Tribunal, Chennai & Another

738 aiagement of Worth Trust vs. Presiding Officer, Industrial

OF BONUS ACT, 1965 S
S5. Though it cannot be said that every educational|| C. PAYMENT and
institution profiteers,
eral such
we are
strangers to sev
not 2(17), 1(3)(a) 32(v) - Petitioneo
tention is that its establishment
ctons
institutions in our midst today. Thougn under Section 32(v) of the Act ie. uld tau
regulations have been formed for streamlining
charges collected by educational institutions, tne empted from plicability the Act
Trust may be an Institution not for t Hel
regulations do not encompass all institutionssucn
and but by running factoriP
there areaberrations that operate outside of pose of profit
restrictions. There is a point in stating that such engaged in commercial activities tor ha
an
Cial
Institution is operating on a
purely
when
commer
proflts
nus Act
Labour laws are applicable
would be applicab to it- Fac
- Bo galning
basis, the dominant purpose shifts from
the dissemination of education to the bein9 having full-fledged manufacturing actiut
generation
profit and such an Institution should be
of
an independent entity though der the um vity
equated to
any other commercial Industry. Such an Institution |
|
brella of Trust. Paras 10 to 12
would then be a commercial
concern per se and not
one
engaged in the pursuit of education as envis- || For Appellants: Mr. Anand Gopalan and and Ms.T.S
aged in terms of section 32(v)(b), particularly since ||Gopalan &Co., Advocates.
the exemption compromises persons who are more
Eor Respondents: Mr. V. Ajoy Khose and Mr,
economically fragile than the Institution they serve. Krishnaswamy, Advocates.
R
There is thus some
ed by the Union and
justification in the point agitat- |
take note of this
perhaps the Legislature could
position and bring into effect suit- | IMPORTANT POINTS
able amendments, in the
manner and where,
essary. 'nec
Payment of Bonus Act, 1965 is
56. For the present, applicable upon a factory even if
however, one has to rest con-|
tent with the provisions of sections it is being run by a Trust, hav-
of section 32(v)
(b) that, in my firm view, support the stand of the ing ful1 fledged manufacturing ac-
Management. In the light of the discussion as tivities and its employees are
above, the impugned order of the Tribunal is set| entitled to claim yearly bonus.
aside and this Writ Petition is allowed. No costs.
Consequently, the connected WMP is closed. Ex-gratia already paid to the
workmen can be adjusted against
payable bonus.

2019 LLR 738 L Trust being a

registered un-
MADRAS HIGH COURT der Societies Act is not similar
Hon'ble Mr. T.S. Sivagnanam, J. to a Red Cross
Society because
Hon'ble Mrs. V. Bhavani Subbaroyan, J. it is running factories, engaging
W.A. No. 1732/2013 and M.P. No.1/2013, Dt/-20-3-2019 itself in
commercial products,
attracting the applicability of
Management of Worth Trust Labour laws.
VS.
Presiding Officer, Industrial Tribunal,
Chennai & Another JUDGMENT
T.S.
filed
SIVAGNANAM, J-1. This appeal has been
A. PAYMENT OF BONUS ACT, 1965 Section by the Management of Workshop for Rehabil
tation and
2(17) Applicability upon factory Held, Trust
Training for the Handicapped (WORIN)
even when a factory is run by a Trust, hav- challenging
22392 of 2004 dated
the order passed in W.P. NG.

ing full fledged manufacturing activities, its 25.03.2013.

employees are entitled to claim yearly bo- 2. The said writ
lant Trust
petition was filed by the appe
nus. Para 15 challenging the correctness of the o
B. PAYMENT OF BONUS ACT, 1965Exgratia||No. passed by the
NO. 109 of 100Industrial Tribunal, Chennai in 1.
- Held, ex-gratia already paid to the work- 109 of 1998 dated 28.04.2004. The empoy
be adjusted against payable bo- ees/workmen of the appellant Trust
men can raiseda
pUte under the provisions of the Industrial
nus. Para 14| Act, 1947 claiming that for DISputhey
the year
190 July, 2019-78
 Management of Worth Trust vs. Presiding Otlicer, Industrial Tribunal, Chennai & Anotngr 739
2019

