{1} lpa33810.odt IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD LETTERS PATENT APPEAL NO.338 OF 2010 IN WRIT PETITION NO.6780 OF 2009 Sarva Udyog Kamgar Sangh, Mamlatdar Kacheri Road, Shrirampur, Dist.Ahmednagar. Appellant Versus M/s Javahar Engineers Pvt.Ltd., Geeta Bhavan, Shivaji Road, Shrirampur, Dist.Ahmednagar. Respondent Mr.B.R.Warma, advocate holding for Mrs.Ujjwal Agarwal, advocate for the appellant. Mr.S.P.Shah, advocate for the Respondent. WITH LETTERS PATENT APPEAL NO.02 OF 2011 IN WRIT PETITION NO.6780 OF 2009 M/s Javahar Engineers Pvt.Ltd., through its Executive Director, Shivaji Road, Shrirampur, Taluka Shrirampur, Dist.Ahmednagar. Appellant Versus Sarva Udhyog Kamgar Sangh, {2} lpa33810.odt through its General Secretary, Shri Vasantrao Ranshur, Mamlatdar Kacheri Road, Shrirampur, Tq. Shrirampur, District Ahmednagar. Respondent Mr.S.P.Shah, advocate for the appellant. Mr.B.R.Warma, advovate for the Respondent. CORAM : D.B.BHOSALE AND R.M.BORDE, JJ. DATE : 18 th February, 2011 JUDGMENT (Per R.M.Borde, J.): 1 Both the appeals are admitted. By consent of learned Counsel for respective parties, appeals are taken up forthwith and heard finally. 2 The appellants in both the appeals raise challenge to the order passed by the learned Single Judge of this Court in Writ Petition No.6780 of 2009, decided on 29.09.2010. 3 Writ Petition before the learned Single Judge was presented by the employer i.e. appellant in L.P.A. No.02/2011, thereby challenging the certificate issued by the Assistant Commissioner of Labour, Ahmednagar, on 31.03.2009 holding the employees entitled to receive amount of bonus for the years 1985-86 and 1986-87 along with interest @ 10% p.a. The {3} lpa33810.odt employees of Jawahar Engineering Pvt. Ltd. are represented by Sarva Udyog Kamgar Sangh i.e. appellants in L.P.A. No.338/2010 4 There was a dispute as regards payment of bonus for the years 1985-86 and 1986-87. The employer had moved the State Government for grant of exemption from the payment of bonus for the aforesaid years under Section 36 of the Payment of Bonus Act, 1965. The application tendered by the employer was allowed by the State Government and exemption was granted in favor of the employer from payment of bonus for two years, in view of the order passed by the State Government on 06.12.1989. The employees Union challenged the order passed by the State Government before this Court in Writ Petition No.3509/1990. The writ petition was decided by the Division Bench of this Court on 13.02.2002 and while allowing the petition, this Court quashed and set aside the order passed by the State Government on 06.12.1989 under Section 36 of the Payment of Bonus Act and directed the Commissioner of Labour to take appropriate steps to ensure that the employees represented by the Union are paid bonus for the relevant years, expeditiously. In spite of persuasion by the employees Union, the employer failed to pay the amount, as such, an application was presented for issuance of recovery certificate under Section 33(1) of the Industrial Disputes Act, 1947. The Assistant Commissioner of {4} lpa33810.odt Labour, Ahmednagar, after extending an opportunity of hearing to both the parties, was pleased to issue recovery certificate for an amount of Rs.2,78,000/- along with interest @ 10% p.a. with effect from 04.01.1987 till realisation of the amount thereby entitling the employees to recover the amount from the employer M/s Javahar Engineering Pvt. Ltd. 5 The certificate issued by the Assistant Commissioner of Labour was challenged by the employer on several grounds. However, at the hearing of the petition before the learned Single Judge, the employer contended that he is ready and willing to discharge his liability and to pay the bonus for the relevant period, however, whereabouts of the workers are not known. The relevant observations recorded by the learned Single Judge, in paragraph 5 of the judgment, are quoted as below: “The learned counsel for the employer contended, the employer is ready and willing to discharge his liability to pay the bonus for the relevant period, however, the workers’ whereabouts are not available as they have left their addresses which are with the employer. There was no communication with the employees. Even if this is factual situation, however, the spirit in Writ Petition No. 3509/1990 need not be obliterated and the employer (writ petitioner) is bound to deposit the amount with the respondent herein (Sarva Udhyog Kamgar Sagh), to facilitate its regular disbursement to the legitimate and eligible {5} lpa33810.odt employees.” 