1996 PLP 425 (PLC)

It will thus be seen that although in 1987, the profit was less than 1986 the respondent maintained a divided of 20% enabling the workers to receive additional bonus. In 1989, the profit was almost Rs.30 Million less than the profit in 1989, but the company declared a dividend of 23 % enabling the workers to ear and receive even more as additional bonus. In 1991, the respondent admitted declaring a pre‑tax profit of over Rs.395 million almost 81 million rupees more than 1990, but the dividend declared was 10 % . The meaning ascribed and views expressed by both the parties as to the meaning of dividend have been heard in depth and detail. The record has carefully been perused. This petition would be incompetent if the controversy was only with regard to the declaration of 10 % dividend in 1991 and if the matter rested there, the respondent may or may not declare a dividend. This cannot be agitated. However, here the controversy revolves in fact on matter vitally connected with the settlement. In August 1991 the respondent admittedly issued bonus shares to its shareholders as mentioned in the petition as "It is admitted the Company in August 1991 issued bonus shares to the shareholder as mentioned in the petition. In para. 7 of the petition, admitted by the respondent, it is asserted as follows:‑‑ "Surprisingly on 8th of August, 1991 the respondent made a bonus issue of shares on Rs. 191.500 million (50% of the holdings) to the shareholders in the form of one fully paid‑up ordinary share of Rs.10 for every two shares. Similarly respondent again approved a bonus issue of shares of Rs. 287.200 million at one share for every two ordinary fully paid‑up shares of 10 each to the shareholders. The most interesting part is that the second issue bonus shares was made on the basis of 50% of the entire holdings of the shareholders including the bonus shares issued to them on 8th August, 1991. Thus, giving the shareholders bonus shares to the tune of one hundred and twenty‑five per cent. of their original shareholdings. It is also worth mentioning here that at the time of issuing the bonus shares, the market price of each share was Rs.96. As is apparent from the above, the shareholders were given 10 % dividend and were given 125 % paid‑up bonus shares out of the profits of the company which were subsequently sold by the shareholders Q Rs. 95 per share, in the market. It is clear that the entire effort of declaring 10 % dividend and thereafter giving bonus shares to the shareholders was an exercise by the respondent to deprive the workers of their due share in the profits of the company and against the terms of their employment. Needless to mention that the profits were generated with the efforts and hard work of the workers who had all the rights to participate in the view of the Memorandum of Settlement agreed upon and signed between the petitioner and the respondent. " Thus, bonus shares were issued twice, once for Rs.191.500 million (50% of the holdings) and again for Rs.287.200 million. One fully paid‑up share of Rs.10 for every two shares. The second issue of bonus share was made on the basis of 50% of the entire holding of the shareholders including the bonus shares issued to them on 8‑8‑1991. The shareholder thus increased their shareholding to 125 % of their original shareholding. The bonus share was given to the shareholders of Rs.10 (without receiving any penny from the shareholders) when the market value of the share was Rs.95. While the dividend was declared at 10% the shareholders received a windfall in the shape of bonus shares. The matter that requires to be interpreted is "whether a bonus share has any relevance to the dividend declared by a company?" What really is a bonus share? Can a bonus share be construed to be a dividend? The settlement of 1987 contain the, rationale and basis for grant of additional bonus in the words "since the payment of bonus is dependent on the profits of the company". But before this important question of interpretation can be discussed certain preliminary objections have to be decided. These contain locus standi of the Collective Bargaining Agent, absence of an industrial dispute, non‑existence of allegations of unfair labour .practice, applicability of Pakistan Essential Service (Maintenance) Act, 1952 non‑service of grievance petition; incapability of the Collective Bargaining Agent .to secure rights guaranteed to the workers under section 34 of the I.R.O., 1969 and in the body of the written reply there is an objection in terms of section 25‑A of the I:R.O., 1969 the grievance petition is time‑barred. These objections lose their relevance altogether in view of the exercise of jurisdiction by the Bench. Admittedly the petitioner is an industry wise Trade Union registered with the National Industrial Relations Commission. Once this fact is admitted, section 22‑B(3)(b) comes into play. The section can usefully be reproduced:‑‑ "In relation to industry-wise trade unions, federations of such trade unions, federations at the national level and cases referred to the Commission, perform such functions and exercise such powers as are performed and exercised by a Registrar, a Labour Court or a Tribunal in relation to trade unions and federations of trade unions within a Province, and for this purpose, any reference in this Ordinance to a Registrar, "Labour Court", or, as the case may be, "Tribunal" shall be deemed to be, a reference to the appropriate Bench of the Commission to which such functions are assigned: Provided that; in the performance of those functions and in the exercise of those powers, the Benches shall, unless otherwise provided in this Ordinance, follow the procedure laid down in the regulations to be made under section 22‑F." The Commission has, therefore, the same jurisdiction as a Labour Appellate Tribunal and the jurisdiction conferred under section 50 of the I.R.O., 1969 to the Tribunal can be exercised by the National Industrial Relations Commission in relation to an industry‑wise trade union. Section 50 of I.R.O., 1969 reads as follows: "Interpretation of settlements and awards.