A.P. FOODSversusS. SAMUEL AND ORS.

                               A.P. FOODS                                       A
                                     v.
                         S. SAMUEL AND ORS.

                              JULY 4, 2006

          [ARIJIT PASAYAT AND TARUN CHATTERJEE, JJ.]                            B


      Labour Laws:

      Industrial Disputes Act, 1947; S.9-A/Payment of Bonus Act, 1965;
Sections 20, 22 and 32(v)(c):                                                   C
        State Government Establishment-Supplying foods to children and woman
 under a Social Welfare Scheme-Raising of demand of payment of bonus by
 its employees-Rejected by Labour Commissioner-Sanctioning of ex-gratia
 in lieu of bonus by the State Government-Withdrawn-Challenge to-Allowed D
 by Single Judge-Affirmed by Division Bench of the High Court-On appeal,
 Held: The disputes between employer and employees with regard to payment
 of bonus in a Public Sector Undertaking deemed to be an industrial dispute
 within the meaning ofID Act-The High Court has failed to consider the basic
 issues-Since a disputed question of fact was involved for which alternative
 remedy available under the ID Act, the High Court should have directed the E
petitioners to avail the statutory remedy-Jn the facts and circumstances of
 the case, the appropriate Government is directed to refer the disputed question
for adjudication to the appropriate tribunal-Constitution of India, 1950-
Artic/P. 226.

      Appellant, a non-profit motive establishment, run by the Andhra           F
Pradesh Nutrition Council, owned and controlled by the State Government
of Andhra Pradesh. It has been entrusted with the function of supplying
foods to women and children selected by the State Government under its
Social Welfare Programme but it neither sell nor distribute its product
either in public or to outsiders. In April, 1982, its employees raised demand   G
of payment of bonus to them under the Payment of Bonus Act, 1965. The
appellant-organisation opposed the demand on the ground that the factory
is a non-commercial venture; and that it falls outside the ambit of the Act.
The Commissioner of Labour held that the provisions of the Payment of
Bonus Act have no application to the factory of the appellant. However,
                                      203                                       H
    204                    SUPREME COURT REPORTS (2006] SUPP. 3 S.C.R.

A   the appellant sanctioned ex-gratia payment to the employees of the said
    organization for the year 198.3-84. In the year 1986, the Executive
    Committee of the Nutrition Council decided to sanction ex-gratia of one
    month's salary each year in li~:u of bonus to the employees. Later, in
    compliance with the directions of the State Government, the appellant
B   stopped payment of ex-gratia to its employees. A Writ Petition was filed
    by the aggrieved employees, which was allowed by a Single Judge of the
    High Court. The writ appeal filed against the order of the Single Judge
    was dismissed by the Division Bench of the High Court. Hence the present
    appeal.

          Appellant contended that on a combined reading of Sections 20, 22
C and 32(v)(c) of the Payment of Bonus Act, the inevitable conclusion is that
    the writ petition should not havt! been entertained; that Section 22 of the
    Act clearly stipulates that the dispute in question is an industrial dispute;
    and that since disputed questions of fact were involved, the writ petition
    should not have been entertaim:d.
D         Partly allowing the appeal!, the Court

          HELD: 1.1. A Writ Petition under Article 226 of the Constitution
    of India should not be entertaint!d when the statutory remedy is available
    under an Act, unless exceptional circumstances are made out. Both the
E   Single Judge and the Division Bench of the High Court have failed to
    consider the basic issues. [208-E]

         Basant Kumar Sarkar and Ors. v. Eagle Rolling Mills Ltd. and Ors.,
    (1964) 6 SCR 913, followed.

         U.P. State Bridge Corporation Ltd. and Ors. v. U.P. Rajya Setu Nigam
F   S. Karamchari Sangh, (2004] 4i SCC 268; Premier Automobiles Ltd. v.
    Kamlekar Shantarum Wadke, [1976) 1 SCC 496; Rajasthan SRTC v. Krishna
    Kant, [1995) 5 SCC 75; Chandrakant Tukaram Nikam v. Muncipa/
    Corporation of Ahmedabad and Anr., [2002] 2 SCC 542 and Scooters India
    and Ors. v. Vijai V. Eldred, [1998[ 6 SCC 549, relied on.

