200 SUPREME COURT REPORTS [1960(1)]

.l959 arriv,ing at the profits or ,gains of the appellant which

Calcutta Company were liable to tax. Consistently enough with this

Lta. attitu~e, the Revenue ought to have expressed· its

v. willingness to treat only a sum of Rs. 29,392-11-9 as

The Commission~r the actual receipt of the appellant during the account~

of Income-ta.-r_ ing year and made up the computation of the profits

Bhagwati J. and gains of the appellant's business on that basis. 'l'he

Revenue, however, did nothing of the sort and insisted

upon

having its pound of flesh, asking us to delete the

whole of the item of Rs.

24,809 from the debit side of

the account which it was certainly not entitled to do.

1959

May IZ.

We accordingly allow the appeal, set aside the judg­

ment of the High Court and answer the referred qu~s­

tion in the affirmative. The respondent will of course

pay the appellant's costs ~hroughout.

Appeal allowed.

THE CENTRAL BANK OF INDIA

v.

THEIR WORKMEN

(and connected appeals)

(S. R. DAs, C. J., JAFER IMAM, S. K. DAs,

K. N. WANCHOO and M. HIDAYATULLAH, JJ.)

Industrial Dispute-Bonus-Banking Companies-Bank Em­

ployees-Whether disentitled to bonus-" Remuneration" meaning of

-Banking Companies (Amendment) Act, I956 (95 of r956), amended

s. ro, whether retrospective-Banking Companies Act, I949, (ro

of I949), S. IO.

Section ro(r)(b)(ii) of the Banking Companies Act, 1949,

provided: "No banking company shall employ any person

whose remuneration

or part of

who~e remuneration takes the

form ... of a share in the profits of the company."

The dispute between the appellant Banks and their

employees related, inter alia, to the question whether, the pro­

visions of the Banking Companies Act, 1949, prohibit the grant

of bonus to bank employees. The Labour Appellate Tribunal

took the v·iew that s. IO of the Act did not stand in the way of

granting bonus to bank employees, because bonus according to it

was not a share in the profits of the company. On appeal, it was

contended for

the appellant Banks that bonus as awarded by the

Industrial

Courts is remuneration within the meaning of s. IO

S.C.R. SUPREME COURT REPORTS 201

read with s. 2 of the Banking Companies Act, 1949, and that it

was also a share in profits, and therefore, the express provisions

of i. 10 read with s. 2 override the provisions of the Industrial

Disputes Act, 1947, so far as banking companies are concerned,

and prohibit the award of bonus to employees of Banks.

Held : (I) that the expression " shall employ any person "

in s. 10 of the Banking Companies Act, 1949, means and includes

" shall have in employment any person " and that in this respect

the amendment of 1956, merely makes clear what was already

meant by the section ;

(2) that the word

"remuneration" in s. ro of the Act has

been used in the widest sense and includes bonus ;

(3) that bonus in the industrial

s~nse comes out of the

available surplus of profits, and when paid, it fills the gap,

wholly or in part, between the living wage and

the actual wage.

It is labour's share in the profits, and as it is a remuneration

which takes the form of a share in profits,

it comes within the

mischief of

s.' ro of the Act ; .

(4) The Banking Companies (Amendment) Act, 1956, is not

a declaratory Act, and except in the sn1all matter of the expres­

sion "shall continue tQ employ" in sub-s. ), it does not pur­

port to explain :any former law or declare what the law has

always been. Consequently, though s. 10 as amended by the Act

of

1956 does not stand in the way of the grant of industrial

bonus,

for the period relating to the present appeals, the amended

section had no retrospectivt ·effect.

Accordingly, s. 10 of the Banking Act, prior to the amend­

ment of I956, prohibited the grant of industrial bonus to bank

employees inasmuch as such bonus is remuneration which takes

the form of a share in the profits of

the banking company.

CrviL APPELLATE JuRISDICTION: Civil Appeals Nos.

56 to 62 of 1957.

Appeals

by special leave from the judgment and

order dated April 28. 1954 of the Labour Appellate

Tribunal of

India (Special Bench-Banks), Bombay,in

Appeals Nos. 122, 129,

130, 142, 144, 145, 152, 153,

154,

155, 162, 169, 217 & 218 of 1953.

N.

A. Palkhiwala, J. B. Dadaclwnji and 8. N.

Andley, for the appellants in C. As. Nos. 56 & 60 of

1957.

M. 0. Setalvad, Attorney-General for India, J. B.

DadacluLnji and S. N. Andley, for the appellants in

C. As. Nos. 57, 58, 59 & 61 of.l957.

~6

I959

The Central Bank

of India

v.

Their Workmen

I959

The Central Bank

of India

v.

Their Workmen

202 SUPREME COURT REPORTS [1960(1)]

M. 0. Setalvad, Attorney-General for India and

Naunit Lal, for the appellant (Punjab National Bank)

in C. A. No. 62 of 1957.

N. V. Phadke, T. S. Venkataraman, K. R. Slw.rma

and K. R. Choudhury, for respondent No. 1 in C. A.

No.

56

oi 1957.

N. G. Cootterjee, Sadhan Chandra Gupta, Janardan

Soorma, M. K. Ramamurthi and M. R. K. Pillai,

for respondents in C. As. Nos. 57 to 61 of ·1957

(Represented by All India Bank Employees Associa­

tion)

B. P. Mahe,r;hwari, for respondent No. 3 (Associa­

tion of the Punjab National Bank Employees) in C. A.

No. 62 of 1957.

B.P. Maheshwari, for Surat Bank Employees Union.

B. G. Ghose, and I. S. Sawhney, for All India

Central Bank Employees' Association.

1

1959. May 12. The Judgment of the-Court was

delivered

by

s. K.

Das J. S. K. D.As J.-These are seven appeals on behalf of

different Banks working in this country, some incorpo­

rated in India and some outside India. It is necessary

that we should very briefly state the background of

the industrial dispute which bas given rise to these

appeals

.. It is now well-known that there was a sharp

rise in the prices of commodities during and after

World War No. II. This rise in prices very seriously

affected salaried employees belonging

to the middle

class including

such employees in the banking industry.

In or about the year 1946 trade unions of bank

em­

ployees presented demands for higher salaries and allow­

ances and better conditions of service. In some cases

notices

of threatened strike were also served on the

employers. The unrest became particularly acute in

the provinces of Bombay, the United Provinces, and

Bengal as they were then known. The local Governments

of those provinces referred these industrial disputes

for

adjudication: this resulted in some regional awards

which came

to be known in Bombay as the

Divatia

Award, in the United Provinces as the B. B. Singh

S.C.R. SUPREME COURt REPORTS 203

Award and in Bengal as the Gupta, Chakravarty

1

959

and Sen Awards. Notwithstanding these a~ards, The Centra~ Bank

the general unrest amongst Bank employees contmued of India

and there was a clamour for control of the banking v.

industry by the Central Government. On April 30, Their Worknu"

1949, was passed the Industrial Disputes (Banking and

Insurance ·Companies) Ordinance (Ordinance VI of s. K. D~Js f.

1949) under the provisions of which all banking com-

panies having branches or other establishments

in

more

than one province came under the jurisdiction of

the Central Government for the purposes of the Indus-

trial Disputes Act, 1947 (XIV of 1947). By a notifica-

tion dated

June 13, 1949, the Central Government

constituted

an

ad hoc Tribunal consisting of Shri K. C.

Sen, a retired Judge of the Bombay High Court, as

Chairman, ·with two other persons as members to

adjudicate upon an industrial disput~ between several

banking companies

and their workmen.

On the same

day,

the industrial dispute was referred to the Tribunal

by a separate order. The dispute covered several

items,

and some more were added from time to time.

For the sake of convenience, we shall hereafter refer to

this Tribunal as the

Sen Tribunal and its award as the

Sen Award. After a very exhaustive enquiry, the Sen

Tribunal made its award which was published on

August 12, 1950. Some of the leading Banks being

dissatisfied with

the award applied to Supreme Court

and obtained special leave to appeal against the said

award,

as it had been specially exempted from the

jurisdiction of the Labour Appellate Tribunal consti-

tuted under the Industrial Disputes (Appellate Tribunal)

Act, 1950

(XLVIII of 195~). This Court ultimately

held

that the award of the

Sen Tribunal was void

in toto for want of jurisdiction, but did not go into the

merits of the award with regard to any of the matters

dealt

with therein. The consequence of this decision

was

that the dispute in the banking industry remained

unresolved. 8oon

after there were some strikes conse-

quent on certain action taken by some

of the Banks.

The result was that the

Central Government had to

ta~e steps afresh to r;;ettle this long standing dispute.

Attempts were a.t first made .through the machinery of

1959

The Central Bank

of India

v.

Their Wodm1et~

S. J(. Das ].

~04 SUPI~EME COURT REPOR~rs [1960(1)]

conciliation to settle the dispute, but these attempts

failed. On June 26, 1951, was enacted the Industrial

Disputes (Amendment and Temporary Provisions) Act,

1951 (XL of 1951) which had the effect of temporarily

freezing some of the gains of labour under the Sen

Award. In ,July 1951 the Central Government

made a fresh reference to an Industrial Tribunal

consisting of Shri H. V. Divatia, a retired Judge as

Chairman and two other members, but the Chairman

and the members resigned within a short time. On

January 5, 1952, two notifications were made. By one

notification a new Tribunal was constituted to be called

the All India Industrial Tribunal (Bank Disputes).

