1981 PLP 429 (PLC)

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9. Bonus.‑Bonus shall be paid as per formula laid down in the Wage Commission's Award provided that in no case an employee shall get by way of bonus an amount less than what he got as bonus for the year ended December 31, 1974."

12. The respondent‑Bank produced Manager, Administration Fazalur Rehman as their witness who has supported the stand taken by the Bank. In cross‑examination, the witness admitted that the Bank is governed by a Board of Directors appointed by the Government. He also admitted that the bonus during the period 1969 to 1974 was paid to the workers under the directions of the Board of Directors.

13. Briefly stated, the contentions of the petitioner Federation are as under :‑ (1) Respondent‑Bank has been paying two substantive salaries as bonus from 1961 to 1969. (2) The respondent Bank has been paying bonus equivalent to three substantive salaries from 1969 to 1975. (3) The respondent‑Bank refused to pay three substantive salaries as bonus to the workers and paid only one gross salary to them after the Wage Commission Award came into force in 1975 and thereafter since 1976 onward the respondent‑Bank has refused to give three substantive salaries to the workers as bonus. (4) The respondent‑Bank has been paying the claimed bonus at a uniform rate irrespective of the amount of profits and also in the event of losses. (5) The bonus equivalent to three substantive salaries has become a part of the terms and conditions of employment of the workers of the respondent‑Bank because of long usage. (6) The workers are entitled 'to the said bonus under Standing Order 10‑C(4) of the Standing Orders Ordinance. (7) The claimed bonus has become part of terms and conditions of service by virtue of an agreement in 1969 after a demand notice was served on the Bank.

14. To summarise the contention of the respondent‑Bank they have contested the claim on the following grounds :‑ (i) The workers are not entitled to three substantive salaries as bonus by way of long usage and custom. (ii) The provisions of Standing Orders Ordinance, 1968 are not appli cable to the respondent‑Bank as it is covered by statutory rules and as such the workers of the Bank have no right guaranteed or secured to them as far as the claim for payment of bonus in addition to the bonus payable or paid by the respondents in terms of the directive contained in the Award is concerned. (iii) That even if it is held that the workers were entitled to bonus as claimed by the applicant Federation by way of custom and usage, the Wage Commission Award supersedes all the terms and conditions prevailing before the Wage Commission Award and as such after the introduction of Wage Commission Award the terms and conditions would be governed by the Wage Com mission Award itself.

15. Before drawing conclusion from the evidence discussed above it may be stated that the petitioner Federation has conceded that the claim for bonus is not made by way of fresh industrial dispute under section 34‑A of the Industrial Relations Ordinance but is based on guaranteed fight under section 34 of the said Ordinance. The first point that comes for determination is that whether or not the respondent‑Bank is covered under the provisions of the Standing Orders Ordinance, 1968. The learned counsel appearing on behalf of the respondent‑Bank has argu ed that application is not maintainable under section 34 of the I. R. O., 1969 as no right has been guaranteed to the workers of the Bank on the ground that the Bank has its own statutory rules. It has been contended that the Bank was established in 1961 under Industrial Development Bank Ordinance, 1961. It has also been contended that the Bank has framed its own rules and regulations incorporating the 1975 Wage Commission Award therein and therefore under the first proviso of section (1) of the Standing Orders Ordinance, 1968 the provisions of the said Ordinance will not apply to respondent Bank. The said proviso is reproduced below. 'Provided that nothing in this Ordinance shall apply to industrial and commercial establishments carried on by or under the autho rity of the Federal or any Provincial Government where statutory rules of service, conduct or discipline are applicable to the work men employed therein.

