Case Note & Summary
The Supreme Court of India considered whether a bonus awarded by the Industrial Court, Bombay, to the operatives of Tata Mills Ltd. constituted 'wages' within the meaning of Section 2(vi) of the Payment of Wages Act, 1936. The dispute arose when the Industrial Court directed that operatives no longer in service should be paid the bonus in a lump sum by a fixed date, with claims to be made in writing. Operatives who applied after that date were refused payment and subsequently approached the Authority under the Payment of Wages Act seeking recovery of the bonus. The Mills contended that the Authority had no jurisdiction as the bonus did not amount to wages. The Authority rejected this contention, and the Mills filed a writ petition in the Bombay High Court under Article 226 of the Constitution, which was dismissed by both a single judge and a division bench. The Mills then appealed to the Supreme Court. The core legal issue was whether the bonus fell within the statutory definition of wages, which requires remuneration to be 'payable on the fulfilment of the terms of the contract of employment, express or implied.' The appellant argued that while bonus could be considered remuneration, it was not such remuneration as payable under the contract of employment, and thus the Authority lacked jurisdiction. The respondents contended that bonus constituted wages and fell within the scope of the Act. The Supreme Court, following its earlier decision in F.W. Heilgers & Co. v. N.C. Chakravarthi, held that bonus awarded by an industrial court, though remuneration, is not payable on the fulfilment of the contract of employment and therefore does not qualify as wages under Section 2(vi). Consequently, the Authority under the Payment of Wages Act had no jurisdiction to entertain the applications. The appeals were allowed, and the orders of the High Court were set aside.
Headnote
A) Labour Law - Wages - Definition of Wages under Payment of Wages Act, 1936, Section 2(vi) - Bonus awarded by Industrial Court, though remuneration, is not wages as it is not payable on fulfilment of contract of employment - Held that Authority under the Act had no jurisdiction to entertain claims for such bonus (Paras Not available).
Issue of Consideration
Whether bonus awarded by the Industrial Court falls within the definition of 'wages' under Section 2(vi) of the Payment of Wages Act, 1936, thereby conferring jurisdiction on the Authority under Section 15 of the Act to entertain claims for its recovery.
Final Decision
Held that the bonus awarded by the Industrial Court was not wages within the meaning of Section 2(vi) of the Payment of Wages Act, 1936, and therefore the Authority under the Act had no jurisdiction to entertain the applications made to it under Section 15. The appeals were allowed, and the order of the High Court was set aside.
Law Points
- Bonus awarded by industrial court is not wages under Section 2(vi) of Payment of Wages Act
- 1936
- Definition of wages under Section 2(vi) requires remuneration payable on fulfilment of contract of employment
Case Details
1958 LawText (SC) (03) 12
Civil Appeals Nos. 35 & 36 of 1954
Vivian Bose, Syed Jaffer Imam, K. Subbarao
1958 AIR 518, 1958 SCR 1504
R. J. Kolah, B. Narayanaswami, J. B. Dadachanji, S. N. Andley, Rameshwar Nath, H. N. Sanyal, Addl. Solicitor-General of India, N. P. Nathwani, R. H. Dhebar, D. H. Buch, Naunit Lal
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Nature of Litigation
Writ petition under Article 226 challenging the jurisdiction of the Authority under the Payment of Wages Act to entertain claims for bonus awarded by the Industrial Court.
Remedy Sought
Appellant (Mills) sought a writ of certiorari to quash the orders of the Authority under the Payment of Wages Act, contending it lacked jurisdiction to award bonus not constituting wages.
Filing Reason
The Authority under the Payment of Wages Act had rejected the appellant's objection to its jurisdiction and entertained applications by former operatives for payment of bonus, leading the mills to challenge the jurisdiction via writ petition.
Previous Decisions
The Bombay High Court, both by a Single Judge and on appeal by a Division Bench, had dismissed the writ petitions, upholding the Authority's jurisdiction, which led to the present appeals to the Supreme Court.
Issues
Whether the bonus awarded by the Industrial Court falls within the definition of 'wages' under Section 2(vi) of the Payment of Wages Act, 1936.
Whether the Authority under the Payment of Wages Act had jurisdiction to entertain claims for such bonus.
Submissions/Arguments
The appellant (Mills) contended that the bonus awarded by the Industrial Court did not constitute 'wages' as defined under Section 2(vi) of the Payment of Wages Act, 1936, because it was not remuneration payable on the fulfilment of the terms of the contract of employment, and therefore the Authority lacked jurisdiction.
The respondents (operatives) argued that the bonus constituted remuneration and was within the purview of wages, thus the Authority had jurisdiction to entertain the applications.
Ratio Decidendi
Bonus awarded by an Industrial Court, though remuneration, is not 'wages' under Section 2(vi) of the Payment of Wages Act, 1936, because it is not remuneration payable on the fulfilment of the terms of the contract of employment, express or implied. The definition excludes such industrial awards unless they fall squarely within the statutory definition based on contractual entitlement. Followed precedent: F.W. Heilgers & Co. v. N.C. Chakravarthi.
Judgment Excerpts
Held, that the bonus awarded by the Industrial Court was not wages within the meaning of S. 2(Vi) of the Payment of Wages Act and as such the Authority had no jurisdiction to entertain the applications made to it under s. I5 of the Act.
Though such bonus was remuneration it was not remuneration payable on the fulfilment of the terms of the contract of employment, express or implied, as required by S. 2(vi).
Procedural History
The Industrial Court, Bombay, awarded bonus of 4 1/2 months' wages to operatives of Tata Mills Ltd. and directed that those no longer in service be paid in lump sum by a fixed date on written claim. Operatives who applied after that date were refused payment. They approached the Authority under the Payment of Wages Act, which rejected the Mills' objection to jurisdiction. The Mills filed writ petitions under Article 226 in the Bombay High Court (Misc. Applications Nos. 302 of 1951 etc.). A single judge dismissed the petitions (January 24, 1952). On appeal, a Division Bench of the High Court dismissed Appeals Nos. 34 and 35 of 1952 (August 28, 1952). The Mills then appealed to the Supreme Court by special leave (Civil Appeals Nos. 35 & 36 of 1954).
Acts & Sections
- Payment of Wages Act, 1936: Section 2(vi), Section 15
- Constitution of India: Article 226