antitled to be paid bonus under the provisions submitted that essentially the
are e Act. Therefore, it is
the
Payment of Bonus Act and ex-gratia. The factory or an establishment should have been
ment vide G.O.(D).No.559 to make profit and if it is
Labour and Em tablished with an intention
yment Departmen dated 25.07.1998 referred Act cannot be applied.
not so, the provisions of the
e Said dispute for adjudication before the Indus- Mr. Anand Gopalan,
Elaborating his submissions,Section 32 of the Act
walTribunal, chennal. The second respondent, the learned counsel referred to
Morkers Union filed the statement of olaim before under the Act will apply to
which states that nothing
he Industrial Tribunal dermanding that the members and Clause (v) of Sec
certain class of employees
of their Union are entitled to 20% bonus with 5%|| tion 82 enumerates three categories of employers
x-gratia for the account year 1996-97. The appel-. to whose emplovees the provisions of the ACt W
nt Trust filed counter affidavit resisting the claim India Red Cross Society
lant not apply, namely, (a) the Universi-
a like nature; (b)
of the workmen and among other things contended or any other institution of
thatthe proVISIons or Payment of Bonus Act will not|| ties and other educational institutions ana (c) inst
apply to the appellant Trust as they would fall with- tutions (including hospitals, chambers of
commerce