16. A perusal of the above proviso would reveal that in order to attract this proviso it is necessary that establishment should be carried on by or under the authority of the Federal or Provincial Government. In this regard it may be stated that the respondent‑Bank came into existence by virtue of Industrial Development Bank Ordinance, 1961 Section 3(2) of the Industrial Development Bank Ordinance, 1961 lays down that the Bank shall be a body corporate by the name of Industrial Development Bank of Pakistan having perpetual succession and a common seal with power subject to the provisions of this Ordinance to acquire, own and dispose of any property and shall by the said name, sue and be sued. In sub section (3) of section 2 it has been laid down that the Bank shall be deemed to be a banking company for the purposes of the Banking Com panies (Inspection) Ordinance, 1946 (IV of 1946) the Banking Companies (Restriction of Branches) Act, 1946 (XXVII of 1946) the Banking Com panies (Control) Act, 1956 (XXXIII of 1956) and any other law for the time being in force relating to Banking Companies. Under section 4(1) it has been laid down that the share capital of the Bank shall in the first instance, be three crores of rupees divided into three lakh fully paid up shares of one hundred rupees each and may, with the approval of the Central Government be increased from time to time by the Board. Under subsection (2) of section 4 it has been laid down that fifty‑one per cent. of the shares issued at any time shall be subscribed for the Central Government and the remaining shares shall in the first instance, be offered to the shareholders of the Corporation other than the Central Government and if such shares are not subscribed for by such shareholders, be offered for public subscription. Section 12 lays down that the general direction and superintendence of the affairs and business of the Bank shall vest in a Board of Directors of the Bank constituted in accordance with section 13 which may exercise all such powers and do all such acts and things as may be exercised or done by the Bank and are not by this Ordinance expressly directed or required to be done by the Bank in the general meeting. It has also been laid down that Board in discharging its functions shall act on commercial considerations with due regard to the interest of industry and commerce and to the public interest generally. Under subsection (3) of section 12 it has also been laid down that in the discharge of its functions the Board shall be guided on the question of policy by the instructions, if any, given to it by the Central Government which shall be the sole Judge as to whether a question is a question of policy. The Board of Directors under section 13 is to consist of a Chairman and six persons to be appointed by the Central Government.

17. From the above it would be seen that the respondent Bank is a Joint Stock Company and the Board of Directors have fully control to run the business and carry on the functions of the Bank. The Federal Government has no authority except on a question of policy. Moreover respondent‑Bank is a Banking Company within the definition of the com mercial establishment as given in section 2(6) of Standing Orders Ordi nance, 1968 and under subsection (3) of section 2 of the Industrial Development Bank Ordinance, 1961, it has been laid down that the Bank shall be deemed to be a banking company under any law for the time being in force relating to Banking Companies. The proviso of section 1 of the Standing Orders Ordinance is therefore not attracted as the Bank is not carried on by or under the authority of the Federal Government. The respondent‑Bank is therefore covered under the Standing Orders Ordinance, 1968. It may be mentioned that I draw support in my view from two decisions reported in 1975 P L C 1 and P L D 1976 Kar. 1176 which apply with full force and where in a similar issue it was held that National Shipping Corporation and Investment Corporation of Pakistan despite their own rules and regulations are covered under the Standing Orders Ordinance, 1968.

18. It may further be stated that the rules alleged to have been framed by the respondent‑Bank have not been placed on record and there fore it is not known if the rules framed by the Federal Government under the Industrial Development Bank of Pakistan Ordinance, 1961 or the regulations made thereunder by the Board' of Directors contain any pro vision regarding the payment of bonus by way of usage to workers.

