1. DORAB PATEL, J.-The question in these two appeals is of the proper construction of Standing Order 10-C of the West Pakistan (Standing Orders) Ordinance, 1968 (hereinafter called the Ordinance).
2. This Order, to which I will refer as the Order, reads :--- "10-C. Payment of bonus.-(1) 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 continuous period of not less than ninety days a bonus in addition to the wages payable to such workmen.
(2) The amount of the bonus payable shall-
(a) if the amount of the profit is not less than the aggregate of one month's wages of the workmen employed, be not less than the amount of such aggregate, subject to the maximum of thirty per cent. Of such profit ; (Illustration 1.-If the profit is Rs. 1,20,000 and the aggregate of one month's wages of the workmen is Rs. 30,000, the amount of bonus payable shall be not less than the aggregate of one month's wages, that is to say, Rs. 30,000.
3. Illustration 2.-If the profit is Rs. 30,000, and the aggregate of one month's wages of the workmen is also Rs. 30,000.00, the amount of bonus payable shall be not less than thirty per cent. Of the profit that is to say, Rs. 9,000).
(b) if the amount of the profit is less than the aggregate referred to in paragraph (a), be not less than fifteen per cent of such profit.
(3) The bonus payable to a workman 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 the wages referred to in paragraph (a) of clause (2) and shall be paid either in cash or in N.
1. T.
4. Units of equivalent value at the option of such workman.
(4) 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 (XXIII of 1969).
5. Explanation----For the purpose of this section --
(a) "N. I. T. Units" mean the Units referred to in the National Investment (Unit) Trust Ordinance, 1965 (VII of 1965) ;
(b) "Profit" means the "not profits" as defined in section 87-C of the Companies Act, 1913 (VII of 1913) ;
(c) "Wages" does not, for the purpose of calculating the bonus payable to a person under clause (1), include the bonus referred to in clause (vi) of section 2 of the Payment of Wages Act, 1936 (IV of 1936)."
6. The Order came into force on the 13th of April, 1972 and was one of the many amendments made in the labour laws by the Labour Laws (Amendment) Ordinance, 1972. It is obviously a piece of welfare legislation and must be construed liberally. But, however, liberally we construe the Order, what does it mean ? It imposes on every employer a statutory liability to pay bonus out of profits in the manner prescribed in the Order. I would, therefore, refer to this bonus as a statutory bonus, and although the Order imposes an obligation on every employer to pay this statutory bonus, the Order leaves it to the employer to make his own arrangement for the discharge of his statutory obligations. Therefore, if on the date of the promulgation of the Order, an employer was under an obligation to pay bonus out of his profits, payment under this obligation would, prima facie be in pro tanto discharge of his statutory obligation in the absence of some clear provision to the contrary in the Order. But, there is no such provision unless, as submitted by Mr. Minto, clause (4) amounts to a clear provision to the contrary.
7. I am, however, unable to accept Mr. Minto's submission, because clause (4) is merely a saving clause. And, because it states that nothing in the Order "shall be deemed to affect the right of any workman to receive an bonus other than that payable under clause (1) to which he may be entitled, in accordance with the terms of his employment...", this does not mean that the workman is entitled to the statutory bonus in addition to the bonus of which he may be entitled "in accordance with the terms of his employment..." Additionally, Mr. Irshad Hasan referred us here to the observations of Fakhruddin G. Ebrahim, J., on the objects of the Order in Pakistan Tobacco Co.
8. Ltd., Karachi v. Pak Cigarette Labour Union and another (PLD 1977 Kar. 879The learned Judge observed at page 883 :- "Now, in so far as the Schedule to the Standing Orders Ordinance is concerned it provides for minimum terms and conditions of service applicable to specified establishments. Before the incorporation of Standing Order 10-C payment of profit bonus depended upon either the will of the employer or was paid under an award or a Settlement between the parties. These were a large number of establishments which did not pay any profit bonus. By introducing Standing Order 10-C such establishments were compelled to pay a profit bonus .."
9. I agree with these observations. At the date of the Order, there were pro--gressive employers, who shared their profits with their workmen and there were employers who were not prepared to part with a paisa of their profits.
10. Therefore, the Legislature stepped in to give workmen a minimum share in the profits of the establishment in which they were employed. But, if we were to accept the submissions of Mr. Minto, it would mean that the intention of the Legislature was to penalise progressive employers, because of the failure of other employers to share their profits with their workmen. And, it is not irrelevant to recall here that the Order was promulgated within three months of the tragic events of December, 1971. As industry in the country was then facing great difficulties, if a progressive employer had been made to pay .Statutory bonus in addition to the. Agreed bonus, it would have put a crushing burden on him, and that on account of employers who earned profits but did not distribute any bonus. As such absurdity is not to be lightly attributed to the Legislature I agree with the view of Fakhruddin G. Ebrahim, J., that the only object of the Order was to give labour a minimum share in the profits of the employer, therefore, the statutory bonus cannot be given. In addition to the agreed bonus, but to the extent to which the agreed bonus falls short of the statutory bonus, the employer would have to make good the difference to his workmen. And, if a bonus was not paid gut of profits, the employer would be liable to pay. The entire statutory bonus. With these observations I turn to the facts of the appeals before us.
