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Application No. 2 of 1982, decided on 12th October, 1983.
‑‑‑Ss. 22(12) & 32(1‑A)‑‑Industrial dispute‑‑Demand for increased bonus‑‑Employer a construction company‑‑Settlement operative regarding bonus not yet expired and projects of company yet not completed and final balance sheet indicating profits or loss also yet not completed‑ Demand, in circumstances, held, premature.
‑‑‑Ss. 22(12)(b) & 32(1‑A)‑‑Institution of proceedings‑‑Locus standi‑ Collective Bargaining Agent only competent to institute proceedings‑ President and General Secretary of Trade Union not authorised by General Body‑‑Not competent to institute proceedings.
Shafique Qureshi for Applicant.
Ehsan Ikram for Respondents.
Associated Construction Ltd., Company, who has the union known as Mehnatkash Union, has preferred the petition before this Court, under section 32(1‑A), of the I.R.O., 1969, against the Associated Constructors Ltd., that this Court be pleased to give award, in form of the directions to the company to pay the bonus to the workers against 4 months' wages/salaries.
2. The applicant union has introduced itself as the Registered Body under the I.R.O., 1969, and also represents through C.B.A. The respondent is a construction company and carries on the business in Karachi and in other parts of Pakistan.
3. The petitioner union gave the notice under section 26(1) of the I.R.O., 1969, placing the charter of demand, of which the bilatial meeting took place between the management and the union, but the discussion regarding the acceptance of the demand failed. The matter was referred to conciliator, who convened joint meeting, which also failed to bring positive results. On the failure of the talks, the matter is referred to the Labour Court that the Court be pleased to award bonus on these grounds:‑‑
(i) The company shall pay bonus for the financial year 1981, equal to 4 months' wages of all the workers who have completed the one year service The workers who have less than one year in service in the year 1981, shall receive bonus on prorata basis.
(ii) The wages and the salaries of the workmen are not consistent with the present cost of living when there is no parity in the terms of wages between this industry and other similar industries.
(iii) The respondent Company has earned huge profits in the financial year 1981 and the profits on overall contracts.
(iv) The respondent Company paid 40 days wages as the bonus in the previous year, but failed to offer more than the agreed bonus.
4. The respondent Company has failed to supply the audited profits and loss accounts and the balance sheet for the year 1980, and they have concealed the profits.
5. The respondent Company has taken the first legal objection that the notice of demand is incompetent, when the previous settlement was still in operation.
6. The second contention of the respondent, is that no fresh demand can lawfully be raised by the C.B.A. until 31‑3‑1982, by virtue of the settlement, dated 25‑6‑1981. The respondent, however, has admitted that bonus for the year 1980 if it is equal to 40 days' wages is given it is admitted as per terms of settlement, dated 10‑3‑1981 but they have taken this ground that they are not bound to pay the bonus as the bonus is increased every year including the increase in the cost of living, productivity and the profits.
7. As regards the year 1978‑1979, bonus was paid at the rate equal to one month's wages against the continuous service for the whole year. As for the year 1977, although there was no written agreement, yet the respondent paid the bonus equal to one month's wages. Similarly bonus for the year 1981 has also been paid as equal to one month's wages, except for the year 1980, the bonus has been paid as equal to one month's wages. The respondent, however, has taken this specific plea that bonus for all these years was in the nature of ad hoc payments to be adjusted against the amount of bonus payable under 10‑C of the Standing Orders Ordinance, in the event, of the Company having made sufficient profits on the completion of the projects and the finalisation of their account. However, the respondent submits that in constructions industry an exact determination of profits, or losses is not possible, which can only be determined on successful completion of the projects. In short, the respondents have given this explanation that so far the account for the year 1981 is concerned, the same is not finalised and the balance sheet shall take some months.
8. In this petition under section 32(1‑A) of the I.R.O., 1969, petitioner union has come to the Labour Court for award that this Court be pleased to issue the directions to the company to pay the bonus to the workers equal to the 4 months' wages for the financial year 1981 because the company has made huge profits. In this context, they preferred demands, served notice of strike, appeared before the conciliator but the negotiations failed. Now they have moved the petition for award.
