The Pondicherry Housing Board Employees' Union and The Pondicherry Housing Board Staff Union vs The Government of Pondicherry and The Pondicherry Housing Board

K. Chandru, J.—The two petitioners are two trade unions functioning under the second respondent management. In the present writ

petition, they are seeking for a direction to the second respondent to grant the statutory minimum bonus of 8.33% every year together with the

exgratia payment paid to the employees of the public sector undertaking under the first respondent Government.

Notice of motion was ordered by this Court on 08.12.1998. On behalf of the second respondent, a counter affidavit dated 13.8.2007 has been

filed. The first petitioner herein has also filed a rejoinder dated 02.10.2001.

It is claimed by the petitioner union that they had sent a representation dated 09.10.1998 demanding minimum statutory bonus under the

Payment of Bonus Act 1965 (for short ''Bonus Act''). The second respondent by their reply letter dated 23.10.1998 stated that they were not

eligible for bonus for the year 1997-98 and they will be paid only the gift as announced by the first respondent Government.

It is the stand of the petitioner union that the second respondent was created by Pondicherry Housing Board Act, 1973 which came into

existence from 05.5.1975. It is also a ''''state"" within the meaning of Article 12 of the Constitution. It was further submitted that the second

respondent is an ''''industry"" u/s 2(j) of the Industrial Disputes Act, 1947 (for short ''ID Act''). It is also a ''''Corporation"" in terms of Section 2(1)

of the Bonus Act. It was further stated that the second respondent was not exempted u/s 32(v)(c) of the Bonus Act, which reads as follows:

''32. Act not to apply to certain classes of employees.- Nothing in this Act shall apply to-

(i) to (iv) omitted

(v)employees employed by -

(a) and (b) omitted

(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit.

Heavy reliance was placed upon the application of the said Act to the Tamil Nadu Housing Board and also the resultant judgment of the

Supreme Court in this regard. Mr. G.Venkataraman, learned Counsel for the petitioner referred to the decision of the Supreme Court in State of

T.N. represented by Secretary, Housing Deptt., Madras Vs. K. Sabanayagam and Another, . In that case, though a contention was raised by the

Tamil Nadu Housing Board and the State of Tamil Nadu that the provisions of the Bonus Act will not apply to the Housing Board, in view of the

exemption granted u/s 32(v)(c), the Supreme Court repelled the said contention on the ground that the Tamil Nadu Housing Board itself had

sought for a specific exemption u/s 36 of the Bonus Act. Therefore, in view of waiver and estoppel, they cannot plead for an exemption u/s 32(v)

(c). The relevant portion found in para 8 of the judgment may be usefully reproduced below:

In this connection it is, therefore, too late in the day for the Tamil Nadu Housing Board to take a somersault and to try to submit that despite its

consistent course of conduct spread over decades accepting the position that it was statutorily liable to pay the minimum bonus as per the Act, but

for the exemption sought by it u/s 36 of the Act, in fact the Act itself did not apply to it u/s 32(v)(c) of the Act and all attempts to get exemption

from the Act u/s 36 were misconceived or uncalled for or an exercise in futility. We must, therefore, proceed on the basis that it was an admitted

position on behalf of the Housing Board during the relevant accounting years with which we are concerned that it is governed by the provisions of

the Act and but for exemption u/s 36 of the Act it would be bound to pay the minimum statutory bonus as laid down by the Act to its employees.

On the basis of this admitted position and stand on behalf of the Housing Board the High Court was quite justified in observing that the Housing

Board had waived its objections regarding non-applicability of the Act u/s 32(v)(c) of the Act in the present cases. There is no question of any

estoppel against statute as tried to be submitted by learned Senior Counsel for the appellants in this connection. On factual aspects if a consistent

stand is taken by the Housing Board to the effect that it is governed by the Act, implicit in the stand is the admission on facts that statutory

exemption u/s 32(v)(c) of the Act factually is not earned by the Board. When on facts the Housing Board has not thought it fit to raise such a

factual dispute or contention for the relevant accounting years its stand admitting the non-existence of the relevant data for invoking Section 32(v)

(c) of the Act must be held binding to the Housing Board. It is obvious that facts which are admitted need not be proved. The Housing Board itself

by its conduct admitted non-existence of relevant factual data for invoking the powers u/s 32(v)(c) of the Act. Therefore, it can certainly be held to

be bound by its admissions on these facts and it can at least to the lowest be said to have waived its contention in this connection for the relevant

accounting years. It would amount to estoppel on facts and not on law and would also certainly amount to a conscious giving up of its claim for

statutory exemption under the said provision. Thus on the principle of waiver and estoppel the second contention of the appellants has to be

repelled as has been rightly done by the High Court. Point No. 2 is, therefore, answered in the negative.