for
inthe scope of either Section 32(v(a) or 32(v(c) and social welfare institutions) established not
of
of the Payment of Bonus Act (hereinafter referred purposes of profit. It is submitted that the rigour
different from the effect of
toas "the Act'). Before the Industrial Tribunal, one Section 32 of the Act is
and
Mr. M. Doss was examined as WW1 and 25 docu- Section 36 which is the power of exemption
ments were marked as Exs.W1 to w25. On behalf the appellant Trust falls within Clause (a) of Sec-
of the appellant Management, Mr. C. Antonysamy, tion 32(v) and therefore, the provisions of the Act
one ofthe Trustee of the appellant Trust was exam- will.not apply to its employees or if it is contended
ined as MW1 and 20 documents were marked as that Clause (a) of Section 32(v) of the Act is not ap
Exs.M1 to M20. The Labour Court after considering plicable, then the appellant would fall within Clause
the
the oral and documentary evidence by award dated (c) of Section 32(V) of the Act and accordingly,
28.04.2004 held that the demand of the second re- || provisions of the Act will not be applicable to its em-
spondent Union for payment of bonus and ex-gratia ployees. To explain as to how the appellant Trust
was established, the purpose of its establishment,
for the year 1996-97 is justified and the workmen,
members of the second respondent Union are en- etc. the leamed counsel referred to the counter
titled to minimum bonus of 8.33% for the relevant statement filed by the appellant before the Industrial
period and also entitled ex-gratia amount for that
to Tribunal in I.D. No. 109 of 1998. It is further sub-
mitted that the witness examined on the side of the
year similar to the amount already received by them
in the previous and succeeding years. Accordingly, workmen, wW1 has accepted in his deposition that
the dispute raised by the workmen was allowed. the employees of the appellant are leprosy cured
passed by the
the award persons and persons who are differently abled. It
Ihe appellant challenged is submitted that the Industrial Tribunal erroneously
Industrial Tribunal in the said writ petition which
was dismissed by the impugned order. Aggrieved held that the provisions of the Act would apply and
the appellant is before us by way of not only ordered payment of bonus at 8.33% but
Overthe same, also directed ex-gratia to be paid without specitying
this appeal.
the amount. It is further submitted that the learned
S. Mr. Anand Gopalan, learned counsel for M/s. Writ Court erroneously confirmed the order of the
S.Gopalan & Co., counsel for the appellant sub-
to be Tribunal but made an observation that the ex-gratia
ited that the scheme of the Act is required order paid to the workmen can be adjusted against the
OOKed into to examine the correctness of the bonus. It is further submitted that in the year 1985
Tribunal as confirmed by
passed by the Industrial the only change which was effected to the Trust
ne Writ Court. It is submitted that the underlying Deed was change of name and it does not take
nciple behind the Act is that the factory or estab- away the purpose for which the Trust was estab-
ent should generate a profit as the computa- lished, namely, for training and/or employment of
earned by the
bonus is based on the profit
ory or an establishment. To substantiate
this ar-
| y curea and differently abled persons.
to Sections 4 4: The learned counsel relied
ent, the learned counsel referred upon the following
10 and 11 of decisions to support his contentions that the provi-
o the Act. Referring to Sections
the f it is submitted that the provision uses the sions of the Act will not apply to its
RCt, employees:
expressi "allocable surplus" and therefore, the 1. Uttar Pradesh
Engineers Association v. Ut
thoons of the Act would stand attracted only if tarpradesh State Electricity Board, 1973 (2)
is no so, the mini- LLJ 243
Mit asurplus and even if it
Section 10 ofthe
nu payable is in terms of
79-July, 2019
 Tribunal, Chennai & Another
740 Presiding Officer, Industrial
LLR
Management of Worth Trust vs.
were to be utilized for hiev
2. Workmen of Tirumala Tirupathi Devastha-| entity and the profits Trust. Thus, the factory be
the objects of the
nam v. Management and another, (1980) || ing a separate unit the proviSIons of Section 32/
1
SCC 583: (1978-79) 15 SCLJ 33. ing submitted that the decision of
(c) will not apply. It is
3. Tamil Nadu Water Supply and Drainage Hon'ble Supreme Court
in the case of Workmen
Board Engineers Association etc. v. State of the Devasthanam (supra) and
Tirumala Tirupathi
Tamil Nadu and Tamil Nadu Water Supply of Christian Medical Co.
the decision in the case of
and Drainage Board, (1991) 2 LLJ 394 the workers Union
lege support the stand taken by
4. Swarajya Ashram Karamchari Sangh v. It is further submitted that the appellant does not
1 LLJ 486 in its fac
Swarajya Ashram, Kanpur, (1995) dispute that the workmen are employed
are made applicable
5. Dr. (Ms.) Sita Bhateja Nursing Home (Trust), tory and all labour enactments
Bangalore v. Presiding Officer, Bangalore to the factory and therefore, the contention that the
and another, (1999) 2 LLJ 1194. provisions of the Act would not apply to the employ-
ees working in the factory is not tenable. It is fur-
5. Mr. Ajoy Khose, learned counsel for the second
ther submitted that the appellant cannot equate the
respondent submitted that on 15.11.1985 not only
amount paid as ex-gratia to that of the payment of
the name of the Trust was changed but substan-
bonus which is statutory and ex-gratia being in the
tial amendments were made to the Trust Deed and
nature of a gratis, the same cannot be treated as
they. were no longer accountable to the Swedish equivalent to paymene of bonus in terms of the pro-
Red Cross, Stockholm. It is submitted that when
the Society was part of the Swedish Red Cross only visions of the Act.
7. In reply, Mr. Anand Gopalan, learned counsel for
training was imparted to leprosy cured and differ
ently abled persons and no commercial activity or the appellant would contend that even before 'the
production activity was carried out and only in the name of the Trust was changed during 1985, they
were carrying on manufacturing activities which
year 1985, the Trust started commercial activities
such as production of various industrial items and is evident on a reading of G.0.Ms.No.1857 dated
therefore, the entire character of the Trust stood 06.09.1969. Further, it is reiterated that what is im
altered. Referring to the Government Order in portant to see is the purpose for which the Institu
G.O.Ms.No.1857 dated 06.09.1969, it is submitted tion was established and what is important is the
that it has been accepted that profit is generated by word 'purpose' and if this is construed in the man
the Trust which goes for rehabilitation work. Thus ner it ought to be construed then it goes without
the objects of the Trust are achieved by the profits saying that the provisions of the Act will not be ap
earned from the Industrial undertakings and facto- plicable to the employees of the Trust.
ries established by the appellant Trust and the pro- 8. We have heard the learned counsel
visions of the Act would be clearly applicable. It is on either side and perused the materials available
appearing
further submitted that in terms of Section 1(3) of the on record.
Act, the provisions of the Act shall apply to every 9. The unsuccessful
and admittedly the appellant has established Management is before a us
factory sailing the correctness of the order
factories in various centres in the State of Tamil
learned Single Bench
passed by t
Nadu and having accepted that those are factories, dustrial Tribunal on the
affirming the award of the
automatically the provisions of the Act will apply. ond respondent Workers
dispute raised by the s
Union. The dispute wn
Therefore, the question of applying Clause (b) of was referred
by the Government of Tamil Naau
Section 1(3) would not arise as the factories estab- G.O.Ms.No.1857 dated 06.09.1969, to the
lished and owned by th appellant Trust clearly fall Tribunal, for adjudication is with regard to Indu
the Pay
Section 1(3), namely Clause
within the first limb of ment of bonus to the
members of the secona
(a) thereunder. spondent Union, employees, for the period
of the above submission, Mr. Ajoy and payment of 19
6. In the light ex-gratia. The appellant Manat
counsel contends that the question ment takes a stand that the
Khose, learned the
visions of A
to whether the appellant is an In- are inapplicable to its employees. The first
of examining as it was established for tion is that cone
stitution ornot and whether Section 32 of the Act deals with
cla
ses

does not arise

because it is a factory of employees to whom the visions of the Act
profit or not of the Act are automatically not
to which the
provisions
that the Trust mav 32
applicable. The appellant's case is that Sectio
further submitted is not an
attracted. It is for the purpose of in exemption provision which is co taine
established
Institution
not Section 36 and by virtue of Section 32, the
Act
be an is
profit but the
factory was e s t a b l i s h e d
as a separate
made inapplicable in certain cases. The appe lant