6 The only objection raised by the employer in respect of the order passed by the Assistant Commissioner of Labour is on account of levy of interest on the amount receivable by the employees from the employer. It was contended that the employees are not entitled to receive interest on the amount of bonus as there is no provision in the said enactment for grant of interest. The learned Single Judge of this Court accepted the objection raised by the employer and while confirming the order in respect of recovery of amount of bonus receivable by the employees, was pleased to direct that the amount payable towards bonus, shall not carry any interest. Accordingly, the order in respect of levy of interest on the principal amount of bonus, as directed by the Assistant Commissioner of Labour, was quashed and set aside. 7 Both – the employees and employer have approached this Court raising exception to the order passed by the learned Single Judge. 8 It is contended by the employer that in fact the Assistant Commissioner of Labour has no jurisdiction to issue certificate under Section 33 of the Act. There was no adjudication as no evidence was received by the Assistant Commissioner of Labour before issuing the certificate. The certificate is also challenged on the ground that no reasons are recorded by the {6} lpa33810.odt Assistant Commissioner of Labour while issuing the certificate. The employer also contends that the claim raised before the Commissioner is barred by limitation. 9 So far as the employees are concerned, they contend that the learned Single Judge has committed an error in disallowing the interest on the amount receivable by them. It is contended by the employees that the objection raised by the employer that whereabouts of the employees are not known and, therefore, the amount is not payable to the employees’ Union is without any basis. In earlier round of litigation, the Division Bench of this Court has allowed the writ petition presented by the employees’ Union and the entitlement of the employees through the Union has been approved. It is merely an excuse put forth by the employer to defeat the just claim of the employees. 10 We have heard the arguments advanced by learned Counsel for respective parties appearing in both the Letters Patent Appeals. 11 That, so far as entitlement to the amount by the employees is concerned, the issue has been settled in view of the judgment of the Division Bench in Writ Petition No.3509/1990. The Division Bench of this Court, while allowing the petition, has quashed the order passed by the State Government, granting {7} lpa33810.odt exemption in favour of the employer in respect of payment of bonus amount and it was further directed to the Commissioner for Labour to ensure that the employees represented by the Union receive the bonus expeditiously. It is also not open for the employer to dispute the entitlement of the employees as there is concession recorded in the judgment delivered by the learned Single Judge and as the employer has specifically exhibited readiness and willingness to discharge his liability to pay bonus for the relevant years. The statement made by the employer is recorded in paragraph 5 of the judgment passed by the learned Single Judge. The only objection raised by the employer is in respect of entitlement of the Union to receive the amount of bonus on behalf of the employees, who are the members of the Union. It is contended that whereabouts of the employees are not known and unless they come forward to receive the amount, the amount cannot be disbursed. Appropriate care can be taken to ensure that the individual employees receive the bonus amount, by issuing directions in that regard. 12 The employees’ Union contend that the learned Single Judge has erred in quashing the order in respect of payment of interest on the amount receivable by the employees towards bonus. It is contended that the reliance placed on the judgment of this Court in the matter of Payal Electronics Vs. Arun Vasant Pawar and another, reported in 2003 (1) Mh.L.J. 284, is misplaced. {8} lpa33810.odt 13 Reliance is placed on the judgment in the matter of Thazhathe Purayil Sarabi and others Vs. Union of India and another, reported in 2009 STPL (LE) 42475 SC. The Apex Court, while dealing with the issue in respect of payment of interest on the amount of compensation receivable by the claimants, under the provisions of Railways Act, 1989, has recorded that the payment of interest is basically a compensation for being denied the use of money during the period in which same could have been made available to the claimants. It is recorded by the Apex Court, in the judgment, that when there is no specific provision for payment of the amount of interest on any amount due, the Court and even the Tribunal have been held entitled to award interest in their discretion under the provisions of Section 3 of the Interest Act and Section 34 of the Code of Civil Procedure. The relevant observations made by the Apex Court, in respect of payment of interest on the amount due, are found in paragraphs 25 to 30, which are quoted below: “25 It is, therefore, clear that the Court, while making a decree for payment of money is entitled to grant interest at the current rate of interest or contractual rate as it deems reasonable to be paid on the principal sum adjudged to be payable and/or awarded, from the date of claim or from the date of the order or decree for recovery of the outstanding dues. There is also hardly any room for doubt that {9} lpa33810.odt interest may be claimed on any amount decreed or awarded for the period during which the money was due and yet remained unpaid to the claimants. 