11. The Pakistan Tobacco Co. Ltd. Is the respondent in Civil Appeal No. 117 of 1977 and I will refer to it as Pakistan Tobacco. It was incorporated as a public company in 1947 and at one time it had a monopoly of the manufacture of cigarettes in the country, therefore, it is not surprising that it had been paying bonus to its workmen long before the promulgation of the Order, and so when the Order came into force, it was under an obligation to pay bonus to its workmen under a settlement executed on 26-1-1972. However, on the promulgation of the Order, Pakistan Tobacco's Labour Union (which is the appellant in Civil Appeal No. 117 of 1977) demanded the statutory bonus in addition to the bonus for which Pakistan Tobacco was liable under the settlement of 26-1-1972. The parties tried to settle their disputes, but as the appellant was adamant, in order to avert a strike, Pakistan Tobacco entered into a fresh settlement with it on 13-6-1973 under which it paid its workmen the statutory bonus in addition to the bonus due from it under the settlement of 26-1- 1972, but, as the pay--ment of the statutory bonus was expressly made subject to its rights to seek relief in the Courts, it immediately filed a petition under section 34 of the Industrial Relations Ordinance on 11-7-1973 before the IIIrd Sind Labour Court, Karachi and its contention in this petition was that it was not liable to pay the statutory bonus, in addition to the bonus for which it was liable under the settlement of 26-1-1972.
12. For reasons which will presently become apparent, it will be convenient to turn now to the facts of the other appeal, which has been filed by the Khyber Tobacco Company Limited, to which I will refer as Khyber. Although Khyber began production in 1962, it commenced making profits only with the financial year beginning with Ist of July, 1967. It paid one month's wages as bonus to its workmen for this year.. As it continued to make profits, it paid a bonus of 12 -- % f to its workmen for the next two financial years. Then, in January, 1971, it entered into a fresh agreement with its Labour Union (which is the respondent in Civil Appeal No. 118 of 1976) under which it agreed to pay two months' bonus to its workmen for the calendar years 1970, 1971 and 1972. Before the expiry of this agreement and after the promulgation of the Order, Khyber entered into a fresh agreement on 8- 1-1973 with the respondent to pay its workmen "an annual bonus at the rate of 21 months basic pay in lieu of the bonus pres--cribed" in the Order.
13. However, despite this agreement, in 1974, the respondent demanded the statutory bonus in addition to this agreed bonus of 21 months and as the parties were not able to settle their differences, in the events that happened, the respondent filed an application in the Labour Court, Peshawar, in order to enforce its claim to the statutory bonus in addition to the agreed bonus.
14. Khyber contested the application, inter alia, on the ground that the respondent was bound by this agreement of 8-1-1973, but as the Labour Court allowed the respondent's application, Khyder filed a writ petition in the Peshawar High Court.
15. The writ petition was successfully contested by the respondent, and the learned Judges, who heard it, accepted the respondent's contention that it was not bound by the agreement of 8-1-1973 because there could be no estoppel against this statute. The learned Judges also accepted the respon--dent's contention that the agreement of 8-1-1973 was void, because the bonus agreed under this agreement was less favourable than the statutory bonus. But, having held that the agreement was void, the learned Judges were nonetheless of the view that the respondent was entitled to enforce this agreement. They also held, after examining various settlements between Khyber and the respondent, that the agreed bonus was not a bonus which was paid out of Khyber's profits, because the settlements between the parties did not contain an express reference that bonus was being paid out of the profits. The learned Judges then approved of the view taken in Messrs M. Tilak & Co. v. Third Industrial Tribunal and others (AIR 1959 Cal. 797and in Messrs The Attock Oil Co. Ltd. v. The Supreme Body of Oil fields League and Refinery Union, Rawalpindi (PLD 1970 Lab. 122and held that if "a worker had been able to make his employer agree to pay him a bonus it would be deemed to have become a part of his wages to which he would be entitled as a matter of right under the contract/settlement." Therefore, they held that Khyber's workmen were entitled to the statutory bonus in addition to the agreed bonus of 21 months. Finally, they were of the view that the remedy of a writ petition was not available to Khyber, because the acceptance of its claim would further injustice. Therefore, they dismissed its writ petition.
16. Turning now to the facts in the appeal against Pakistan Tobacco, I had pointed out that Pakistan Tobacco had filed an application in the Sind Labour Courts in order to obtain a clarification of its liabilities under the Order. This application was dismissed by the Labour Court on the basis of the Peshawar High Court's judgment in Khyber's case which is Khyber Tobacco Co. Ltd., Mardan v.