July, 2 0 1 9 - 8 0
2019 Management of Worth Trust vs. Presiding Officer, industrial Tribunal, Chennai & Another 741

claimsumbrage under Section 32(a) or (). The || Red Cross' in the Trust Deed was deleted. Thus,
said provision reads as follows: and after the amendment the
Trust became an
on
to any control by
32. Act not to apply to certain classas of em- entity in its own right not subject the ap
ployees-Nothing in this Act shall apply to the Swedish Red Cross Society. Therefore,
cannotclaim itself to fall within the expres-
pellant
the provisions
sion of a Red Cross Society. Firstly
Indian Red Cross Society
of the Act mentions only
) and not a Swedish Red Cross Society. Therefore
Section 32(v) of the
(iv) the first limb of Clause (a) of
Act will not apply to the appellant.
() employees employed by would fall with
11. The second argument is that it
(a) the Indian Red Cross Society any oth
or a like nature
er institution of a like nature (including its in the scope of other institution of
the objects
There is nothing on record to show that
branches); of the appellant Trust is akin to that of the Indian
(b) universities and other educational institu- Red Cross Society. It may be true that the appellant
tions Trust was established with a laudable object of
re
abled.
(c) institutions (including hospitals, cham- habilitating leprosy cured and the differetly
institution of like nature
bers of commerce and social welfare in- However, to qualify to be an
stitutions) established not for purposes of as that of the Red Cross Society,
there should be
profit sufficient material. No such material was placed be
10. The case of tha appellant is that it was and is fore the Industrial Tribunal to state that they are an
institution similar to or like that of Indian Red Cross
part of the Red Cross Society and therefore, the
provisions of the Act will not apply to its employees. Society. Therefore, Clause (a) of Section 32(v) of
If for any reason it is to be held thatthe appellant is the Act will not come to the rescue of the appellant
not a Red Cross Society, it will fall within the sec- The alternate submission of Mr. Anand Gopalan,
ond limb of the same clause as being an institution learned counsel for the appellant is that it would fall
of a like nature, i.e., similar to Red Cross Society. within Clause (c) of Section 32(v) of the Act as the
The alternate submission of Mr. Anand Gopalan, appellant is an institution established not for pur
learned counsel for the appellant is that the appel- poses of profit. Institution' has not been defined
under the Act. We may decipher the meaning by
lantwould fall within Clause (c) of Section 32(v) of taking note of the categories of institutions shown
the Act as the appellant Trust is an institution, a|
Within parenthesis and it appears to be an inclusive
social welfare institution, established not for pur-||
poses of profit. The appellant Trust was established || deinition or appears to give an inclusive meaning.
institutions including hospitals, chambers of
by a Deed of Trust dated 25.08.1969 registered as namely,
Document No.10 of 1969 on the file of the Sub-|| Commerce and social welfare institutions. Therefore
and until the appellant does not fall in any
Registrar, Katpadi. The Deed of Declaration was|| uniess
an or-|| otner category anywhere described under the Act,
executed by the Swedish Red Cross Society,
ganization registered in Sweden. The Deed of Dec-|| then alone we are required to see whether it will fall
laration states that the Swedish Red Cross Society WItnin the scope of an institution' as described in
of Section 32(v) of the Act. In our con-
is an institution devoting its activities among others ause (C)
desirous of con- sidered view, Section 32(v)(c) ill never come to
towards charitable, objects and are the aid and assistance of the appellant as we are
Stituting a charitable trust in India for the purpose
of promoting rehabilitation of leprosy cured and concerned about the workmen employed in a fac
tory established by the appellant Trust. Clause (a)
other handicapped by training and/or employment.
underwent an amend- of Section 1(3) of the Act states that the provisions
During 1985 the Trust Deed of the Act shall apply to every factory. Section 2(17)
15.11.1985, whereby
ment vide agreement dated of the Act defines 'factory' to have the same mean-
changed from Red Cross
the name of the Trusttowas the requirement to ing in
as Clause (m) of Section 2 of the Factories
Rehabilitation Trust WORTH, 1948. The appellant does not deny the fact that
accounts to the Swedish
Turnish annual reports and deleted, the condition in Act,
they have established factory/s in different locations
Hed Cross, Stockholm was concurrence of Swedish in the State. The factories are engaged in manu
ne Trust Deed regarding of the Swedish facture of industrial and commercial products. The
ed Cross was deleted, approval provisions of the Employees State Insurance Act,
were deleted and
ed Cross for certain decisions Swedish Employees Provident Fund Act and all other labour