The Chairman of this Tribunal was Shri Panchapagesa

Sastry, ·another retired Judge. The other two members

were Shri M. L. Tannan and Shri V. L. D'Souza. Here­

after we shall refer to this Tribunal as the Sastry

Tribunal. By another notification of the same date

the Central Government referred the matters speci­

fied

in sch. II of the notification,

which: were the

matters in dispute between the employers and work­

men of the banking companies specified in sch. I, to

the Tribunal for. adjudication. We need not set out

here the matters specified in sch. II, but shall presently

refer to those items only with which we are concerned

in theRe appeals. The Sastry Tribunal made its award

which was published on April 20, 1953. This award

eame up for consideration of a Special Bench of the

Labour Appellate Tribunal on appeals preferred by

the employees of banks all over India and of the

Banks themselves. The decision of the Labour Appel­

late Tribunal was given on April28, 1954. Some of the

Banks moved this Court for special leave to appeal

from the decision dated April 28, 1954, of the Labour

Appellate Tribunal and such leave was granted ori

October 4, 1954. The same order which granted special

leave also

directed that the appeals be copsolidated.

These seven appeals on behalf of different Banks

against their workmen have been filed in pursuance of

the aforesaid leave granted by this

Court.

In Civil Appeal No. 56 of 1957 in which the Imperial

Bank (now substituted as the State Bank of India) is

S.C.R. SUPREME COURT REPORTS 205

the appellant, a preliminary objection has been taken

1

959

on behalf of the respondent workmen of the Bank to Tit c nt al

8

flk

the effect that the appeal is incompetent. We shall e oil:dia a

presently consider this preliminary objection, but v.

before we do so, it will be convenient to indicate the Thlir Worllmen

principal questions which arise for consideration in

these seven appeals. s.

1

'· Das r.

These questions have been formulated und er four

heads:

(1) what is the scope of item 5 of schedule II of

the notification dated January 5, 1952, the item

being expressed in

the following

words-" Bonus,

including

the qualifications for eligibility

and method

of payment";

(2) does s. 10 of the Banking Companies Act, 1949

(prior to

its amendment by Act 95 of 1956) prohibit

the grant of bonus to Bank employees;

(3) whether

an industrial tribunal is enti~ led in law

to compel Banks to disclose .. secret reserves " and

"other necessary provisions" made by them, for the

purpose of adjudication ;

(4) whether the Full Bench formula laid down by

the Labour Appellate Tribunal in Mill Owners'

Association, Bombay v. Rashtriya Mill Mazdoor

Sangh, Bmnbay (

1

)

for the payment of bonus to

employees in the textile industry is applicable to

Banks.

Of the aforesaid four questions, the first t,wo directly

fall for decision in

the appeals before us. For reasons

which

we shall presently give, we consider that ques­

tions

(3) and (4) do not call for

any decision at tho

present stage.

We shall now state how the

Sastry Trjbunal and the

Labour Appellate Tribunal dealt with the first two

questions. We have stated that item 5 of sch. II of the

notification dated January 5, 1952, referred to the

claim of bonus by Bank employees. We have also

quoted earlier the words. in which item 5 was expressed.

The Banks contended before the Sastry Tribunal that

the ~ispute referred to in item 5 did not contemp late

the determination of the quantum of bonus payable by

(1) [1952] L.A.C. 433·

206 SUPREME COURT REPORTS [1960(1)]

any of the Banks for any particular year, but the item

The Central Batik merely referred to the question of bonus in general

of India with special reference to qualifications for eligibility and

1959

v. method of payment. This contention of the Banks was

Their Workmen upheld by the Sastry Tribunal which said:

S. I<. Das ].

"The primary duty is on th!;l Government to be

satisfied subjectively whether a reference should be

made or not. In the circumstances aforesaid, we

hesitate to hold that we are concerned with the

question of quantum of benefits for particular banks

and for particular years in the past in the light of

profits of such banks during those periods. We

ruled out a request that evidence should be taken for

determination of the question. It may yet be open

to the concerned parties where there is a real

grievance to approach the Government to get a

suitable -reference for

the future as well as for the

account

ye~rs 1949, 1950 and 1951."

What the Sastry Tribunal did was to consider the

question whether there could be a bonus scheme for

future years and whether it should be made to apply

retrospectively to all Banks and for all years; and as

to the guiding principles for the ascertainment of

bonus, the Sa.stry Tribunal suggested certain lines of

approach and recommended them for the earnest

consideration of both the parties. The Labour Appel­

late Tribunal, however, came to a different conclusion

_ with regard to the scope of it~m 5 and held that it

embraced the claims to bonus for the relevant years.

Accordingly,

it said:- " It follows, therefore, that the claims to bonus .

made for the relevent years have not yet been

adjudicated upon and that the terms of the reference

have not been exhausted. The ad hoc Tribunal to

which this reference was made is no longer in exist­

ence and some other Tribunal will have to decide

what bonus, if auy, is payable by the Banks to its

employees for the .relevant years. "

The correctness of this part of the judgment of the

Labour Appellate Tribunal has been seriously contest.

ed before us

on behalf of the appellants and this is the

first question which we have to decide.

S.C.R. SUPREME COURT RE.PORTS 207

On the second question, namely A.S to the interpret- r959

ation of s. 10 of the Banking Companies Act, 1949 Th c alB nA

(prior to its amendment in 1950) there was again a e oJ~~dia a

difference .between the Sastry Tribunal and the Labour v.

Appellate Tribunal. The Chairman of the Sastry Their Workmen

Tribunal was of the view that s. 10 of the Banking

Companies Act, 1949, did not stand in the way of a s. K. Das .J.

grant of bonus to Bank employees, but the other

members

of the Sastry Tribunal apparently felt that

the matter was not free from doubt and the Tribunal as a. whole recommended to Government that the

alleged legal difficulty by reason of s. 10 of the Bank-

ing Companies Act, 1949, should be removed by suit-

able legislation. Perhaps, it was as a result of this

recommendation

that s.

10 of the Banking Companies

Act, 1949, was amended in 1956. The Labour Appellate

Tribunal, however,

by

a majority of 2 to 1 came to the

conclusion that s. 10 was no bar to a claim for bonus

by Bank employees. One member of the Appellate

Tribunal, Shri D.E. Reuben, recorded a note of dissent

in which he held that by reason of s. 10 of the Bank-

ing Companies Act, 1949, as it stood at the relevant

time,

the Industrial

Courts could not grant bonus to

the workmen of a Bank. On behalf of the appellants

it has been contended that the view of the majority of

the Labour Appellate Tribunal with regard to s. 10 of

the Banking Companies Act, 1949, is not correot. This

is

the second question for our decision. As we are not

deciding the other two questions, no useful purpose

will be served by setting out the findings of the

Tribunals below with regard to them.

We now proceed to consider

the preliminary

objec­

tion taken on behalf of the respondent workmen in

Civil Appeal No. 56 of 1957. Some more facts must

be stated with reference

to this preliminary objection. After the decision of the Labour Appellate Tribunal

and before

it could be implemented, several Banks

appealed to Governme

nt to set aside the decision of

the Labour Appellate Tribunal as they felt that the

total burden imposed by it was entirely beyond their

capacity to bear. Therefore,

the Reserve Bank of

India., under directions of the

Central Government,

I959

The Central Bank

qf l?Sdia

v.

Their Workmen

S. K.Das ].

208 SUPREME COURT REPORTS [1960(1)]

carried out a rapid survey of the possible effect of the

decision of the Labour Appellate Tribunal on the

working of a few typical banks which were parties to

the dispute. On a study of the evidence so collected,

the Central Government concluded that it was

inexpedient .on public grounds

to give effect to parts of

the decision.

Consequently, tho Labour Appellate

Tribunal's decision was modified by them by an order

dated August 24, 1954. This decision was debated in

Parliament and ultimately Government announced

their. decision to appoint a Commission (known as

Bank Award Commission) to help them assess more

fully the effect of the award. The Commission sub­

mitted its report on July 25, 1955, and with regard to

the claim for bonus it said :

" In regard to the claim for bonus, no general ·

principles can be invoked and the case of each

individual bank would have to be considered on its

merits. Since this dispute has not been resolved so

far,

it is likely that it may have to be dealt

with in

the near future. The claim for bonus is not within

the terms of my reference and I do not wish to

trespass in the area of this dispute. I am, however,

referring incidentally

to this aspect of the matter

because the fixation of a wage structure is likely to

have an effect on employees' claim for

bonus." (see

paragraph 51 at page 34 of the Commission's report).

Thereafter,

the Industrial Disputes (Banking

Com­

panies) Decision Act, 1955 (XLI of 1955) was passed to

provide for the modification of the decision of the

Labour Appellate Tribunal in accordance with the

recommendations of the Commission. This Act in so

far as it is relevant for our purpose said ins. 3 thereof

that the decision of the Labour Appellate Tribunal

shall have effect as if the modifications recommended

ih Ch. XI of the report of the Commission dated ,July

25, 1955, had actually been made therein and the appel­

late decision as so modified shall be the decision of the

Appellate Tribunal within the meaning of the InrlnA­

trial Disputes (Appellate Tribunal) Act, 1950 and the

award shall have effect accordingly. It is clear that

the Commission did not make any recommendation in

S.C.R. SUPREME COURT REPORTS 209

respect of the bonus claim and the Industt·ial Disputes 1959

(Banking Companies) Decision Act, 1955, does not -

affect the present appeals; that Act merely gave effect The ~~~r~l· Balik

to the modifications recommended by the Commission,

0 11

'a

but did not give the decision of the Labour Appellate Tlleir ~orkmen

Tribunal any higher sancf:.ity as a statutory enactment.

