K. Mohan Ram, J
1. The writ appeal is directed against the order dated 30.3.2000 passed in WP. No. 21345 of 1992 by a learned Single Judge of this Court.
2. The brief facts, which are necessary for the disposal of the writ appeal, are set out below:
The first Respondent is a registered union under the provisions of the Indian Trade Union Act, 1926. According to the first Respondent, the duty
free shop is one out of six at all India level started in 1969 with a view to facilitate foreign tourist and earn foreign exchange. The employees, who
are numbering about 80 working in the duty free shop under the control of the Appellants, were paid 20% bonus for several years. But, for the
year 1982-83, the management declared 8.33% bonus to the employees working in the duty free shop at Madras. But at the same time, the
Appellants declared bonus at 20% to the employees working in the other duty free shops at Madras. After failure of conciliation, the Government
of Tamilnadu referred the dispute for adjudication by the Labor Court to fix the quantum of bonus payable to the workmen employed in the duty
free shop at Madras for the year 1982-83 in G.O. Ms. No. 2523 Labor Department dated 29.11.1983.
3. Pursuant to the aforesaid reference, the claim was filed before the Third Additional Labor Court, Madras and a counter statement was filed by
the management. The Labor Court, on a consideration of the materials produced before it, by an award dated 24.9.1990, held that the balance
sheet is being prepared and maintained by the management in respect of the individual units and on the basis of the profit and loss account in
respect of each unit, the bonus is being paid. The Labor Court, after recording a finding that during 1982-83, the duty free shop at Madras
suffered a loss, upheld the grant of 8.33% bonus to the employees of the first Respondent union.
4. Being aggrieved by the order of the Labor Court, the first Respondent preferred WP. No. 21345 of 2002. The learned Single Judge, by an
order dated 30.3.2000, accepting the contention of the first Respondent, set aside the order of the Labor Court and issued the following
directions:
(i) The first and second Respondent management is hereby directed to determine the quantum of bonus that is to be paid not only to the members
of the Petitioner union but to all the workmen employed in the Madras duty free shop based on a overall balance sheet drawn on the basis of the
profit and loss account arrived at by all the units in the country and settle the said bonus to be paid in favor of the workmen of the Madras unit for
the year 1982-83; and
(ii) The management is further directed to follow the same method in the years to come.
Being aggrieved by that, the management has preferred the above writ appeal.
5. Learned Counsel for the Appellants has made a representation before this Court that the first Respondent union has become defunct and there
are only two employees belonging to the first Respondent union and on that ground, sought permission of this Court to serve notice upon those
employees. Accordingly, by an order dated 22.6.2010, permission was granted to the Appellants to serve notice upon those two employees and
the Appellants served notice on the two employees. Further, even after service of notice on the two employees and their names appeared in the
cause list, they did not choose to appear either in person or through counsel. Therefore, we are disposing of the writ appeal on merits.
6. Mr. S. Jayaraman, learned Counsel for the Appellants mainly submitted the learned Judge has exceeded in his jurisdiction in directing the
Appellants herein to determine the quantum of bonus to be paid to the workmen in the Madras duty free shop based on a overall balance sheet on
the basis of the profit and loss account arrived at by all the units in the country and settle the said bonus in favor of the workmen of the Madras unit
for the year 1982-83. Learned Counsel further submitted that as per Section 3 of the Payment of Bonus Act (hereinafter referred to as the Act),
where for any accounting year, a separate balance sheet and profit and loss account are prepared and maintained in respect of any such
department or undertaking, then such department or undertaking or branch shall be treated as a separate establishment for the purpose of
computation of bonus under the Act for that year, unless such department or undertaking or branch was, immediately before the commencement of
that accounting year, treated as part of the establishment for the purpose of computation of bonus.
7. Learned Counsel for the Appellants submitted that the learned Judge has failed to note that in this case each unit viz Madras, Trichy,
Trivandrum, Delhi, Bombay and Calcutta has been treated as a separate unit and separate balance sheet and profit and loss account was prepared
and maintained during the past years also and the said individual balance sheets and profit and loss accounts were taken into consideration for the
purpose of arriving at the allocable surplus under the Act for the payment of bonus every year to the respective individual units. Learned Counsel
further submitted that the learned Judge has failed to appreciate the documents viz ExM1 the balance sheet, ExM2 the statement of allocable
surplus of the Madras unit, ExM5 the balance sheet of the Madras unit, ExM6 and ExM7 the accounts of the duty free shop at Madras, ExM10 to
ExM12 the profit and loss accounts of Delhi duty free shop, ExM13 the consolidated accounts of all the duty free shops and ExM14 the
consolidated profits and loss account of all the duty free shops and ExM2, ExM16 and ExM17 the allocable surplus account and the profit and
loss accounts of Madras duty free shop.