9. They have raised number of demands that 4 months' wages be given to all workers who have put up one year's service and those who have put up less than one year service on prorata basis. They have justified the demand on this consideration, that their wages as compared to other similar industries are low and, therefore, this increase will cover the cost of living which is increasing.
10. The respondents have attacked the maintainability of the petition an this ground that the petitioners have no cause of action, because no fresh demand could be raised until 31‑3‑1982, when the settlement between the union and the management, dated 25‑6‑1981, has become the documents of legal importance.
11. To put it precisely, petitioner has produced the settlement and also the respondent has referred to certain documents, which I refer Here, how for, the parties have expressed intentions, what was the object of that settlement whether it referred to other terms of employment or purely on the question of bonus or the union cannot raise the demand of bonus when they have to come after settlement expired on 31‑3‑1982 or the union can raise the demand as required under section 22(12) of the I.R.O., 1969.
12. These are the points of consideration, and it is to be seen whether the President or General Secretary can come to the Court to file petition or they have to come through the C.B.A. when it is the registered union represented by the C.B.A. under the law.
13. First document produced is with reference to Annexure "A" on page 35, this settlement was made on 10‑3‑1981. In this settlement, the management had taken this version that the financial results of the complex of R.M.V.P.P and Plant furnace and the allied works which are in progress at Pak Steel Mills does not permit to distribute the bonus under 10‑C of Standing Orders, but company has agreed to pay bonus equal to 40 days wages for the year 1980. Second contention was that on the final completion of the project, the amount of bonus for the year 1980 and paid for the years 1977, 1978 and 1979, shall be taken into account and third contention was that 40 days wages bonus shall be paid to the workers who have completed one year and on prorata basis, to the workers less than one year. This settlement was accepted by the union and becomes the document of legal importance.
14. There is another document to which my attention is drawn and between the President and the General Secretary there was settlement which opened with these words: "agreement executed on 7‑3‑1979 has become effective for two years upto 6‑3‑1981". Union served notice on company on 4‑4‑1981 and the settlement is amicable to the satisfaction of both the parties. Then it further reads which is important: "It says that on 25th of June, 1981, in the joint meeting it is agreed that this agreement was to remain effective upto 31‑3‑1982", the other terms were as follows:‑‑
15. Now what are those terms demand for 30 days gratuity demand to increase wages, leave, appointment of doctor, and for vehicle, and the number of demands not including bonus.
16. There is other settlement which has been shown to me and was reached on 16‑2‑1980, where the bonus was also discussed, it was agreed that bonus will be payable at calculation of 2J wages per month that is 30 days wages for complete year. From the settlement of 10‑3‑1981 where also the bonus was a demand, there came the document, dated 25‑6‑1981, which was subsequent to the settlement of 10‑3‑1981, but in the document of 25‑6‑1981, no demand of bonus was raised but it concerned other demands like the wages increase.
17. The question that now confronts whether the settlement of 25‑6‑1981, which was between the union and the management, binding on the union not to raise the demand of bonus, or they have cause of action to come in the Court for the award of bonus which was not otherwise raised in the agreement of 25‑6‑1981. But the context of the settlement is to be read as the whole. It will be seen that the settlement of 25‑6‑1981 also refers to the settlement of 7‑3‑1979, and that settlement expired upto 6‑3‑1981 and after the expiry of the period of settlement this settlement of 25‑6‑1981 further came in the form of another settlement with the conditions of earlier settlement of 1979 to be part of new settlement by which both the parties agreed to abide what the settlement of 1979 recites.
19. The intention of the union eras that the bonus shall be payable equal to 4 months wages and the management version was that on the financial result of the jobs‑in‑progress company does not permit the distribution of the bonus under 10‑C of the Standing Orders, but to maintain industrial relations, the bonus shall be payable on principle of 30 days wages. To this settlement it may be mentioned that both the parties agreed each others point of view and this document of 1979 was also the document of importance where also the bonus was the main discussion. It appears, therefore, that specifically bonus was not discussed in the settlement of 25‑6‑1981, but there was reference of 1979 settlement in the very opening of its recital and there was no reference of the settlement of 10‑3‑1981.