26 The courts are consistent in their view that normally when a money decree is passed, it is most essential that interest be granted for the period during which the money was due, but could not be utilised by the person in whose favour an order of recovery of money was passed. 27 As has been frequently explained by this Court and various High Courts, interest is essentially a compensation payable on account of denial of the right to utilise the money due, which has been, in fact, utilised by the person withholding the same. Accordingly, payment of interest follows as a matter of course when a money decree is passed. 28 The only question to be decided is since when is such interest payable on such a decree. Though, there are two divergent views, one indicating that interest is payable from the date when claim for the principal sum is made, namely, the date of institution of the proceedings in the recovery of the amount, the other view is that such interest is payable only when a determination is made and order is passed for recovery of the dues. However, the more consistent view has been the former and in rare cases interest has been awarded for periods even prior to the institution of proceedings for recovery of the dues, where the same is provided for by the terms of the agreement entered into between the parties or {10} lpa33810.odt where the same is permissible by statute. 29 Accordingly, we are unable to sustain the order of the Railway Claims Tribunal directing payment of interest on default of the payment of the principal sum within a period of 45 days. 30 As we have indicated hereinbefore, when there is no specific provision for grant of interest on any amount due, the court and even tribunals have been held to be entitled to award interest in their discretion, under the provisions of Section 3 of the Interest Act and Section 34 of the Civil Procedure Code.” 14 In view of the law laid down by the Apex Court in the judgment referred to above, we are of the considered opinion that the employees are entitled to receive interest on the amount of bonus payable to them by the employer. 15 The entitlement of the employees to receive amount of bonus has been recognised by this Court while disposing of Writ Petition No.3509/1990 presented by the Union. The writ petition was disposed of on 13.02.2002 and the employer was directed to pay the amount receivable by the employees, expeditiously. On account of failure of the employer to pay the amount, the employees were required to approach the Assistant Commissioner of Labour, who ultimately issued certificate of recovery in their favour. The employees, thus, shall be deemed to be entitled to receive the amount of interest from the date of decision in Writ {11} lpa33810.odt Petition No.3509/1990 i.e. from 13.02.2002. The employer i.e. appellant in L.P.A. No.02/2011 shall deposit the amount of interest on the total amount of Rs.2,78,000/- receivable by the employees @ 6% p.a. from 13.02.2002 till the date of payment of the amount. The amount of interest calculated @ 6% p.a. from 13.02.2002, on the amount of Rs.2,78,000/-, shall be deposited with Assistant Commissioner of Labour, Ahmednagar, within six months from today. 16 Thus, we are not inclined to cause interference in the Letters Patent Appeal presented by the employer, being L.P.A. No. 02/2011, whereas, the Letters Patent Appeal presented by the employees, being L.P.A. No.338/2010, is partly allowed. We, therefore, direct: ● (a) The employer i.e. M/s Jawahar Engineering Pvt.Ltd., shall deposit the amount of interest @ 6% p.a. on the amount of Rs.2,78,000/- from 13.02.2002 till the date of payment with the Assistant Commissioner of Labour, Ahmednagar, within six months from today. ● (b) The Assistant Commissioner of Labour, Ahmednagar, shall confirm the identity of each of the labour / employee while disbursing the amount of bonus {deposited with him by the employer amounting to Rs. {12} lpa33810.odt 2,78,000/-}, receivable by such employee together with interest @ 6% p.a., as directed above {which amount is directed to be deposited by the employer in terms of direction (a)}. ● (c) In the event of any of the employees failing to appear before the Assistant Commissioner of Labour, for receiving the amount towards bonus and interest accrued thereon, such unclaimed amount shall be permitted to be withdrawn by the employer at the end of six months from the date of deposit of the amount of interest in terms of direction (a). ● (d) With these directions, Letters Patent Appeal No. 338/2010 stands allowed partly, whereas, L.P.A. No.02/2011, shall stand dismissed. In the facts and circumstances, there shall be no order as to costs. R.M.BORDE D.B.BHOSALE JUDGE JUDGE adb/lpa33810