Civil Appeal No 1935 NL of 1974
From the Award dated 851974 of the Ninth Industrial Tribunal of West Bengal Durgapur in Case No X 4 of 1973
Dr Shankar Gkosh and DN Gupta for the Appellants
SK Nandy for the Respondents
The Judgment of the Court was delivered by BALAKRISHNA ERADI J
This appeal by Special Leave has been preferred against the Award dated May 8 1974 made by the Ninth Industrial Tribunal of West Bengal Durgapur in Case No X 4 of 1973 on its file
The appellants are two companies incorporated 187 under the Indian Companies Act 1913 having their registered office in Calcutta
Both the appellants are engaged in the business of generation transmission distribution and sale of electricity in certain areas of Bengal and Bihar under licences granted by the concerned Governments
Appellant No 1 has a power station at Dishergarh and Appellant No 2 has its power station at Sibpore
In connection with their aforesaid business the two appellants were having at the relevant time 400 and 250 workmen respectively employed under them
For the years 1965 66 to 1970 71 inclusive bonus was paid to the workmen on the basis of agreements entered into each year under Section 343 of the hereinafter referred to as the Act 
Concerning the bonus payable for the year 1971 72 a dispute was raised by the workmen of the two companies and it was referred to conciliation under Section 121 of the 
The contention of the workmen before the Conciliation officer was that they were entitled to bonus equivalent to three months  basicwages as on March 31 1972 as customary bonus or in any event as bonus payable under the provisions of the Act
The appellant companies on the other hand contended that the workmen were entitled to only minimum bonus as provided under the Act on a computation being made in the manner laid in the said Act
The said dispute was ultimately settled before the Conciliation officer inter alia on the following terms 1 Subject to usual adjustments made in 1969 70 and 1970 71 each eligible workmen will be paid an amount equal to three months  basic wages as on 3131970 
2 A sum of Rs20000 will be distributed equally among all workmen who were on the rolls on 1581972 and have worked for at least 30 days
This will be Silver Jubilee Year  payment
3 The demand of the Union for bonus this year will be referred to as Tribunal for adjudication
4 The payment should be made by 12101971 Eligible workmen under terms1 of this settlement a Permanent and probationers
Rest of workmen will be paid bonus under the 
 188 Although the said settlement was an agreement under section 343 of the Act since under its very terms as incorporated in clause 3 the parties had stipulated for a reference of the question for adjudication by a Tribunal
The issue was accordingly referred by the Government of West Bengal for adjudication to the Ninth Industrial Tribunal of West Bengal by an order of reference dated January 15 1973
In the written statement filed by the workmen before the Ninth Industrial Tribunal they claimed three months  basic wages as on March 31 1972 as customary bonus or in the alternative 20 per cent of the salary or wages as bonus payable under the Act
The appellants reiterated before the Tribunal the same contentions which they had put forward before the Conciliation officer
The Tribunal allowed the parties to adduce evidence
After a detailed discussion of the evidence produced before it the Tribunal recorded a clear finding that the workmen had failed to make out the claim of customary bonus put forward by them and that the said plea had therefore to fail
It was further found by the Tribunal that the plea put forward by the appellant companies that there was no available surplus during the year in question and that only the minimum bonus was payable under the provisions of the Act had to be upheld
The Tribunal therefore held that the unions representing the workmen had failed to make out the case put forward by the workmen that the workmen were entitled to maximum bonus of 20 per cent as provided under the Act
After having recorded the aforesaid findings the Tribunal however proceeded to accept the contention advanced before it by the Counsel appearing for the workmen that it was legally open to it to substitute for the agreement entered into between the parties before the Conciliation officer a new contract and pass an award on that basis if such a step would be conducive to industrial peace
On this reasoning the Tribunal proceeded to observe In my opinion there would not be material alteration in the financial liability of the companies in case the agreement was modified by substituting for the words that the workmen will be paid the amount equal to three months  basic wages as on 3131970 by the words an amount equal to basic wages as on 3131972
I am therefore in agreement with this contention of the learned lawyer for the unions that the Tribunal should create a new contract and that is pass an award of three months  basic wage as on 3131972