20. Mr. Shafique Qureshi has also referred the aspect of the settlement regarding profits made by the company. There is evidence of Accountant Mr. Mirza Sardar Husain, who says as follows;
"It is the private limited company. The paid up capital of the company is Rs.50,000. The amount of capital reserved is Rs.1,58,144.29, at the disposal of the directors. Bonus shares of Rs.15,00,000 earned as profits. The sum of Rs. 1,20,98,494 is the disposal of the directors as profits and losses, appropriation account."
21.Exceptional loss reserved of Rs.10,00,000 can also been the drawn by the directors. In case, the Court adjudicate the grant of bonus equal to 4 months wages, to the workers, company would be in position to pay. He supports the reply statement also. He further states that tie cannot say if the workers were not paid wages according to the living wages.
22. This is also very important to point out that what the company representative has said regarding profits earnings: "the reason of earning profits, is the work and the labour performed by the workers".
23. With this background of the company representatives admissions, and the balance‑sheet produced in support thereof, showing the receipts of expenditure, profits and losses account, this aspect is also to be considered, but in the first place, as it is argued by the respondent Company whether the petitioner union has the cause of action to come in the Court before the maturity of the period of settlement which expires on 31‑3‑1982.
24. Mr. Shafique Qureshi has also raised other aspects of the legal nature that the union could raise the demand under section 22(12) of the I.R.O., and there is no bar for the President or the General Secretary to come in the Court for the redress. Company's representative on other hand, has raised the contention of legal nature that no authority was given to the President or the General Secretary to file the petition, except to come through the C.B.A. and has criticised the resolutions of the managing Committee on this ground that the resolution as passed was not in accordance with the legal requirements of the serving notices etc. he has, therefore, challenged the petition as the whole, regarding its maintainability and its effects. Notwithstanding the fact that the company's representative has made such statement of giving the profit if the Court adjudicates.
25. The contention of the union, that they have cause of action to raise the demand can only be raised when the settlement has expired on 31‑3‑1982, which was the final settlement having the force of law.
26. So far the entitlement of bonus, it is argued by Mr. Shafique Qureshi, that the company has earned huge profits. And the company's own willingness to pay bonus which not only they pay under statutory rights under 10‑C of the Standing Orders, but also they are willing to pay 4 months wages as bonus, if the Court adjudicates.
27. In view of this statement of company's representative, that they are in position to pay, even it be accepted that the company has made the profits, this will in no way change the legal position which they have raised in their reply statement and also the union is bound by the settlement which they expect the Court to enforce according to law.
28. In this connection also, I will give the abstract from para. 5 of the affidavit of Mr. Mirza Sardar Husain, where apart from willingness, of making payment has also shown the legal position of the balance statement:‑‑
"Profits shown in these statements have been earned not as a result of the work done in the year 1981 but these are the profits which the company has earned against the work done during the 5 years from 1977, on the projects which were completed in 1981 and it is not possible until the projects are satisfactorily finished as to what loss and profits company will in cure."
29. 1n para. 6, he has further given the legal position that the company has been giving one months wages, from 1977 to 1981, with exception of 40 days wages for 1980, which comes to Rs.36,25,543. The witness has made further statement on oath that the net income derived from the completed projects of the Pakistan Steel Projects S.I.T.E. establishment for distribution of the shareholders comes to Rs.82,65,236 which shows the net receipts from all the projects is also Rs.2,95,51,363.03, which is composed of Rs.1,79,63,999 from the Pakistan Steel raw material plant and the remaining Rs.1,15,87,364.03 from Kabul River Bridge, Hockey Stadium and National Stadium, Projects, on the ratio between the two being 60.74 and 39.260 of the total receipts and as such only 60.74 of the total income is appropriated to the share holders as per profits or loss account, which comes to &5.1,35,98,494.60, by adding a figure of the bonus shares and the balance carried to balance sheets. So, the respondent shows that from 1977 to 1981, the company has paid Rs.36,25,543 and shows the income for distribution to the shareholders Rs.82,65,236.