19. Having held that the Standing Orders Ordinance, 1968 is applicable to the respondent‑Bank, it is to be seen if bonus as claimed by the Federation has become a part of terms and conditions of the employment of the workers of the respondent‑Bank by way of usage according to clause (4) of Standing Order 10‑C of the said Ordinance. Clause (1) of Standing Order 10‑C lays down that every employer making profit in any year shall pay for that year within three months of the closing of that year to the workmen who have been in his employment in that year for a con tinuous period of not less than ninety days a bonus in addition to wages payable to them. Clause (2) of Standing Order 10‑C lays down the rate at which the bonus is to be paid. Clause (3) lays down that the bonus payable to the worker entitled thereto under clause (1) shall bear to his monthly wages the same proportion as the total bonus payable by the employer bears to the aggregate of wages referred to in paragraph (a) of clause (2) and shall be paid either in cash or in N. I. T. units of equivalent value at the option of said workman. Under clause (4) it has been laid down that nothing in this section shall be deemed to affect the right of any workman to receive any bonus other than that payable under clause (1) to which he may be entitled in accordance with the terms of his employment or any usage or any settlement or an award of a Labour Court established under the Industrial Relations Ordinance, 1969. As stated above the claim for bonus is made by the petitioner Federation mainly on the basis of usage. It is admitted by the parties that the workers and officers of the Bank were given bonus equal to two months substantive salaries from the years 1961 to 1968, In the year 1969 an industrial dispute under section 26(1) of the I. R. O. was raised. Amongst other demands, it con tained a demand for bonus, equal to four substantive salaries. In the letter dated 12th March, 1969 (Exh. A. W. 1/1) written to the Bank, the General Secretary of I. D. B. P. Employees Union stated as under :‑ "You will appreciate that we have already submitted a twenty‑point demand charter to you keeping in view of the Board's Meeting to be held on 13th March, 1969 so as to enable you to discuss the relevant demands with the Board Members and reach a final solution thereby. Our demands are merger of dearness allowance with Basic Salary, Promotion of staff, four annual bonuses, 30% House Rent, Change of cadres of Stenographers and typists, medical facilities to dependents, conveyance allowance and ad hoc relief etc. It is not within our knowledge what decisions you have taken to fulfil our demands or what arrangements have been made to put our demands to the Board. We have received a telegram from the General Secretary of I. D. B. P. Employees Union of our Dacca Office (copy enclosed). The telegram is self‑explanatory. As we have submitted our demand charter to you in consultation with our Union of Dacca Office, we feel it necessary to request you to put forward our major demands to the Board on 13th March, 1969 for their consideration and immediate acceptance of our demands. These demands are :‑ (i)

(ii)

(iii) Four annual bonuses. (iv)

20.The respondent‑Bank on 13th March, 1969 addressed a letter to the General Secretary of the Union an extract of which is reproduced below :‑ "With reference to our letter dated the 13th March, 1969 and the discussion held today, we have to advise that the following matters have been agreed to by the Bank. (1) Ad‑hoc relief. (2) Immediate promotion. (3) Medical facilities. (4) House Advance. (5) Change of cadres.

21. In the last para. of the said letter it was stated that "the manage ment will recommend to the Board of Directors the Central Government and the Annual General Meeting of Share‑holders of the Bank grant of three bonuses for staff upto and including category II". This letter was followed by a Staff Order No. 43/69 dated 19th September, 1969 in which it was stated that the Board of Directors at its meeting held at Karachi has been pleased to declare bonus for the financial year ended 30th June, 1969 to officers and staff of the Bank at the following rates :‑ (i) Staff in category I two months substantive pay as on 30th June, 1969. (ii) Staff in categories 11, III and IV three months substantive pay as on 30th June, 1969. .

22. From the above correspondence it will be clear that the Union raised a demand of getting four bonuses. The Management replied that the Bank has agreed to recommend to the Board of Directors grant of three bonuses. The demand of three bonuses was submitted to the Board of Directors. After discussion, the Board of Directors agreed to allow three months pay as bonus as against four months bonus demanded by the Union. It would be thus clear from the above that under an agree ment the quantum of bonus at the rate of two months substantive pays was raised to three months substantive pays. There is no evidence to show that this agreement was terminated by either parties. Moreover the letter through which the Management of the Bank agreed to pay three months' substantive pay as bonus does not state that the agreed bonus is to be paid only for the year 1969. The only inference that can be drawn is that the workers who continuously and regularly received two months substantive pay as bonus would now be receiving three months' substan tive pay as bonus after 1969. This conclusion is further confirmed by the fact that the same amount of bonus was paid to the workers for the financial years 1969‑70, 1970‑71, 1971‑72, 1972‑73, 1973‑74, 1974‑75, This is proved by the staff orders and the annual reports for the years 1969 to 1975 which have been placed on record and which show that continuously for the last six years the workers were receiving bonuses at the rate of three substantive pays as on 30th June of each year. There was no mention in these circulars or in the report of Directors that the said bonuses were profit bonuses or that the said bonuses were linked in any way with the profits. There are only two possible interpretations. The first interpreta tion is that the bonuses were paid under an agreement in 1969 when the Bank agreed to pay the same consequent upon raising of the demands in March, 1969. In this way to workers have become entitled to receive, three months' substantive pay as bonus according to the terms and conditions of an agreement and as such the said bonus is admissible to workers under clause (4) of Standing Order 10‑C of the Standing Orders Ordinance.