8. Learned Counsel for the Appellants submitted that the learned Judge should have seen that these overwhelming documentary evidence
supported by the oral evidence of the Accounts Officer Mr. Jayaraman will clearly establish the contention of the Appellants herein to show that
each and every duty free shop is treated as a separate unit for the purpose of computation of quantum of bonus u/s 3 of the Act. Learned Counsel
further submitted that when there is a clear evidence that though the company has a number of undertakings, separate accounts are kept for each
separate undertaking and separate balance sheet is prepared for each unit and separate profit and loss account is worked out for each unit and
such undertaking should be treated as a separate establishment in accordance with Section 3 of the Act especially when the said separate profit
and loss account is worked out for each unit except for the head office.
9. We have carefully considered the aforesaid submissions of the learned Counsel for the Appellants.
10. To appreciate the aforesaid submissions of the learned Counsel for the Appellants, it is relevant to refer to Section 3 of the Act as here-under:
3. Establishments to include departments, undertakings and branches:
Provided that where for any accounting year a separate balance sheet and profit and loss account are prepared and maintained in respect of any
such department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the
purpose of computation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the
commencement of that accounting year, treated as part of the establishment for the purpose of computation of bonus.
11. A careful reading of the aforesaid provision makes it clear that where for any accounting year, a separate balance sheet and profit and loss
account are prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branch
shall be treated as a separate establishment for the purpose of computation of bonus under the Act for that year, unless such department or
undertaking or branch was, immediately before the commencement of that accounting year, treated as part of the establishment for the purpose of
computation of bonus. However, the learned Single Judge has not at all referred to the provisions contained in Section 3 of the Act.
12. As rightly contended by the learned Counsel for the Appellants, the Labor Court has extensively considered the evidence of MW1 and
Exhibits M1, M2, M5, M6, M7, M10 to M14, M16 and M17 and came to the conclusion that each and every duty free shop is treated as a
separate unit for the purpose of computation of quantum of bonus u/s 3 of the Act. Such factual finding has not been set aside by the learned Single
Judge and in fact, the said finding has not been challenged by the first Respondent. That being so, the learned Single Judge ought to have applied
the provisions contained in Section 3 of the Act. However, the said provision has not been applied to the facts of this case. The learned Single
Judge, in paragraph 15 of the order, has observed that just for the simple reason that they prepare separate balance sheets based on the profit and
loss account that is arrived in each and every unit, the individual units cannot be taken as independent entities having all features of an independent
corporation or firm created under the authority of law and it is only a segment having its existence, management and control being centralized and
operated by the management, i.e. the India Tourism Development Corporation. Learned Single Judge has further observed that functional
integrality should be ascertained in order to arrive at the conclusion that there is independent existence for each and every unit so as to call it a
separate ''industrial establishment''.
13. The contention of the learned Counsel for the Appellants that the functional integrality test cannot be applied for determining the quantum of
bonus to be paid under the Act and that test should be relevant for determining applicability of other social welfare legislations like Employees
State Insurance Act, etc merits acceptance. The payment of bonus to the employees is governed by the provisions by the Act. When specific
provisions have been made governing the issue of payment of bonus, such provisions ought to have been taken note of and applied to the facts of
the particular case. When the Labor Court has applied the said provisions to the facts of this case and held that for the year 1982-83, the Madras
unit has sustained loss and that therefore, the management is right in paying the minimum bonus at 8.33%, the learned Single Judge ought to have
adverted to Section 3 of the Act. Had the learned Single Judge considered the applicability of Section 3 of the Act to the facts of this case, he
would have upheld the award of the Labor Court.
14. The entire reading of the order dated 30.3.2000 does not show that the learned Single Judge has adverted to the provisions contained in
Section 3 of the Act, which has resulted in passing the impugned order. When the provisions contained in Section 3 of the Act permits preparation
and maintenance of a separate balance sheet and profit and loss account for any accounting year in respect of a particular unit such as the
department or undertaking or branch and such department or undertaking or branch shall be treated as a separate establishment for the purpose of
computation of bonus under the Act for that year and when the Appellant management established by overruling the evidence that for the
accounting year 1982-83, separate balance sheet and profit and loss account had been prepared and maintained in respect of the Madras unit, that
should have been taken into consideration for deciding the issue as to whether the Appellant management is right in paying the minimum bonus.
But, the learned Single Judge, as stated above, has failed to take into consideration the relevant provisions of the Act. More over, as rightly
contended by the learned Counsel for the Appellants, the learned Single Judge has not only directed the determination of quantum of bonus on the
basis of the profit and loss account in respect of all the workmen employed in the Madras duty free shop and settle the bonus for the year 1982-
83, but also directed the management to follow the same in the years to come. The second part of the direction issued by the learned Single Judge
is beyond the scope of the writ petition. For the aforesaid reasons, we are unable to agree with the reasonings of the learned Single Judge in
allowing the writ petition.
15. Accordingly, the writ appeal is allowed. The order passed by the learned Single Judge dated 30.3.2000 passed in WP. No. 21345 of 1992 is
set aside. Consequently, the above CMP is closed.