G         2.1. S1~ction 22 of the Payment of Bonus Act makes the position clear
    that where the dispute arises between an employer and employees with
    respect to the bonus payable under the Act or with respect to the
    application of the Act in public sector then such dispute shall be deemed
    to be an industrial dispute withiin the meaning of Industrial Disputes Act.
                                                                        [210-C)
H
                         A.P. FOODS v. S. SAMUEL                        205
      2.2. As disputed questions of fact were involved, and alternative        A
remedy is available under the ID Act, the High Court should not have
entertained the writ petition, and should have directed the writ-petitioners
to avail the statutory remedy. [210-D]

      3.1. Because of the long passage of time since the filing of the writ
petition, the attendant circumstances, the background of the case and in       B
view of the agreement that this is a matter which requires to be referred
to the Tribunal, the appropriate Government is directed to refer the
following questions for adjudication by the appropriate Tribunal:

     (1) as to whether there was violation of Section 9-A of the Industrial    C
Disputes Act, 1947 as claimed by the employees;

    (2) as to whether the withdrawal of the construction allowance
amounted to the change in the conditions of service; and

     (3) as to whether the appellant, A.P. Foods was liable to pay bonus       D
under the Act to its employees?

      Though, it is for the State Government to take a decision in the
matter of reference when a dispute is raised, the direction has been given
by this Court in the facts and circumstances of the case.
                                                       (210-E-F-H; 211-A(      E
     Nirmal Singh v. State of Punjab, AIR (1984) SC 1619; Sankari Cement
Alai Thozhilalar Munnetra Sangam v. Management of India Cement Ltd.,
(1983) 1 Lab.L.J. 460; V. Veerarajan and Ors. v. Government of Tamil Nadu
ana Ors., AIR (1987) SC 695 and Sharad Kumar v. Govt. of N.C. T. of Delhi,
AIR (2002) SC 1724, referred to.                                               F
      3.2. It is clarified that no opinion has been expressed on the merits
of the case. [211-C)

     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4330 of 2000.

     From the Judgment and Order dated I L2.1997 of the High Court of          G
Andhra Pradesh at Hyderabad in W.A. No. 92/1997.

     B. Partha Sarthy, J.C. Rose, V. Pattabhi and Hanumanthu RajgopaI for
the Appellant.

     V.B. Joshi for the Respondents.
                                                                               H
    206                     SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R.

A         The Judgment of the Court was delivered by

         ARI.HT PASA YAT, J. Appellant calls in question legality of the
    judgment rendered by learned Single Judge of the Andhra Pradesh High
    Court which was affirmed by a Division Bench in Writ Appeal by the
    impugned judgment.
B
          Background facts in a nutshell are as follows :

        Appellant is run by Andhra Pradesh Nutrition Council and is owned
  and controlled by the Government of Andhra Pradesh. The Nutrition Council
  is registered under the Andhra Pradesh (Telengana Area) Public Societies
C Registration Act, 1350 (Act I of 1350 Fasli). The principal object is to
  provide and supply nutritious foods to school and pre-school children, pregnant
  women and lactating mothers and such other categories of beneficiaries as
  the Government from time to time decide within the general framework of
  the Government social welfare programmes. It is claimed to be a non-profit
D motive establishment. It does not sell or distribute its product either in public
  or to outsiders except those selected by the Government of Andhra Pradesh
  under its prograir.mes. In April, 1982 a question arose regarding demand of
  payment of bonus under the Payment of Bonus Act, ! 965 (in short the 'Act')
  to the employees of the appellant, and it approached the Commissioner of
  Labour, inter a/ia, stating that the (a) regular production of the factory was
E handed over to the State Government by the CARE Organisation (b) that the
  factory is a non-commercial venture and (c) that, therefore, it falls outside the
  ambit of the Act. By order dated 21.1.1983 the Commissioner of Labour,
  Andhra Pradesh held that the provisions of the Act have no application to the
  factory of the appellant. In November 1984 appellants sanctioned ex-gratia
F payment to the workers as per GOMs.319 for the year 1983-84 in view of
  the fact that the Act is not applicable to the appellant and eligibility for the
  ex-gratia was on the lines being given in some other public sector undertakings.
  In January, 1986, the Executive Committee of the Nutrition Council decided
  to sanction ex-gratia of one month's salary each year in lieu of bonus to the
  employees. On the basis of this decision, ex-gratia payment of one month's
G salary from the year 1984-85 was given on the lines of certain other public
  sector undertakings. GOMs. No. 366 dated 29.10.1993 was issued by the
  Government of Andhra Pradesh, Finance and Planning Department, pending
  final decision by the Government directing its various Organisations not t0
  pay ex-gratia until further orders. Appellant issued directions by its Circular
  dated 24.11.1993 that payment of ex-gratia to the employees shall stand
H
                   A.P. FOODS v. S. SAMUEL (PASAYAT, J.]                    207