In the counter affidavit filed by the second respondent, it is stated that the Pondicherry Housing Board will not come u/s 32(iv), which reads as

follows:

''32. Nothing in this Act shall apply to -

(i) to (iii) omitted

(iv) employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central

Government or a State Government or a local authority.

But, however, in paragraph 10 of the counter affidavit, it was averred as follows:

This respondent respectfully submits that in so far as the paragraph 7 is concerned, it is respectfully submitted that the Board is not a

commercial organisation like other public sector undertakings of Pondicherry State Government to merit consideration of payment of ex-gratia on

par with such undertakings. Unlike other public sector undertakings Pondicherry Housing Board is governed by a separate legislation Pondicherry

Housing Board Act, 1973, with the main object of providing for the execution of housing and improvement scheme. There is no trade or business

carried on by the Pondicherry Housing Board. Acquiring lands, constructing houses and providing the same to landless person on ownership or

rented basis for nominal price or rent are the functions of Pondicherry Housing Board. The Board does not run the business on commercial line.

Based upon this averment, Mr. R.Gandhi, learned Senior Counsel for the second respondent submitted that the exemption available u/s 32(v)(c)

will be available to the Pondicherry Housing Board as it is an institution not intended for profit. He also submitted that this is not a case where the

High Court can grant a direction under Article 226 of the Constitution. The only course open to the trade union is to raise an industrial dispute

under the provisions of the ID Act. A reference was made to Section 22 of the Bonus Act, which reads as follows:

Reference of disputes under the Act.- Where any dispute arises between an employer and his employees with respect to the bonus payable

under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an

industrial dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding law relating to investigation and

settlement of industrial disputes in force in a State and the provisions of that Act or, as the case may be, such law, shall save as otherwise expressly

provided, apply accordingly.

Per contra, Mr. G.Venkataraman, learned Counsel for the petitioner relied upon the judgment of the Supreme Court in Housing Board of

Haryana Vs. Haryana Housing Board Employees Union and others, . In that case, the Supreme Court rejected the contention that the Haryana

Housing Board was a local authority and hence exempted by virtue of Section 32(iv) of the Bonus Act. In paragraphs 35 and 36 of the said

judgment, the Supreme Court dealt with that issue, which reads as follows:

Para 35. It will be seen that the Legislature itself has given the Board limited status of ""local authority"" only for the purpose of Land Acquisition Act

as also the parent Act, namely, the Haryana Housing Board Act, 1971, under which the Board has been constituted and established. The

Legislature has given this status only fictionally as the Board, in reality, is not a ""local authority"" and that too only for a limited purpose. The

Legislature could well have given this status to the Board for purposes of other Acts also including the Payment of Bonus Act but this has not been

done and consequently the Board cannot, specially in view of what has been stated above, be treated as ""local authority"", under the Payment of

Bonus Act.

Para 36. There does not, therefore, appear to be any reason to differ from the view expressed by the learned Single Judge or by the Division

Bench (in appeal) of the Punjab and Haryana High Court that the Board is not a ""local authority"" as it does not possess the attributes indicated by

this Court in the case of R.C. Jain.

In view of the Haryana Housing Board''s case, the contention raised by the second respondent that it comes within the exemption provided u/s

32(iv) will stand rejected. But the case of the petitioners that they are eligible to get bonus in the light of the Tamil Nadu Housing Board case

cannot be accepted as the case was relied on by the courts on grounds of waiver and estoppel and not on the merits of the exemption pleaded and

in terms of Section 32(v)(c) of the Bonus Act.

Thereafter, the learned Counsel for the petitioner placed reliance upon the judgment of the Division Bench of this Court in Tamil Nadu Water

Supply and Drainage Board Engineers Association etc. v. State Government of Tamil Nadu and Tamil Nadu Water Supply and Drainage Board

reported in 1991 2 LLJ 394 in which exemption u/s 32(v)(c) claimed by the Tamil Nadu Water Supply and Drainage Board was considered. The

following is the conclusion reached by the Division Bench, which is found in paragraphs 12 and 13, and they are as follows:

''12. We have no manner of doubt that the respondent Board has been established to serve the public interest by ensuring better amenities of life

and raising the standard of life of the community as a whole. Learned Single Judge has referred to the functions of the Board and its powers and

rightly held that the purpose behind the functions of the Board is to provide protected drinking water supply and drainage facilities, but this also

cannot be disputed that the Board has got its own assets and liabilities, that it has got its own method of recovery of the cost of the schemes,

making investment and constituting its funds by ''''all monies received by and on behalf of the Board..., all proceeds of land or any other kind of

property sold by the Board, all charges, all interest, profits and other money accruing to the Board and all monies and receipts"", deposited into the

public accounts of the Government under such detailed head of accounts as may be prescribed or in the Reserve Bank of India, State Bank of

India or any corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertaking) Act,1970. It has thus a

scheme of profit and loss. It shall earn profit in some year and loss in another year. Thus, in its commercial activities of a sort, it has got a capital

structure, profit and liabilities and a labour force to care for....