23. The other interpretation would be that the workers received these bonuses by way of usage. The Bank came into existence in 1961. Since its establishment in 1961 upto 1968 the workers and the officers both received bonus equal to two months' substantive pay. In deciding the point under consideration, it would be of much help to find out the nature of the two months' bonus paid to the workers prior to 1969. It is, admitted by the Bank that two months' bonus was being paid to the wor kers from 1961 to 1969. The Bank itself was established in 1961 and since then the said bonus was paid to the workers as well as to the officers of the Bank. There is no evidence to show that this bonus was dependent on profit. The Bank has been paying this amount at a uniform rate both to the workers as well as the officers. In my opinion since the two months' bonus for successive nine years was being paid both to the workers and the officers it constituted part of the terms and conditions of service parti cularly because it was not linked in any way with the profits.

24. Similarly from 1969 to 1975 the workers regularly received three months substantive pay for seven years. It has also been alleged that workers received the said bonuses also in loss. No evidence has been led to refute this allegation. The said bonus was paid irrespective of the amount that the Bank made during three years. I therefore hold that the said bonus equivalent to three months' substantive pay was received by them by way of usage and the workers are entitled to receive the said bonus under Standing Order 10‑C(4) of the Standing Orders Ordinance, 1968.

25. It has been next contended by the respondent‑Bank that Wage Commission Award 1975 has superseded all the terms and conditions of the employment of the workers. In this regard a reference has been made to pare. 283 of the Award. It has been laid down in para. 283 that the payment of bonus shall be subject to the maximum limits of divisible profit prescribed in section 10‑C of the West Pakistan Standing Orders Ordinance, 1968. A perusal of the above para. would reveal that bonus under para. 283 of the Wage Commission Award pf 1975 has been given as a profit bonus and the reference to Standing Order 10‑C is made only for the purpose of prescribing a maximum limit to which workers were entitled by way of profit bonus. At the most it could be said that the amount of bonus awarded under para 283 is in substitution of Standing Order 10‑C of the Standing Orders Ordinance, 1968. It is nowhere laid down in paras 283 and 284 of the Wage Commission Award that the workers will not be entitled to any bonus if it is available to them in accordance with‑ the terms and conditions of employment by way of usage or any settlement or any award of a Labour Court established under I.R.O., 1969. The contention therefore that the Wage Commission Award has superseded the terms and conditions to which a worker was entitled prior to the coming into force of the Wage Commission Award is not tenable. A Press Note issued by the Government of Pakistan dated 5th October, 1976 which has been relied upon by the respondent‑Bank clearly states that the bonus awarded by the Wage Commission Award shall not be less than the amount received by the workers under Standing Order 10‑C of the Standing Orders Ordinance on 30th June, 1974. This also supports my view that the bonus mentioned in para 283 of the Wage Commission Award of 1975 relates to profit bonus and it does not super sede the provisions of Standing Order 10‑C(4) of the Standing Orders Ordinance.

