Associated Publishers (Madras) Ltd. vs Govt. of Tamil Nadu and Others

W.P. Nos. 3797 of 1978, 2316/79 and 1991 of 1980 are the three writ petitions filed by the Associated Publishers, who print and publish the

English Daily ""The Mail"" W.P. No. 3980/78, 2555 of 1979 and 260 of 1981 are the petitions filed by the Wheel & Rim Co. of India. In all these

writ petitions same point relating to the refusal to grant exemption applied for under S. 36 of the Payment of Bonus Act, 1965, hereinafter referred

to as the Act, arises for consideration.

In W.P. No. 3797 of 1978, in the supporting affidavit, it is stated that the operations of the petitioner have become uneconomic and all the

efforts taken to reorganise the work force and increase its profitablility had proved to be a failure due to various reasons including non-co-

operation from labour and high labour cost. The company has been sustaining losses from the year 1964 and from 1970 upto 31-1-1977, the total

accumulated loss, has amounted to Rs. 67,00,000. The loss for the year ending 31-1-1978 was about Rs. 8,00,000 and by the time the petition

was filed, accumulated loss had increased to Rs. 76,00,000 approximately before adjustment of the reserve of Rs. 15,00,000. Since, under the

provisions of Bonus Act, a minimum bonus of 8.33% which would approximately amount to Rs. 90,000 had to be paid for the year 1976-77 and

as the company was facing serious financial difficulties, it applied to the first respondent for exemption under S. 36 if the Act by making an

application on 24-9-1977. For that year, the labour union did not file any written representation and in spite of the particulars furnished, by order

dated 11-7-1978, the first respondent refused to grant relief under S. 36 of the Act on a misconception of facts and law. The reason given that the

Act has been amended to provide for bonus even when there is no allocable surplus, is no ground particularly when the company was incurring

heavy losses continuously which had wiped out its reserves and capital and thus has endangered the continuance of the establishment itself. The

respondent failed to consider the question of ""public interest"" which has not been spelt out in the order when several factors had been mentioned in

the petition to consider only the financial aspect, is not sufficient and that difficult financial position is a relevant circumstances and to conclude that

the minimum bonus payable is within the company''s means, could be sustained only if the company had earned profits. Audited Balance-Sheet and

profit and loss account reveal an accumulated loss of Rs. 67-67 lakhs as on 31-1-1977 and a total picture of dismay in which the entire capital

invested by the share-holders and also reserve built up have been wiped off. In such a critical situation, when the impugned order having been

passed without giving adequate reasons and not even ascertaining whether ""public interest"" would be affected, the petitioner is entitled to the

relief''s as prayed for.

In the counter-affidavit, it is stated that the Government had clearly explained in the impugned order that though the company has incurred a loss

of Rs. 11-31 lakhs for the financial year ended 31-1-1977, the overall business carried out can enable the payment of minimum bonus to the

workers and that the Government had taken into account public interest in that, if exemption is granted, it would result in spate of petitions from

labour which would later turn into industrial disputes resulting in work stoppages etc. Further, the fact that the petitioner had paid a sum of Rs. 100

at a flat late to all workers prior to Deepavali in 1977, itself shows that they do not want to face any industrial unrest. Hence the petition deserves

to be dismissed.

In W.P. No. 2316 of 1979; it refers to the accounting year ending 31-1-1978 and here and again the same plan have been raised and in the

letter sent by the management on 29-9-1978, as it pointed out only the financial loss incurred by them and the high rates of wages paid to

employees, and the exemption sought was based only on financial difficulties and nothing else. Government was well aware of the public interest

involved and considered that loss alone cannot be the criterion for the grant of exemption in view of the concept underlying the provisions of the

Bonus Act that bonus is a deferred wage. In the impugned order, it was stated that payment of Rs. 90,000 by way of minimum bonus for that year

was within the means of the company.

In W.P. No. 1991 of 1980, in the impugned order, it was stated that thought total loss of nearly Rs. 90,39,460 as on 31-1-1979 is claimed.

Since the Act provides for payment of bonus to workers irrespective of the position whether there is allocable surplus or not, and no valid or

compelling grounds having been made out that the company cannot pay Rs. 84,000 only to its employees for the year ending 31-1-1979, the

request for exemption was rejected. The workers'' union also objected to the relief being granted.