Para 13. Applying the test as above, we have no hesitation in holding that the learned Single Judge has fallen in error in holding that the

respondent/Board is an institution established not for purposes of profit. Employees of the Board qualifying for bonus under the Act, in our opinion,

are entitled to minimum amount of bonus and/or such amount computed in accordance with law upon the surplus in the accounting year.

The matter was taken to the Supreme Court and the decision of the Division Bench was upheld by the Supreme Court in Tamil Nadu Water

Supply and Drainage Board Vs. Tamil Nadu Water Supply and Drainage Board Engineers Association and Others, . The Supreme Court while

dismissing the appeal filed by the TWAD Board, in paragraphs 3 and 4 had observed as follows:

Para 3. While reaching the above conclusion, the Division Bench has noticed another judgment of the High Court in T.N. State Housing Board v.

K. Sabanayagam. The said judgment of the High Court came up before this Court and this Court in State of T.N. v. K. Sabanayagam3 has upheld

the judgment of the High Court holding that the Tamil Nadu Housing Board was governed by the provisions of the Payment of Bonus Act. In para

12 of the said judgment of this Court, it was observed as follows: (SCC p.333)

We may mention that by a decision of a Bench of two learned Judges of this Court in the case of Housing Board of Haryana v. Employees''

Union Bonus Act is held applicable to Haryana Housing Board by holding that it is not entitled to statutory exemption from the Act u/s 32 as a

local authority. We are informed that accordingly bonus is being paid by the said Board to its employees as per the Bonus Act.

Para 4. It is not in dispute that the appellant has been paying, though not in the name of bonus every year either in the name of ex gratia payment or

under some other name. No doubt Mr. Krishnamurthy, learned Counsel appearing for the appellant-Board, argued at length to persuade us to

hold that the appellant-Board will come under the exempted category u/s 32(v)(c) of the Act. However, we are unable to persuade ourselves to

take a different view from the one taken by the High Court on the facts as found by it. We are satisfied that the judgment of the High Court does

not call for any interference. The appeals fail and are accordingly dismissed with no order as to costs.

In this context, it is necessary to refer to the relevant provision of the Tamil Nadu Water Supply and Drainage Board Act, 1971, which

concluded the issue by foreclosing an exemption u/s 32(v)(c) of the Bonus Act and may be compared with a similar provision found in the

Pondicherry Housing Board Act, 1973. Those two provisions are extracted below:

TWAD Board Act, 1971 Pondicherry Housing Board Act, 1973

''''Board''s funds:- (1) The Board shall 73(1). The Board shall have and maintain its

have its own fund. own fund to which shall be credited.-

(2) omitted. (a) omitted.

(3) All moneys received by or on behalf of the (b) all moneys received by or on behalf of the

Board by virtue of this Act, all proceeds of Board under this Act including the sale

land or any other kind of property sold by the proceeds of lands and other kinds of property

Board, all charges, all interest, profits and sold by the Board, all rents and all interests,

other moneys accruing to the Board shall profits, or other moneys accruing to the Board

constitute the fund of the Board. under this Act.

Therefore, the plea of exemption u/s 32(iv) pleaded by the second respondent must necessarily fail on account of Haryana Housing Board

case (cited supra). In the same way, exemption based on Section 32(v)(c) as pleaded before this Court must also fail on account of TWAD

Board''s case (cited supra). Once the statutory exemptions pleaded u/s 32 by the respondents fail and there being no other exemption granted by

the State Government u/s 36 of the Bonus Act, the necessary corollary is that the Bonus Act will apply to the second respondent. Since the

petitioners are only seeking for a statutory minimum bonus guaranteed u/s 10 of the Bonus Act, there is no necessity to drive them to raise an

industrial dispute regarding the quantum of bonus payable to its employees.

In the light of the above, the writ petition will stand allowed and the direction issued to the second respondent to pay statutory minimum bonus

guaranteed u/s 10 of the Payment of Bonus Act, 1965 from the accounting year 1997-98 onwards. However, while paying the said statutory

minimum bonus, the second respondent is entitled to adjust the exgratia/gift or by whatever name it was called. If the workmen of the second

respondent are aggrieved and want something more than the statutory minimum bonus the only remedy open to them is to raise an industrial dispute

in terms of Section 22 of the Payment of Bonus Act, 1965, The second respondent is directed to implement the order within a period of three

months from the date of receipt of a copy of this order. There will be no order as to costs.