Now,

the preliminary objection taken on behalf of the s. I(. Das J.

respondent workmen is that the decision of the

Labour Appellate

Tribunal merely says that the

claims to bonus for the relevant years have not been.

adjudicated and therefore

the terms of the reference have not been fully worked out; it is contended that

this means that some other Tribunal will have to

decido

what bonus, if any,

is payable by the Banks

to

their employees, and no such Tribunal having been

so long appointed, there is

at the present stage no

enforceable award within the meaning of the Indus-

trial Disputes Act 1947, and·the appeal accordingly is

premature

and incompetent. We are unable to accept this contention as correct. On behalf of the a ppcllant

Banks it has been submitted that tho Labour Appellate

Tribunal misconceived the scope of it-em 5 of sch. II

of the relevant notification and on that misconception

it came to the conclusion t,hat the ter.Qls of reference

had not been exhausted, a conclusion the correctness

of which the appellants are entitled to challenge by

way of appeal or else they will be bound by the

• decision that the reference is still pending and can be

worked

out by another Tribunal. This submission we

think

is correct. In the Industrial Disputes Act, 1947,

an 'award' 1n:eans an interin1 or final determination by

an. Industrial Tribunal of any industrial dispute or of

any question relating thereto. The dispute between

the parties in the present case related ·to bonus: on

behalf

of the banks it

was contended (a) that item 5

of sch.

II did not include claims of bonus for

parti­

cular years in respect of particular banks but related

to a general scheme

of bonus including qualifications

for eligibility

and method of payment,

and (b) that

even a general scheme of bonus could not, be made by

reason

of the provisions of

s. 10 of the Banking

27

I959

The Centml Bank

of India

v.

'Their Workmen

S. K. Das ],

210 SUPREME COURT REPORTS [1960(1))

Companies Act, 1949; on bcha.lf of the Bank employe~

es it was contended that (a) item 5 included claims for

bonus for particular years in respect of particular

hanks and (b) s. lO of the Banking Companies Act,

1949,

did not stand in the

way of such claims. These

rival contentions led to an industrial dispute which

the Labour Appellate Tribunal determined by its

decision dated April 28, 1954. 'Ve do not see why

that decision iK not an 'award' within .the meaning of

the Industria] Disputes Act, 194 7. In our opinion, in

no sense can the appeals be said to be premature or

incompetent. It is worthy of note that these appeals

have been _filed in pursuance of special leave granted

by this Court under Art. 136 of the Constitution. That

Article enables this Court to grant, in its discretion,

special leave

to appeal from any judgment, decree,

determination, sentence or order in any cause or

matter passed or made by any

C<?urt or tribunal in the

territf9ry of India. The powers of this Conrt under

the said Article are wide and are subject to such

considerations only as this Court has laid down for

itself for

the exercise of its discretion. The argument

before us is not that these appeals do not come within

those considerations

and special leave should not have

been granted; but the argument is that they are

incompetent for. other reasons. Even those reasons,

we

think,

3re not sound. Learned counsel for the

respondent workmen has cited before us some deci­

sions,

one

Australian (In re the Judiciary Act8, etc. (

1

));

and another American (David :Muskrat v. United

States

(2))

in support of his contention. We consider,

however,

that the point is so clear

and beyond doubt

that it is unnecessary to embark on an examination

of decisions which relate to entirely difl"erent facts.

There is, in our opinion, no substance in the prelimi­

nary objection which must be overruled.

Now, we proceed to consider

the true scope of item

5 of sch. 11 of the notification dated January 5, 1952.

Schedule

II of the notification dated June 13, 1949,

by which a reference was made to the

Sen Tribunal

contained an identical item which was item 6. That

(I) (1921) 29 C.L.R. 257· (2) (1910} 219 U.S. 346 ; 55 L. Ed. 2<j6.

S.C.R. SUPREME COURT REPORTS 211

item was expressed exactly in the samu words as

1

959

item 5 of sch. II of the notification under our eon-

1

.h

c-

8

k

'd' . Th S T '1 l .J lt 'th tl f f nllral an .. ,

s1 erat10n. e en n mna. uea Wl 1e scope o of hldia

that item and said that a large number of demands v.

had been made by the unionr:; for bonus for· particulat' Tlleir Workmen

years in respect of particular banks. The SCiu

Tribunal then said :- s. K. Das J.

"\Ve have been unable to deal with such indivi­

dual demands, except such matters as were pending

in the different States at the time of our appointment

and have been specifically referred to us under the

pl'ovisions of s. 5 of Ordinance VI of 1949 or Act

LIV of 1949. Apart ft·om the great deal of time

that we should have to spend on such questions,

had we to hear and dispose of every application for

a particular yeat' in respect of a. particular bank,

we beheve

that the kind of

disputes regarding bonus

that have been referred to us are disputes of a

general nature, e.g., questions regarding 'qualifica­

tions for eligibility and method of payment'."

Thus it is clear that the Sen Tribunal also understood

the item as a reference of a dispute of a wmeral nature

which did

not include

demands for bonus for parti­

cular years in respect of particular ba.nks. The

Central Government which made the reference to the

Sastry Tribunal by the notification dated January 5,

1952, had before it the intet·pretation which the Sen

Tribunal had made in respect of the self-same item.

Having that interpretation before it, the Central

Government used ident.ieal ]angun.ge to express the

dispute which it referred to the Sastry Tribunal in

i tern 5 of sch. II. This, in our opinion, clearly shows

that item 5 of sch. II of the notitkation relating to

the Sastry Tribunal has the Harne meaning as item 6

of sch. II of the notification relating to the Sen Tribu­

nal as interpreted by that Tribunal. The various

items in sch. II of the relevant. notification are not

items in legislati~e lists, but are items in an admini­

strative order and it would not be right to apply the

same canon of interpretation to the items in an ad­

ministrative order as is applied to items in a legislative

list.

It is worthy of note that some of the items in

212 SUPREME COURT REPORTS [1960(1)]

I959 the .Sen reference were modified when the subsequent

.. reference was made to Sastry Tribunal. Item 38 of

The Central Bank the Sen reference read as follows :-

of India "In what manner and to what extent do the

Their ;;;~rkmen decisions of the Tribunal require modification in the

case of employees of banks in liquidation or

moratorium ?'' S. K. Das ].

This item was dealt with by the Sen Tribunal at

pp. 157 to 160 of its award and it pointed out certain

defects in the wording of the item. When a similar

item wss referred to the Sastry Tribunal, necessary

changes were

made in the

wDrding of the item to

remove the defects pointed out by the Sen Tribunal

(see item II of sch. II of the notification relating to the

Sastry Tribunal). Another example of a similar charac­

ter is item 5 of sch. II of the Sen reference, an item

which related to "other allowances" payable to bank

employees including conveyance allowance for clerks

for journeys to and from the clearing house. A point

taken before the Sen Tribunal was that by conveyance

allowance was meant an allowance for joyrney,s to and

from the place of work. The Sen Tribunal confineu

conveyance allowance to expenditure incurred for

going out on the Bank's work \Yhile the Bank em­

ployee was

on duty. The scope of the

reference was

made clearer by changing the phraseology of the 1tem

when the subsequent reference to the Sastry Tdlmnal

was made ; see in this connection the phraseology of

item 28 of sch. II of the notification relating to the

Sastry Tribunal. It ·would thus appeat' that we have

two kinds. of examples: (1) in some cases the phrase­

ology of the items is changed when the , subsequent

reference is made taking into consideration the cri­

ticisms

made by the

Sen Tribuna-l and (2) there are

other cases where no change in phraseology i~ made

even though the Sen Tribunal has understood a

particular item in a particular sense. ,Judged in the

light of these examples, it seems to'us that the true

scope of item 5 of sch. II is what the Sastry

Tribunal understood it to be, namelv, whether bonus

was payable to Bank employees ~nd, if so, what

were the qualifications for eligibility and method of

S.C.R. SUPREME COURT REPORTS 213

payment. The reference in item 5 of schedule II did

not include within itself claims of bonus for par~icular

years in respect of particular banks. The Sastry

Tribunal further pointed out that there ·wcte specific

references with regard to the rlnims for bonus in

respect of some Banl\.s. Those refel'ences did not,

however, come within item 5 of sch. ll. If they did,

it was completely nnnecessn.ry to make sep::~.ra ~c and

specific references with regartl to such c:ln.im~. Item 5

was not the only item which raised a g~n <."ral question.

'1

1

here were many other items of a simii:.H nn.ture, such

as items 3, 6, 9 etc.