17. Labour Union PLD 1976 Pesh. 8). There challenged the order of the Labour Court in a writ petition in the Sind High Court. The. Was contested by the appellant which .Relied on the judgment of the Peshawar High Court in the Khyber Tobacco Company's case. The plea of Pakistan Tobacco, on the other hand, was that an employer was not liable under the Order to pay a bonus twice out of its profits. And, as it proved that it had been paying bonus year after year out of its profits (except for an ex gratia payment in 1971 when it had incurred losses) its contention was that it was not liable to pay a second bonus. It also challenged the view of the Peshawar High Court that the bonus paid by it to its workmen had become a part of their wages merely because it had been paying bonus for many years.
18. Zafar Hussain Mirza, J., who heard the writ petition, dissented from the view taken in the Khyber Tobacco Company's case and in Attock Oil's case that bonus paid under an agreement became a part of the contractual wages of workmen. The learned Judge also examined the view taken in the Khyber Tobacco Company's case that bonus paid under a settlement is not a bonus paid out of profits if the settlement does not specify that the bonus is being paid out of profits. As he was not able to agree with this view, he examined the background in which Pakistan Tobacco had been paying bonus year after year and held that the bonus paid by Pakistan Tabacco had always been paid out of its profits. He then examined Pakistan Tobacco's claim that the Order did not impose upon the employer an obligation to pay two bonuses in the same year out of profits, and held that if this plea was accepted, it would lead to anomalous consequences, and in this connection he observed :- "It is quite obvious from clause (2) of S. O. 10-C that the statute prescribed for minimum rates and no maximum rates was stipulated therein. Accordingly, an employer would be guilty of violation of the provisions of Standing Order 10-C in case he fails to pay profit bonus at the minimum rate prescribed and any agreement to that effect would be void as being unlawful. This leads to the conclusion that it is open to the workmen despite the mandatory payment of profit bonus under S. O. 10-C to demand for the payment of profit bonus at a higher rate if they can justify the same and in case of such a dispute the employer may enter into a settlement or a Labour Court may award a profit bonus at a higher rate. This interpretation does not offend in any way against the language of the enactment or operate harshly to any party. Apparently, clause (4) would be attracted to bonuses pay--able under existing terms of employment, usage or settlement or award in force at the time Standing Order 10-C became operative. Likewise,it will be attracted to eases arising in future. Looking at the provisions of clause (4) in the above prospective it would appear that the intention of the Legislature was to clarify that if the bonus is payable otherwise than under the statute by virtue of terms of employment, usage, settlement or award, it shall continue to be payable. To me the meaning of the word is "other than" appears to be "apart from" and if the former words are substituted with the latter the meaning would be plain and clear."
19. Accordingly, for these reasons the learned Judge agreed with the view of the Peshawar High Court and dismissed Pakistan Tobacco's writ petition.
20. Pakistan Tobacco filed an Inter Court Appeal in the Sind High Court against this judgment which was allowed. In allowing the appeal. Fakh--ruddin G. Ebrahim, J., who wrote the judgment of the Court, observed "To my mind there is no question of the workers being entitled to two profit bonuses and it will be for the workers to accept either a settle--ment profit bonus or statutory profit bonus. There would, therefore be no occasion for a conflict between the two. The other interpretation would be that an attempt will be made to harmonise the terms and conditions of the settlement bonus and the statutory bonus and the more favourable between the two will prevail."
21. But the learned Judge rejected this "other interpretation' without giving any reasons for so doing, therefore, he allowed Pakistan Tobacco's appeal, and Pakistan Tobacco's Labour Union has come in appeal to us against this judgment. We have heard it with Khyber's appeal as both the appeals turn on the same questions of law, and especially on the meaning of the word "bonus".
22. The Lahore and Peshawar High Courts have taken the view that once the payment of a bonus is agreed to by the employer, it becomes part of the wages of workmen, but as the Sind High Court has dissented from this view, it is necessary to resolve this cleavage of opinion in the High Courts.
23. According to the Oxford English Dictionary, the word "bonus" means- "A boon or gift over and above what is normally due as remuneration to the receiver . . . Money or its equivalent, given as a premium, or as an extra or irregular remuneration, in consideration of offices performed, or to encourage their performance;" .
24. The Encyclopaedia Britannica (Volume 3) defines the word "bonus" as- "a term used in business or finance to describe an exceptional, occasional, or gratuitous addition to customary payments."
25. The Corpus Juris Secundum, Volume 11, defines the word "bonus" as "Bonus" has been characterized as a word of fixed and determinate meaning; but in its popular sense it has several .Meanings; an it has been defined generally as meaning a consideration for what is received; an advantage, a benefit given in return for the benefit C received, or an inducement for conferring a benefit; and allowance in addition to what is usual, current, or stipulated; a premium; a sum given or paid beyond what is legally required to be paid to the recipient; something given in addition to what is ordinarily received by, or strictly due to, the recipient. It has been said to carry the idea of something uncertain and indefinite, something which may or may not be paid, depending on varying circumstances; and, under particular conditions, has been said to imply a benefit accruing to him who offers it and an inducement to the offeree, the existence of a contract obligation, and a consideration; . . ."
