JUDGMENT
1. This original petition is filed by the petitioner, who is a partner of Malabar Tile Works, Feroke, and who has been appointed as receiver by Court in O.S No. 237 of 1984. The petitioner prays for the relief of quashing exhibit P-2 order, dated 13 December, 1985, passed by the Deputy Labour Commissioner, the authority appointed under S. 21 of the Payment of Bonus Act, in Bonus Application No. 2 of 1984.
2. The short question that arises for consideration in this original petition is whether the lay-off compensation paid to the employees is to be considered as “salary” or “wages” under the Payment of Bonus Act (hereinafter called the Act) for the purpose of determining the bonus payable to the employees.
3. When the matter was taken up, the petitioner's counsel brought to my notice order, dated 10 August, 1990, passed by T.L Viswanatha Iyer, J., in Original Petition No. 1779 of 1986, and requested that as his Lordship was pleased to refer an identical matter for consideration by a Division Bench, the present original petition may also be referred to a Division Bench. I am unable to accede to this request. In that order my learned brother referred to Nutan Mills… v. Employees State Insurance Corporation, [A.I.R 1956 Bom. 336], which deals with a case under the Employees' State Insurance Act and Chalthan Vibhag Sahakari Khand Udyog v. Government Labour Officer, [1981 - I L.L.N 267], a decision of the Supreme Court which deals with retaining allowance paid to seasonal employees during the off-season, and came to the conclusion that as the question is of general importance, it would be proper to have an authoritative decision by a Division Bench. I find that as far as the Kerala High Court is concerned there is not a single decision dealing with the question of lay-off compensation and the Bonus Act. In the absence of a decision of this Court, it is the bounden duty of the Judge concerned to decide the matter which arises before him. I feel that I have necessarily to decide the matter to the best of my lights in the light of the learned arguments addressed on both sides. It is open to the aggrieved party to test the correctness of this Court's judgment by preferring a writ appeal. (2) I also find that the two decisions mentioned in the order relate to the Employees' State Insurance Act as it stood prior to the amendment and the Supreme Court decision which deals with retaining allowance and as to how it should be considered under the Payment of Bonus Act cannot be said to be conflicting decisions. In this view of the matter, I have requested counsel on both sides to argue the matter elaborately and they have argued the matter in extenso.
4. The facts pertinent for decision of this original petition are as follows. The first respondent is the Deputy Labour Commissioner, the authority appointed under S. 21 of the Act, and respondents 2 to 112 are the employees of the petitioner. Regarding bonus for the year 1983 there was a settlement between the employer and the employee, and it was agreed that bonus should be paid at 20 per cent of the salary, and in addition to that 5.4 per cent of the salary is to be paid as ex gratia. Accordingly bonus and ex gratia were disbursed to the employees. The employees were dissatisfied with the mode of calculation of “salary”. They claimed that salary should be computed including the “lay-off” compensation paid to them during the year. The employer resisted their claim. Then an application was filed before the first respondent and the first respondent decided that lay-off compensation paid is part of “salary or wages” and hence the petitioner should pay a sum of Rs. 13,218.23 to respondents 2 to 112 in settlement of their claim. His order includes the lay-off compensation paid to the workers as part of “salary” or “wages”. The petitioner challenges exhibit P-2 order as illegal and void.
5. Sri Chandrasekhara Das, appearing on behalf of Menon and Menon, for the petitioner, contends that exhibit P-2 is illegal and without jurisdiction and it is vitiated by errors of law apparent on the face of the record. The lay-off compensation paid under S. 25C of the Industrial Disputes Act cannot come within the ambit of “salary” or “wage” as defined under S. 2(21) of the Act. The lay-off compensation is evidently not remuneration payable to the employees for work done. During the period of lay-off, the contract of employment is suspended, and not operative. The language of S. 25C of the Industrial Disputes Act, the definition of “lay-off” under S. 2(kkk) and the definition of “wages” in the Industrial Disputes Act make this amply clear. A proper interpretation of S. 2(21) of the Act clearly indicates that lay-off compensation does not come within the definition of “salary” or “wage”. He places reliance upon Nutan Mills… v. Employees State Insurance Corporation, [A.I.R 1956 Bom. 336] (vide supra), and contends that exhibit P-2 order which is illegal and without jurisdiction should be set aside.
