an employee is dismissed on the grounds specified therein, whereas, Section 18 deals with an employee found guilty of misconduct causing financial loss to the employer and the penalty can be any penalty short of dismissal.
c) Section 9 specifies the misconduct whereas Section 18 does not specify the misconduct but at the same time the misconduct must result in causing financial loss to the employer.
d) Section 9 does not limit the disqualification to the accounting year but Section 18 does.
e) Section 9 opens with non obstanate, clause 'notwithstanding anything contained in this Act'. Thereby it has overriding effect on all the provisions of the Act including Section 18. Whereas, it is not so in the case of Section 18.
24. In a decision of this Court reported in Wheel & Rim Company of India Ltd. v. Government of Tamil Nadu, (supra), K.S. Palaniswami, J. has elaborately examined the scheme of Sections 9 and 18 and has held that Section 9 of the Act is not restricted only to receiving on bonus by the disqualified employee payable for the accounting year for which the order of dismissal is passed. In other words, even if bonus for any previous accounting year has not been paid, the employee would be disqualified form receiving the bonus. The reasons are given at the end of paragraph 9 by the learned Judge. It reads thus at p. 306.
'The question in this case is whether there is any defect in Section 9. Is the defect such that unless certain words are added, the ordinary grammatical meaning would lead to any manifest contradiction of the apparent purpose of the enactment Or would it lead to an absurdity or injustice presumably not intended I have already pointed out that there are sufficient reasons for the Legislature to have intended that, if any amount remained unpaid by way of bonus, the disqualification arising out of dismissal under Section 9 should be sufficient to deprive the employee of the bonus. There are no compelling reasons to take the view that we must read into Section 9 words to convey the meaning that the disqualification of receiving bonus is applicable only to the bonus payable for the accounting year which the order of dismissal is passed. There are weighty reason for the view that Section 9 is intended to deprive the worker of his right to receive whatever bonus he was entitled to. The reasons are :
i) Use of the expression 'notwithstanding anything contained in this Act'.
ii) Use of the expression 'disqualified from receiving bonus under this Act'.
iii) Absence of any reference to any particular accounting year in vivid contrast with the use of clear expression in Section 18 providing for deduction of the amount of the loss caused to the employer by the misconduct of the employee from out of the bonus payable to the employee in the particular accounting year only;
iv) Possibility of the criminal acts, the commission of which disqualifies, being found to have been committed in the course of more than one accounting year; and
v) The nature of the acts of misconduct enumerated in Section 9 being serious and opposed to the principle of sharing in the prosperity of the management which is one of the fundamental concepts of bonus,
For all these reasons, I am not inclined to accept the argument that Section 9 is restricted only to the receiving of bonus by the disqualified employee payable for the accounting year in which the order of dismissal is passed. On a consideration of all the circumstances, I am of the view that this disqualification is applicable to whatever bonus was payable under the Act'.
25. The judgment of K.S. Palaniswamy, J. was followed by the Patna High Court in the decision reported in M/s. Sriram Bearings Ltd. v. The Presiding Officer, Labour Court, Ranchi,. (supra). In paragraph 6 at P. 460 it is observed as follows :
'I am unable to accept the contention of Mr. Mitter. No such restriction in Section 9 of the Act has been put by the Legislature and the words 'an employee shall be disqualified from receiving bonus under this Act' is wide in its import must be construed as receiving any bonus under the Act. If Legislature intended to put such restriction in Section 9 of the Act then it would have used the word 'in accounting year'. Therefore, on proper construction of Section 9 it must be held that if an employee is dismissed from service, he stands disqualified from receiving any bonus under the Act and not the bonus only of the accounting year. Reference may be made to a decision of the Madras High Court in the case of Wheel and Rim Company of India Ltd. v. Govt. of Tamil Nadu & Anr. (supra) where similar contention, as now raised by Mr. Mitter, was overruled by the Madras High Court and the view I have taken is supported by the said decision'.