26. The meaning of the word "bonus" is thus changing, in the light of the changing concepts of industrial legislation, from a `boon' or a `gift' to something in the nature of a right which is in addition to wages; and this is reflected in the pronouncements of the superior Courts of the common law countries.
27. As the meaning placed by the Lahore and Peshawar High Courts on the word `bonus' as based on Indian rulings, I will examine them in some detail, but I will first refer to a judgment of Inamullah Khan, J., in Messrs Paris Mills (Sabina Ltd.), Karachi v. Workmen (represented by the Paris Mills Workers' Union) and another (1970 PLC 166who observed: "The original ex gratia nature of the payment of bonus has during recent years, owing to development of industry and Industrial and Labour Legislation come to mean a part of the legitimate remunera--petition, which the labour is entitled to look as an additional com-- pensation for their services. The underlying principle for the payment of bonus is that the employee has contributed by his labour to the earning of the profits made by the Company. The only just and equitable principle upon which the employer can be called upon to give bonus to the employees is to consider the amount of profit made by the employer in any given year and the general financial condition of the concern and its capacity to bear this additional burden without impairing the efficiency or injuring the business.
28. The payment of bonus is dependent on there being an available surplus. Applying the ordinary test as to burden of proof, it would be on the party who would fail if no evidence was given. It is, therefore, the duty of the workmen, who claim bonus to cause evidence to be produced about available surplus."
29. The liberal construction thus placed on the word `bonus' had been taken half a century earlier by the House of Lords in Sutton v. Attorney-General ((1923) 39 T L R 294). In that case the Earl of Birkenhead draw a distinction between wages and bonus, and observed at page 297 :- "For good and sufficient reasons that part of pay which was intended to remain permanently was distinguished from that part which was granted only for a period and was to cease when the need which occasioned it had disappeared; but it was nonetheless pay. He was entitled to be paid for the time being for his services the total amount of permanent pay and war bonuses. The term `bonus' may, of course, be properly used to describe payments made of grace and not as of right.
30. But it nevertheless may also include, as here, payments made because legally due, but which the parties contemplate will not continue indefinitely."
31. I now turn to the Indian view, and in Muir Mills Company Ltd. v. Suti Mills Mazdoor Union, Kanpur (AIR 1955 SC 170), Bhagwati, J., referred to the changing connotation of the word `bonus' and observed :- "This imports the conception that even though the payment be not strictly due to the recipient nor legally enforceable by him, a claim, to the same may be laid by the employee under certain conditions and if such claim is entertained either by an agreement with the employer or by adjudication before a properly constituted Tribunal as on an industrial dispute arising, the same would ripen into a legally enforceable claim . . . . It is therefore clear that the claim for bonus can be made by the employees only if as a .Result of the joint contribution of capital and labour the industrial concern has earned profits. If in any particular year the working of the industrial concern has resulted in loss there is no basis not justification for a demand for bonus. Bonus is not a deferred wage. Because if it were so it would necessarily rank for precedence before dividends. The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees. If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year."
32. This is now the settled view of the Indian Supreme Court, and in Meenakshi Milt's v. Their Workmen (AIR 1958 SC 153), the learned Judges observed :- "The true nature and character of the workmen's claim for bonus against their employers is now well settled. Bonus is not, as its etymological meaning would suggest, a mere matter of bounty graciously made by the employer to his employees; nor is it a matter of deferred wages. It has been held by this Court in Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur (1) that the term `bonus' is applied to a cash payment made in addition to wages. 'It generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained."
33. This decision is based on the view that both labour and capital contribute to the earnings of the industrial concern and so it is but fair that labour should derive some benefit if there is surplus available for that purpose."
34. The observations of Bhagwati, J., in the Muir Mills' case were again reaffirm--ed by the Indian Supreme Court in the Central Bank of India v. Their Workmen (AIR1960SC12in circumstances somewhat unusual. The claim in this case was for payment of bonus by the employees of a Bank, but the Banking Companies Act prohibited employees of Banks from sharing in the profits of the banks. Therefore, in rejecting their claim for bonus, the Court observed at page 25 :--- "Bonus in the industrial sense as understood in our country does come out of the available surplus of profits, and when paid, it fills the gap, wholly or in part, between the living wages and the actual wage. It is an addition to the wage in that sense, whether it be called contingent and supplementary. Nonetheless, 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 section 10 of the Banking Companies Act."
