JUDGMENT
S. M. Jhunjhunwala, J.
1. The petitioner is a public limited company registered under the provisions of the Indian Companies Act, 1913 having its registered office at J. K. Building, Narottam-Morarjee Marg, Ballard Estate, Bombay – 400038 and a factory at Thane. The 1st Respondent is the State of Maharashtra. The respondent 2 and 3 are the Trade Unions.
2. At all material times, the petitioner at its factory at Thane has been engaged in manufacture and sale of Sodium Hydrosulphite and other Chemicals. For the financial year ending on 31st December, 1979, the petitioner suffered a loss of Rs. 55.99 lakhs. In the following year, the petitioner changed its accounting year from 1st January 1980 to 30th April, 1981. For the accounting year ending on 30th April, 1981, the petitioner suffered a loss of Rs. 79.5 lakhs (after providing for depreciation of Rs. 51.1 lakhs).
3. To provide for payment of bonus to persons employed in certain establishment on the basis of the profits or on the basis of production or productivity and for matters connected therewith, the Payment of Bonus Act, 1965 (for short, ‘the Act’) was enacted. The Act applied to the petitioner, section 10 of the Act as amended with effect from 21-8-1980 provides for payment of minimum bonus by every employer to every employee. As per amended section 10, every employer is bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus of 8.33 per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. While conferring rights on the workman to get the minimum bonus without regard to whether the business of the year results in the profits or losses, the legislature has, in section 36 of the Act conferred power on the Government to exempt any establishment from liability to pay such minimum bonus, having regard to the financial position of the concerned establishment and other relevant factors so justify. As per section 36, if the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of the Act thereto, it may, by notification in the official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of the Act. In other words, by providing for exemption from any or all the provisions of the Act, the legislature has cast a duty on the appropriate Government to examine the financial position and other circumstances of the establishment concerned and decide them as to whether grant or rejection of such application is in the public interest or not. Section 36 thus creates right in the parties as also duty on the part of the appropriate Government to consider the application on merits and dispose it of in accordance with scheme of the Act. Both sections 10 and 36 are contemporaneous provisions in the Act. Thus, it is patent that the Government has the competence to exempt any establishment or class of establishments even from section 10 notwithstanding that section 10 is mandatory so far as the employer’s liability to the workmen and notwithstanding the said provision is an ameliorative one from the point of view of the workmen.
4. For the accounting year ending on 31st December, 1979, the petitioner became liable to pay bonus amount of Rs. 5,55,907/- which the petitioner has paid. In the accounting year ending on 30th April, 1981, the petitioner had employed 743 workmen to whom the petitioner became liable to pay the sum of Rs. 6,99,720/- as and by way of minimum bonus under section 10 of the Act. As per section 19(b) of the Act, the petitioner was required to pay the said amount to its employees within a period of eight months from the close of the said accounting year i.e., by 31st December, 1981. On 15th December, 1981, the petitioner made an application under section 36 of the Act to the 1st Respondent of grant of exemption to the petitioner from payment of compulsory bonus payable for the accounting year ended on 30th April, 1981. In the said application, the petitioner stated that the petitioner had suffered heavy losses during the two years preceding the accounting year ended on 30th April, 1981 which accumulated to Rs. 99,71,879/- after adjustment and that the loss for the said accounting year was to the extent of Rs. 79,50,137/-. The petitioner further stated that the petitioner had no resources at all left with which the petitioner could make the payment of even the minimum bonus as provided under the Act. The petitioner also stated in the said application that the workmen had resorted to strike from 27th June, 1981 which was subsequently declared as illegal by the Labour Court resulting into even closure of petitioner’s factory.
5. By its letter bearing No. PBA/1081/ (948) /Lab-12 dated 4th October, 1983, the 1st-Respondent informed the petitioner that its said application for exemption from payment of compulsory bonus for the accounting period commencing from 1st January, 1980 to 30th April, 1981 could not be granted for the following reasons :
(i) that it was not be in public interest not to apply the provisions of the Act to the petitioner;
(ii) that the petitioner did not make out a satisfactory case for grant of exemption except that it had suffered losses during the previous two years and no overwhelming considerations were advanced by the petitioner for grant of exemption;
And
(iii) that the management of petitioner had not proved that the losses were due to any direct action on the part of the workers during the period for which the compulsory bonus had become payable.