The J~abour Appellate Tribunal itself rcn.lised the

difficulty of deciding under itrm 5 of sdl. II the pll.rti­

cula.r cla.ims for bon ns for part iru tar years. Tho Sasky

Trib1vml pointed out that thrr<' wore 129 hn.nks before

it. and no evidence was gi\en to substn.nti atc the claims

for bonus for particuhtl' Y~"~"l. rs in resprct ()f pn.rticnlar

banks. The Sastry Tribuna.] sairl :-

"We cannot assume that for a.U these 129 bn.nks

before us and for all those years there were livo

disputes about this nw.ttcr w·h i0h the Govcrnm<>.nt

ha.d consiJ. ercd tlt and vroper to he rl'fc:rred to Hs

after n.pplying th<'ir minds to the problem whether

such :.1 reference should he liHtde to an industrial

tribunal. There i!:> al:::o this n.dclitional circumstance

that there ha.d ht~cn two speoial n.nd specific

referenc·cs

by

the Go,·ernment in reln.t.ion to t.h(l

p ~.t.yrue nt of l>onns by t.he Cc>ntml Bank of India, the

Alln.ha.bn.d Rank a.ud t lte ·u n ite<l Com m(':rcial Bank

for the ye:t.n; 1050 antl 195!. )foreover, oven apar't

fro~u the gont-1'<1.1 cb;wn.ct(~J· of the v~~riom; heads of

clisputes in t.he refcn~nre to us, individua.l cn.sc.<J

pert.aining o11ly to some b<tnks wherever the GovC'rn­

ment want.ecl to make such a ref<'rcnce have been

particuln.ris€'d ... 'tnd set out, <>.g., absorption of Bharat

Bank emplvyees-itcm 31 in se;hcdnle H of the

notification .... It may be mention~d that. the claim

before ns in connection with the bonus payable

hy the Impnrial nank of India for the years 1948,

194!>, 1950 and 1951 would involve a payment of

very nearly a crore of rupees over and abo\Te the

1959

The Centml l3azlk

of /1zdia

v.

Their Workmen

S. 1\'. Da< ].

I959

The Ce·ntral Bank

of Tndia

v.

Their Workmen

S. K. Das ].

214 SUPREME COURT REPORTS [1960(1)]

payments already made for these yean;. It is not

possible for us to affirm what the attitude of the

Government would have been on the question of

referring a dispute of this character to us under s. 10

of the Industrial Disputes Act, 194 7. "

Faced with the difficulty referred to by the Sastry

Tribunal, the Labour Appellate :rribunal also Raid that

it could not deal with itHlividnal claims for bonus in

the present proceedings. The Labour Appellate

Tribunal said that it would be acting in vacuo if it

attempted to decide individual elaims for bonus with­

out having before it specific cases of bonus, particularly

when there were no materials on the record on which

the Tribunal could make a decision as to the quantum

of bonus payable by a particular bank for a particular

year. This difficulty instead of leading the Labour

Appellate Tribunal to give a proper interpretation to

the true scope of item 5 of sch. II led it to the conclu­

sion that item 5 of sch. II embraced 'vithin itself

individual claims for bonus for particular years and

those claims must be dealt with by another tribunal

on the footing that the reference had not been comple­

tely workAd out. We consider thiR tn he a complete

non sequitur. Item 5 of sch. H must be interpreted as

an item in an order of reference in the context in

which the item has been used, the \vords in 'vhich it

-has been expressed and against the background in

which the dispute has arisen. The practical difficulty

which may arise· in deciding individual claims for

bonus in respect of particular banks is merely a

circumstance to be taken into consideration. It

cannot be decisive on the question of determining the

true scope and efl'eet of item 5 of seh. II.

On a consideration of all relevant circumstances and

having regard to the context and the words in whir.h

item 5 of sch. II ha~ been expressed, we are of tl~c

view thn,t the Labour Appellate Tribunal was wrong

in its conclusion that the reference had not been

worked out and that individual claims for bonus in

respect of particular banks must be determined by

another tribunal on the basis of the reference made

in 1952.

S.C.R. SUPREME COURT REPORTS 215

We now

proceed to a

con~ideration of tho more

important question, aH to the effect of 1:>. 10 of the

Banking Companies Act, 1H49. \Ve have stated earlier

that s. 10 of·the Ba.nking Companies Act, 1949, herein­

after called the Bimking Act, wal:) amended in 1956.

We shall first rea.d the unamended l-3CCtion, the

provisions '"hereof were in force at the time r<.>levaut..

to these appeals. \iVe shall later rca.d also the ;unended

sect.iou in connection with ttn a.rgument pre~cnted ou

behalf of the Bank employees tha.t the Banking

Companies (Amendment) Aet, 1956 (XCV of 1956) w<ts

not remedial in nature but was declaratory of the law

as it always was.

Section 10 of the Banking Act prior to its amend­

ment in 1956, was in these terms-

" S. 10. (1) No banking Company-

(a) shall employ or be managed by a managing

agent or,

(b) shall employ any persou-

(i) who is or n.t any time has been adjudicated

insolvent, or has· suspended payment or ha,s

compounded with his crt\ditors, or who is or ha~

been convicted bv a criminal court of an offence

involving moral t~urpitude ; or

(ii) whose remuneration or pn.rt of wtwse remu­

neration ta:kes the form of commission or of a share

in the profits of the company ; or

(iii) whose remuneration is, tt<;cording to the

normal standards prevailing in banking business, on

a scale disproportionate to the resource~ of the

Company ; or

(t;} shall be UHctged by c:wy person:-

(i) who is ~1 director of any other company, not

being a subsidiary company of the banking company;

or

(ii} who i!> ongaged in any other bu:sines:s or

vocation ;

or

.

, (iii) who has a contract with the company for

1ts management for a period exceeding· five years at

any one time :

1959

The Cc11tral IJa11k

£'] ]Iulie'

v.

Their Wo rkmen

S. 1\. Vas J.

I959

The Ce11tral Bank

of b1dia

v.

Their Workmen

S. K. Das ].

216 SUPREME COURT REPORTS [1960(1)]

Provided that the said period of five years shall

in relation to contracts subsisting on the 1st day of

July, 1944, be computed from that date:

Provided further that any contra.ct with the

company for its management may be renewed or

extended for a further period not exceeding five

vears at a time if and so often as the directors so

decide.

(2) If any question arises in any particular case

whether the remuneration is, according to the

normal standards prevailing in banking business, on

a scale disproportionate to the resources of the

company for the purpose of sub-clause (iii) of

clause (b) of sub-section (I), the decision of the

Heserve Bank thereon shall be final for all

purposes. "

Before we proceed to a consideration of the construc­

tion of the section, a, little history may not be out of

place. The Companies (Amendment) Act, 1936

introduced a new Part XA in the Indian Companies

Act, 1913 (VII of 1913). Part XA conhtined certain

special provisions applicable to banking companies

only. The section with whieh we are concerned was

s. 277HH, and that scetion was introduced by an

amending Act of 1944. lt wa.s the precursor of s. 10

of the Banking Act and it may, perhaps, be advisable

to read s. 277HH in~so fitr as it is relevant for our

purpose: •

'' 277HH. No ha.nking company ...... shall, after

the expiry of two years from the commencement of

the Indian Companies (Amendment) Act, 1944,

em ploy or be managed by a mana.ging agent, or any

person whose rcmun('ration or part of whose

remuneration takes the form of commission or a

share in the profits of the company, or any person

having a contract with the company for its manage­

ment for a period exceeding five years at any one

time;

Provided that the period of five years shall, for

the purposes of this section, be computed from the

date on which this section comes into force;

S.C.R. SUPREME COURT REPORTS 217

Provided further that any such contract may be

be renewed

or extended for

a further period not

ex~eeding .five years at a time if and so often as the

directors think fit."

The Central Bank

of India

Obviously, the most undesirable feature in the structure

and management of banking C<?mpanies which the

section tried to remedy was the appointment of

managing directors or lll<tnagers on. long term con­

tracts on payment of remuneration by commission or

a share in the profits. However, the section was not

confined t.o a ry~anaging agent or manager only, though

by a refe"rence to the statement of objoct,s and reasons

in relation to the amendment of 1944 it was suggested

on behalf of the respondents that the section waR so

confined. The statement

of

objects and reasor~s is not

admissible, however, for construing the section ; far less

can it control the actual words used. ~rhe section in

express terms said that ' uo bn,nking company . . . .

shall employ

any person whose remuneration or part

of whose remuneration takes the form of . . .

a sh:ue

in the profits of the company'.

Then, in 1949 came the Banking Act. As its long

title and preamble indicate, it is an Act to consolidate

and amend the law relating to banking companies.-It

repealed the whole of Part XA of the Indian Companies

Act, 1913 including s. 277HH referred to above, hut

s. 2 said:

" S. 2. The provisions of this Act shall be in

addition to, and not, save as hereinafter express

ly

provided, in derogation of the Indian Companies

Act, 1913,

and any other law for the time being in

force."

The Indian Companies Act, 1913 itse lf stood repealed

by the Inc;lian Companies Act, 1956 (I of 1956).

We now come back to s. 10, the proper interpretation

of which is the immediate problem before us. Shorn

of all such details as are unneces sary for onr purposP-,

the section says that no banking company shall employ

any llerson, whose remuneration or part of whose

remuneration takes the form of a share in the profits

of

the company. The section opens with a negative,

28

v.

Their Worlmren

S.I\. Das ].

I959

The Central Bank

of India

v.

Their Worlimen

S.K. Das J.

218 SUPREME COURT REPORTS [1960(l)J

and says that no banking company shall employ any

person ; the expression ' any person ' is followed by the

adjectival clause descriptive of the person who shall

not be employed. The adjectival clause says that the

person, who shall not be employed, is one whose remu­

neration or part of whose remuneration takes.the form

of a share in the profits of the company. Two questions

at once confront us : (1) is 'bonus' remuneration; and

(2) is it a share in the profits of the company. The

argument on behalf of the appellant Banks is that

'bonus, as awarded by Industrial Courts is remunera­

tion within the meaning of s. 10 and it is also a share

in profits; therefore~ the express provisions of s. 10

read with s. 2 of the Banking Act override the pro­

visions of the Industrial Disputes Act, 194 7 so far as

banking companies are concerned, and prohibit the

award of bonus to employees of Banks. On behalf of

the Bank employees the argument is that bonus as

awarded by Industrial Courts is not 'remuneration'

within the meaning of s. 10 of the Banking Act, nor iS'

it a share in profits in its true nature. The argument

on both sides hinges on the two key expressions :

'remuneration' and' share in profits'. The meaning

of these expressions we shall consider in some detail.