35. I have referred to the dictionaries and to all these judgments in order to emphasize the true meaning of bonus. According to the dictionaries and to the judgments, `bonus' is a remuneration given to labour which is different from and in addition to wages, and the difference, in the words of Lord Birkenhead, is that it is a payment "which the parties contemplat will not continue indefinitely".
36. Secondly, the word has been used in our jurisprudence much more frequently in order to indicate labour's share of the employers profits, and as submitted by Mr. Lrshad Hasan, the judgments of this Court in Zeal Pak Cement Factory Ltd. v. The Cement Labour Associa--petition (PLD1960SC14and in Saffee Development Corporation Limited's case (PLD 1961 SC 39), are based on this view. I cannot, therefore, agree with the conclusion of the learned Judges of the Peshawar High Court that if a workman makes `his employer agree to pay him bonus, it would be deemed to have become a part of hi wages . . . "
37. However, as submitted by Mr. Minto, the Indian Supreme Court evolved in Ispahani Ltd. v. Ispahani employees' Union (AIR 1959 SC 1147and in Messrs Grahams Trading Co. v. Their Workmen (AIR 1959 SC 1151a novel concept of bonus for which an employer was permanently liable. I say novel, because as I suggested earlier, the very essence of bonus is that it is a payment which is not intended to be permanent, as distinct from wages, which are intended to be paid permanently.
38. However, Wanchoo, J., who pronounced both these judgments, did not examine this question. Be that as it may, in Ispahani's case, he held that the appellant was liable for bonus on the basis of an implied agreement, whilst in the other case the appellant was held to be liable on the basis of custom. And, as learned counsel placed great stress on Ispahani's case, I would examine it in some detail.
39. Ispahani, the appellant in this case, was the successor-in-interest of M. M. Ispahani Limited and it would appear that M. M. Ispahani Limited had been registered in Calcutta in 1934. On the eve of Partition, it transferred its registered office to Chittagong in order to become a Pakistani Company.
40. The appellant was registered after Partition in order to take over the assets of M. M. Ispahani Ltd., in Calcutta, which it did. It also retained in its employment the workmen of M. M. Ispahani Ltd., who had not shifted to Chittagong. Now, M. .M. Ispahani Ltd., had been paying its workmen a Puja bonus for an unspecified number of years, and the appellant also paid this bonus for the four years up to 1952. As it declined to pay this bonus in 1953, there was an industrial dispute which was decided against it by the Labour Appellate Tribunal. This order was challenged in the Indian Supreme Court, and Wanchoo, J., who pronounced the judgment of the Court, observed :- "Puja is a special festival in Bengal and it has become usual with many firms there to give bonus before Puja to their workmen."
41. As the learned Judge was further of the view that an employer could be made liable for such a bonus on the basis of an implied agreement, he went on to lay down three tests for inferring such an agreement. These were :- `(1) The payment must be unbroken;
(2) It must be for a sufficiently long period; and
(3) The circumstances in which payment was made should be such as to exclude that it was paid out of bounty."
42. As the appellant had paid bonus since its incorporation up to the year in which the dispute with its workmen began, Wanchoo, I., held that the appellant satisfied the first of the three tests laid down by him. He then observed that bonus had not been "paid out of bounty due to profit having raisen, for it was paid in some years' of loss also. The only other question that remains is whether it has been paid for a sufficiently long period in order to justify the inference that it was an implied term of employment . . . In the present case, since the appellant has paid the bonus continuously since its birth, we agree with the Appellate Tribunal that the circumstances justify inference of an implied term of employment for payment of puja bonus at the rate of one month's wages every year . . . ."
43. Mr. Minto relied on these observations, because Pakistan Tobacco bad paid bonus even when it bad suffered losses. But the payment of bonus by an employer during a period when he has suffered losses is not necessarily inconsistent with his intention to pay bonus `out of bounty', and; as the judgment of Wanchoo, J., does not refer to the appellant's explanation of its payment of bonus during the period it suffered losses, the ratio of the case is not clear. Secondly, if an employer becomes liable for bonus merely because he has paid it in a year in which he had incurred losses, will this not amount to altering the meaning of the word 'bonus'? Unfortunately, Wanchoo, J., did not consider this question, nor were the learned counsel able to refer us to any other judgment in which the view of Wanchoo, J., has been followed. The question is of importance, and as we have not heard proper arguments on it, I would not like to decide it, nor is it necessary to do so, because even according to Wanchoo, J., Puja was a festival on which it had become customary in the State for many firms in all types of industries to pay bonus. But, in the instant case, although according to the workmen, bonus had been paid once or twice by both the companies, despite losses, there is not a shred of evidence to show that there was any custom, much less a countrywide custom for paying bonus, nor is the claim of workmen supported by any religious practice. Therefore, Ispahani's cpse is distinguishable on the facts, and as the judgment in the case of Grahams Trading Company is also distinguishable on this ground, I would refrain from expressing any opinion on the wider question of the validity of the concept of bonus evolved by the Indian Supreme Court in these two cases.
