ecial Leave Petition Civil No 7506 of 1988
From the Judgment and Order dated 22101987 of the Kerala High Court in SA Nos
527 of 1981 and 535 of 1981
MK Ramamurthy Mrs C Ramamurthy and MA Krishnamurthy for the Petitioner
The Order of the Court was delivered by VENKATARAMIAH J
The question involved in this petition is whether a member of a trade union is entitled to ask for an account and to claim refund of the sums received by the trade union from the management for and on his behalf on his ceasing to be a member of the said trade union
Respondents 1 and 2 EK Thomas and KK Surendran respectively were employees of a certain management which was the member of the Cochin Railway Forwarding Agents Association whose President is impleaded as Respondent No 4 in this petition
The management concerned was doing the business of a clearing agent in the Cochin Harbour Terminus Railways Goods Shed
The respondents 1 and 2 were working as head load workers
Some of the employees working under the management concerned were members of a trade union called Cochin Port Thozhilali Union hereafter referred to as the trade union  whose General Secretary is impleaded as Respondent No 3 in this petition
The petitioner GS Dhara Singh was the President of the trade union
The terms and conditions of service including the rates of wages and other allied matters relating to the head load workers were decided and settled through mutual negotiations between the trade union and Respondent No 4
Under an agreement entered into in October l973 an amount equivalent to 10 paise out of every rupee earned by the workers was deducted by the management towards the gratuity fund and transferred to the trade union for and on behalf of the workers
Under another agreement a sum equivalent to 10 paise per rupee in the wages of the workers was paid by the management to the trade union towards accident benefit fund of which the workers were the beneficiaries
The amounts so collected were entrusted to the petitioner who was also the treasurer and custodian of the funds of the trade union
It is alleged that the Petitioner deposited the amounts so received by him in his personal name in his bank account
No account of the amounts so received by him was rendered and the members of PG NO 262 the trade union found that it was not possible to keep control over the funds so received by the petitioner
The petitioner who was the President of the trade union did not call any general body meeting and thus the members of the trade union could not ventilate their grievance regarding the mismanagement of the funds received by the petitioner by democratic means
In view of the above difficulty faced by them 85 workers including Respondents 1  2 and three others namely KT Raghavan AN Joseph and KJ Anthappan resigned from the trade union on 1311976 and formed a separate union of their own which was registered under the 
Thereafter Respondent Nos 1  2 KT Raghavan AN Joseph and KJ Anthappan instituted five suits being Original Suits Nos 49 to 52 and 54 of 1977 on the file of the Munsiff Cochin against the petitioner and Respondent No 3 praying for a decree directing the petitioner and Respondent No 3 to render an account of the amounts collected on their behalf from December 1969 towards the accident benefit fund and from October 1973 towards the gratuity at the rate of 10 paise per rupee under each head and to pay the amounts due to them
Each of the plaintiffs in the said suits estimated the amount payable to him at Rs 3000
They also claimed future interest at 6 per cent per annum on the amounts found to be due to them till the date of payment
The petitioner who was the President and Treasurer of the trade union took up various pleas denying his liability to render account and to refund the amount
One of the pleas raised by the petitioner was that since the plaintiffs had resigned and ceased to be the members of the trade union they had no right to claim the refund of the sums due to them from out of the funds of the trade union and that if they rejoined the trade union they would be entitled for payment of gratuity and accident benefit when occasion arose for payment of the same
He also pleaded that the suits were not maintainable in civil courts in view of the provisions of the and the 
On the basis of the pleas raised by the parties the Trial Court framed two issues in each of the suits namely i whether the plaintiff could ask the petitioner and Respondent No 3 to render an account of the amounts received by them and ii whether he was entitled to claim the refund of any amount
All the five suits were tried together and they were disposed of by a common Judgment dated 315
1979 by the learned Munsiff
By his judgment the Munsiff passed a preliminary decree against the petitioner and Respondent No 3 directing them to render an account of the amounts received by them towards the accident benefit fund from PG NO 263 December l969 to 16111975 and towards gratuity from October 1973 to 16111975
The learned Munsiff further directed that each of the plaintiffs was entitled to get proportionate share of the amount due to him from out of the total amount received by the petitioner and Respondent No 3
He further directed the plaintiffs to apply for a final decree for ascertaining the actual amount due to them in accordance with the preliminary decree passed by him along with future interest at 6 per cent per annum from the date of suit till date of realization
Aggrieved by the judgment and decree passed by the learned Munsiff the petitioner filed two appeals in AS 122 of 1979 and AS 124 of 1979 on the file of the Additional Sub Judge Cochin against the decrees passed by the Munsiff in favour of Respondent Nos 1 and 3 respectively
After hearing the parties the learned SubJudge found that the petitioner and Respondent No 3 had received from the management amounts on behalf of the workmen concerned towards gratuity and accident benefit fund but the plaintiffs were not entitled to the decree at the hands of the Civil Court since the suits were not maintainable in view of the provisions of the  197
and the which provided for separate remedies
He accordingly set aside the decrees passed in favour of Respondent Nos 1 and 2 in the suits filed by them
Aggrieved by the common Judgment dated 2181980 of the learned Additional Sub Judge Respondent Nos 1 and 7 filed Second Appeal No 537 of 1981 F and Second Appeal No 535 of 1981 G respectively on the file of the High Court of Kerala
