Supreme Court Denies Transfer of Petitions Challenging Bonus Act Amendment: Union of India vs. United Planters Association (2022)

LEGAL ISSUE: Whether writ petitions challenging the constitutional validity of the Payment of Bonus (Amendment) Act, 2015 should be transferred to the Supreme Court.

CASE TYPE: Constitutional Law, Labour Law

Case Name: Union of India vs. The United Planters Association of Southern India

Judgment Date: 11 July 2022

Date of the Judgment: 11 July 2022

Citation: 2022 INSC 623

Judges: Dinesh Maheshwari, J. and Vikram Nath, J.

Should all cases challenging a central law be heard by the Supreme Court? The Supreme Court of India recently addressed this question when the Union of India sought to transfer numerous writ petitions from various High Courts, all challenging the Payment of Bonus (Amendment) Act, 2015. The core issue revolved around whether the Supreme Court should consolidate these cases or allow the High Courts to rule on the matter first. The bench, comprising Justices Dinesh Maheshwari and Vikram Nath, ultimately decided against the transfer, emphasizing the importance of allowing High Courts to address the issues initially.

Case Background

The Payment of Bonus Act, 1965 was amended in 2015, with changes taking effect retrospectively from April 1, 2014. These amendments included:

• Raising the salary limit for employee coverage from ₹10,000 to ₹21,000 per month.
• Increasing the wage ceiling for bonus calculation from ₹3,500 to ₹7,000 per month, or the minimum wage, whichever is higher.

These changes led to numerous writ petitions being filed in various High Courts across India. The petitioners challenged the retrospective implementation of the amendments and the linkage of bonus calculation to minimum wages.

Timeline

Course of Proceedings

The Union of India filed transfer petitions seeking to consolidate all writ petitions challenging the Payment of Bonus (Amendment) Act, 2015 before the Supreme Court. These writ petitions were pending in 18 different High Courts across the country. Some High Courts had issued interim orders, with varying directions on the implementation of the amendments. Some directed that the amendments would take effect from the financial year 2015-16, while others directed implementation from 2016-17. One High Court directed that no coercive action be taken against the writ petitioners.

Legal Framework

The core of the dispute lies in the interpretation and application of the Payment of Bonus Act, 1965, specifically:

• Section 2(13): Defines an “employee” as someone earning up to ₹21,000 per month.
  
  ““employee” means any person (other than an apprentice) employed on a salary or wage not exceeding [twenty-one thousand rupees] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied;”
• Section 12: Specifies that bonus is calculated as if the employee’s salary is ₹7,000 per month or the minimum wage, whichever is higher.
  
  “Where the salary or wage of an employee exceeds [seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher] per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were [seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher] per mensem.”
  
  “Explanation. —For the purposes of this section, the expression “scheduled employment” shall have the same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, 1948.”
• Section 2(5): Defines “appropriate Government” as either the Central Government or the State Government, depending on the establishment.
  
  “(5) “appropriate Government” means— (i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 (14 of 1947), is the Central Government, the Central Government; (ii) in relation to any other establishment, the Government of the State in which that other establishment is situate;”
• Section 36: Grants the appropriate Government the power to exempt establishments from the Act’s provisions.
  
  “36. Power of exemption. – If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act.”

Arguments

The arguments presented before the Supreme Court were as follows:

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the writ petitions challenging the constitutional validity of the Payment of Bonus (Amendment) Act, 2015 should be transferred to the Supreme Court or to one High Court.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issue:

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court declined to transfer the writ petitions, emphasizing the importance of allowing the High Courts to address the issues first.

How each authority was viewed by the Court?

• Union of India v. M/s Cummins Technologies India Pvt. Ltd. & Ors. Etc. : Transfer Petition (Civil) Nos. 1481-1482 of 2021*: The court followed this precedent, noting that the Supreme Court had previously declined to transfer similar cases involving a central statute, emphasizing that the High Courts were already seized of the matter.
• Lunawat Construction Company v. Union of India & Anr. : (2019) 5 SCC 467*: The court followed this case, highlighting the benefit of having the views of the High Court before the Supreme Court considers the matter.
• Institute of Chartered Accountants of India v. Southern Petrochemical Industries Corporation Limited and Anr. : (2007) 15 SCC 649*: The court distinguished this case, where transfer to one High Court was ordered, stating that in the present case, it was not appropriate to transfer the matters to any one High Court.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors:

• The varying factual backgrounds across different states due to the role of the appropriate government in calculating bonus.
• The need for the jurisdictional High Courts to address the specific issues related to minimum wages and state-specific regulations.
• The benefit of having the views of the High Courts before the Supreme Court considers the questions of law.
• The importance of protecting the right of judicial review by allowing the High Courts to act as the first instance of judicial review.

The Court emphasized that a comprehensive view of all facts and relevant surrounding factors is the best guiding light for exercising jurisdiction under Article 139A of the Constitution of India.

Logical Reasoning

The Court reasoned that the factual variations arising from the role of the appropriate government (Central or State) in calculating bonus, as well as the linkage to minimum wages, necessitated that the jurisdictional High Courts address the specific issues. The Court also emphasized the benefit of having the views of the High Courts before the Supreme Court considers the questions of law.

The Court stated, “the decision on the questions being raised in the respective writ petitions, may have to be addressed with reference to the relevant decision of the appropriate Government, depending on the nature of establishment; and that may include the particular State Government too.”

The Court also observed, “it does appear appropriate to have the benefit of the views of the jurisdictional High Courts before the questions of law are taken up for consideration in this Court, if occasion so arises; and such a course appears better serving the cause of justice, including protecting the right of seeking judicial review after the decision of the Court of first instance.”

The Court also noted, “the likelihood of divergence of views, looking to the framework of the statute itself, cannot be a ground for transfer. Equally, there appears no reason to transfer the matters to any one High Court; rather it appears just and proper that the petitions in the jurisdictional High Courts are decided with reference to their own factual background and the law applicable.”

There were no dissenting opinions in this case, as both judges were in agreement.

Key Takeaways

• The Supreme Court will not automatically transfer cases involving similar legal issues from various High Courts.
• The Court prioritizes the role of jurisdictional High Courts in addressing cases with specific factual backgrounds and state-specific regulations.
• The Supreme Court prefers having the benefit of the views of the High Courts before considering the questions of law.
• The right of judicial review at the High Court level is an important consideration.

Directions

The Supreme Court vacated all interim stay orders and directed the respective High Courts to proceed with the matters expeditiously, assigning them reasonable priority.

Development of Law

The ratio decidendi of this case is that the Supreme Court will not transfer writ petitions challenging a central statute merely due to the possibility of conflicting views among High Courts. The Court emphasized the importance of jurisdictional High Courts addressing cases with specific factual backgrounds and state-specific regulations. This decision reinforces the principle that the High Courts are the primary courts for judicial review and that the Supreme Court will benefit from their views before considering the questions of law.

Conclusion

The Supreme Court declined to transfer the writ petitions challenging the Payment of Bonus (Amendment) Act, 2015, emphasizing the importance of allowing the jurisdictional High Courts to address the issues first. The Court’s decision underscores the significance of the High Courts in the judicial hierarchy and their role in addressing state-specific issues.