44. However, in view of the observations of Zaffar Hussain Mirza, J., about Ispahani's case, I have to observe that this judgment, like that in the Grahams Trading Company's case, turned on its peculiar facts, and I would not extend a rule about a religious festival supported by a countrywide custom to any claim which is not supported by these two considerations. And, I may point out here that the Indian Supreme Court took a similar view in B. N. E. & Co. Employees' Union v. B. N. E. & Co.
45. (AIR 1960 SC 886) and in Management of Bombay Co. v. Workmen of Bombay Co. (AIR 1964 SC 1770 I now turn to the two judgments on the basis of which the Peshawar High Court held that bonus was a form of deferred wages. And, in the Attack Oil Company's case the dispute was whether the appellant was liable for a bonus of 2J months, for which it admitted liability, or whether it was liable for a bonus of three months, as claimed by its workmen. Although the question of the amount of bonus, for which the appellant was liable, was a question which related to the terms of employment of its workmen, the appellant advanced the extraordinary plea that this dispute did not relate to the terms of employment of its workmen. In view of the settled law, the appellant's plea was frivolous, and could have been rejected on this short ground. But, Fazle Ghani Khan, J., who rightly rejected this plea, went on to examine Ispahani's case and some other Indian Judgments and observed :- "Taking into consideration the various decisions cited above and the changed conditions of our society in which. The rapid industrializatiog is taking place in the country, we are of the view that bonus has to be regarded as deferred wages payable to employees which may be claimed by them as of right . . ."
46. As the learned Judges of the Peshawar High Court have relied on these observations, I have to point out that they were completely unnecessary for the decision of the case and were mere obiter.
47. Secondly, for the cogent reasons given ' by Bhagwati, J. (I say so with respect) in the Muir Mills Company's case, I cannot agree with the proposition laid down by the learned Judges in these observations that bonus is a form of deferred wages. But, unfortunately, it was this obiter which was approved by them in Khyber's case.
48. The learned Judges of the Peshawar High Court have also relied on a judgment of the Calcutta High Court in Messrs M. Tilak & Co. v. Third Industrial Tribunal and others AIR 1959 Cal. 797), and as both Mr. Minto and Mr. Farooq placed great reliance on this judgment, I would point out here that the workmen in this case had claimed bonus for three years, 1951, 1952 and 1953. As this claim was allowed by an Industrial Tribunal, the petitioner had challenged the Industrial Tribunal's order in an appeal, and the Labour Appellate Tribunal had varied the Industrial Tribunal's finding "by holding that there was no available surplus (of profits) for the year 1950, 1951, and, therefore, no bonus was payable for the said year." This order was challenged by the petitioner in a writ petition in the Calcutta High Court, but, as the question whether there was an "available surplus" of profits for distribution as bonus was a pure question of fact, the writ petition bad to be dismissed on the short ground that the Court could not, in a writ petition, enter into a controversy turning entirely on facts.
49. And, the learned Judge dismissed the writ petition with the observation that there was no manifest error of law or jurisdiction which would entitle the Court to issue a writ. However, whilst dismissing the writ petition, he also observed :- "This much is clear that ordinarily and apart from agreement or custom no bonus can be claimed or justified unless there is profit out of which the bonus is to come and that profit is a result of the joint contribution of labour and capital."
50. Although these observations support the view of the learned Judges of the Peshawar High Court, once again, the observations are mere obiter and I cannot agree with them. Further obiter dicta of the learned Judge appear to be based on the Indian Supreme Court's judgment in the Grahams Trading Company's case and, as I pointed out, the Indian Supreme Court later declined to extend the principle laid down in this case to claims for bonus of other types. Therefore, I am constrained to express my regret that these later judgments of the Indian Supreme Court were not placed before the learned Judges of the Peshawar High Court.
51. Mr. Minto then attempted to defend the view taken by the learned Judges of the Peshawar High Court on the basis of the definition of wages in the Payment of Wages Act, because the definition of wages in clause (vi) of section 2 of this Act expressly states that wages mean "all remuneration . . .
52. And includes any bonus . . ." And, the learned counsel placed great reliance on this definition, because this statute was, so to say, part our Labour Code. Now, although the definition of wages in this statute has been extended to include bonus, this is by an express provision. Secondly, this statute is not in pari materia with the Ordinance, and, on other hand, the definition of wages in some of other statutes in our Labour Code, such as the Social Security Ordinance and the Minimum Wages Ordinance, expressly clarify that wages do not include any bonus paid to workmen.
53. Obviously, therefore, the definitions of wages in the various statutes constituting our Labour Code have reference to the objects of those statutes, and the definition of wages in one statute should not, so to say, be transplanted into another statute unless the Legislature has so prescribed. And, for example, in the West Pakistan Shops and Establishments Ordinance, 1969, the Legislature has made an express provision that wages under this Ordinance mean wages as defined in the Payment of Wages Act. But, as there is no such provision in the Ordinance. I am unable to accept Mr. Minto's submission, and, as pointed out by Lord Halsbury long ago, wages mean "that part of pay which was intended to remain permanently." Therefore, with respect, I am not able to agree with the view of the learned Judges of the Peshawar High Court that bonus is a part of wages.