This is in my opinion would be con 189 ducive to industrial peace and it would not violate any existing industrial law
 Accordingly the Tribunal passed an award directing the appellant companies to pay to the workmen the balance amount by way of bonus as per the rates calculated by the Tribunal within a month from the date of publication of the award in the Calcutta Gazette
It is the legality of this award that is under challenge in this appeal
It has to be remembered that the claim of the workmen which the Tribunal was considering while making the aforesaid observations was one for Profit bonus only since the claim for customary bonus had been rejected by it
The rights and liabilities of the parties regarding Profit bonus were governed by the provisions of the Act which are exhaustive on the subject and the adjudication had to be conducted by the Tribunal strictly in accordance with those provisions See Sanghi Jeevraj Ghewar Chand and Ors
vs Secretary Madras Chillies Grains Kirana Merchants Workers  Union and Anr  and Mumbai Kamgar Sabha Bombay vs Ms Abdulbhai Faizullabhai  Ors 1976 3 SCR 591
As already noticed the Tribunal has categorically found on a consideration of the evidence adduced before it that there was no available surplus in respect of the two companies for the year in question on a computation made under Section S of the Act
The settlement entered into before the Conciliation officer constituted an agreement under Section 343 of the Act and but for the said agreement the liability of the appellants under the provisions of Act would have been only to pay minimum bonus under Section 10 of the Act
Since the parties were at variance on the question of existence of liability for payment of customary bonus in the establishments as well as on the question regarding the existence of available surplus provision was made in clause 3 of the agreement for reference under the industrial adjudication
If the Tribunal found that the claim for payment of customary bonus was substantiated it could have passed an order in favour of the workmen for payment of such bonus
That claim had been negatived
The only question which remained for determination for the Tribunal was whether the claim of the workmen for payment of 20 per cent of the salary or wages as bonus payable under the Act was tenable or not
That depended essentially on the question of existence of available surplus and its quantum if any surplus was available
In view of the finding recorded by the Tribunal accepting 190 the plea put forward by the appellant companies that the result of the working of the companies during the concerned year was a loss and there was no available surplus the Tribunal could not have legally proceeded to make an award directing payment of bonus at any rate higher than the minimum bonus specified in Section 10 of the Act
As pointed out by this Court in The New Maneck Chowk Spinning and Weaving Company Ltd Ahmedabad and others vs The Textile Labour Association Ahmedabad   while it is certainly open to an industrial court in an appropriate case to impose new obligations on the parties before it or modify contracts in the interest of industrial peace or give awards which may have the effect of extending Agreement or making new one but this power is conditioned by the subject matter with which it is dealing and also by the existing industrial law and it would not be open to it while dealing with a particular matter before it to overlook the industrial law relating to that matter as laid down by the legislature
 It is manifest that the impugned award made by the Tribunal is clearly inconsistent with the provisions of the which contemplate the imposition of an obligation for payment of only the minimum bonus where the employer has no allocable surplus in the concerned accounting year
However in as much as the appellant companies had entered into the settlement before the Conciliation officer agreeing to pay bonus at a rate higher than the minimum bonus the said settlement would constitute an agreement under Section 34 of the Act and the terms of the settlement will govern the liability for bonus for the year in question
It follows from the foregoing discussion that the impugned award passed by the Ninth Industrial Tribunal is not legally sustainable
The appeal is accordingly allowed and the Award of the Industrial Tribunal will stand set aside
The rights of the workmen for payment of bonus for the year in question will be governed by the terms of the agreement enterd into before the Conciliation officer on October 9 1972
In view of the condition imposed by the order of this Court dated November 21 1974 while granting Special Leave the appellants are directed to pay the costs of the respondents in this appeal
MLA Appeal allowed


Summary:
A dispute regarding bonus payable to the workmen respondents of the two companies appellants for the year 1971 72 was referred to conciliation under section 121 of the 