But it is convenient at this stage to get rid of some

minor points.

Section 10 in its operative part says that' no bank­

ing company shall employ any person etc.' The

amendment of 1956 says that 'no banking company

shall employ or continue the employment of any person'.

The question has been mooted before us if the expres­

sion 'shall employ ' means and includes, prior to the

amendment of 1956, 'shall continue the employment

of'. We think it does ; otherwise the very purpose of

the section is defeated. Take, for example, the case of

an insolvent. The section says that no banking com­

pany shall employ any person who is or at any time

has been adjudicated insolvent. Suppose that at the

time the bank employs a person, he has not incurred

any of the disqualifications mentioned ins. 10; but

subsequently, there is an order of adjudication against

him and he is adjudicated an insolvent. The section

S.C.R. SUPREME COURT REPORTS 219

obviously means

that such a person can no longer be

employed

by the bank. If subsequent disqualification

is not within the mischief of the section, then the very

purpose

of the section which must be the safety and

well-being of the bank will be rendered nugatory. We

must, therefore, hold

that the expression 'shall employ

a

person' ins.

10 means and includes 'shall have in

employment' and in this respect the amendment of

1956 merely makes clear what was already mea.nt by

the section.

We may also dispose of here au argument based on

s. 2. When an industrial dispute as to bonus between

an employer and his workmen is referred to a tribunal

for adjudication,

the tribunal has the power to resolve

the dispute by an award. Such an award may grant

bonus to workmen, if certain conditions are fulfilled.

The argument before us is that the provisions of the

Banking Act are not to be interpreted in derogation of

the provisions of the Industrial Disputes Act, 1947, but

in addition thereto. This argument, however, ignores an essential qualification embodied in s. 2-na.mely,

the qualification in the clause 'save as hereinafter ex­

pressly provided'. If s. 10 expressly provides that no

banking company shall employ a person whose remu­

neration or part of whose remuneration takes the form

of a share in profits, and ' b<;~nus' is both remuneration

:;tnd a share in profits, then s. 2 can be of no assistance

to the respondents. The express provisions of s. 10

must then override any other law for the time being

in force, so far as banking companies are concerned.

This brings us back to

the two key expressions

'remuneration' and' share in profits'. We

take the

expression ' remuneration ' first. The dictionary mean­

ing of the word is 'reward, recompense, pay for service

rendered' (see the Concise Oxford Dictionary ); and

that is the ordinary meaning of the word. The word

·Was judicially noticed in a. very ea rly decision (R. v.

Postmaster General (1); and on appeal (

9

); Blackburn, J .,

said: "I think the word ' remuneration ' ......... means

a

quid pro quo. If a man gives his services,

whatever

consideration he gets for giving his services seems to

(t) (1876) 1 Q.B.D. 658: (2) (1878) 3 Q.B.D. 428.

1959

The Central Bank

of !tulia

v.

Their Workmen

S.K. DasJ.

I959

The Central Bank

of India

v.

Their Workmen

S.K. Das f.

220 SUP-REME COURT REPORTS [1960(1)]

me a remuneration for them. Consequently, I think if

a person was in receipt of a payment, or in receipt of a

percentage,

or any kind of payment which would not

be an actual money payment, the amount he would

receive

annually in respect of this would be

remunera­

tion." The word was again noticed in several English

decisions in connection with s. 13 of the Workmen's

Compensation Act, 1906, which enacted that a work­

man did not include a person employed otherwise than

by way of manual labour whose " remuneration,

exceeded£ 50; and in Skiles v. Blue Anchor Line, Ltd.(l)

it was observed that remuneration was not the· ~ame

thing as salary or cash payment by the employer but

involved the same consid~rations as earnings. This

was a case in which the purser of a ship received, in

addition to his regular wages, at the end of each

voyage, at a fixed rate per month, a bonus or extra

wages ; he also made a profit by the sale on board ship

of whisky in nips. The majority of Judges held that

both the bonus and the profit on the whisky ought to

be taken into account in estimating the purser's remu­

neration. In an earlier decision, Penn v. Spiers and

Pond, Limited e), the gratuities and tips which the

deceased workmen, employed as a waiter on a restau­

rant car, received from passengers using the restaurant

car were held to be 'earnings in the employment of the

same employer'. The decision in Penn v. Spiers anV,

Pond, Limited (supra) (2) was approved by the House of

Lords in Great Western Railway v. Helps (a). In his

speech

Lord Dunedin

repell~d the argument addressed

for the appellants of that case that the meaning of the

expression "earnings" should be limited to what the

workman gets from direct contract from his employer

by saying that the simple answer to the argument was

that the statute did not say so; it used the general

term 'earnings' (in our case the general term 'remu­

neration') instead of the term "wages" or the ex­

pression" what he gets from his employer". It is. we

think, unnecessary to multiply decisions. In a recent

A1.1Stralian decision, Corutlly v. Victorian Railways

(I} [19U] I K.B. 360, (~) [I9o8] I K.H. 766.

(3) [1918] A.C. 141.

S.C.R. SOPREME COURT REPOR1'S 221

Oommissione1·s (1) the matter has been tersely put as

follows: "It (the word remlineration) should be given

its

natural meaning unless there is reason to do other· wise., This is a salutary rule of· construction and

· should, we think, be adopted in the present case.

Is there anyt.hing in the Banking A ct to give the

word ' remuneration , a restricted meaning? Three

meanings have been canvassed before us.

The widest

meaning for which

the learned Attorney-General

. appearing for some

of the banks has contended is the

natural meaning of the word ' remuneration

' in the

sense of any recompense for services rendered, whether

the payment is voluntary or under ·a legal obligation.

The second meaning, which is intermediate between

the widest and the narrowest, is that it means what is payable un~er any legal obligation, whether under a

contract, statute, or

an award. The narrowest m eaning

for which

Shri N.C. Ch.atterjee, learned counsol.for the

respond ent workmen, has canvassed is that remunera.

tion

in s.

10 of the Banking Act mean.<J contractual

wages, viz.,

what is payable under the terms of the

contract, of employment only. He

has put his argu­

ment in the following way: section 10, when it says

that' no banking company shall employ a person etc.',

refers to

the contractual relationship of employer and

employee created by an

·act of parties, and its purpose

is

to put

a ban on one kind of employment of a person

who is to be paid a particular remuneration under

the

terms of his employment. It is stated

that the prohi·

bition is against

any remuneration in the nature of

profit sharing being fixed under

a contract of service

between

the bank

and its employees and it is contend.

ed that the legislature mad e the prohibition depe ndent

on the terms of employment. It is submitted that the

adjudication of an industrial tribunal in awarding

Lonus does

not create

any obligation by act of parties,

and even if it imports some kind of implied te rm, it is

dehors the contract of employm ent and is the result

of a judicial verdict under the indUI:jtriallaw.

The argument is attractive ·Lut does n ot in our

opinion

stand the

fest of closr. scrutiny. Let UR look 1'1.

(r) (1957) V.R. 466 (also 1957 Australian Law Reports 1097).

I959

1'114 Central Bauk

of India

v.

Their Workmen

S.K.Das].

I959

The Central Ba11k

of India

v.

Their Workmen

S.l(, Das ].

222 SUPREME COURT REPORTS [1960(1)]

little more closely to s. 10 of the Banking Act. It

says inter alia that no banking company shall employ

or be managed by a managing agent or shall employ

a person who is or has been conv.icted by a criminal

court of an offence involving moral turpitude etc; see

cl. (b)(i). It is obvious that when the section says 'shall

employ', it means' shall have in the employment of'.

It is not suggested that the disqualifications mentioned

in cl. (b} (i) refer only to the contract of employment.

If that were so, the section would hardly serve the

purpose for which it must have been meant. We may

take another example which brings out the meaning

of the section even more clearly. Let us suppose that

the Bank employs a manager on a contract of service

which makes no mention of bonus or commission. On

the argument of learned counsel for the respondents,

s. 10 does not stand in the way of the bank to pay

voluntarily and ex gratia any amount to the manager

by way of commission or bonus, as long as the

contract of service docs not contain any term as to

such payment. This, in our opinion, makes nonsense

of the section. Learned counsel for the respondents

had himself suggested in the course of his arguments

that having regard to the legislative history of the

enactment, the section was intended to prevent banks

from having managers, by whatever name they might

be called, who were paid by commission or a share in

the profits; and yet the Bank can make such payment

if it adopts the subterfuge of not saying anything

about such payment in the contract of service. "

There are, in our view, clear indications in the sec­

tion itself that the word 'remuneration' has been

used in the widest sense. Firstly, cl. (b) (iii) also uses

the word remuneration. It says-" whose remunera·

tion is, according to normal standards prevailing in

banking business, on a scale disproportionate to the

resources of the company ". Sub-section (2)-un­

amended-sta'tes inte1· alia that if any question arises

in any particular case whethel' the remuneration is

according to the normal standards prevailing in banking

business on a scale disproportionate to the resources of

the company etc., ~the decision of the Reserve Bank

S.C.R. SUPREME COUitT REPORTS 223

shall

be final. It is clear that incl. (b) (iii) of sub-s. (1)

and

a\so in sub-s. (2), the word remuneration has been

used in

the widest sense. We may invite attention

in this connection to r. 5 of the Banking Companies

Rules,

1949 (which are statutory rules) which requires

a banking company to send periodically to the prin­

cipal office

of the Reserve Bank a statement in

E'orm I

showing

the remuneration paid during the previous

calendar

year to officers of the company etc. Form I

has a footnote which says :

" Remuneration includes

salary, house allowance, dearness allowance, . . . .

bonus . . . fees

and allowances to directors

etc." We

do not say that a statutory rule can enlarge the mean­

ing of s. 10; if a rule goes beyond what the section

contemplates,

the rule must yield to the statute. We

have, however, pointed

out earlier that s.lO itself uses

the word' remuneration' in the widest sense, and r. 5

and

E'orm I are to that extent in consonance with the

section.