26. The next contention of the respondent‑Bank is that according to section 38‑I of the Industrial Relations Ordinance, 1969 the Award of the Wage Commission has repealed all the provisions of the Standing Orders Ordinance, 1968 to the extent of repugnancy. I do not agree with this contention. Section 38 I is reproduced below :‑

381. Effect of law and agreements inconsistent with sections 38‑A, 38‑B, 38‑C, 38‑D, 38‑E, 38‑R, 38‑G and 38‑H.‑The provisions of sections 38‑A, 38‑B, 38‑C, 38‑D, 38‑E, 38‑G and 38‑H shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service, whether made before or after the coming into force of the Industrial Relations (Amendment) Ordinance, 1974."

27. A perusal of section 381 would show that whatever is contained in sections 38‑A to 38‑H shall have effect notwithstanding anything contain ed in any law, settlement, award or contract of service but it would not mean that the Wage Commission has been empowered to give an award through which all the guaranteed rights under various statutes can be taken away. For instance, the award cannot take away the right of for oration of Unions. Such wide powers would mean that the Wage Commission has been given the powers to repeal the statutes. On the other hand subsection (3) of section 38‑C lays down that no industrial dispute shall be raised in respect of any matter which is under the consideration of the Wage Commission nor shall any dispute be raised in respect of any matter on which the decision of that Commission is in operation. Since the above provision is contained in section 38‑C itself, no industrial dispute can be raised in respect of any matter which is under the considera tion of the Wage Commission but sections 38‑A to 38‑H are silent on the subject of formation or registration of trade unions. The Wage Com mission therefore is not competent to take away the right of association and registration of Trade Unions. Had it been the intention of legislation it would have clearly laid down that the award of the Wage Commission shall have effect notwithstanding anything contrary laid down In any law, settlement or award. What section 38‑I lays down is that sections 38‑A to 38‑H would have ascendancy over settlement award or law. Sec tions 38‑A to 38‑H provide for the establishment of a Wage Commission, manner of fixation of wages, publication of the decision of, the Wage Commission, its effective way of implementation, special powers of the Wage Commission, its powers and procedure, the binding nature of its decision and also its powers to fix interim rates of wages. The Wage Commission in my opinion has not been given the powers to legislate. The contention is therefore repelled.

28. It may be added that other banks and financial institutions have allowed additional bonus over and above the Wage Commission Award to their workers. The names and amount of such bonus has been men tioned earlier in this decision. There is no reason why the workers of the respondent‑Bank should be denied their right of receiving bonus parti cularly when the workers are entitled to the same by way of usage udder Standing Order 10‑C(4) of the Standing Orders Ordinance, 1968.

29. In this view, I draw support from a decision of the High Court of Sind in Constitutional Petition No. 150 of 1976 Investment Corporation of Pakistan v. Presiding Officer III Sind Labour Court and I.C.P. Employees Union decided on 17th June, 1979. The facts of the above case as would be seen from the extract below are similar to the present case :‑ "The relevant facts in this petition are that the petitioner is a statutory Corporation established in 1966 for the business of investment finance. It started its business in 1967 and awarded a bonus of 1 months' basic pay to all its employees in the month of November, 1969. In thx year 1970 a bonus of two months basic pay was declared and similar types of bonuses were declared in 1971, 1972, 1973 and 1974. It is an admitted position that these bonuses were declared before Eid but the petitioner has contended that the declaration of bonuses before. Eid was merely a matter of coincidence as they were declared as a result of the meeting of the Board of Directors after the accounts for the previous year had been concluded. For the year 1975 the petitioner declared a bonus of only one month's basic pay and the same was declared in accordance with the award made by the Wage Commission which award was given in June, 1975 but was made effective from 1st January, 1975. The bonus declared in 1975 was ‑on the basis of profit earned by the Company. This Wage Commission had been constituted under section 38‑A of Industrial Relations Ordinance, 1969. The workers felt aggrieved that they had been denied the custom bonus on the occasion of Eid of two months' basic wage given to them by the petitioner‑Company during the preceding 6 years from 1969 to 1974 and they claimed that it was a customary bonus given to them on the occasion of festival of Bid and the same was a different bonus based on usage and custom distinct from the bonus declared in accordance with the award of Wage Commission which was statutory bonus under section 10‑C of Standing orders Ordinance, 1968 and that paragraph 4 of S. O. 10‑C had clearly saved the bonus to which workmen were entitled in accordance with the terms of employment or any usage or settlement or an award. They asserted that such bonus had to be awarded separately from the bonus declared on the basis of profits."