The workmen contended before the Conciliation officer that they were entitled to bonus equivalent to three months  basic wages as on 31st March 1972 as customary bonus or in any event as bonus payable under the provisions of the Act
The appellant companies on the other hand argued that the workmen were entitled to only minimum bonus as provided under the Act
The said dispute was ultimately settled before the Conciliation officer on the terms a that each eligible work man will be paid an amount equal to three months  basic wages as on 3131970 and b that the demand of the Union for bonus this year will be referred to a Tribunal for adjudication
Accordingly the Government referred the dispute for adjudication to the ninth Industrial Tribunal of West Bengal
After a detailed discussion of the evidence produced before the Tribunal it found i that the workmen had failed to make out the claim of customary bonus or that they were entitled to maximum bonus of 20 per cent as provided under the Act and ii that there was no available surplus during the year in question and that only the minimum bonus was payable under the provisions of the Act
However after having recorded the aforesaid findings it proceeded to hold that it was legally open to it to substitute for the agreement entered into between the 185 parties before the Conciliation officer a new contract and pass an award on that basis if such a step would be conducive to industrial peace
On this basis the Tribunal held that there would not be material alteration in the financial liability of the companies in case the agreement was modified by substituting for the words that the workmen will be paid the amount equal to three months  basic wages as on 3131970 by the words an amount equal to basic wages as on 3131372 and accordingly it passed an award in those terms
In appeal to the Supreme Court the appellants companies challenged the legality of this award
Allowing the appeal  HELD 1
The impugned award passed by the Ninth Industrial Tribunal is not legally sustainable and has to be set aside
The rights of the workmen for payment of bonus for the year in question will be governed by the terms of the agreement entered into before the Conciliation officer on October 9 1972
190F 2
The rights and liabilities of the parties regarding profit bonus are governed by the provisions of the payment of Bonus Act 1965 which are exhaustive on the subject and the adjudication had to be conducted by the Tribunal strictly in accordance with those provisions
189C D In the instant case the Tribunal has categorically found that there was no available surplus in respect of the two companies for the year in question on a computation made under section 5 of the Act
The settlement entered into before the Conciliation officer constituted an agreement under section 343 of the Act and but for the said agree ment the liability of the appellants under the provisions of the Act would have been only to pay minimum bonus under section 10 of the Act
189E F Sanghi Jeevraj Chewar Chand and Ors
vs Secretary Madras Chillies Grains Kirana Merchants Workers  Union and Anr   and Mumbai Kamgar Sabha
Bombay vs Ms Abdulbhai Faizullabhai  Ors   referred to
It is certainly open to an Industrial Court in an appropriate case to impose new obligations on the parties before it or modify contracts in the interest of industrial peace or give awards which may have the effect 186 of extending the agreement or making new one but this power is conditioned by the subject matter with which it is dealing and also by the existing industrial law and it would not be open to it while dealing with a particular matter before it to overlook the industrial law relating to that matter as laid down by the legislature  190B D The New Maneck Chowk Spinning and Weaving Company Ltd Ahmedabad and others vs The Textile Labour Association Ahmedabad  relied upon
In the instant case in view of the finding recorded by the Tribunal that the result of the working of the companies during the concerned year was a loss and there was no available surplus the Tribunal could not have legally proceeded to make an award directing payment of bonus at any rate higher than the minimum bonus specified hl section 10 of the Act
Therefore the impugned award made by the Tribunal is clearly inconsistent with the provisions of the Payment of Bonus Act which contemplate the imposition of an obligation for payment of only the minimum bonus where the employer has no allocable surplus in the concerned accounting year
However inasmuch as the appellant companies had entered into the settlement before the Conciliation Officer agreeing to pay bonus at a rate higher than the minimum bonus the said settlement would constitute an agreement under section 34 of the Act and the terms of the settlement will govern the liability for bonus for the year in question
190D E