By this petition, the petitioner has challenged the said order not granting exemption under section 36 of the Act to the petitioner.
6. Mr. Parekh, learned counsel appearing for the petitioner, has submitted that though there was overwhelming evidence before the 1st respondent to show that the financial position of the petitioner was precarious and that the petitioner did not have the necessary fund to make payment of bonus for the relevant period, the 1st respondent did not consider the same and proceeded on totally unsustainable grounds in refusing to grant exemption to the petitioner. Mr. Parekh has further submitted that the fact that strike in the factory of the petitioner commenced from 27th June, 1981 which ultimately led to the closure of the factory was a relevant consideration for grant of exemption since the capital of the petitioner was eroded resulting into inability of the petitioner to pay the bonus which the 1st respondent did not consider while deciding the application of the petitioner for exemption. It is further submitted that since the decision of the 1st respondent is based on extraneous considerations, it is liable to be quashed and set aside in this writ petition. In support of his submissions, Mr. Parekh has put reliance on the unreported Judgment of the Division Bench of our Court in Appeal No. 214 of 1977, decided on 2nd December, 1977, in the case of the Phoenix Mills Ltd. & Ors. v. The State of Maharashtra and also the judgment of this Court in the case of M/s. Navbharat Potteries Pvt. Ltd. v. The State of Maharashtra, reported in 1989 II CLR 129. Mr. Parekh has also put reliance on the judgment of our Court in the case of The Phoenix Mills Ltd. & Ors. v. The State of Maharashtra & Ors. reported in 1991 II CLR 878.
7. The Act is a Welfare Legislation, the validity of which has been upheld by the Supreme Court of India in the case of Jalan Trading Co. v. Mill Mazdoor Sabha . As indicated earlier, the Act creates liability to pay the minimum bonus as against the employer and confers a right on the workman but this obligation and right is subject to the claim of exemption under section 36 of the Act. However, payment of compulsory minimum bonus cannot be avoided merely because there is a loss in the accounting year concerned. There are two stages in section 36. The first stage is that the Government shall consider financial position and other relevant circumstances of an establishment or class of establishments. The second stage is that it should be of the opinion that it would not be in the public interest to apply all or any of the provisions of the Act. The expression ‘financial position of the establishment’s is comprehensive enough to include loss suffered by the establishment during accounting year concerned as also various other factors, the totality of which would picture the economic condition of the establishment. The expression ‘other relevant circumstances’ will include every consideration as to whether the workmen had principally contributed to the financial loss of the company during the accounting year concerned. Moreover, if the bonus liability of the establishment is negligible compared to the loss suffered by the company, it is even not advisable that the power of exemption should be exercised by the Government as when the Company is to shoulder all other liabilities, there would be no justification to relieve the company of this statutory liability. On the facts of each case, the Government has also to consider public interest in processing the application for grant of exemption under section 36 of the Act.
8. Though the petitioner has stated in the said application made for grant of exemption under section 36 that the petitioner had no resources at all left with it with which the petitioner could make payment even of the minimum bonus under the Act, perusal of the audited accounts of the petitioner for the accounting year ended on 30th April, 1981, on which the reliance has been placed by the learned Counsel for the petitioner, establishes that to say the least, the said statement of the petitioner is not accurate since the reserves and surplus for the said period as mentioned therein aggregated to Rs. 1,34,72,400/- even after adjusting the losses of Rs. 99,71,879/- which included even the carried forward loss for the previous accounting year ended on 31st December, 1979. For the financial year ended on 31st December, 1976, the petitioner had made gross profit of Rs. 46,60,774/-. In the financial year ended as 31st December, 1977, the petitioner had made gross profit of Rs. 13,79,287/- and in the financial year ended on 31st December, 1978, the petitioner had made gross profit of Rs. 84,83,718/-. Even though the petitioner had suffered loss of Rs. 28,15,436/- for the accounting year ended on 31st December, 1979, the petitioner had paid the bonus amounting to Rs. 5,55,907/-. At the end of accounting year on 30th April, 1981, the capital worth of the petitioner was at Rs. 2,14,94,400/- and it is absolutely incorrect to say that the capital of the petitioner had eroded at the end of the said accounting year. Even in the accounting year ended on 30th April, 1982, not current assets of the petitioner are shown at Rs. 2,14,07,569/- and in the accounting year ended as 30th April, 1983 at Rs. 84,86,707/-. The liability of the petitioner for payment of compulsory minimum bonus for the accounting year ended on 30th April, 1981 was only to the extent of Rs. 6,99,720/-. The strike of the workers had commenced from 27th June, 1981 when the liability of the petitioner for payment of the compulsory minimum bonus had risen on 1st May, 1981. There is even no whisper to suggest that the workers had contributed to the financial loss of the petitioner during accounting year concerned. This being the financial position of the petitioner for the accounting year concerned, it cannot be said that the petitioner was entitled to exemption under section 36 of the Act or that the grant of exemption was in the interest of public. The 1st respondent had considered the said application of the petitioner on merits and had disposed it of in accordance with the scheme of the Act. The 1st respondent having arrived at the decision not to grant exemption to the petitioner in payment of compulsory minimum bonus for the accounting year concerned by the relevant and germane considerations and no extraneous considerations having weighed with the 1st respondent, no interference of this Court in writ jurisdiction is called for.