Shri Phadke appearing for some of the respondents

has urged a ::;omewhat different contention. He has

argued that assuming that the word ' remuneration '

has been used in the· widest sense in s. 10 and there­

fore includes bonus, r. 5 and Form I, show that pay­

ment of bonus is permissible: this is intelligible only on

the footing that the provisions of s. 10 are restricted in

their application to such employees of a ban~ing

company as are employed in a managerial or admini­

strative capacity; they do not apply to 'workmen ' as

defined in the Industrial Disputes Act, 1947. We find

it difficult to accept this argument. The section says

that 'no banking company shall employ any person',

and we do not see how the expression ' any person '

can be restricted to those on the managerial or

administrative staff only. We cannot arbitrarily cut

down the amplitude of an expression used by the

legislature.

It is necessary to refer here to the decision in

Wmttesley v. Regent St?'ee.t Flo1'ida Restaurant (1) on

which learned counsel for the respondent workmen has

placed great reliance. It is necessary to refer to the

(I) {J95ll2 K.B. 277·

I959

The CenJya.l Bank

of India

v.

Their Workmen

S.K. Das ].

224 SUPREME COURT REPORTS [1960(1)]

.1959 facts of the case, which are stated in the headnote.

The c tral Bank The waiters employed at an unlicensed restaurant, by

otinaia an oral agreement ap:10ngst themselves and between

v. them and their employers, paid into a pool all the tips

Their worhmen received l}y them during the course of their employ­

ment. The tips were placed in a locked box, and the

s.K. Das!]. contents were distributed weekly in shares calculated

in accordance with the agreement. The total weekly

sum received by each waiter including the share of the

tips exceeded, but-the weekly wage paid by the

employers was itself less than, the minimum wage

prescribed by the Wages Regulations (Unlicensed

Place of Refreshment) Order, 1949. The proprietors

of the restaurant were prosecuted for failing to pay the

minimum wage. It was held that the sums paid from

the pool were not remuneratioiJ., and the earlier deci­

sions relating to the calculation of the earnings of a

waiter in connection with the Workmen's Compensa­

tion Acts were distinguished. Lord Goddard, C.J.,

thus explained the distinction:

"The amount of a man's earnings in an employ­

ment and the amount of remuneration which his

employer pays to him are not necessarily the same

thing. The section cr~ating the offence, and under

which the proceedings are taken, is s. 9, sub-s. 2, of

the Catering Wages Act, 1943. That section provides

that, if an employer fails to pay to a worker to

whom a wages regulation order applies remuneration

not less than-the statutory minimum remuneration

clear of all deductions, he shall be guilty of an

offence. Section 10 contains somewhat elaborate

provisions for

the computation of remuneration.

Not only the short title but the structure of the Act

-setting up a wages commission, permitting the

establishment of wages boards, and providing for

wage regulation

orders-clearly indicates that it is

with wages

that the Act is intended to deal. The

use of the word "remuneration" in both s. 9 and s.

10 and, indeed, in other sections, is probably because

there are certain deductions from wages which are

authorized by s. 10, so that remuneration is an apt

word to indicate the net payment.

S.O.R. SUPREME QOURT REPORTS 225

What we have to decide is whether, when a

1

959

waiter, receives a payment from the tronc in Tu cn~t al Bank

the manner found in th~ case, that sum can be of I:dia

regarded as remuneration paid to him by, or as v.

remuneration obtained by him in cash from, his Thti, Workmen

employer. In our opinion, when a customer gives a

tip to a waiter the money becomes the property of

5

· K. Da .~ f.

the latter."

We think that the decision itself shows that the word

'remuneration' must be given its meaning with refer­

ence to the context in which the word occurs in the

statute. In the context of the Catering Wages Act,

1943, it meant the net payment after certain deductions

from wages

paid by the employer;

and in the Work­

men's Compensation Acts, it meant the amount of a

man's earnings in an employment. We have pointed

out that in the Banking Act with which we are con­

cerned, the word ' remtmeration' has been used in the

widest sense. In that sense, it undoubtedly includes

bonus.

We proceed now

to

a consideration of the second

key expression for our purpose, viz., 'takes the form

of a share in the profits of the company '. The con­

ception of industrial bonus (that is, profit bonus claim­

ed by employees and granted amicably, through

conciliation or as a result of an industrial award) has

had a chequered development. In some of the earlier

Bombay decisions of Industrial Adjudicators, it was

held that the grant of bonus was entirely a matter of

grace and not of right; some decisions characterized

bonus· as a gift, a sort of bakshis or pour-boire (see

D.

G. Damle's Labour Adjudications in India. p.

408).

By 1948, however, the conception had crystallised, and

it was judicially recognised that the claim of profit

bonus could not any longer be regarded a.s a.n ex gratia

payment. In _Millowner'.-; Association, Bombay v.

Rashtriya Mill Mazdo01· 8angh Bombay (

1

)

the Full

Bench of the Labour Appellate Tribunal evolved the

formula. for determining the quantum of bonus,

and

the general principles governing the claim of bonus

were &lso laid down. These are: (1) aB both capital

(I) 1950 L.L.j. u1.

I959

The Cetztral Bank

of India

v.

Their Workmen

S. K. Das].

226 SUPREME COUR.T REPORTS [1960(1)]

and labour contribute to the earnings of the industrial

concern, it is fair that labour should derive some

benefit,

if there is a surplus after meeting prior or

necessary charges ; (2) the claim of bonus would only

arise if there should be a residue after making

pro­

vision for (a) prior charges and (b) a fair return on paid

up capital and on reserves employed as working

capital; and (3) bor,us is a temporary satisfaction,

wholly

or in part, of the needs of the employee where

the capacity of the industry varies or is expected to

vary from year to year, so that the industry cannot

afford to pay 'living wages'. The Labour Appellate

Tribunal recognised that where the goal of living wages

had been attained, bonus like profit sharing in the

technical, narrow sense would represent more the cash

incentive to greater efficiency and production. The

conception of the living wage itself is a growing con.

ception, and the goal has been reached in very few

industries,

if any, in this conntry. The general

princi­

ples laid down by the aforesaid Full Bench decision of

the Labour Appellate Tribunal were generally approv.

ed by this Court in Muir Mills Go. Ltd. v. Suti MiU8

Mazdoor Union, Kanpur· (1), and have been fully

considered again and approved in Civil Appeals

Nos. 459 and 460 of 1957 (Associated Cements) in which

judgment was delivered on May 5, 1959.

We

have to consider the expression 'takes the form

of a share in the profits of the company ' in the context

of

the meaning of the word 'bonus' as explained above.

It is necessary t.o state that we are not considering

here the question of production bonus or Puja bonus,

which may not necessarily come out of profits and

these stand on a different footing. There can be now

no doubt, however, that profit bonus, in the industrial

sense in which we now understand it, is a share in the

profits of the company ; it is labour's share of the

contribution which it has made in the earning of the

profits. The two grounds on which it has been con.

ten4ed that bonus is not a. share in the profits are (1)

that it is not a fixed or certain percentage of the

available surplus of profits and (2) it partakes of the

(1) ~195~] I S.C.R. 991,

S.C.R. SUPREME COURT REPORTS 227

nature of a contingent, supplem~ntary wage. These I959

two grounds weighed considerably with the majority Th c -l B k

of members of the Labour Appellate Tribunal who e 0

j~;::ua an

expressed the view that s. 10 of the Banking Act did v.

not stand in the way of granting bonus to bank Their Workmen

employees, because bonus according to them was not

a share in the profits of the company. We do,not s. K.Das f.

think that either of these two grounds is valid. The

first ground arises out of a confusion between the

expression ' takes the form of a share in profits ' and

the expression ' profit sharing ' used in a. narrow,

technicar sense.

It is undoubtedly true that the bonus

formula. does not la.y down

any fixed percentage which

should go

to labour out of the availa.ble surplus. The

share of labour will depend on

a number of circum~

stances; but once the amount which should go to labour

has been determined, it is easy enough to calculate

what proportion it bears to the whole amount of

available' surplus of profits. There is thus no difficulty

in identifying bonus as a share ' in the profits of the

company. It is true that the International Congress

on Profit~sharing held in Paris in 1889 adopted the

definition of 'profit sharing' in the technical, nartow

sense. That definition said that profit sharing was

"an agreement (formal or informal) freely entered

into,

by

which· the employees receive a share, fixed in

advance, of the profits " (see EQ.oyclopa.edia of the

Social Sciences, Seligman and Johnson, Vol. XII, p.487).