of the
tne Clause 'Subject to the approval
81 July, 2019
 742 Management of Worth Trust vs. Presiding Officer, Industrial Tribunal, Chennai & Anoner LLA
anents are made applicable to the factory. The||14. The fine but à marked distinction i5 requiredto
n t has obtained a license for all its factories. || be seen in the instant case. This distinction is be
s e acts are not denied by the appellant. There- | tween the institution called the WORTH Trust and
n e very threshold the provisions of the Act ll the factory established by the Trust. It may or may
willapply to the factory. It may be true not be true that there were manutacturing activities
pellant Trust has established the factory,that the ap- much prior to 1985. However, in our considered
so established is a but factory| view the same is not very material. This is so be.
distinct and separate entity
which various statutes including labour welfare to cause the appellant Trust has established a factory
at-
utes are
mandatorily made applicable. true, with a laudable object to rehabilitate the lep-
12. Thus the members of the rosy cured and differently abled. Nevertheless, the
second respond-
ent Union factory which has a full fledged manufacturing facil-
being employed in the factory estab-
lished by the appellant would be ity is an independent entity though may fall within
sufficient to hold
that the provisions of the Act are made the umbrella of the Trust. The factory has a distinct
to the employees who are applicable position,in law it is recognized as a separate unit,
employed
The decision of the High Court of
in the factory.
Allahabad in the all labour welfare legislations have been made ap-
case of Uttar Pradesh plicable and there can be no denying the fact that
Engineers Association (su-
pra) dealt with the case of the employees of for all purposes it falls within the definition of factory
Uttar Pradesh State Electricity Board the as defined under Section 2(17) of the Act. This is
claiming that
they are entitled to receive bonus under the provi- sufficient to hold that the provisions of the Act are
sions of the Act. The Court after fully applicable.
facts of the case took note of the
examining the
provisions
of the 15. In the light of the above, we are of the clear
Electricity (Supply) Act, 1948 held that the
Electric view that the Industrial Tribunal was right in hold-
ity Board is not owned by shareholders to whom ing that the provisions of the Payment of Bonus Act
the profit might go or for whose benefit the
profits would apply to the employees of the factory/s es-
might be earned and therefore, the Electricity Board tablished and administered by the appellant Trust.
cannot be presumed to be an institution established With regard to the claim for
for purposes of profit and ex-gratia, the Industrial
accordingly held that the Tribunal had directed the appellant to
pay ex-gratia
Electricity Board is an institution established not for amount. The Management were successful before
profit purposes and falls within the exception pro- the learned Writ Court which directed that
vided under Clause (c) of Clause (v) of Section 32 the ex
gratia which has been paid to the workmen can be
of the Act and the provisions of the Payment of Bo-
adjusted as against the bonus payable at 8.33%.
nus Act will not apply. The facts in the case of Uttar Had the workmen filed an
Pradesh Engineers Association is entirely different, appeal against
this find-
ing, we may be required to examine the said as-
it is a Board established by a statute and on the
pect. However, the workmen chose to
given facts and circumstances, the Court found that order passed by the learned accept the
Writ Court. Therefore,
it will be an institution which falls within the excep- we do not venture into
the correctness of the order
tion provided under Section 32(v)(©). The said deci- passed by the learned Writ Court in
sion is clearly distinguishable on facts and does not
appellant to adjust the
permitting the
render any assistance to the case of the appellant. ex-gratia amount
paid to the
workmen from and out of the bonus
13. In the decision in the case of Tamil Nadu Water 16. For the above reasons
payable.
the writ appeal fails
Supply and Drainage Board Engineers Association is dismissed. No costs. and
(supra), this Court after taking note of the decision Consequently,
miscellaneous petition is closed. connected
in Workmen of Tirumala Tirupathi Devasthanam
(supra) held that the Tamil Nadu Water Supply and Appeal Dismissed
Drainage (TWAD)) Board was created and all the

projects were transferred to the TWAD Board to

be
and
of service to the community it was
an institution
established not purposes of profIt. As mentioned
for
above, the facts of the appellant's case cannot be
Sub-clause (a) or Sub-clause
brought under either
of the Act as the answer to the
(c) of Section 32(v) under Section 1(3)(a) and the
lies
question raised to the appellant.
provisions of the Act will apply

July, 2019- 82
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