# THE CENTRAL BANK OF INDIA v. THEIR WORKMEN

- **Citation:** [1960] 1 S.C.R. 200
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Bench:** S. R. DAs, Jafer Imam, S. K. DAs, K. N. Wanchoo, M. Hidayatullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-central-bank-of-india-v-their-workmen-1749
- **Pages:** 37

## Headnote

Industrial Dispute-Bonus-Banking Companies-Bank Employees-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 provisions 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 expression "shall continue tQ employ" in sub-s. \r), it does not purport 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 amendment 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 Association)
B. P. Mahe,r;hwari, for respondent No. 3 (Association of the Pu

## Text

_Characters 0–39,987 of 81,837. This is a partial read: ask again with offset=39987 for what follows._

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 judgment 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 Employees-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 provisions 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 expression "shall continue tQ employ" in sub-s. \r), it does not purport 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 amendment 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 Association)
B. P. Mahe,r;hwari, for respondent No. 3 (Association 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 incorporated 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 employees presented demands for higher salaries and allowances 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
1959
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 companies having branches or other establishments in
more than one province came under the jurisdiction of
the Central Government for the purposes of the Industrial Disputes Act, 1947 (XIV of 1947). By a notification 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 constituted 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 consequent 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. Hereafter we shall refer to this Tribunal as the Sastry
Tribunal. By another notification of the same date
the Central Government referred the matters specified in sch. II of the notification, which: were the
matters in dispute between the employers and workmen 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 Appellate 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
1959
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 under 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 questions (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 contemplate
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 Appellate 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 existence 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 interpretr959
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 Banking Companies Act, 1949, should be removed by suitable 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 Banking 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 objection 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 Government 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 submitted 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 Companies) 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 appellate decision as so modified shall be the decision of the
Appellate Tribunal within the meaning of the InrlnAtrial 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 Industrial 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 particular 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 decisions, 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 preliminary 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
1959
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 individual 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 'qualifications 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 particular 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 Tribunal 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 administrative order and it would not be right to apply the
same canon of interpretation to the items in an administrative 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 character 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 employee 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 phraseology of the items is changed when the , subsequent
reference is made taking into consideration the criticisms 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 t here ·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
1here 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.rticula.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.ntiatc t he claims
for bonus for particuhtl' Y~"~"l.rs in resprct ()f pn.rticnlar
banks.
T he Sastry Tribuna.] sairl :-
"We cannot assume t hat for a.U these 129 bn.nks
before us and for all those years there were livo
disputes about t his 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 liHtd e to a n 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.yruent 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 t he v~~riom; heads of
clisputes in t.he refcn~nre to us, individua.l cn.sc.<J
pert.aining o11 ly to some b<tnks wherever the GovC'rnment 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 . . . . I t 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 without 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 conclusion 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 completely 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, hereinafter 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 amendment 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 remuneration 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 UH\nctged 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 W orkmen
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 construction 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 management 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 contracts 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 expressly
provided, in derogation of the Indian Companies
Act, 1913, and any other law for the time being in
force."
The Indian Companies Act, 1913 itself 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 unnecessary 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 remuneration 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 remuneration within the meaning of s. 10 and it is also a share
in profits;
therefore~ the express provisions of s. 10
read with s.