Mr. Ramasubramaniam, learned counsel for the petitioner in these three writ petitions by referring to S. 36 of the Act, would be plead that the

financial position and other relevant circumstances of any establishment or class of establishments have to be taken into account and the

Government is bound to refer to ""Public interest"" in the order and also to state reasons for refusing to exercise powers of exemption under S. 36 of

the Act and that in these petitions, the impugned orders passed do not contain the essential ingredients contemplated under the Act and hence they

are bound to be set aside. When application is made for relief under S. 36 of the Act, it is not only the financial position, but other relevant

circumstances pertaining to the establishment will have to be taken into account.

By merely pointing out that the company is in financial difficulty, if exemption is sought for the onus is upon the establishment to show that

circumstances warrant the non-enforcement of either all or any of the provisions of the Act for a specific period and subject to such conditions as

may be imposed. It is the contention of the counsel for the petitioner that the impugned orders have laid emphasis only on financial position, but had

not taken into account, other circumstances. He states that the circulation of ""The Mail"" having only an evening edition as on date is dwindling, but

if relief is granted as prayed for and also from other sources, it would come back to its original position. He contends that when the accumulated

loss is almost nearing a crore of rupees, the financial position pleaded had not been properly appreciated. The fact that the establishment relates to

a News paper with a tradition behind it and which had been publishing for nearly a century and that its workmen would not like it to be disbanded

which have catastrophic result on them also; and when such of those relevant and other circumstances had not been considered, the impugned

order, does not satisfy the requirements of S. 36. Nowhere the impugned order refers to the aspect of ""public interest"" which should have been

spelt out in the impugned orders.

Mr. Dolia appearing for the union would state that S. 36 of the Act is not exhaustive, and case of the establishment is not that it has come to a

grinding halt, but it had suffered financial difficulties which are due to irresponsible spending and when the first respondent had stated that only a

nominal sum is required to be paid by way of minimum bonus, there has been proper consideration of the financial position vis-a-vis bouns, and

therefore, the contentions of the petitioners are without substances, As for the plea that the impugned order does not refer to any other relevant

circumstances, he would stress on the omission on the part of the petitioner to place before the first respondent anything other than financial loss.

Therefore, it is not open to the petitioner to accuse the first respondent that it had not taken into account other relevant circumstances, when the

onus had not been fully discharged by it.

Mr. Fenn Walter would state that the power to be exercised under S. 36 of the Act is equitable to S. 10 of the Industrial Disputes Act and that

there is no need for the first respondent to spell out public interest when it rejects a petition and such a requirement would aries only when

exemption is granted and that in so far as the losses claimed, they are only based on balance-sheet and profit and loss account prepared for the

convenience of the management and that no material is placed a to what extent, they can be acted upon, and that the obligation is on the part of the

petitioner to satisfactorily establish that the loss is not attributable to its own mismanagement and excessive payments made to the top echelons in

the company.

In reply Mr. Ramasubramaniam, would state that during the personal hearing the first respondent was appraised about every relevant

circumstance. Section 36 of the Act, has been upheld holding that it is a conditional legislation and it cannot be treated as deferred wages and so

far as S. 36 of the Act is concerned, the power to be exercised is quite distinct from the administrative power exercised under S. 10 of the

Industrial Disputes Act, and more so when the power of exemption is quasi-judicial function to be discharged with a speaking order.

On these contentions raised, the first point to be considered is, whether the financial position, alone, would be sufficient to grant exemption and

if so, whether in the instant case, the petitioner has satisfactorily established and to what extent the first respondent had failed to the take into

account the materials placed by the petitioner ? The records produced by the first respondent, show that in all the representations made, only the

financial difficulty faced by the establishment have been relied upon. The balance-sheet and profits and loss accounts have been mounting year to

year and has reached nearly Rs. 90,00,000 by 1979. At the same time, what requires to be considered is whether this loss suffered, entitles the

workers from getting their minimum bonus, which does not exceed, even according to the petitioner, Rs. 90,000 in a financial year. When the

business transacted in a year is nearly Rs. 35,00,000 the plea that it is possible for it to incur several lakhs of rupees on so many items of necessary

expenditures but could not part with a sum of Rs. 80,000 or Rs. 90,000 towards bouns to all the workmen in a year, could not convince the