But that is not the sense in which bonus has been

understood in our industrial law, and it is worthy of

note that s. 10 of the Banking Act does not use the

technical expression ' profit-sharing ' but the more

general expression ' takes the form of a share in the

profits etc.'. We are unable to hold that this general

expression has a technical meaning in the sense that

the share in profits must be fixed in advance, as in

technical profit-sharing; such a meaning would, with-

out sufficient reason, exclude from its purview

schemes under which the workers

are granted regularly a share in the net profits of industry, but iri which the

share to be distributed among the workers is not fixed

in advance but is decided from time to time on ad 1wc

1

959

1'11c Ce11tral Bar1k

of India

v.

Their W orkme11

S. J(. Das J.

22i HUPH.EME COURT REPOitTS LW60(1)]

basis by an independent authority :mch as an industrial

court or tribunal.

The s~cond ground also appears to us to be equally

untenable. Bonus in

the industrial sense as under­

stood in

our country does come out of the available

surplus

of profits, and when paid, it fills the gap,

wholly

or in part, between the living

wage and the

actual wage. It is an addition to the wage in that

sense, whether it be called contingent and SUJJple­

mentary. None the less, it is labour's share in the

profits, a.nd as it i~ a, remuneration which t.akes the

form of a share in profits, it comes within the mischief

of s. 10 of the Banking Act. It may be asked why

should the legislature seek to deprive bank employees,

who

are not on the managerial or administrative staff,

of their industrial claim to bonus when they contribute

to the prosperity of the banks? This really is a

ques­

tion of policy on which we are not permitted to specu­

la.te. On the one side there is the necessity for safe­

guarding the integrity and stability of the banking

industry, and on the other side there is the claim of

employees for a share in the profits. Which claim has

a greater urgency at a particular time is really a

matter for the legislature to say. We may refer here

by way of contrast to s. 31A of the Insurance Act.

1938.

That section is in terms similar to s.

10 of the

Banking Act, but has some marked differences. :Firstly,

it specifically m~ntions bonus, along with a share in

profits, in cis. (b) and (c) of sub-s. (l); secondly, it has

a proviso which says inter alia that nothing in sub­

~. (1) shall prohibit the payment of bonus in any year

on a uniform basis to all salaried employees etc., or

such bonus which in the opinion of the Central

Government is reasonable having regard to the cireum­

stances of the ease. This merely sho,Ys that it i8 for

the legislature to decide how to adjnst the claim of

employees with the safety and security of the busineRs

in which the employees are in employment.

The learned Attorney-General has relied on a number

of decisions in support of his contention that bonus

comes within the expression 'takes the form of a share

in profits'. In re Young, Ex Parte Jones C) it was held

(1) [t896] :z Q.B. 484.

S.C.R. ~UPREME COURT REPORTS 229

that a contract that a person shall receive a fixed sum

" out of the profits" of a business was equivalent to

a contract that he shall receive "a share of the profits"

within the meaning of sub-s. 3( d) of s. 2 of the Partner­

ship Act, 1890. A similar question arose in Admiml

Fishing Company v. Robinson e) in connection with s. 7,

sub-s. 2,

of the Workmen's

Compensation Act, 1906

which said: "This Act shall not apply to such mem­

bers of the cr~w as are remunerated by shares in the

profits or gross earnings of the working of such vessel."

The claimant who was the engineer of a fishing smack

was entitled to one share of the net profits of the

working of the vessel on the particular voyage. The

question was-was he remunerated by shares in the·

profits? The answer given was that he qlearly was

so remunerated.

In

Costello v. Owners of Ship Pigeon (i)

the claimant was employed as a. boatswain on a steam

fishing trawler

and was remunerated by wages;

maintenance,

and poundage dependent on the profits

of the fishing expedition. The House of Lords decided

by a majority that the claimant was remunerated

by

a share in profits within the meaning of s. 7, sub-

s. 2,

of the Workmen's Compensation Act,

1906.

Shri N! C. Chatterjee has invited our attention to

Newstead v. Owners of Steam Trawler Labrador (

3

). That

was a case of a claim for compensation by the widow of

a member of the crew of a fishing vessel, which was

lost

with all hands. The claim was

resisted by the

owners on the ground that the deceased was remu­

nerated by a share in the profits or gross earnings of

the vessel within s. 7, sub-s. 2 of the Workmen's Com­

pensation Act, 1906, and therefore that the Act-did not

apply to him. He was ~mployed as chief engineer on

board a steam trawler at a fixed weekly wage of £ 2. 5s.

It was the custom of the owners when the gross earn­

ings of the boat exceeded£ 100 for any one trip (each

trip being usually of about a week's duration) to allow

a sum of£ 2 by way of bonus, of which £ I went to the

captain and 2s. 6d. to each of the remaining. eight

members of.

the crew. If the gross earnings of the

(r) [1910)

t K.B. 540. (2) [1913) A.C. 407·

(3) [1916) I K. B. 166.

I959

The Central Bank

of India

v.

Their Workmen

S. J(. Das j,

230 SUPREME COURT REPORTS [1960(1)]

I959 boat exceeded £ 125 the bonus was proportionately

- increased and so on~ but it was not further increased

The Central. Bank if the gross earnings realised more than £ 175. The

of ~~ta decision proceeded on the footing that the bonus in that

Their Workmen case was not a share in profits but an additional sum

for wages determined by the amount of the gross earn­

s. I<. Das f. ings. Lord Cozens Hardy~ M. R.~ expounded the

ratio of the decision in the following words :-

"The question is whether~ having regard to the

circumstances~ that. can be said in the present case.

It seems that by the custom of this firm and by the

understanding and arrangement between the parties,

if the vessel made£ 100 the skipper was entitled to

£ 1, and in that particular case each member of the

crew was entitled to half a crown. If the vessel

made more the skipper and crew . were entitled to

larger sums. Now what was the effect of that?

The bonus was not, as it seems to me any part of the

p~ofits, nor was it a share in the gross earnings of the

vessel. There was an obligation on the part of the

owners ofthe trawler to pay the half a. crown (to

take that as one instance) in a certain event, which

event was to be determined by the gross earnings of

the vessel. I see no ground for holding that it was

in any sense of the word a share of the gross earn­

ings of the working of the vessel any more than the

actual wages which were payable to the seamen

could be treated as being a share of the gross earn­

ings of the vessel, although the bonus as well as the

wages would figure in the ship's accounts as against

the receipts ou the other side.''

It seems clear to us that the ratio of the decision does

not apply here. The bonus we are dealing with here

is not additional wage determined by the amount of

profits; it is really part of the availiable surplus of

profits distributed to labour for its contribution to the

earnings. It does not arise out of any contract to -pay~

though the olaim is recognised as one based on social

justice. · ·

Shri Phadke has relied on the decision In ·re The

Spanish Prospecting Company Li-m.ited C). That

(1) [1911] I Ch. 92·

S.C.R. · SUPREl\IE COURT El~l'ORTt-; · 231

decision proceeded on the meaning of the word 'profits', I959

of which a classic definition was ·given by Fletcher Th c

1

alB

11

l\Ioulton, L. J. In view of the decisions of this Court e o7r:aia ~n

referred to earlier, it is now beyond dispute that bonus v.

in the industrial sense comes out of profits .. If it does, Their. Workmen

we do not seehow it can be held that it is not a share

in profits. Shri Pha4ke suggested that the concept of

5

• K. Das f.

a share in profits· pre-supposes. the idea of either a

definite

amount or a definite proportion determined in · advance. This submission we have dealt. with at an

earlier stage and no useful purpose will be served :by

repeating what we have said already~ _

\Ve must now notice two other arguments advanced

o~ behalf of the respondent workmen. These argu­

ments are based on.the amendments made in 1956.

Section 10 as amended by the· Banking Companies

(Amendment) Act, 1956 (XCV of 1956) reads, .in so far

as it is relevent for our purpose-

" S. 10. No Banking Company- _

(a) shall employ or be managed by a managing

agent; or

(b) shall employ or continue the employment.

of any person- . .. . _

(i) who is, or at any time has been, · adjudicated

insolvent

or has suspended

payment. or has com~

pounded with his creditors, or who is, or has been,

convicted

by a criminal

Court of an offence involving

moral turpitude; or · ·

(ii) whose remuneration or part of whose remu­

neration takes the. form of commission or of a share

in the profits of the company :

Provided that nothing contained in this clause

shall apply to the· payment of any bonus by any

banking company in pursua.n'ce of a settlement or

award arrived at or made under any la~. relating to

industrial disputes or in accordance with any scheme

· framed by such banking company or in accordance

with the usual practice prevailing-· in ba:nking busi­

ness; or

(iii) whose remuneration is, in the opinion of the

Reserve Bank, ·excessive; or·

(c) ·••!>!'!"!!· ~·· !•·! •• ,, ··~· .. , ... ,, •• , •• ,. ... ,.-., ... ,, • ·' •• • •• , •• , • ., .,

I959

The Central Bank

of India

v.

Their Workmen

s_ J(.Das ],

232 SUPHEME COUHT HEPORTS [1060(1)]

Explanation.-For the purpose of sub-clause (iii)

of clause (b), the expression "remuneration''; in

relation

to

a person employed or continued in

employment, shall include salary, fees and perquisites

but shall not include any allowances or other amounts

paid to him for the purpose of-reimbursing him in

respec~ of the expenses actually incurred by him in

the performance of his duties.

·,' (2) i ... : ........................ .

