ALLOY STEEL PROJECT Vs. WORKMEN

JUDGEMENT

(1.) The appellant, Messrs. Alloy Steel Project, is an undertaking owned, controlled and managed by a government Company, viz. , Messrs. Hindustan Steel Ltd. Alloy Steel Project was started in the year 1961 and it went into production in the year 1964-65. No profit was earned at least right up to the year 1967-68. The workmen, however, claimed bonus at the minimum rate prescribed under the Payment of Bonus Act No. 21 of 1965 (hereinafter referred to as "the Act") in respect of theyear 1965-66 on the plea that this Alloy Steel Project was a part of the Hindustan Steel Ltd. and could not be treated as a new establishment for purposes of S. 16 of the Act. Hindustan Steel Ltd. was itself an establishment which had been in existence for a long period and had been even earning profits, so that exemption could not be granted to this Company in respect of payment of bonus under S. 16 of the Act. This claim of the workmen was resisted by the Company on the plea that Alloy Steel Project was a separate establishment in respect of which separate balance sheets and profit and loss accounts were maintained, so that no bonus was payable until either this Project itself earned profits, or from the sixth accounting year following the year 1964-65 when this Project went into production. The dispute between the workmen and the Company could not be resolved amicably and, consequently, a reference was made under the Industrial Disputes Act, 1947 which came up before the Ninth Industrial tribunal, West Bengal. The tribunal held that Alloy Steel Project could not be treated as a separate establishment because, under the Act, a Company is itself an establishment, so that all units of a Company like Hindustan Steel Ltd. will constitute one establishment. Since this project had not been earning any profits, the tribunal directed payment of bonus at the minimum rate of 4 per cent. of wages prescribed by the Act. Aggrieved by this award of the tribunal, the Company has come up in this appeal to this court by special leave, though the name of the appellant is shown as Alloy Steel Project, because it was under this name that the reference was dealt with by the tribunal.

(2.) The main basis of the decision of the tribunal is that "the word 'establishment' has been used in this Act to indicate a 'company' as called in common parlance". It was on this view that the tribunal further proceeded to consider whether this Alloy Steel Project could be held to be an establishment separate from Hindustan Steel Ltd. , or it had to be treated as a part of the parent establishment, viz. , Hindustan Steel Ltd. In this approach, it is clear that the tribunal committed an obvious error, as it ignored the indications which are manifest from the language used in the Act. In S. 2, Ss. (15) and (16) , establishments have been divided into two classes and their meaning has been defined. In clause (16) , "establishment in public sector" is defined as meaning an establishment owned, controlled or managed by-

(3.) Learned counsel for the respondent-workmen, however, advanced a new argument which was not put forward before the tribunal. His submission was that, if an establishment of a Company consists of a number of departments) undertakings or branches, the principal part of S. 3 will apply and all such departments, undertakings or branches must be treated as parts of one single establishment for purposes of computation of bonus under the Act, out the proviso to S. 2 will not apply in such a case. According to him, the proviso to S. 3 will apply to establishments consisting of different departments, undertakings or branches which are owned, controlled or managed by persons other than companies. This argument was based on the reasoning that, in order to calculate available surplus for distribution of bonus in the case of a company) the Act lays down in S. 6 (d) , read with the Third Schedule that the deductions to be made from net profits will also include dividends payable on preference share capital, and 8.5 per cent. of its paid up equity share capital as at the commencement of the accounting year. This provision cannot be given effect to in respect of separate units of a Company, because the paid up capital or the preference share capital is not allocated between different units. In the case of the present Company, viz. Hindustan Steel Ltd. , the entire paid up capital is shown in the accounts of the head office. The money needed for working of the various units, including the Alloy Steel Project, is shown as remittance received from the head office and not as paid up capital of the Alloy Steel Project, etc. The result is that, if Alloy Steel Project or other units of the Hindustan Steel Ltd. are treated as separate establishments and available surplus is calculated separately for each unit, there will be no deduction at 8.5 per cent. of the paid up equity share capital as envisaged by S. 6 (d) and the Third Schedule of the Act.