Government to hold that the statutory obligation should be avoided to the detriment of the workers in the establishment. It is within the domain of

the Government either to grant or refuse exemption and what requires to be looked into at the instance of the petitioner is, whether the State had

taken into account pertinent aspects in passing the impugned order. Merely because the company has been incurring loss, it does not mean that the

statutory obligation should be avoided unless the petitioner is able to place clinching materials which should justify the exercise of powers of

exemption by the State to the detriment of the workmen. As rightly pointed out by Mr. Dolia, in all the representations made, only financial position

had been placed before the respondents and no other relevant circumstances had been pleaded. What Mr. Ramasubramaniam was emphasising

before Court is to see the communication dated 29-9-1978 wherein it is contended that the peculiar nature of the industry/establishment and how

far it is necessary to continue to publish for the benefit of the public and to what extent it would in turn effect the workmen if the establishment is to

be closed have been pleaded. He produced the communication sent on 29-9-1978 for the year ending 31-1-1978 wherein it is stated :

Here we would like to bring to your kind attention that our industry being a newspaper industry is committed to public everyday. Hence we would

request you very much to grant us exemption from all the provisions of the Payment of Bouns Act, 1965 by exercising the powers conferred on

you under S. 36 of the Payment of Bonus Act, 1965, in public interest, which is the sole relevant consideration. We shall furnish any other detail

that you may require in this connection.

Except to raise such a plea and also plead that during the oral representations all other relevant circumstances have been placed, the records reveal

that except financial position no other factor or materials had been placed. Therefore, it will not be open to the petitioner to raise other points or

plead about other aspects as it this Court can take them into account, to grant relief under S. 36 of the Act, or on that score, remand the matter for

fresh consideration. When the petitioner had not discharged the onus placed upon it and failed to furnish materials about other relevant

circumstances, the impugned orders after referring to financial position, held that payment of a sum of Rs. 80,000 or Rs. 90,000 in a year to the

workmen, is within the means of the company, when it has got overall business which stands at nearly, Rs. 35,00,000. Hence it cannot be said that

the first respondent had not looked upon the aspect of financial position with any perversity or rejected the application on any irrelevant grounds.

The next contention of Mr. Ramasubramaniam, learned counsel for the petitioner is that, the impugned orders do not anywhere use the word,

public interest"", and, therefore, there is a failure to exercise the jurisdiction as contemplated under the S. 36 of the Act.

Mr. Fenn Walter contended that it is only when exemption is granted, public interest aspect comes up for consideration and not when the

application is refused.

The aspect of public interest is injected into this Section because when the workers are invested with a right to claim minimum bonus

statutorily, if they are to forego it. It will be the duty of the State Government to clearly, state as to what extent their entitlement to statutory

minimum bonus requires to be taken away because of certain aspects of public interest being involved, so that the affected workers can reconcile

themselves to the inevitable situation and join hands to advance public interest. Hence the need to spell out public interest would necessarily arise,

when the exemption is granted, because then only it would become obligatory on part of the State Government to make it known to the workmen

that for a specified period subject to conditions imposed, they will have to forego their rights vis-a-vis paramount public interest. But if the State

Government, on going throughout the application, found that irrelevant materials are pleaded while invoking the power of exemption writ is open to

the State to reject the application stating that sufficient and relevant materials have not been placed. The order of rejection results in the

establishment continuing to pay minimum bonus, which is an existing liability. To state that the liability on the establishment under Act would

continue to be in force, it would not be necessary for the State Government of state that in public interest, the minimum bouns requires to be paid.

The words ""public interest"" need not be used when the liability to pay which is already existing under the Act, continues.

There may be occasions wherein an establishment or class of establishments may place plethora of materials and if the materials placed are

claimed to be concerned with public interest; it may then become necessary for the State to analyse as to what extent the circumstances pleaded or

do not justify the invocation of public interest so as to deprive the workers of their statutory rights.

If the Government is to grant exemption it has to spell out the aspect of public interest, failing which such an order would be contrary to the

requirements of the Section.