30. In the above case similar objections were taken by the Investment Corporation of Pakistan and were overruled. It was held that the bonus received by the workers during the years prior to the enforcement of the Wage Commission Award became part of terms and conditions of workers by way of usage. Relevant extracts from the judgment are reproduced below :‑ "Mr. Mansoor A. Khan states that since the Wage Commission has determined as to what bonus would be payable therefore, any other bonus, even if it is a bonus of usage or custom, should have no effect. I do not agree. In the first instance the Wage Com mission award has not been placed either on the record of Lower Court nor before this Court and therefore placing any reliance on the same is out of question. Moreover, there is no claim of the petitioner that the Wage Commission award has dealt with anything except profit bonus which is allowed under Standing Order 10‑C of West Pakistan Industrial and Commercial Employ ment (Standing Orders) Ordinance, 1968. The Wage Commission is not alleged to have made any declaration that any bonus, if it could be claimed by a worker under Standing Order 10‑C(4) on account of usage unconnected with profits, could not be claimed by a worker. Thus, I do not find any force in the contention of Mr. Mansoor Ahmad Khan that the Wage Com mission award had, by implication, done away with the bonus by usage. No such inference by implication can be made and if there was an intention to take away right established by usage or a right which was a term of employment then the same should have been done in unequivocal terms and not otherwise. Since the claim of the respondent was evidently not covered by the Wage Commission Award therefore non‑payment of such bonus could be made the basis of grievance under section 34 and the application was therefore competent.

Consequently if the C. B. A. could establish that their claim for such bonds was covered by clause 4 of Standing Order 10‑C then they could competently file any application under section 34 of I. R. O. off` 1969 which allowed the enforcement of right guaranteed under any law. The bonuses saved under Standing Order I.O‑C(4) were in fact the rights guaranteed under the law.

The contention that it had not acquired usage of bonus on account of lack of ancient practice is not correct because the length of the usage would depend upon the circumstances of each case. The usage is not required to be ancient as is the rule with custom. In the law Lexion by Aiyer, 1940 edition page 1310 the word `usage' is described as "rights of every kind, which stand upon the foot of usage, gradually receive new strength in point of light and evidence from the continuance of that usage. In J L R 26 Cal. 184', the word usage occurring in Act VIII of 1885, Bengal Tenancy Act was held to include what the people are now or recently in the habit of doing in a particular place". In my view usage in respect of petitioner com pany is to be determined in accordance with the length of the life of the petitioner itself. The business operations of the petitioner had started only from 1967 and they started giving the bonus only one year after the operations had started and they announc ed the first bonus in November, 1969 for the fiscal year 1968‑69, thereafter, the petitioners consistently declared bonus for 5 years. Therefore, in the circumstances of this case, I hold that a usage had been established of the payment of such a bonus on account of its consistent declaration for 6 years."

31. I have therefore no hesitation in holding that for the years 1975‑76, 1976‑77, 1977‑78, 1978‑79, 1979‑80, the workers of the respondent‑Bank are entitled to bonus equal to three months substantive pays as they respectively stood on 30‑6‑1975, 30‑6‑1976, 30‑6‑1977, 30‑6‑1978, 30‑6‑1979. Accordingly‑ the respondent‑Bank is ordered to pay the said bonus to the workers. I am informed that in view of the Press Note issued by the Federal Government on 5th October, 1975 the respondent‑Bank has already paid some amount out of the said bonus to the workers, if so the balance should be paid to them one month after passing this order to enable the respondent to prefer an appeal to the Full Bench of the Commission if they so desire.