Case: Bala Subrahmanya Rajaram Vs. B.C. Patil &amp; Others

a bonus awarded by an Industrial Court.27. The clause we have yet to examine is this :"And includes any bonus or other additional remuneration of the nature aforesaid which would be so payable."It was contended that the words "and includes any bonus" stand by themselves and that the words that follow must be disregarded when bonus is under consideration because they relate only to "additional remuneration" and not to "bonus."28. Now, it may be possible to say that the words "of the nature aforesaid" only govern the words "additional remuneration" and that they do not apply to "bonus," with the result that the inclusion clause "and includes any bonus etc." would refer to two separate things, namely,(1) bonus and(2) other additional remuneration of the nature aforesaid.29. In our opinion, the clause means -(1) "Bonus............which would be so payable," and(2) "other additional remuneration of the nature aforesaid which would be so payable." If that is correct, then the words "which would be so payable" throw us back to the earlier part of the definition and we reach the position that the kind of bonus that is included by the inclusion clause is the kind that would be payable "if the terms of the contract of employment, express or implied are fulfilled."30. There is another reason for reaching this conclusion. The opening words of the definition made it clear that "wages" means remuneration that is payable when the terms of the contract of employment are fulfilled. Therefore, that is something certain. One knows ahead of time that if the terms of the contract are fulfilled, then the bonus is payable. It may be that the exact amount has yet to be determined but the fact that bonus is payable and can be claimed as soon as the terms of the contract are fulfilled is a matter that can be predicated before-hand, that is to say even before the terms of the contract are fulfilled, or indeed, even before the work has started if the contract is made that far ahead. But that is not the case when bonus is awarded by an Industrial Court, for there it is impossible to say ahead of time whether bonus will be awarded or not; indeed, at the time the contract is entered into, it would be impossible to say whether such a claim could be laid at all because a difference of opinion between one worker and his employer about the right to bonus would not necessarily lead to an industrial dispute. When an Industrial Court awards a bonus, independent of any contract, it does so only if there is an available surplus for a distribution of bonus and the amount of the award would depend on the extent of the surplus available for that purpose. Therefore, the fulfilment or otherwise of the terms of the contract of employment is not an essential ingredient of an award of an Industrial Court.31. In F. W. Heilgers and Co. v. N. C. Chakravarthi, 1949 F C R 356 at p. 360 : ( A I R 1949 F C 142 at p. 143) (A) , the learned Judges of the Federal Court held that a bonus not payable under a contract of employment does not fall within the definition of "wages" in S. 2 (vi) of the Payment of Wages Act, as it stood before the amendment in 1957. We are concerned with the old definition here and not the amended one, so the present case is, in our opinion, covered by that authority.32. It is true, that no bonus had been awarded in Heligers case (A) and that therefore there was no ascertained sum, whereas there is one in the present case, or rather a sum that is ascertainable, but that was only one of the grounds on which the learned Judges proceeded. They held that in order to bring a particular payment under the definition of "wages" two things are necessary -"(1) A definite sum, and(2) a contract indicating when the sum becomes payable.";and they said -"It is obvious that unless there is an express provisions for paying a stipulated sum, the definition will not cover such a payment."33.The bonus in the present case is not payable because of a contract but because of the award of an Industrial Court. Therefore, according to the Federal Court, it is not "wages" within the meaning of the Payment of Wages Act.34. In 1957 the definition was amended and the following was added :" Wages means......and includes.....................(c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name);..............but does not include-(1) any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of remuneration payable under the terms of employment........ ."The change would have been unnecessary had the law been otherwise under the old definition; nor is it possible to say that the clause was added by way of abundant caution because the Federal Court decided otherwise in 1949. In view of this amendment, and in view of the Federal Courts decision, we do not feel justified in taking a different view, especially as we think the decision was right.35. The learned Judges of the Bombay High Court, tried to distinguish the Federal Courts judgment on the ground that no bonus had been declared there and so there was no ascertained sum, but, as we have pointed out, the ratio of the decision covers the present case and, in any case, that is our view quite apart from their conclusion.36. On this view, it is not necessary to consider the other points that were argued because, if the definition of "wages" as it stood before the amendment is not wide enough to include a bonus of the kind we have here, namely, one payable under an award of an Industrial Court, then, the Authority under the Payment of Wages Act had no jurisdiction to entertain the petitions made to it under S. 15 of the Act.3

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]The opening words of the definition made it clear that "wages" means remuneration that is payable when the terms of the contract of employment are fulfilled. Therefore, that is something certain. One knows ahead of time that if the terms of the contract are fulfilled, then the bonus is payable. It may be that the exact amount has yet to be determined but the fact that bonus is payable and can be claimed as soon as the terms of the contract are fulfilled is a matter that can be predicated before-hand, that is to say even before the terms of the contract are fulfilled, or indeed, even before the work has started if the contract is made that far ahead. But that is not the case when bonus is awarded by an Industrial Court, for there it is impossible to say ahead of time whether bonus will be awarded or not; indeed, at the time the contract is entered into, it would be impossible to say whether such a claim could be laid at all because a difference of opinion between one worker and his employer about the right to bonus would not necessarily lead to an industrial dispute. When an Industrial Court awards a bonus, independent of any contract, it does so only if there is an available surplus for a distribution of bonus and the amount of the award would depend on the extent of the surplus available for that purpose. Therefore, the fulfilment or otherwise of the terms of the contract of employment is not an essential ingredient of an award of an Industrialchange would have been unnecessary had the law been otherwise under the old definition; nor is it possible to say that the clause was added by way of abundant caution because the Federal Court decided otherwise in 1949. In view of this amendment, and in view of the Federal Courts decision, we do not feel justified in taking a different view, especially as we think the decision was right.On this view, it is not necessary to consider the other points that were argued because, if the definition of "wages" as it stood before the amendment is not wide enough to include a bonus of the kind we have here, namely, one payable under an award of an Industrial Court, then, the Authority under the Payment of Wages Act had no jurisdiction to entertain the petitions made to it under S. 15 of the Act.