In respect of the present petitions, when the petitioner had not plodded anything except financial position and when the Government in the

impugned orders had given reasons as to why it cannot entitle the petitioner to ask for exemption there was no need to spell out public interest. It is

only when exemption is granted, it would be necessary to state in the impugned order itself as to what public interest exists for taking away the

application of, either all or any of the provisions of the Act for such period and subject to such conditions as may be imposed by the State

Government.

The next contention of the learned counsel for the petitioner is that, the reason given is not relevant at all. Further the likely closure of the

establishment as has happened in the case of the Wheel & Rim Co., deserves to be avoided in the interests of the workmen who are themselves

anxious for the survival of the Newspaper. Here again, Simpson and Group Companies Worker''s Union made a representation for the year

ending 31-1-1979 which was taken into account while passing the impugned order in W.P. No. 1991 of 1980. The stand of the workmen is that

in spite of the continuing loss, it is possible for payment of the minimum bonus. Hence it cannot be said that the respondent had not taken into

account the points taken by the petitioner, but came to an opinion to and within the ambit of the Section.

For comprehending the proper scope of S. 36 of the Act, the following decisions were referred to and relied upon.

In Jalan Trading Co. (Private Ltd.) v. Mill Mazdoor Union, 1969 II L.L.J. 546. Act was upheld and as for S. 36 of the the Act, it was held

that the power conferred on the appropriate Government is not an unguided power as the Govt. is enjoined to take public interest, financial

position of the establishment, and other relevant circumstances into consideration before exercising the said power, and, therefore, no excessive

delegation of legislative authority under S. 36 and hence it is valid. To claim that the discretion of the Government is not absolute, and that the

exercise of powers is justifiable and that it must be based on consideration of facts relevant to the provisions of the statue itself and it must be also

a speaking order, the decision in Amal Kr. Ghatak and Srinathpur Tea Co. Ltd. Vs. State of West Bengal and Others, , is relied upon.

The decision in Fashions Electric Dry Cleaners Vs. Government of Andhra Pradesh and Another, , is to the effect that the order should

indicate the materials on which it was based and that taking profits in some year into account, but not the losses sustained in certain other years, is

not a proper ground and a bare order without giving reasons, deserves to be set aside.

A division Bench of the Patna High Court in S.V.P. Cement Co. v. State of Bihar, (1977) Labour & Ind. Cases, 1692, held that the

satisfaction of the Government much be objective and as the order entails civil consequences the decision must be arrived at strictly within the

guidelines laid down in the said Section and the appropriate Government should state the reasons on the basis of which it has formed the opinion

that the establishment concerned is or is not entitled to exemption so that a competent Court of law may examine whether or not the appropriate

Government has acted in accordance with the provisions of the Section and know as to why the impugned order was passed.

In these petitions as stated above the financial position alone which had been pleaded by the petitioner, had been taken into account to come

to the conclusion that the quantum involved in payment of bonus is within the means of the establishment. There has been application was rejected

is also stated in the impugned orders. Hence, there is no justification made out to interfere with the impugned orders.

As for the three writ petitions filed by the Wheel and Rim Co. in the first of the impugned orders, reference is made to the loss reported to

have been incurred from 1975 onwards, but it was held in the impugned order that merely because the company was incurring loss, it cannot be

considered that exemption should be granted.

In the next impugned order it was held that the financial losses cannot be regarded as a valid reason and that the company is reported to have

ceased to manufacture from 1-12-1978 and that the workmen have been paid amounts due to them except the bonus for the year ending 31-12-

1977. Such being the case, it was considered that there could be no exemption with regard to bonus. In the last of the impugned orders, after

referring to the loss suffered, and to the objection raised by the union, it was held that the mere fact that loss had been incurred, is not valid ground

to exempt the payment of bonus.

It is since reported that the company has ceased to exist and its manufacturing process had come to a grinding halt. The amount due to

workmen in respect of every other claim had been paid, and, therefore, as stated by the Government, there was no justification made out for

depriving the workman, who had actually already lost their employment, of the bonus to which they were entitled to under the Statue. It is an

opinion to which the respondent is entitled to arrive at based on relevant materials. Therefore, there being no error apparent on the face of the

order or failure to exercise jurisdiction, vested under S. 36 of the Act these writ petitions also deserve to be dismissed.

Hence all the six writ petitions are dismissed. No costs.