WORKMEN OF MODERN MILLS Vs. GENERAL MANAGER

JUDGEMENT

(1.) An interesting question arises on the proper interpretation of S. 3 of the Payment of Bonus Act (Act). Though this point is no more res integra in the light of the decisions of the Supreme Court Workmen of Binny Ltd. v. Management of Binny Ltd. & another, AIR1986 SC 509 , [1985 (51 )FLR345 ], 1985 LablC1792 , (1985 )II LLJ564 SC , 1985 (2 )SCALE329 , (1985 )4 SCC325 , [1985 ]Supp2 SCR652 and Workmen of HMT Ltd. v. National Tribunal [1973-II L.L.J. 100], the applicability of the provisions of that Section to a given set of facts arises for consideration.

(2.) The petitioners in this petition are the workmen of Modern Mills Limited. It is not in dispute that prior to the order of amalgamation made by the Bombay High Court amalgamating the company known as Sundatta Food and Fibres Division (Sundatta Company) with Modern Mills Ltd. Sundatta Company was functioning as a separate legal entity and the petitioners were workmen of Sundatta Company. This amalgamation took place on 12th October, 1977. The order of amalgamation provided that the assets and liabilities of Sundatta Company had been transferred to the Modern Mills on the appointed date, i.e., 1st January, 1976. The accounting year of Sundatta Company which was calendar year stood altered to 'April to March' in consonance with the accounting year of Modern Mills Ltd. It is not in dispute that 20% bonus was paid to the workmen of Sundatta Company for the calendar year 1976 on the trading results of that Company. However, the 1st respondent management paid the minimum bonus at the rate of 8.33% for the accounting year 1977 plus an ex gratia of 9.17% of the total annual emoluments as per the agreement dated 11th November, 1978. There was another settlement between the parties on 31st October, 1979 pertaining to bonus for the accounting year 1978. It is averred in the Writ Petition that the settlement was contrary to the provisions of the Act and therefore it was terminated by the petitioners by giving the necessary notice. There was a further settlement dated 18th November, 1980 pertaining to the accounting year 1979 and according to the petitioners, it was accepted under protest without prejudice to the rights of the parties, if any. The petitioners received the bonus as stipulated under that settlement (which is produced as Ex. M-7 before the Industrial Tribunal) under protest and raised a dispute claiming bonus at the rate of 20%, i.e., the maximum permissible under the Act. Though their claim was for 40% bonus, in the course of their negotiations with the management, they limited their claim to 20% since the Act does not provide for payment of more than 20% bonus. This settlement Ex. M-7 was followed by another settlement dated 17th February, 1981 (Ex. M-8) under which the parties had agreed that they would not reopen the claim for bonus and the settlement Ex. M-7 was binding on all the parties.

(3.) In the dispute before the Tribunal, the defence of the 1st respondent was that bonus paid under the settlement Ex. M-7 was on the basis of the consolidated balance sheet of Modern Mills and that the available surplus which was worked out on the basis of the consolidated balance sheet did not permit the management to pay more than 8.33%. This contention was based on the fact that though Sundatta Company was making considerable profits, Modern Mills was incurring heavy losses and therefore the overall performance of the Modern Mills also included the trading result of Sundatta Company. The management could have taken that stand if it had satisfied the requirement of S. 3 of the Act. Section 3 reads as under :