withdrawn until further orders. Employees of the appellant-establishment A
sent representations to the Minister of Labour regarding stoppage of ex-
gratia payment. Ministry of Labour by communication in December, 1995
indicated that employees are not entitled to ex-gratia with effect from
November, 1993 onwards in view of the guidelines issued by the Government.
A Writ Petition was filed by 243 employees making grievance that the stoppage B
of ex-gratia/bonus was unauthorized and contrary to law. Said writ Petition
was allowed by a learned Single Judge. It was submitted that the question
whether the employees were entitled to bonus is an industrial dispute and the
writ petition should not be entertained. Learned Single Judge turned down
the contentions of the present appellant that the Act does not apply to it in
view of Section 20 and Section 22 of the Act. With reference to certain C
documents he came to the conclusion that the stand of the appellant that it
was working without profit motive is factually wrong. In any event, Section
22 of the Act would not stand in the way of entertaining the writ petition.
The appellant filed a writ appeal before the High Court which maintained the
order of learned Single Judge by the impugned judgment.
                                                                                   D
       Learned counsel for the appellant submitted that on a combined reading
of Sections 20, 22 and 32(v)(c) of the Act, the inevitable conclusion is that
the writ petition should not have been entertained. Further Section 22 clearly
stipulates that the dispute raised is an industrial dispute under the Industrial
Disputes Act, 1947 (in short the 'ID Act'). Since disputed questions of fact       E
were involved, the writ petition should not have been entertained.

       In response, learned counsel for the writ petitioners-responder.ts
submitted that in view of the established factual position, the High Court was
justified in entertaining the writ petition and deciding in favour of the writ
petitioners.                                                                       F
      Sections 20, 22 and 32(v)(c) read as follows :

        "Section 20: Application of Act to establishments in Public Sector in
        certain cases :

       (I) If in any accounting year an establishment in public sector sells       G
            any goods produced or manufactured by it or renders any services,
            in competition with an establishment in private sector and the
            income from such sale or services or both is not less than twenty
            per cent of the gross income of the establishment in public sector
            for that year, the provisions of this Act shall apply in relation to H
    208                     SUPREME COURT REPORTS [2006] SUPP. 3 S.C.R.

A               such establishment in public sector as they apply in relation to
                a like establishment in private sector.
           (2) Save as otherwise provided in sub-section (I), nothing i11 this
               Act shall apply to the employees employed by any establishment
               in public sector.
B           Section 22 : Reference of disputes under the Act -

                 Where any dispute arises between an employer and his employees
            with respect to the bonus payable under this Act or with respect to
            the application of this Act to an establishment in public sector, then,
            such dispute shall be deemed to be an industrial dispute within the
c           meaning of the Industrial Disputes Act, 1947, or of any corresponding
            law relating to investigation and settlement of industrial disputes in
            forc:e in a State and the provisions of that Act or, as the case may be,
            such law, shall, save as otherwise expressly provided, apply
            accordingly.
D
            Sector 32: Act not to be applied to certa.'n classes of employees:
           (v) Employees employed by -

            (c ) Institutions (including hospitals, chambers of commerce and social
            welfare institutions) established not for purposes of profit;"
E
          In a c:atena of decisions it has been held that writ petition under Article
    226 of the Constitution of India, 1950 (in short 'the Constitution') should not
    be entertained when the statutory remedy is available under the Act, unless
    exceptional circumstances are made out.

F        In U.P. State Bridge Corporation Ltd. and Ors. v. U.P. Rajya Setu
    Nigam S. Karamchari Sangh, [2004] 4 SCC 268, it was held that when the
    dispute relates to enforcement of a right or obligation under the statute and
    specific remedy is, therefore, provided under the statute, the High Court
    should not deviate from the general view and interfere under Article 226
G   except wh1~n a very strong case is made out for making a departure. The
    person who insists upon such remedy can avail of the process as provided
    under the statute. To same effect are the decisions in Premier Automobiles
    Ltd. v. Kamlekar Shantarum Wadke, [1976] l SCC 496, Rajasthan SRTC v.
    Krishna Kant, [1995] 5 SCC 75, Chandrakant Tukaram Nikam v. Muncipal
    Corporation of Ahmedabad and Anr., [2002] 2 SCC 542 and Scooters India
H   and Ors. v. Vijai v. Eldred, (1998] 6 sec 549.
                          A.P. FOODS v. S. SAMUEL [PASAYAT, J.]                 209
              In Rajasthan SRTC case (Supra) it was observed as follows:               A
                "A speedy, inexpensive and effective forum for resolution of disputes
                arising between workmen and their employers. The idea has been to
·rt:·           ensure that the workmen do not get caught in the labyrinth of civil
                courts with their layers upon layers of appeals and revisions and the
                elaborate procedural laws, which the workmen can ill afford. The B
               procedure followed by civil courts, it was thought, would not facilitate
               a prompt and effective disposal of these.disputes. As against this, the
               courts and tribunals created by the Industrial Disputes Act are not
                shackled by these procedural laws nor is their award subject to any
               appeals or revisions. Because of their infonnality, the workmen and C
               their representatives can themselves prosecute or defend their cases.
               These forums are empowered to grant such relief as they think just
               and appropriate. They can even substitute the punishment in many
               cases. They can make and re-make the contracts, settlement, wage
               structures and what not. Their awards are no doubt amenable to
               jurisdiction of th~ High Court under Article 226 as also to the D
               jurisdiction of this Court under Article 32, but they are extraordinary
               remedies subject to several self-imposed constraints. It is, therefore,
               always in the interest of the workmen that disputes concerning them
               are adjudicated in the forums created by the Act and not in a civil
               court. That is the entire policy underlying the vast array of enactments E
               concerning workmen. This legislative policy and intendment should
               necessarily weigh with the courts in interpreting these enactments
               and the disputes arising under them".

