Introduction
Date of the Judgment: March 5, 2008
Judges: Dr. Arijit Pasayat, J., P. Sathasivam, J.
Can daily wage employees claim statutory bonus through an application under Section 33-C(2) of the Industrial Disputes Act, 1947? The Supreme Court addressed this question in a batch of appeals concerning the Himachal Pradesh State Electricity Board’s denial of bonus to its daily wage employees. The core issue was whether the Labour Court had the jurisdiction to adjudicate such matters and whether the Payment of Bonus Act, 1965, applied to daily wage earners. The judgment was delivered by a bench comprising Dr. Arijit Pasayat and P. Sathasivam.
Case Background
The respondents were employed by the Himachal Pradesh State Electricity Board as daily wage employees. They sought to claim minimum statutory bonus under the Payment of Bonus Act, 1965. The Labour Court, on July 6, 1991, ruled in favor of the employees, directing the Electricity Board to pay the bonus within a stipulated time. This decision was based on a reference made to the Labour Court.
Timeline:
| Date | Event |
|---|---|
| 1977-1986 | Period for which bonus was claimed by the employees. |
| July 6, 1991 | Labour Court ordered payment of minimum statutory bonus to the employees. |
| 1991 | Application filed by employees, long after the claim period. |
| December 30, 1998 | Himachal Pradesh High Court disposed of several writ petitions by a common judgment. |
| March 5, 2008 | Supreme Court delivered its judgment. |
Legal Framework
The case primarily revolves around the interpretation and application of Section 33-C(2) of the Industrial Disputes Act, 1947, and the Payment of Bonus Act, 1965.
- Section 33-C(2) of the Industrial Disputes Act, 1947: This section allows workmen to recover money due from their employers under a pre-existing right. It is often used when the right to a benefit is already established, and the issue is merely the computation of the amount due.
- Payment of Bonus Act, 1965: This Act provides for the payment of bonus to employees based on profits or productivity. Key sections include:
- Section 2(11): Defines “employee” in terms of monthly salary.
- Section 8: Deals with eligibility for bonus.
- Sections 10 and 11: Specify the payment of minimum bonus.
- Section 22: Relates to the quantum of bonus payable.
Arguments
Arguments by the Appellants (H.P. State Electricity Board):
- The Labour Court lacked jurisdiction to decide the issue of bonus for daily wage employees.
- The Payment of Bonus Act, 1965, does not apply to daily wage employees as it is intended for those receiving monthly salaries.
- Dearness allowance is not payable to daily wagers, making the reference to Section 8 of the Bonus Act incorrect.
- The application for bonus was filed long after the claim period (1977-1986), specifically in 1991, rendering it time-barred.
- Section 33-C(2) of the Industrial Disputes Act, 1947, is akin to an execution application and applies only to pre-existing rights, which bonus claims do not fall under.
- In Civil Appeal Nos. 87/2002, 8490/2001, and 331/2002, the Labour Court and High Court wrongly decided on the entitlement of interest at 12% when no such claim for interest was made.
Arguments by the Respondents (Daily Wage Employees):
- Sections 10 and 11 of the Bonus Act deal with the payment of minimum bonus, and Section 22 relates to the quantum of bonus payable.
- The High Court was correct in holding that the application under Section 33-C(2) of the Industrial Disputes Act, 1947, was maintainable.
Submissions Table
| Main Submission | Appellant’s Sub-Arguments | Respondent’s Sub-Arguments |
|---|---|---|
| Jurisdiction of Labour Court |
✓ Labour Court lacks jurisdiction to decide bonus for daily wagers. ✓ Bonus is not covered under the Second Schedule of the Industrial Disputes Act. |
✓ High Court was right in holding the application under Section 33-C(2) as maintainable. |
| Applicability of Bonus Act |
✓ Bonus Act applies only to employees receiving monthly salaries. ✓ Dearness allowance not applicable to daily wagers. ✓ Reference to Section 8 of the Bonus Act was incorrect. |
✓ Sections 10 and 11 of Bonus Act deal with minimum bonus payment. ✓ Section 22 relates to the quantum of bonus payable. |
| Time Limit | ✓ Application filed long after the claim period (1977-1986). | (No counter-argument presented in the provided text) |
| Nature of Section 33-C(2) | ✓ Section 33-C(2) is like an execution application and applies only to pre-existing rights. | (No counter-argument presented in the provided text) |
| Entitlement of Interest | ✓ No claim for interest was made, yet the Labour Court and High Court wrongly decided on 12% interest. | (No counter-argument presented in the provided text) |
Issues Framed by the Supreme Court
- Applicability of Section 33-C(2) of the Industrial Disputes Act, 1947.