26. However, the Bombay High Court disagreed with the reasoning of the Madras High Court in the decision reported in Bankeshwardhar R. Dubey v. New Standard Engineering Company Ltd. (supra).
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28. As rightly pointed out by Mr. Vijay Narayan, the decision of the Karnataka High Court (supra) decides the issue on three reasons, viz.,
i) The Payment of Bonus Act is a piece of welfare legislation and therefore, a schematic interpretation of the Act would be a better guide for interpreting the financial provisions of the Act.
ii) Section 31(A) which talks of productivity linked bonus does not say that it should be a settlement in a particular accounting year.
iii) The scheme of the Act would, therefore, reveal that the claim for bonus is related to the profits in a particular accounting year and, therefore, Section 9 of the Act would apply only to a particular accounting year.
29. Yet another decision of this Court viz., The Peelamedu Co-op. Land Development Bank Ltd. Coimbatore v. A. Shanmugham, (supra) by V. Ramaswamy, J., as he then was, without referring to any of the previous decisions has held that the eligibility to pay the bonus for an accounting year cannot be wiped out by the dismissal of an employee in a subsequent accounting year.
30. It is to be noticed that the Act is a complete and exhaustive Code on the payment of bonus to the employees and the Act gives a right to the employees to receive bonus in accordance with the provisions of the Act. The Act does not permit an employer to withhold payment of bonus during the pendency of a disciplinary inquiry. It is, therefore, obvious that if an enquiry is pending for a long period, bonus cannot be withheld on that account. However, Section 19 of the Act provides for a total time limit for payment of bonus and there may be cases where an employee is dismissed before the time limit for payment of bonus has expired. In such cases, it would be open to the employer to disqualify the employee for bonus for the previous accounting year. The judgment of this Court : (1971)IILLJ299Mad does not refer to this aspect. If we apply the principle, as stated above, it would mitigate the hardship caused to employees where the inquiry is pending for an inordinately long period. At the same time, it would enable the employer to disquality the employee for bonus for the previous accounting year if the order of dismissal is passed before the expiry of the time stipulated for payment of bonus. In this case, in as much as the dismissal took place within the period stipulated in Section 19 of the Act, the employer was entitled to disqualify the employee for bonus for the accounting year 1983-84 as well as for the accounting year 1984-1985.
31. Moreover, the employee had entered into a settlement under section 18(1) of the Act by which he gives up his claim prior to his dismissal. Even though the settlement was not marked before the Labour Court, we are of the opinion that the employee is bound by the said settlement and, therefore, cannot at all claim any benefit for the period prior to this dismissal.
32. We, therefore, hold that the view expressed by K.S.Palaniswamy, J., in : (1971)IILLJ299Mad as followed by the Patna High Court in : (1986)IILLJ459Pat that on a proper construction of Section 9 of the Payment of Bonus Act, it must be held that if an employee is dismissed from service, he stands disqualified from receiving any bonus under the said Act and not the bonus only for the accounting year, is the correct view. We, therefore, hold that the decision reported in 1980 T.L.N.J. 237 of the Madras High Court does not lay down the law correctly. Hence it is overruled. With great respect we find it difficult to agree with the view taken in 1984 II LLN 594 of the Bombay High Court; and : (1986)IILLJ45Kant of the Karnataka High Court (all learned single Judges) in view of the reasons expressed by us in paragraphs supra. These decision completely overlook the clear wordings contained in Section 9 of the Act with a non obstante clause. The scope of Section 31A relied upon by Bopanna, J. is quite different and it does not effect or take away the bar for bonus contained in Section 9 of the Act. The provisions of Sections 9 and 18 have to be harmoniously construed keeping in view the objects sought to be served by these provisions and without doing any violence to them. It is not permissible, rather it is wrong for the Court to read the words not in the statue where the statute is not vague and is unambiguous. Section 31A deals with a different situation not common to Sections 9 and 18.
33. For the foregoing discussions, the Writ Petition is allowed. However, we order no costs.