6. On behalf of the contesting respondents Sri M. Ramachandran contends that the definition of “salary” or “wage” under S. 2(21) of the Act is a wide definition and it includes several things including the lay-off compensation. From the nature of the definition, unless language of exclusion is used to exclude lay-off compensation, the lay-off compensation has necessarily to be treated as coming within the definition of “salary” or “wage” under this Act. He also relies upon S. 14 of the Act, which clearly says that the period of lay-off has to be included to arrive at the number of working days and for the purpose of computing the bonus. This is an indication that the compensation paid during the period of lay-off should also be taken into consideration as part of “salary” or “wage” for cumputing the bonus. Strong reliance is placed upon the decision in Chalthan Vibhag Sahakari Khand Udyog v. Government Labour Officer, [1981 - I L.L.N 267] (vide supra), a decision of the Supreme Court.
7. Sri Chandrasekhara Das contends that during a period of lay-off the contract of employment is not in subsistence, and hence the compensation paid for the period of lay-off is not relatable to the contract of employment, while Sri M. Ramachandran contend that during the period of lay-off the jural relationship of employer and employee continues, but the obligation to do work stands suspended and there is the obligation on the part of the employer to pay wages on a diminished scale for his failure to provide employment during the period of lay-off. I shall now consider the rival arguments and find out whether lay-off compensation has to be considered as part of “salary” or “wage” as defined under S. 2(21) of the Act and whether, it should be taken into consideration for computing the bonus.
8. It should be remembered that the Payment of Bonus Act, the Employees' Provident Funds and Miscellaneous Provisions Act, the Payment of Wages Act, the Employees' State Insurance Act, and the Industrial Disputes Act are all social welfare legislations meant for bettering the service conditions of the workmen. Each Act deals with a particular aspect, and each Act has got its own scheme and its own definitions. It would not be proper to rely upon decisions dealing with the definitions in one particular enactment for dealing with a dispute relating to a definition under another enactment. We have to consider the contention of the parties mainly with reference to the definitions and the scheme of the Act of that particular enactment with which we are concerned.
9. Nutan Mills… v. Employees State Insurance Corporation, [A.I.R 1956 Bom. 336] (vide supra), on which heavy reliance is placed upon by the petitioner's counsel deals with the definition of “wages” in S. 2(22) of the Employees' State Insurance Act and it lays down that considering the peculiar definition given, the compensation payable for the period of lay-off need not be included for the purpose of calculating the contribution payable by the employer under S. 73A of the Employees' State Insurance Act. It should be remembered that the Bombay decision was dealing with the definition as it stood in 1954. As can be seen from the definition section extracted at the righthand side top column of page 337, the definition as it stood in 1954 is far different from the definition of “wages” given in S. 2(22) after amendment by Act 44 of 1966. While the earlier definition read as follows:
“‘Wages’ means all remuneration paid or payable in cash to an employee if the terms of the contract of employment, express or implied, were fulfilled and includes other additional remuneration, if any, paid at intervals not exceeding two months, but does not include…”.
The present definition of “wages” under S. 2(22) specifically includes payment of various other amounts like payment to an employee in respect of any period of authorised leave, lockout, strike which is not illegal, or lay-off. The definition as it now stands reads as follows:
“‘Wages’ means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lockout, strike which is not illegal or lay-off and other additional, remuneration if any, paid at intervals not exceeding two months, but does not include—
It is quite clear that the principles enunciated in the Bombay decision would apply to a situation when the old S. 2(22) was in force and it cannot apply to a situation arising after the amendment of S. 2(22) by Act 44 of 1966.
10. There are several observations in the Bombay decision to indicate that the contract of employment is subsisting, but it stands suspended during the period of layoff. The rights and obligations of the parties get altered during the period of lay-off. But the jural relationship of employer and employee is not terminated. It is only suspended or kept in abeyance. The decision of the Bombay High Court cannot be a proper guide for interpretation of the law as it now stands after the amendment of S. 2(22) by Act 44 of 1966. That decision does not hold the field.
11. The definition of “salary” or “wage” given in S. 2(21) of the Bonus Act reads as follows:
“‘Salary or wage’ means all remuneration other than remuneration in respect of overtime work capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to any employee in respect of his employment or of work done in such employment and includes dearness allowance that is to say all cash payments, by whatever name called, paid to an employee on account of a rise in the cost of living, but does not include—
(i) any other allowance which the employee is for the time being entitled to;
(ii) the value of any house accommodation or of supply of light, water, medical attendance or ofher amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession;
(iv) any bonus including incentive, production and attendance bonus;
(v) any contribution paid or payable by the employer under any law for the time being in force:
(vi) any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him;
(vii) any commission payable to the employee.
Explanation.— Where an employee is given in lieu of the whole or part of the salary or wage payable to him, free food allowance or free food by his employer, such food allowance or the value of such food shall, for the purpose of this clause, be deemed to form part of the salary or wage of such employee”.