‑‑‑(1) If any difficulty or doubt arises as to the interpretation of any provisions of an award or settlement, it shall be referred to the Tribunal constituted under this Ordinance. (2) The Tribunal to which a matter is referred under subsection (1) shall after giving the parties an opportunity of being heard, decide‑the matter and its decision shall be final and binding on the parties." Unlike a Labour' Appellate Tribunal, the National Industrial Relations Commission has implicit jurisdiction to take action on its own motion with regard to any matter in relation to its functions which not only includes the' jurisdiction under section 50 of the I.R.O. but also to take measures in terms of the National Industrial Relations (Procedure and Functions) Regulations, 1973 to prevent the occurrence of unfair labour practice. Section 22‑A(9) of I.R.O., 1969 reads as follows:‑ "The Commission may, on the application of a party, or of its own motion,‑‑ (a) initiate prosecution, trial or proceedings or take action, with regard to any matter relating to its functions; and (b) withdraw from a Labour Court any application, proceedings or appeal relating to unfair labour practice. " Therefore, the National Industrial Relations Commission can take action with regard to any matter relating to its functions and interpreting the settlement (with regard to which there is both doubt and difficulty) which jurisdiction is available to this Commission under section 50 read with section 22‑B(3)(b) of the I.R:O., 1969. This can be done suo motu or the petition in hand can be treated as one under section 50 of I. R.O. 1969. Since reference to sections in a petition are not germane to the exercise of jurisdiction if otherwise available preliminary objection in this view of the matter fall by the wayside as:‑‑ (a) Any party to a settlement can move the National Industrial Relations Commission for interpretation and if one party is an industry-wise trade union, the National Industrial Relation Commission can even do if of its own motion, this being one of the functions of the National Industrial Relations Commission. The objection as to locus standi becomes unsustainable. (b) The existence or absence of an industrial dispute is irrelevant. There is clearly a dispute, doubt and difficulty as to the interpretation on a settlement. (c) The non‑mention of allegation of unfair labour practice is irrelevant as this is not a case of unfair labour practice. These can certainly be apprehended but there are none committed but this is not germane to the National Industrial Relations Commission interpreting a settlement to which an industry wise trade union is a party. (d) The applicability of Pakistan Essential Services (Maintenance) Act, 1952 has no bearing on the issue particularly when the specified authority under Essential Services (Maintenance) Rules is the Chairman, National Industrial Relations Commission or a member of the Commission authorised by the Chairman. This is a case for interpreting a settlement and the Act of 1952 is not attracted at all. (e) The non‑service of grievance notice and the inability of a Collective Bargaining Agent to secure rights of workers under section 34 of the I.R.O. becomes meaningless objections nor is the grievance time‑barred as the rights would only be available after this decision. The matter, unless decided, is likely to lead to occurrence of unfair labour practice, on the part of both the parties and wrestling with technicalities would constitute a failure to exercise jurisdiction vested in the National Industrial Relations Commission by law. The difficulty and doubt in the settlement arise with respect to the meaning word ‑"dividend". In 1991, the respondent having earned far more profit than in 1990, declared 10 % dividend when in the previous years it declared 23 % . It, however, issued bonus shares. The word dividend is defined in section 2(20) of the Income Tax Ordinance, 1979, Relevant clause is (b) which is reproduced hereunder:‑‑ "(20) Dividend includes‑‑ (b) any distribution by a company, to its shareholders of debentures, debenture‑stock or deposit certificate in any form, whether with or without interest, and any distribution to its preference shareholders of shares by way of bonus, to the extent to which the company possesses accumulated profits whether capitalized or not." Bonus shares to preference shareholder are included in dividend under section 2(20)(b) of Income Tax Ordinance, 1979. Therefore, the two bonus shares issued by the respondent in 1991 are nothing else but a dividend. Clearly, this was manner of rewarding the shareholders without taking the settlement into account, rather by declaring the dividend at only 10 % the company attempted to deprive the workers of additional bonus. "Dividend" as defined in the Articles of Association of the Company includes "bonus". The power to issue bonus shares is available even under the Companies Ordinance, 1984. It is perfectly in order of a company to do so. But the additional bonus is dependent upon the quantum of profits. The profits in 1991 were higher than 1990 when a dividend of 23 % was declared but no bonus is dependant upon the quantum of profits. The profits in 1991 were higher than 1990 when a dividend of 23 % was declared but no bonus shares were issued. In 1991 the dividend was reduced to 10 % but bonus shares were issued assuring a ‑windfall to the shareholders. The shareholders were rewarded but the workers deprived of their shares in the profits based on the settlement. The bonus shares issued in 1991, therefore, are dividend and entitle the workers to the additional bonus in terms of the settlement. There is no need to get into calculation as to how much profit was earned by the shareholders through the bonus shares nor is the commission inclined to stick to the figure of a dividend of 28.89% but in any case the dividend could not be less than 23 % declared in 1990. The bonus clause in the settlement is, therefore, interpreted and doubt and difficulties are removed as follows:‑‑ (i) The workers have clearly a stake in the profits under the settlement. (ii) Additional bonus is dependent on a declaration of dividend. (iii) Bonus shares are dividend and have been so shown in the column of profits in the balance‑sheet. (iv) The issue of bonus shares is to be taken into account for the purposes of calculating additional bonus under the settlement. (v) The workers are entitled to additional bonus under the settlement on the basis of cash dividend 10% + bonus shares issued by the Company, and the respondent is directed to make payment of the same to the workers. (vi) Both the parties are directed not to commit any act of unfair labour practice whatsoever nor to pressurize, coerce or intimidate each other which be deemed to be an act in furtherance of acts of unfair labour practice. The petition, is disposed of in the above terms, without any orders as to costs. M.B.A./265/L Order accordingly.