The two second appeals were heard together and the High Court by its common Judgment dated 22
1987 set aside the judgment and decrees passed by the First Appellate Court and restored the judgment and decrees passed by the Trial Court
This Special Leave Petition is filed by the petitioner against the said common judgment of the High Court under Article 136 of the Constitution of lndia
At the hearing of the Special Leave Petition the learned counsel for the petitioner stated and we think rightly that the ground on which the First Appellate Court had set aside the decrees passed by the Trial Court namely that the suits were barred under the provisions of the and the was unsustainable
But he however contended that since the amounts had been realised by the petitioner and Respondent No 3 from the management under settlements which had been entered into through the trade union Respondents 1 and 2 could not claim the amount after resigning from the membership of the trade union as the said amounts formed part of the general fund of the trade union to which a PG NO 264 member who had resigned had no right
The learned counsel further urged that since the amounts were made available to the trade union by the employer for the benefit of the members of the trade union on the happening of certain contingencies and since the resignation from membership of the trade union was not one such contingency a member of a trade union who had resigned from the membership of the trade union could not claim the amount
He further urged that only on the dissolution of the trade union its funds could be distributed as per the rules of the trade union and where the rules did not provide for the same then the fund was liable to be distributed as per rule 111 of the Central Trade Union Regulations 1938
We do not find that the petitioner is right in his contentions
Admittedly the amounts were received by the trade union from the employer concerned towards the gratuity and accident benefit to which the workers were entitled
There was no scheme drawn up by the trade union regarding the payment of the gratuity amount and the accident benefit fund received on behalf of the Workmen to the workmen concerned
There was no agreement between the trade union and its members that the amount received towards gratuity and accident benefit should form part of funds of the trade union
Any amount received for and on behalf of the members is liable to he refunded to the workmen concerned
In the instant case the amount which had been received on behalf of Respondent Nos 1 and 1 by the petitioner and Respondent No 3 had therefore to be refunded to them on their resignation from the membership of the trade union
We do not find any tenable defence which the trade union could put forward in the circumstances of the case
On the question that the workmen concerned were entitled to the amounts received on their behalf there is a concurrent finding of all the three courts in favour of the plaintiffs
The decision in Balmer Lawrie Workers  Union Bombay and Anr
vs Balmer Lawrie and Co Ltd and Ors  l985  2 SCR 492 is of no assistance to the petitioner
In that case this Court was concerned with the validity of clause 17 of the Settlement referred to therein which read as follows Arrears will be paid within two months from the date of signing of the settlement
Further the Company shall collect from each workman an amount equivalent to 15 of the gross arrears payable to each employee under this settlement as contribution to the Union Fund and this Amount shall be paid to the Union within 3 days of the payment of arrears by Payee s Ac Cheque emphasis added PG NO 265 The appellant in the above case which was a non recognised union had challenged the validity of clause 17 referred to above on the ground that it permitted a compulsory exaction not permitted by the Payment of Wages Act from the arrears payable to the workmen
This Court rejected the said contention since under clause 17 the amount of 15 of the gross arrears received by the Union was to be treated as contribution to the Union Fund and that the said clause was a valid one
In the case before us the petitioner and Respondent No 3 have not shown that there was any such settlement between the management and the trade union or a scheme prepared by the trade union which was binding on the workmen under which the amounts received towards the gratuity and the accident benefit fund on behalf of the workmen would become a part of the Union fund
We do not therefore find any ground to interfere with the judgment of the High Court
This Special Leave Petition therefore fails and it is dismissed
NVK Petition dismissed


Summary:
The appellants claimed bonus for the years 1950 1951 and 1952 at the rate of six months  wages per year
The Industrial Tribunal to which the dispute was referred allowed in calculating the surplus available for payment of bonus inter alia return on paid up capital and on the reserves at 7 and 5 respectively and accepted the  unit scheme  of payment of bonus which the company had been following since 1926
Under this scheme units were credited to each workman taking into consideration the importance of the job he held the wages he got and the number of years he had been employed in that particular job and each workman was paid bonus in proportion to the units to his credit
On appeal the Labour Appellate Tribunal modified the award and raised the return on the reserves from 5 to 6  Held that the formula laid down in Sree Meenakski Mills vs Their workmen 1958 SCR 878 at 884 for ascertaining the surplus on the basis of which bonus becomes determinable and distributable could be applied to the tea industry with suitable adjustments
The allowing Of 7 return on capital as against 6 held allowable under that formula was justified by the additional risk factors in the tea industry
The allowing Of 5 return on reserves by the Industrial Tribunal as against 4 allowed by the formula was not unreasonable it being sufficient to safeguard the interests of the company
But the increasing of this to 6 by the Appellate Tribunal was insupportable in the absence of any claim in the respondent s written statement for rehabilitation or of any figures for determining this amount
The  unit scheme  was suitable for the payment of bonus and would result not only in the fair distribution of bonus but would also lead to improvement in the quality and quantity of work