1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.2221 OF 2003 M/s.Indian Naval Canteen Service. ...Petitioner. Vs. INCA Employees' Union. ...Respondent. .... Mr.Rahul L. Nerlekar for the Petitioner. None for the Respondent. ..... CORAM :DR.D.Y.CHANDRACHUD, J. April 24, 2008. P.C.: A reference was made to the Industrial Tribunal of the following demand for adjudication: “Whether the action of the management of Indian Naval Canteen Services, Mumbai in not paying Bonus/ex-gratia at the rate of 20% of the gross earnings of the employees for the years 1994-95, 1995-96 and 1996-97 is legal and justified? If not, what relief the workmen concerned are entitled?” The Industrial Tribunal by its award dated 29th May 2001, has allowed the reference by directing the Petitioner to extend the 2 facility of bonus/ex-gratia at the rate of 20% of the gross earnings of the employees for the years 1994-95, 1995-96 and 1996-97. The Petitioner before the Court is the Indian Naval Canteen Service which is a non-public fund organization established under the orders of the Government of India for providing Canteen Stores and Supplies to the Defence personnel. It has been stated that the nominal profits which arise out of these services are remitted to the Indian Navy Amenities Fund to be used for such benevolent or amenity purposes as the Chief of the Naval Staff may deem fit. The Petitioner is directly controlled by the Indian Naval Canteen Control Board (INCCB) consisting of the Chairman, four members from the Indian Navy and one member each from the Union Ministries of Defence and Finance. In the year 1994-95, 1995-96 and 1996-97, the INCCB declared bonus as follows: “(a) Ad-hoc grant part-1 – 10% of Basic + D.A. (Subject to ceiling of Rs.2500/-) PLUS (b) Ad-hoc Grant part 2 – Ex-gratia payment: 3 1994-95 1995-96 1996-97 Group-1 Rs.1550 Rs.1550 Rs.1700 Group-2 Rs.1350 Rs.1350 Rs.1500 Group-3 Rs.1150 Rs.1150 Rs.1300 Group-4 Rs. 950 Rs. 950 Rs.100” The bonus was uniformly paid to all the employees of Indian Naval Canteens all over the country. On 22nd October 1996, the Respondent, which is an unrecognized Union, raised a dispute in respect of the payment of bonus for the year 1995-96 and claimed bonus at the rate of 20% for the year. Since the dispute was not settled in conciliation, the Central Government made a reference to the Industrial Tribunal. The Petitioner did not appear in the proceedings before the Tribunal. It has been averred in paragraph 5 of the petition that though on 7th December 1999, a notice was issued by the Tribunal in respect of the said reference, no statement of claim was served at any stage though a letter was addressed on 8th May 1999 by the Petitioner to the Tribunal. The reference was allowed by the impugned award dated 29th May 2001. The Tribunal has relied upon the affidavit filed in 4 support of the claim in the Reference and has come to the conclusion that the Naval Canteen is an 'industry' within the meaning of Section 2 (j) of the Industrial Disputes Act, 1947, and that the provisions of the Payment of Bonus Act, 1965 are also applicable. Since the testimony of the Union had gone unchallenged, the Tribunal has, by its award, directed the Petitioner to pay bonus at the rate of 20% of the gross earnings of the employees for the years 1994-95, 1995-96 and 1996-97. For assailing the correctness of the award, Counsel appearing on behalf of the Petitioner urged that Section 32(iv) of the Payment of Bonus Act, 1955 provides that the Act shall not apply to 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. It was urged that the Indian Naval Canteen Service falls within the purview of Clause (iv) of Section 32. Consequently, it was urged that the Act itself is not applicable and the award of the Industrial Tribunal is manifestly in error. 5 The Respondents have been served and there is an office noting to that effect. Section 32(iv) of the Payment of Bonus Act, 1965 provides as follows: “Nothing in this Act shall apply to - (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.” The question which arises before the Court is not res integra and stands concluded by the judgment of the Supreme Court in Radhu K. Kakde vs. Union of India, (1986) 1 SCC 400. The issue which fell for determination before the Supreme Court, was the correctness of the view taken in the judgment of a Division Bench of this Court to the effect that the Canteen Stores Department is an establishment engaged in an industry carried on by or under the authority of any department of the Central Government and falls within the purview of the exemption enacted by Section 32(iv). After examining the history, the origin and organizational structure of the establishment, the Supreme Court held as follows : 6 “In the light of all these facts pertaining to the history, organizational structure, exercise of functional control by governmental authorities and the special nature of service rendered by it to the defence forces of the country, we have no hesitation to hold that the High Court was clearly right in holding that the Canteen Stores Department (India) is an 'establishment' engaged in an industry carried on by or under the authority of a department of the Central Government namely the Ministry of defence.” Counsel appearing on behalf of the Petitioner stated that though the aforesaid decision was rendered in the context of the Army Canteen Services, the Naval Canteen Service has the same organizational structure and its functioning is controlled by the Central Government. The submission requires to be accepted and the issue which is raised in these proceedings is clearly covered by the judgment of the Supreme Court. In view of the judgment of the Supreme Court, it would have to be held that the Indian Naval Canteen service is an establishment engaged in an industry carried on by or under the authority of a department of the Central Government. The Payment of Bonus Act, 1965, is, therefore, not attracted by virtue of the provisions of Section 32(iv). Tthe award of the Industrial Tribunal directing the payment of bonus at the rate of 20% for the years 1994-95, 1995-96 and 1996-97 is therefore, 7 unsustainable and would have therefore, to be quashed and set aside. Rule is, therefore, made absolute in terms of prayer clause (A) and the award of the Industrial Tribunal dated 29th May 2001 shall stand quashed and set aside. Reference CGIT-2/400 of 1999 shall accordingly stand dismissed. No order as to costs. .....