Sarvaraya Textiles Ltd. vs Allada Lakshmana Rao and Another

Gopal Rao Ekbote, J.—This is an application for the issue of a writ of certiorari to quash the order of the Authority under the Payment of Wages Act, dated 14 October 1965. It arises in the following circumstances.

The petitioner voluntarily declared bonus to be paid to the employees for the year 1963-64. The declaration said that each worker will get four months of basic pay by way of bonus. This bonus was on the basis of profits made by the company. The employees accordingly received amounts and delivered receipts. After sometime, however, about 100 or 160 employees of the company filed an application u/s 15(2) of the Payment of Wages Act with the authority under that Act contending that under the recommendation of the Wage Board award, a part of clearness allowance that is to say Rs. 37.50 should have been merged with the basic wage, and, after merging the said amount with the basic wage, four months'' bonus should have been paid to each of the workers. The company raised a preliminary objection that since the dispute is in regard to bonus, it does not fall within the definition of " wages " as is given in the Act and consequently, the authority under the Act has no Jurisdiction to entertain the application. The authority posed the question properly, but answered that the voluntarily declared bonus of four months is also a " wage " within the meaning of that term. It is this view that is now assailed in this writ petition.

The same contention has been raised by Sri Srinivasamurthi, the learned Counsel for the petitioner before me. In order to appreciate the contention, it is necessary to examine the definition of "wages" as it appears in Section 2(vi) of the Act. It is as follows, in so far as it is relevant:

''wages'' means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, If the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done In such employment, and includes--

(a) * * * (c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);

(d) * * *(e) * * *

but does not Include-

(1) any bonus (whether under a scheme of profit-sharing or otherwise) which does not form part of remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court....

It is true that under Clause (c) any additional remuneration, whether such remuneration is called a bonus or by any other name, payable under the terms of employment is also included in the definition of "wages." But Clause (1) of that definition excludes any bonus whether under a scheme or profit-sharing or otherwise which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court. It is not in dispute that the four months'' bonus was voluntarily declared by the management. It neither formed one of the terms of employment nor was it based on any award or settlement between the parties. It was not also based on any order of a Court. The bonus which is linked with the profit therefore expressly falls within Clause (1) of the definition and is excluded from the definition of " wages." In view of this exclusion, It is not necessary to consider the main definition and Clause (c) of it. That this is so is supported by a decision of the Mysore High Court, although it was given under the unamended definition of "wages"- Chandrasekhar (S.) Vs. Abdullah (H.) and Others, This position of law is not seriously disputed by the learned advocate for the respondent. If the bonus thus voluntarily declared does not come within the term of " wages," what must necessarily follow is that the Authority under the Payment of Wages Act cannot entertain the application u/s 15, filed by respondent 1.

The writ petition, is, therefore, allowed and the impugned order quashed. In the circumstances, I make no order as to costs.