54. I now turn to the second question on which there has been a cleavage of opinion between the two High Courts. According to the Peshawar High Court, if an agreement between an employer and a workman did not mention that "payment of bonus would depend on the Company making profits", then this necessarily meant that workmen "had been receiving directly bonus entirely free from the consideration of the Company making profits or incurring losses". On the other hand, Zafar Hussain Mirza, J., held that there was "no bar in law in taking all the available evidence including that which is extraneous to a settlement deed for decision of the question as to the nature of the bonus paid thereunder." Although this judgment was reversed in appeal, the learned Judges of the Division Bench of the Sind. High Court agreed with the view of Zafar Hussain Mirza, J., that the Court was entitled to examine evidence in order to determine the nature of the bonus paid under the settlement deeds. And, in this connection, Fakhruddin G. Ebrahim, J., observed :- "It is settled law that an ambiguity or a doubt in a written document can be resolved by reference to extrinsic evidence. The expression bonus immediately conjures upon one mind the concept of a share in profits . . ."
55. As this cleavage of opinion between the High Courts has to be resolved, I would recall here that Khyber began paying bonus to its workmen only when it commenced making profits. Thereafter it has paid bonus every year to its workmen, but as it has also been earning substantial profits every year, its claim was that it had paid bonus only because it was making profits and had available surpluses every year to distribute. Pakistan Tobacco's case is identical, except that it had been paying bonus for a much longer period and except for the further fact that it had paid bonus ex gratis in 1971, although it had made a loss in that year, like so many other industries which traded in both wings of the country. Further, like Khyber, in order to prove its plea that it had paid bonus only out of its profits, it relied on its audited accounts, including its profit and loss accounts for the relevant years. In order to repel! The plea that these two companies had paid bonus only because they had been earning profits, the contention of their labour unions was that the agreements between them and these two companies (except for Khyber's agreement of 8-1-1973 with its workmen) had been reduced into writing, therefore, the companies were not entitled to lead any other evidence on the question of how they had paid bonus, and as the agreements were silent on the question of the nature of the bonus paid, the further submission of both the labour unions was that the companies had not paid bonus out of their profits.
56. The learned Judges of the Sind High Court have not accepted these submissions. However, the learned Judges of the Peshawar High Court have accepted these submissions, but they have not given any reasons for so doing, and with due respect, I am not able to agree with their view for the obvious reason that the word "bonus" has, through usage, become an ambiguous word. As I explained earlier, it means something in addition to wages which in the words of Lord Birkenhead "the parties contemplate will not continue indefinitely." But this something in addition to wages may be labour shares of the employer's profits, or it may be a payment for which the employer is liable even though he has not made profits. At first sight, these two meanings. Namely, a payment out of profits, and a payment for which the employer is liable even though he has not made profits, seem to be inconsistent, but they are not, because the concept underlying both the meanings is that of a payment not intended to continue indefinitely. But, whilst these two meanings are not inconsistent, they are clearly different with the result that the word has become ambiguous. And, as rightly observed by Fakhruddin G. Ebrahim, J., evidence is always admissible to construe an ambiguity in a document. And, on the other hand, in the absence of evidence, it was not possible to give a finding that bonus had not been paid by Khyber out of its profits. Nor could there be any question of drawing an adverse inference against Khyber on the ground that the settlements were silent on the question of the nature of bonus, because the settlements were document prepared by mutual consent, and, also because the question of specifying the nature of the bonus paid did not arise, and was not in issue before the promulgation of the Order: Therefore, with respect, I cannot agree with the view of the learned Judges of the Peshawar High Court, that the parties were not entitled to produce evidence on the question of the nature of the bonus paid under the agreements between them, nor can I agree with their view that the bonus paid was not a bonus paid out of profits, because the agreements were silent on the question of the nature of the bonus paid.
57. I now turn to a submission which is common to both the appeals. According to Mr. Irshad Hasan, as a workman is not entitled to two bonuses out of profits, the workmen could not, in these appeals, claim the statutory bonus in addition to the aggregate bonus, because the agreed bonus was paid out of the profits of Khyber and Pakistan Tobacco.. The last limb of this submission is correct, because the profit and loss accounts of Khyber prove that Khyber was not only earning profits, but it was also paying dividends and carrying varying amounts into reserves, therefore, its claim that it was paying a bonus out of its profits is correct. Similarly, throughout the long period during which Pakistan Tobacco was paying bonus, it was making profits, except for the year 1971 which was an exceptional year and bonus had been paid ex gratia in this year. Therefore, I would accept its plea that it had also paid bonus out of their profits. But, I do not see how this can relieve these two companies of their obligation to pay the statutory bonus.