If we examine the language of this definition we find that salary or wage is defined in a broad and wide manner, and it is an inclusive definition. Specific item which are to be excluded are specifically mentioned and excluded. Then seven different items are specified as items which are not included within the substantive part of the definition. The lay-off compensation paid to a worker under S. 25C of the Industrial Disputes Act is not one of the seven items mentioned in the latter portion of the definition. In the substantive part of the definition, only remuneration in respect of overtime work is excluded. When we come to S. 10 we find that bonus shall be a percentage of the salary or wage earned by the employee during the accounting year. Under S. 14 which deals with computation of working days, it is specifically mentioned that the period during which an employee is laid off under an agreement or as permitted by standing order under the Industrial Employment (Standing Orders) Act, 1946, or under the Industrial Disputes Act, 1947, or under any other law applicable to the establishment should also be included. If S. 14 contemplates inclusion of the period of lay-off for the purpose of determining the number of working days, it positively indicates that the lay-off compensation is also to be included in the definition of “salary or wage,” when it is not specifically excluded.
12. The decision in Chalthan Vibhag Sahakari Khand Udyog, Chalthan (by Managing Director) v. Government Labour Officer, [1981 - I L.L.N 267] (vide supra), is a decision of the Supreme Court which deals with the definition of “salary or wage” under S. 2(21) of the Act, and it was dealing with the question of “retaining allowance” paid to seasonal employees in a sugar factory. The Court observed, in Para. 6, at page 269, as follows:
“… The definition of the expression ‘salary or wage’ given in S. 2(21) of the Act is wide enough to cover the payment of retaining allowance to the workmen. It is nothing but remuneration correlated to service and it would be a misnomer to call it an allowance. The retaining allowance does not fall within the purview of Cl. (i) of the exclusionary, clause of S. 2(21), but comes within the substantive part of the definition of ‘salary or wage’ in S. 2(21) of the Act. The retaining allowance cannot be construed to be any other allowance which the employee is, for the time being, entitled…”
The Court held that the retaining allowance paid to seasonal employees is part of their salary or wage within the meaning of S. 2(21) of the Act, and, therefore, it must be taken into account for the purpose of calculation of bonus payable under the Payment of Bonus Act. Two particular sentences in this decision of the Supreme Court are of great significance for deciding the question involved in our case. These two sentences are:
“The payment of such allowance by the management to its workmen during the off-season when there is no work and when the factory is not working, is indicative of the fact that it wants to retain their services for the next crushing season. The very fact, that retaining allowance is paid to the workmen clearly shows that their services are retained and, therefore, the jural relationship of employer and the employee continues”.
In our case, the payment of lay-off compensation during the period when there is a lay-off and when the employer is unable to provide work is indicative of the desire of the employer to retain the services of the employee. The jural relationship of employer and the employee continues, and what is paid to him partakes of the nature of basic wage on a diminished scale.
13. It should be remembered that under the Industrial Disputes Act, S. 2(rr) defines “wages” as meaning all remuneration capable of being expressed in terms of money, which would if the terms of employment, express or implied, were fulfilled, be payable to a workman, in respect of his employment or of work done in such employment. It should be remembered that this definition is also an inclusive definition. This definition also does not exclude the lay-off compensation from the ambit of “wages”. Section 2(kkk) defines lay-off. This definition clearly indicates that lay-off is caused by the failure, refusal or inability of an employer or on account of shortage of coal, power or raw materials, he is not able to give employment to the workman whose name is borne on the muster-rolls of his establishment. Lay-off is similar to the non-functioning of a seasonal factory during the off-season. Section 25C of the Industrial Disputes Act lays down the right of workman laid off for compensation. This section lays down that whenever an employee is laid off whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid off, compensation which shall be equal to fifty per cent of the total of the basic wages and dearness allowance that would have been payable to him, had he not been so laid-off. The payment of fifty per cent of wages plus dearness allowance is analogous or equal to the payment of diminished wages during the off-season for a seasonal employee. The Supreme Court decision is nearest to the facts of our case, and it squarly applies to a case of lay-off compensation paid to workmen. Following the reasoning and rationale of that decision, and giving importance to the wide inclusive definition of “salary or wage” under S. 2(21) of the Act, I hold that lay-off compensation should be included within the meaning of salary or wage for the purpose of computing the bonus. The view taken by the first respondent in exhibit P-2 order is perfectly corrrect, and it is sustainable under law.
14. In the result, the original petition is dismissed as deviod of merits. Exhibit P-2 order stands confirmed. Each party shall bear its own costs.