. (3) If any question arises in' any particular case

wither the. remuneration is excessive within the

meaning of sub-clause '(iii) of clause (b) of sub-

. section (1),

the decision of the Reserve Bank thereon

shall be final for

all

purposes." · ·· ·

It will be noticed that the amended sectiori ha~ a

proviso which -makes it clear that ·nothing in. the

relevent clause in subs-s. (I) shall apply to the payment

of any bonus by any banking company in pursuance

of a settlement or award arrived at or made under

any law· relating to industrial disputes or in accordance

with any scheme framed by such banking company or

in accordance • with· the usual practice prevailing in

· banking business. It is clear that the amended section

does

not stand in the way of the grant of industrial

bonus.

It was, however, not in force. at the time

relevent in these appeals, and there is nothing in the

Banking Companies (Amendment) Act,

·t956, which

_would make it retrospective in operation. Shri N. C.

Chatterjee has, however, contended that the amending

Act is declaratory

of the law as it

always· was~ and

Shri Phadke has contended that the amending Act is

parliamentary exposition of the true meaning of s. 10

of the Banking Act. . \Ve are unable to accept any of

these two contentions. The amending Act states in

its long title that it is an Act to amend the Banking

Companies Act, 1949. Section 2 states: "Por section

10 of the Banking Companies Act, 1949, the following

section shall

be

substituted." There is nothing in the

amending Act to indicate that it was enacted to remove

any doubt, explain any former statute, or correct any

omission or error. \Vhat is a decl~uatory Act? The

S.C.R. SUPREME OOUHT REPORTS 233

following observations in Craies on Statute Law, Fifth I959

editionF, pp. 56d-57 are apposited: I A b The Central Batik

" or mo ern purposes a ec aratory ct may e

11

d.

defined as an Act to remove doubts existing as to the

0

v~

14

common law, or the meaning or effect of any statute. Their workman

Such Acts are usually held to be retrospective. The

usual reason for passing a declaratory Act is

to set s. K.

Das J.

aside what Parliament deems to have been a judicial

error, whether

in the statement of the common law or

in the interpretation of statutes.

Usually, if not in~

variably, such an Act contains a preamble, and also

the word "declared, as well as the word 'enacted'."

A remedial Act, on the contrary, is not necessarily

retrospective;

it may be either enlarging or restraining

and it takes effect prospectively, unless it has

retro­

spective affect by express terms or necessary intend­

ment. We are of the view that the amending Act of

1956 is

not

a declaratory Act, and except in the small

mat~r of the expression 'shall continue to employ' in

sub-s. (1), it does not purport to explain any former law

or declare what the law has always been. It is an ordi­

nary remedial piece of legislation which came into

effect from

January 14, 1957. For the period relating

to the appeals before us, the amended section was not

in force.

This brings us to

an end of the two questions, (1)

and (2), which directly fall for decision in these seven

appeals. Contrary to the findings of the Labour

Appellate Tribunal,

we have come to the conclusion

that (1) the scope of item 5 of sch. II of the relevant

notification is

not what the Labour Appellate Tribunal

thought it to be and the reference of 1952 is not

pend­

ing for· determining the quantum of bonus for the

relevant years

in respect of particular banks and (2)

in any event, s.

10 of the Banking Act, prior to the

amendment

of 1956, prohibited the grant of industrial

bonus

to bank employees inasmuch

as such bonus is

remuneration which takes the form

of

a share in the

profits of the banking company.

We do not think that the other two questions, (3)

and (4), require any decision at this stage. It is to be

remembered

that

we are exercising our appellate

~0

I959

The Central Bank

of India

v.

Their Worhmen

S. K. Das ].

234 ~UPREME COURT REPORTS [1960(1)]

jurisdiction in these seven appeals and not our ad­

visory jurisdiction. These seven appeals stand com­

pletely disposed of on the findings w bich we have

given on the two questions already discusserl. On our

findings the dispute as to bonus referred to the Indus­

trial Tribunal in 1952 has come to an end. The

reference is no longer pending and in the view which

we have expressed as respects the interpretation of

unamended section 10 of the Banking Act no claim

for bonus

can be adjudicated on for the past relevant

years. It is, therefore, not necessary for us to decide

hypothetical questions

which may arise in any future

reference that may be made under the amended

section. In the exercise of its appellate powers this

Court does not give speculative opinions on hypotheti­

cal questions. It would be contrary to principle, incon­

venient and inexpedient that opinion should be given

on such questions.

If and when, they arise, they

must arise in concrete cases and to use the words of

the Earl of Halsbury, L.

C., in Attorney General of

Ontario v. Hamilton Street Railway (t) :-

"It would be extremely unwise for any judicial

Tribunal to attempt beforehand to exhaust all pos­

sible cases and facts which might occur to qualify,

cut down, and override the operation of the parti­

cular words when the concrete case is not before it."

It is also to be remembered that no evidence was

allowed to be given either by the banks or the bank

employees as to the claims for bonus for particular

years in respect of particular banks. The dispute was

treated, rightly in our opinion, as a dispute relating

to the general question of bonus. That general ques­

tion is now dispm~ed of on the findings which we have

already given. -'Ve are aware that if and when a

future reference as to an industrial dispute relating to

bonus is made by the appropriate Government and

the amended section falls for consideration, questions

(3) and (4) may fall for decision. It would be time

enough

to decide those questions when they actually

arise

in concrete cases and we consider that it is not

only unwise but inexpedient that we should forestall

questions

which may arise in future cases and decide

(1)

[1903] A.C-~24, 529,

S.C.R. SUPREME COlJR'r REPORTS 235

them more oe less in vacuo and in the absence of I959

necessary materials for the decision of those questions. Th C-aJB k

• • e et1lr an

'rhese are our reasons for holdmg that questions (3) of India

and (4) should not now be decided. It is necessary to v.

state, however, that any observations which the Their Wdrkmen

Tribunals below may have made with regard toques-

tions (3) and (4) would be in the nature of obiter dicta

5

· K. Das f.

and it would be open to both parties to canvass those

questions

if and when they arise in any

concreic case

in future. Therefore, we have not considered it neces-

sary to state in detail the contentions raised before us

on behalf of the parties concerned with regard to

questions (3} and (4).

A few words regarding Civil Appeal No. 62 of 1957

before we conclude. Besides the question of bonus two

other questions were raised in this appeal: (1) whether

the Labour Appellate Tribunal had jurisdiction to

order cancellation and refund of cash deposits and (2)

whether the Tribunals below were wrong in holding

that the taking of cash deposits etc., should be restrict­

ed to workmen of three categories only. When it

was pointed out that the cash depos its had already

been refunded in accordance with the decision of the

L~.bour Appellate Tribunal the learned Attorney­

\Jeneral who appeared for the appellant in Civil

Appeal No.

62 of 1957 (The Punjab National Bank,

Limited) did not press those points. Therefore, in Civil Appeal No. 62 of 1957 also the only surviving

question is

the question of bonus on which we have

already given our decision. Shri Sadhan Chandra Gupta. appeared on behalf of

tho respo~dents in Civil Appeal No. 62 of 1957 and

made his 'submissions on the question of bonus. He

has taken a stand on s. 2 of the Banking Act and has

contended that even if bonus is remuneration which

takes the form of a. share in profits, s. 2 saves the

power of industrial tribunals to award such bonus

under the Industrial Disputes Act, 1947, and such

award,

if made, wiJl

impose an obligation on banks to

pay the bonus awarded and would not make them liable

to penalty under s. 46 of the Banking Act.

1

We have

dealt with this argument at an earlier stage and have

pointed out that ·s. 2 is a. saving provision with regard

1959

The Centr11l Bank

of India

v.

Their WorktiZeJJ

S.K. Das J.

I9S9

May u.

2~6 SUPREM.E COURT REPORTS [1960(1)]

to any other law for the time being in force, provided

there is no express provision to the contrary in the

Banking Act. If, as we hold. unamended s. 10 of the

Banking Act expressly prohibits the employment of

any person by a bank whose remuneration takes the

form of a share in the profits of the compa~y, then s. 2

of the Banking Act is of no help and cannot permit

something which i~ expressly prohibited by s. 10.

For the reasons given above, we allow these seven

appeals to the extent already indicated, namely, (1)

the reference of 1952 is not now pending for determin~

ing the question of bonus for the relevant years in

respect of particular banks and (2) section 10 of the

Banking Act prior to the amendment of 1956 pro~

hib~ts the grant of industrial bonus to bank employees

when such bonus

is remuneration which

takes the form

of a share in the profits of the banking company. In

the circumstances of these cases and in view of the

long drawn out nature of the dispute, we make no

direction as to costs.

Appeal.s aUCYWed in part.

SHlU JAGDISH MILLS LTD.

v.

THE COMMISSIONEH OE, INCOME-TAX, BOMBAY

NORTH,

KUTCH

AND SAURASHTRA,

AHMEDABAD

(S.

R. l>As, C .• J., N.H. BHAGWATT, and

M. HIDAYA'l'ULLAH, JJ.)

Income~tctx-Assessee company manufacturing and supplying

goods from outside British India-Stipulation for payment by cheque

-Cheques remitted by post from British India-Post Office, if ccn

agent of the assessee-Income, if received in taxable territories­

Indiat'

Imome~tax

Act (XI of I922), s. 4(1)(a).

The appellant company, carrying on business in manufactur ~

ing and st:lling textiles at Baroda, received in the assessment

years 1942-43

and

1943~44 payments in cheques from the Govern­

ment of India for

the supply of such goods on bills submitted, as

agreed upon in prescribed printed forms which provided that the

Government should pay the amount due to the appellant by

cheque. The appellant, however, did not request or

write to the

Government indicating in what way the payment by cheque was