9. Mr. Ganguli, the learned Counsel for the 2nd respondent has submitted that even intention of management of the petitioner is not bona fide since the management had wrongfully dismissed all workmen and till the year 1991, settled with all the said 743 workmen exempting 53. Barring the said 53 workmen, other workmen have been paid their dues including the amount of compulsory minimum bonus for the accounting year concerned. Since these 53 workmen have not opted to settle with the petitioner, they have not yet been paid compulsory minimum bonus for the accounting year concerned. Hence, in the submission of Mr. Ganguli the non-payment of compulsory minimum bonus by the petitioner for the accounting year concerned has no nexus with alleged deteriorating financial condition of the petitioner and the said application of the petitioner for grant of exemption under section 36 has been not allowed on sound and good reasons. Since in out view no extraneous consideration weighed with the 1st respondent in not granting the said application of the petitioner, it is not necessary to consider the subsequent developments as pointed out by Mr. Ganguli. However, suffice it to say that in the facts and circumstances, the application for grant of exemption made by the petitioner for the accounting year concerned lacked bona fides.
10. In the case before Division Bench of our Court in Appeal No. 214 of 1977, The Phoenix Mills Ltd. & Ors. v. The State of Maharashtra, the Learned Single Judge had summarily rejected the Miscellaneous Petition No. 1566 of 1977 at the admission stage itself and in appeal, the Division Bench on the facts thereof opined that it was necessary to issue Rule Nisi and accordingly allowed the appeal and remanded the matter for issuing rule and disposing of the same in accordance with law. In the case of M/s. Navbharat Potteries Pvt. Ltd. v. The State of Maharashtra (supra), the accumulated losses as on 31st December, 1979 were to the tune of Rs. 58 lakhs. In respect of liability for payment of bonus for the year 1978, the application was made on 27th November, 1979 and second application for the year 1979 was made on 25th July 1980. The exemptions for the years 1976 and 1977 were already granted to the company. On the facts involved therein, the Court concluded that the company had wiped out not only its reserved capital by the end of the year 1978 but also its assets and losses were suffered right from the year 1972 onwards save and except a profit of Rs. 10,000/- in one year. The Court held that such financial condition of the Company could not have been ignored by the State Government while exercising powers under section 36 of the Act. In the case of The Phoenix Mills Ltd. & Ors. v. The State of Maharashtra & Ors. reported in 1991 II CLR 878, the liability to pay minimum bonus to workers was to the extent of Rs. 26,60,000/-. The financial year involved was from 1st April 1981 to 31st March, 1982 and application for exemption under section 36 of the Act was filed on 25th October, 1982. On 18th January, 1982, there was general textile industries strike in the City of Bombay which lasted for a long period. The company had suffered severe financial set back during the concerned accounting year and even earlier. The accumulated losses aggregated to Rs. 6,56,82,622/- which had put the company in a dismal financial condition. In the facts of the case, the Court held that the company had made out good and sufficient case for grant of exemption under section 36 of the Act. Since facts in these cases relied upon by Mr. Parekh have been different than the facts in the present case, the said judgments are of no assistance to the petitioner.
11. In the result, the petition, being devoid of any merit, is dismissed. Rule is discharged. However, there shall be no order as to costs of the petition.
12. On application being made, issuance of certified copy hereof is expedited.
13. Petition dismissed.