              In Basant Kumar Sarkar and Ors. v. Eagle Rolling Mills Ltd. and Ors.,
        [ 1964] 6 SCR 913 the Constitution Bench of this Court observt:d as follows:   F
               "It is true that the powers conferred on the High Courts under Art.
               226 are very wide, but it is not suggested by Mr. Chatterjee that even
               these powers can take in within their sweep industrial disputes of the
               kind which this contention seeks to raise. Therefore, without expressing
               any opinion on the merits of the contention, we would confinn the G
               finding of the High Court that the proper remedy which is available
               to the appellants to ventilate their grievances in respect of the said
               notices and circulars is to take recourse to s. 10 of the Industrial
               Disputes Act, or seek relief, if possible, under sections 74 and 75 of
               the Act."
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    210                      SUPREME COURT REPORTS (2006] SUPP. 3 S.C.R.

A         The inevitable conclusion, therefore, is that both learned Single Judge
    and the Division Bench have failt:d to consider the basic issues. In the normal
    course we would have left it to the respondent to avail appropriate remedy
    under the Act.

         The above aspects were highlighted in Hindustan Steel Works
B   Construction Ltd. and Anr. v. Hindustan Steel Works Construction Ltd.
    Employees Union, (2005] 6 SCC 725.

          A ban: reading of Section 22 of the Act makes the position clear that
    where the dispute arises between an employer and employees with respect to
    the bonus payable under the Act or with respect to the application of the Act
C   in public sector then such dispute shall be deemed to be an industrial dispute
    within the meaning of ID Act.

           As disputed questions of fact were involved, and alternative remedy
    is available under the ID Act the High Court should not have entertained the
D   writ petition . and should have directed the writ-petitioners to avail the statutory
    remedy.

           However, because of the long passage of time (the writ petition was
    filed in 1996), the attendant circumstances of the case in the background
    noted above and in view of the agreement that this is a matter which requires
E   to be refern:d to the Tribunal, we direct that the appropriate Government
    shall refer the following question for adjudication by the appropriate Tribunal:

           (I) Whether there was violation of Section 9-A of the Industrial
               Disputes Act, 1947 as claimed by the employees?
            (2) Whether the withdrawal of the construction allowance amounted
F               to the change in the conditions of service?

    Question:

         Whether the A.P. Foods was liable to pay bonus under the Act to its
G   employees?

          The parties shall jointly move the appropriate Government with a copy
    of our judgment.

          Nonnally, it is for the State Government to take a decision in the
H matter of reference when a dispute is raised, the direction as noted above has
                  A.P. FOODS v. S. SAMUEL (PASAYA T, J.)                 211

been given in the circumstances indicated above.                                 A
      In some cases, this Court after noticing that refusal by appropriate
Government to refer the matter for adjudication was prima facie not proper,
directed reference instead of directing reconsideration. (See Nirmal Singh v.
State of Punjab, AIR (1984) SC 1619, Sankari Cement Alai Thozhilalar
Munnetra Sangam v. Management of India Cement Ltd., (1983) 1 Lab.L.J.            B
460, V. Veerarajan and Ors v. Government of Tamil Nadu and Ors., AIR
(1987) SC 695 and Sharad Kumar v. Govt. of NC. T. of Delhi, AIR (2002)
SC 1724.

      The parties shall be permitted to place materials in support of their      C
respective stands. We make it clear that we have not expressed any opinion
on the merits of the case. The Tribunal shall make an effort to dispose of the
reference within four months of the receipt of the reference from the State
Government, which shall be done within three months from today.

     The appeal is allowed to the aforesaid extent with no order as to costs.    D
S.K.S.                                                Appeal partly allowed.