30. From this statement the same Sardar Husain, in cross examination, has shown that the company is till in position to pay the bonus as I have mentioned above referring to his cross‑examination. It is difficult, of Course, to resolve why the company is making two, sta1e.ments through its own representative, on one hand, willing to make payment if tile Court adjudicates and at the same time, showing rite loss income for not entitling the workers to receive tile wages. It is very significant 6o underline the evidence of Mr. Sardar Husain where he himself has said that the company has earned profits because of' the work and the labour made by the workers. In other words he has given expression that the profit have earned when tile workers have put the honest labour and made the company to earn the profits.
31. Now with whatever the back ground of the profit as given, it is tile question of law, for which the President of the union has come to the Court for adjudication. It this respect I many point out that the notice given for such demand was premature because the time of tire settlement had not expired when they expect the settlement to be binding document between the workers union and the employer to promote the industrial understanding and good will.
32. In the settlement of 25-6‑1981, the mention (if the bonus settlement of 10th March, was not there. It obviously indicated that the union in that settlement of 25th June, continue to follow the same principle of 1979 settlement, without mentioning the specific demand of bonus and, therefore, there was reference of 1979 settlement in its preamble.
33. So tile company has to pay the statutory bonus and the union call come again if so desire and raised the demand after the completion of ail the projects in view of the statement of the employer as it stands on the legal principle.
34. No doubt it is 19,83, the matter has taken so much time and the date also expired in this situation, let the projects be completed and the company have the final balance‑sheet after all .the receipts of the income. expenditure liabilities, income‑tax liabilities, the profits distribu tion to the shareholders and them see the final statement.
35. Respondent company's Advocate has very rightly contended that President and the Central Secretary of the union have no jurisdiction except the Collective Bargaining Agent by reference to section 22(12.) of the I.R.O. M‑r. 6hafiq Qureshi has said that there is no bar under this section to come by Secretary. 'No doubt, the settlement which B have been arrived at previously between the President arid General Secretary but for institution of the proceedings, subsection (12) of section .12., .clause (b) reads as follows:‑‑
"The collective bargaining agent shall be entitled to represent all or any of the workman in any proceedings."
If the function is legally specified, the union has to come in the manner as the Ordinance has indicated.
36. It is also argued by Mr. Shafique Qureshi that they were authorised by the managing committee to represent in the proceedings. Respondent employer has very seriously contested this matter that no notice was given to the workers of the General Body Meeting to find C out in the minutes book, and, therefore, unless the General Body Meeting authorises, they have no jurisdiction to come directly except, the C.B.A In this context, 1 refer to tire cross‑examination of Sher Muhammad. General Secretary:‑‑
"This is correct that the minutes of the Managing Committee Meeting held on 1‑1‑1902 do not refer the agenda notice and the names who attended the meeting. Similarly the meeting of 2‑1‑1982, not refer to the advance notices nor the names of persons, who attended. This is serious defect."
37. So far the legal position is concerned, whatever procedure is to be followed in respect of the industrial dispute, it is to be in accordance with the la‑w, which governs the relationship of the workers with the employer and, industrial establishment.
38. Finally this may also be mentioned that the respondent employer has said, that so far the cost of lining is concerned, the Government is, time to time, increasing the cost of living allowance for the worker's convenience and‑, therefore, the concession of the bonus of 4 months is the hardship, an the employer.
39. This point is premature now. This can be raised when there is demand by the union after completion of the projects and profits seen, fit the light of all conditions existing at that time.
40. In the result, the notice of demand is premature. Union had no cause of action in law and the petition is dismissed with the above observations. Meanwhile the company will give the statutory bonus under Standing Order 10‑C, as stated by them.
Petition dismissed.
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