- Jurisdiction of the Labour Court to decide the matter.
- Applicability of the Payment of Bonus Act, 1965 to daily wagers.
Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Applicability of Section 33-C(2) of the Industrial Disputes Act, 1947 | Remitted to High Court for reconsideration | High Court did not consider the scope and ambit of Section 33-C(2) properly. |
| Jurisdiction of the Labour Court | Remitted to High Court for reconsideration | High Court overlooked that the Labour Court can only decide matters specified in the Second Schedule of the Act, and “Bonus” is not covered there. |
| Applicability of the Payment of Bonus Act, 1965 to daily wagers | Remitted to High Court for reconsideration | High Court did not adequately consider whether the Bonus Act applies to daily wagers. |
Authorities
The Supreme Court considered several cases to determine the scope and applicability of Section 33-C(2) of the Industrial Disputes Act, 1947, and the jurisdiction of the Labour Court.
| Authority | Court | How Considered | Legal Point |
|---|---|---|---|
| U.P. State Road Transport Corporation v. Birendra Bhandari (2006 (10) SCC 211) | Supreme Court of India | Cited | The benefit enforceable under Section 33-C(2) is a pre-existing benefit or one flowing from a pre-existing right. |
| State Bank of India v. Ram Chandra Dubey & Ors. (2001 (1) SCC 73) | Supreme Court of India | Cited | Explained the principles for determining entitlements under Section 33-C(2) and the difference between pre-existing rights and those considered just and fair. |
| Vijay Kumar v. Whirlpool of India Ltd. (2007 (13) SCALE 379) | Supreme Court of India | Cited | Highlighted the position on pre-existing benefits under Section 33-C(2). |
| Central Inland Water Transport Corporation Ltd. v. The Workmen and Anr. (AIR 1974 SC 1604) | Supreme Court of India | Cited | Elaborated on the limitations of the Labour Court’s functions under Section 33(C)(2) and distinguished between functions of a suit and execution proceedings. |
| State Bank of Bikaner and Jaipur v. R.L. Khandelwal [1968] 2 L.L.J. 589 (SC} | Supreme Court of India | Cited | A workman cannot claim under Section 33(C)(2) for a matter not based on an existing right and which can be appropriately the subject-matter of an industrial dispute requiring a reference under Section 10 of the Act. |
Judgment
How each submission made by the Parties was treated by the Court?
| Party | Submission | Court’s Treatment |
|---|---|---|
| Appellant (H.P. State Electricity Board) | Labour Court has no jurisdiction. | Remitted to High Court for reconsideration. |
| Appellant (H.P. State Electricity Board) | Bonus Act was not applicable to daily wagers. | Remitted to High Court for reconsideration. |
| Respondent (Daily Wage Employees) | Application under Section 33-C(2) was maintainable. | Remitted to High Court for reconsideration in light of the principles discussed. |
How each authority was viewed by the Court?
- U.P. State Road Transport Corporation v. Birendra Bhandari (2006 (10) SCC 211): The Court cited this authority to emphasize that Section 33-C(2) can only enforce pre-existing benefits or rights.
- State Bank of India v. Ram Chandra Dubey & Ors. (2001 (1) SCC 73): This case was cited to highlight the difference between pre-existing rights and rights considered just and fair, clarifying the scope of Section 33-C(2).
- Vijay Kumar v. Whirlpool of India Ltd. (2007 (13) SCALE 379): The Court referred to this case to further support the position that Section 33-C(2) applies to pre-existing benefits.
- Central Inland Water Transport Corporation Ltd. v. The Workmen and Anr. (AIR 1974 SC 1604): This authority was used to explain the limitations of the Labour Court’s functions under Section 33(C)(2) and to distinguish between the functions of a suit and execution proceedings.
- State Bank of Bikaner and Jaipur v. R.L. Khandelwal [1968] 2 L.L.J. 589 (SC}: Cited to support the view that a workman cannot claim under Section 33(C)(2) for a matter not based on an existing right, reinforcing the need for a prior determination of rights under Section 10 of the Act.
What weighed in the mind of the Court?
The Supreme Court’s decision to remit the matter back to the High Court indicates that several factors weighed heavily on its mind. The primary concern was whether the High Court had correctly assessed the jurisdiction of the Labour Court under Section 33-C(2) of the Industrial Disputes Act, 1947, and the applicability of the Payment of Bonus Act, 1965, to daily wage employees.
