PHOENIX MILLS LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) Appellants Nos. 2 and 3 are the shareholders of the 1st appellant concern which carries on the business of spinning of yarn and weaving of cloth at their factory at Senapati Bapat Marg, Bombay. After the amendment of section 10 of the Payment of Bonus Act, 1965 (hereinafter referred to as the Bonus Act) under the Ordinance dated 3rd September, 1977, introducing sub-section (2-A) in section 10 of the said Act, compulsorily requiring the employees to pay the minimum bonus to their employees at the rate of 8.33 per cent of the salary earned by the employees during the accounting year the appellants made an application to respondent No. 1 for exemption on 13-10-1977 under section 36 of the said Act. It is alleged, in the said application, that (a) there was not only no allocable surplus during the year ending on 31st March, 1977, but the concern suffered a cash loss without providing for depreciation to the tune of Rs. 56,93,300; (b) during the preceding three years, viz. 1974-75, 1975-76 and 1976-77, it incurred net losses respectively to the tune of Rs. 51,15,393, Rs. 1,47,86,319 and Rs. 92,91,189; (c) it liabilities as on 31-3-1977 amounting to Rs. 10,77,88,823 exceed its current assets to the tune of Rs. 8,59,02,091 by Rs. 2,18,86,732; (d) their reserves have been wiped out; (e) on 21st September, 1977, there was a disastrous fire in the Spinning Department which almost gutted it; and thereby the working of the mills have virtually been stopped from that date, further aggravating the liquidity which has already been eroded by the losses for the last there financial years; and (f) in all 6,000 workmen were employed in the concern and bonus liabilities under amended section 10 (2-A) with regard to its Bombay unit would come Rs. 33,66,000 in addition to Rs. 8,00,000 with regard to its Ujjain unit. The compulsion to pay bonus for the year ending on 31st March, 1977 in these circumstances, would bring about it total collapse rendering all the 6,000 workers jobless as also losses of production of a vital necessity of life, i.e. cloth.

(2.) This application made on 13-10-1977, after approaches through the Mills Owners Associations, was rejected by the Government by its order dated 1-11-1977. The appellants then challenged the validity of this order by a petition to this Court being Miscellaneous Petition No. 1566 of 1977 under Article 226 of the Constitution. The matter was placed for admission before a learned Judge of this Court, who was pleased to reject the same in limini on 9th November, 1977. This is an appeal against the same, when it came up for admission on 22nd November, 1977, after hearing Mr. Bhatt, the learned Advocate for the appellants, we felt it necessary to know the reasons why respondent No. 1 fled implead to reject the appellants application. We indicated the same to Mr. N.H. Gursahani, the learned Government Pleader, appearing for the State, and we adjourned the matter to 24th November, 1977, to enable him to produce the case papers or file an affidavit indicating the reasons for such rejection. On 24th November, 1977 Mr. Gurshani, did neither produce the record nor file any affidavit but indicated his readiness to argue and satisfy that the impugned order was well founded. After hearing the learned Advocate on both the sides and also Mr. Buch the learned Advocate appearing for the Union of workmen, opposing, the admission of the appeal, we admitted the appeal and directed the appellants, to implead the Union as respondent, dispensed with the printing and with the consent of the parties posted the appeal for hearing on 29th November, 1977, in view of the extreme urgency involved. Under section 19 of the Act employees have to satisfy the liability of bonus within eight months of the accruel of the liability at the end of the accounting year. The accounting year closed in this case on 31st March, 1977, and the period for eight months, was to expire at the end of November, 1977. Mr. Gursahani pleaded Governments liability to extend the time in view of the "explosive" situation created by the pressing claim of the workmen. All that we could do in these circumstances was to expedite the hearing of the appeal.

(3.) When the appeal was taken up for hearing on 29th November, 1977, Mr. Gursahani, filed an affidavit sworn by Mr. Konkar, Under Secretary to the Government in reply for the limited purpose of meeting the case made out in the notice of motion for stay. He expressly reserved his right to file detailed affidavit, in reply to the main petition in the event of the matter being remanded to the learned Single Judge for issuing rule Nisi.