PETROLEUM EMPLOYEES UNION Vs. INDUSTRIAL COURT MAHARASHTRA BOMBAY

JUDGEMENT

(1.) This petition raises questions as to the true interpretation of item 9 of Schedule IV read with section 26 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, hereinafter referred to as the M.R.T.U. & P.U.L.P. Act and the effect of section 34 of the Payment of Bonus Act, 1965, hereinafter referred to as the Bonus Act.

(2.) The petitioner is the Union of the employees, Respondent No. 2, the Hindustan Petroleum Corporation Limited, hereinafter referred to as the Corporation is the employer. The employees of the Corporation earning salary or wages exceeding Rs. 1600/- per month are also the members of this Union. An agreement was entered into between the Corporation and the union on 27th March, 1975, on the question of bonus. Sub-clause (H) of Clause II of the said agreement provided for the mode of its payment. The Bonus Act contemplates payment of bonus only to the employees earning less than Rs. 1,600/- per month in terms of the definition of the word "employee" thereunder. The agreement thus covered only such employees of the Corporation. The Corporation, however, agreed at that time to make ex---gratia payment in lieu of bonus to the employees earning more than Rs. 1,600/- per month in the course of discussion with the Union. The Corporation addressed a letter on 12th May, 1975 to the President of the Union confirming this agreement. It made reference to the discussions that the author of the letter had with the President of the Union at the time of signing the above agreement on 27th March, 1975 about the payment of bonus to the employees drawing gross salary over Rs. 1,600/- per month. The letter then confirms that such employees will be paid by the Corporation "an ex gratia amount calculated at the same rate as bonus payable to employees drawing gross salaries up to Rs. 1,600/- under the Payment of Bonus Act". Such ex gratia amount was agreed to be calculated on the first Rs. 750/- of gross salary in terms of this letter. It is not in dispute that pursuant to this agreement, the ex gratia payment in lieu of bonus was in fact made to all the employees of the Corporation drawing gross salary over Rs. 1,600/- per month.

(3.) Subsequent, to this settlement, Income-Tax Act was amended, excluding such ex gratia payments, not covered by the Bonus Act, from the deductible expenses under the Act for determining the taxable income. This was obviously an uncontemplated burden on their income. In the meanwhile section 31-A was added to the Bonus Act by Amendment Act No. 23 of 1976, while section 34 was substituted under the same Amendment Act. An agreement to pay bonus linked with production or productivity in lieu of the profit based bonus payable in terms of the Scheme of the Act is made permissible under this section 31-A. Section 34 seeks to give overriding affect to the provisions of the Bonus Act subject to the departure permissible under the above section 31-A. The Central Government appears to have advised the Corporation to withdraw its commitment under its letter to the Union dated 12-5-1975 as to such exgratia payment presumably assuming that amendments of sections 31-A and 34 of the Bonus Act can justify such withdrawal. The Corporation accordingly took a decision to that effect in compliance with their advice and conveyed it to the President of the Union by a letter dated 2nd April, 1976. The exgratia payment was accordingly treated as overpayments. It was decided to recover the same in instalments within the period not exceeding two years from the salaries payable. The Corporation than started deducting the amount at the rate of Rs. 75/- per month commencing from the salary of April, 1976.