The Court emphasized that Section 33-C(2) can only be invoked to enforce pre-existing rights. It noted that the High Court needed to determine whether the claim for bonus by daily wage employees constituted such a pre-existing right. The Court also highlighted that the Labour Court’s jurisdiction is limited to matters specified in the Second Schedule of the Industrial Disputes Act, 1947, and that “bonus” is not included in that schedule.
Additionally, the Court was concerned about whether the High Court had adequately considered the applicability of the Payment of Bonus Act, 1965, to daily wage employees, particularly in light of Section 2(11) of the Act, which defines “employee” in terms of monthly salary.
Sentiment Analysis Ranking of Reasons
| Reason | Percentage |
|---|---|
| Jurisdiction of the Labour Court | 35% |
| Applicability of Section 33-C(2) | 35% |
| Applicability of the Payment of Bonus Act to daily wagers | 30% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact (Consideration of factual aspects of the case) | 40% |
| Law (Legal Considerations) | 60% |
Logical Reasoning
The Court’s logical reasoning can be summarized as follows:
Issue: Applicability of Section 33-C(2) for Daily Wagers Claiming Bonus
↓
Step 1: Determine if claim is based on a pre-existing right
↓
Step 2: Assess Labour Court’s jurisdiction
↓
Step 3: Evaluate applicability of Payment of Bonus Act to daily wagers
↓
Conclusion: Remit to High Court for reconsideration
The Supreme Court did not make a final determination on the issues but instead directed the High Court to reconsider the matter in light of the principles discussed. This indicates that the Court found the High Court’s initial assessment to be lacking in several respects.
Key quotes from the judgment include:
- “The benefit which can be enforced under Section 33-C(2) is a pre-existing benefit or one flowing from a pre-existing right.”
- “Bonus” appears as Item 5 in the Third Schedule. Therefore, the question of entitlement to bonus could not have been decided by the Labour Court.”
- “The stand that the expression ‘bonus payable’ relates to the quantum and not payability is also not correct.”
Key Takeaways
- Section 33-C(2) of the Industrial Disputes Act, 1947, can only be used to enforce pre-existing rights.
- The Labour Court’s jurisdiction is limited to matters specified in the Second Schedule of the Industrial Disputes Act, 1947.
- The applicability of the Payment of Bonus Act, 1965, to daily wage employees needs to be carefully assessed, considering the definition of “employee” under the Act.
- Employers should ensure that claims for bonus are assessed based on established legal principles and jurisdictional limitations.
Development of Law
The ratio decidendi of the case is that the applicability of Section 33-C(2) of the Industrial Disputes Act, 1947, is limited to pre-existing rights, and the Labour Court’s jurisdiction is confined to the matters listed in the Second Schedule of the Act. The Supreme Court clarified that the High Court needs to reconsider whether the claim for bonus by daily wage employees constitutes a pre-existing right and whether the Payment of Bonus Act, 1965, applies to daily wage employees, considering the definition of “employee” under the Act.
Conclusion
In summary, the Supreme Court remitted the case back to the High Court for reconsideration, emphasizing the need to assess the applicability of Section 33-C(2) of the Industrial Disputes Act, 1947, the jurisdiction of the Labour Court, and the applicability of the Payment of Bonus Act, 1965, to daily wage employees. The Court highlighted that Section 33-C(2) can only be used to enforce pre-existing rights and that the Labour Court’s jurisdiction is limited to matters specified in the Second Schedule of the Act.
Category
- Industrial Disputes Act, 1947
- Section 33-C(2), Industrial Disputes Act, 1947
- Payment of Bonus Act, 1965
- Section 2(11), Payment of Bonus Act, 1965
- Section 8, Payment of Bonus Act, 1965
- Section 10, Payment of Bonus Act, 1965
- Section 11, Payment of Bonus Act, 1965
- Section 22, Payment of Bonus Act, 1965
- Labour Law
- Bonus
- Daily Wage Employees
FAQ
- What is Section 33-C(2) of the Industrial Disputes Act, 1947?
Section 33-C(2) allows employees to recover money due from employers under a pre-existing right. It is typically used when the right to a benefit is already established, and the issue is merely calculating the amount due.
- Does the Payment of Bonus Act, 1965, apply to daily wage employees?
The Supreme Court has directed the High Court to reconsider this issue, particularly in light of Section 2(11) of the Act, which defines “employee” in terms of monthly salary. The applicability to daily wage employees needs to be carefully assessed.
- What should employers do based on this judgment?
Employers should ensure that claims for bonus are assessed based on established legal principles, jurisdictional limitations, and the specific provisions of the Payment of Bonus Act, 1965. They should also verify whether the claim is based on a pre-existing right.