58. Mr. Irshad Hasan submitted that it would be unjust if a workman received two bonuses out of profits in the same year and as such an unjust intention could not be attributed to the Legislature, the Order should be --construed to mean that workmen had to make their choice between the statutory bonus and the agreed bonus, as held by the learned Judges of the Sind High Court in Pakistan Tobacco's appeal.
59. I am not able to understand bow the payment of more than one bonus would be unjust, because it is not the number of bonuses paid, but the total amount paid which could lead to injustice. In any event, the Legis--lature has fixed the criterion for determining what is a just bonus and as that criterion is clear, it is not for the Courts to modify it. Therefore, to the extent to which an agreed bonus falls short of the requirements of the' statutory bonus, the claim for the difference or differences between the1~ agreed bonus and the statutory bonus cannot by any stretch of imagination be described as unjust.
60. However, the real question is of the meaning of the words "other than" in clause (4) of the Order which I quoted earlier. And, I would recall here that clause (1) of the Order imposes a . Statutory liability on the employer to pay a share on his profits to his workmen in the manner prescribed in clauses (2) and (3). Then, comes clause (4), which has been enacted to save bonuses "other than that payable under clause (1)". Now, according to Mr. Irshad Hasan, the word "other" in these words cannot cover a bonus paid out of profits, because such a bonus was the same as the statutory bonus prescribed in clause (1) of the order. But, if in a given case, the statutory bonus works out to a month's wages, whilst the agreed bonus, also being paid out of profits, comes to two months' wages how can it be said that the two bonuses are the same?
61. It is true that there are other types of the bonuses, such as a production bonus or an overtime bonus which are not paid out of profits, and on the contrary, as they are paid in order to create profits, Mr. Irshad Hasan submitted that such bonuses were different from bonuses paid out of profits. But, because such bonuses are different from bonuses paid out of profits, can this lead to the conclusion that bonuses paid out of profits are the same? In any event, the distinction between bonuses paid out of profits and those not paid out of profits should not be exaggerated. Although a production bonus is paid in order to create profits, even a bonus paid out of profits leads, in the long run, to greater efficiency and greater profits, because if it was not paid, it would lead to resentment and a sense of injustice which would affect production in due course. And, on the other hand, because a production bonus is in some ways different from a profit bonus, this does not mean that a profit bonus of a week's wages is the same as a profit bonus of a month's wages.
62. The question is only of the meaning of the word "other" and according to Black's Law Dictionary, it means "Different or distinct from that already mentioned; additional, or further."
63. Turning now to the Oxford Dictionary, as the Order has to be construed liberally, it would be sufficient to refer to the fifth meaning of the word in the Oxford Dictionary. It reads :- "Existing besides, or distinct from, that already mentioned or implied; not this, not the same different indefinitely; further, additional."
64. A bonus will, therefore, be a bonus "other than that payable under clause (1)" if it is different in any way from the statutory bonus or if it is not the same as the statutory bonus.
65. Now, with all respect to learned counsel, a bonus of two weeks' wages is different from and is not the same as a bonus of one month's wages even though both the bonuses may be paid out of profits. That is self-evident. Similarly, bonuses paid out of profits will be different from each other if the method for calculating them is not the same. Thus, for example, a workman qualifies for the statutory bonus on completing ninety days' service. But, if the qualifying period under an agreement is one year, many workmen entitled to the statutory bonus would not be eligible for the agreed bonus. There are also other possible differences between the statutory bonus and a bonus paid under an agreement. Therefore, I am not able to accept Mr. Irshad Hasan's submission that a bonus "other than that payable under clause (1)" can only be a bonus not paid out of profits.
66. As no other submissions were advanced, which were common to both the appeals, I now turn to Khyber's appeal; and I would recall here that in response to labour's demand for a revision of the agreed bonus because of the promulgation of the Order, Khyber and its workmen bad entered into a fresh agreement on 8-1-1973, under which Khyber undertook to pay 2J months' bonus. And, as under the earlier agreement of January, 1971, its liability was limited to a bonus for two months, its submission both before the Labour Court and before the High Court was that its workmen were estopped from repudiating this agreement. This plea was rightly rejected (I say so with respect) by the learned Judges of the High Court, on the principle that there could be no estoppel against a statute. But, this does not mean that Khyber's workmen can claim the statutory bonus in addition to the agreed bonus. It only means that to the extent to which the agreed bonus falls short of the statutory bonus, Khyber's workmen are not estopped from claiming the difference.
67. Reverting however to the judgment in Khyber's case after rejecting the plea of estoppel, the learned Judges observed that the agreement of 8-1-1973 was void, and as Mr. Ziaullah placed great stress on this observation, I may explain here that he was the Secretary of Khyber's Union and had defended its case before the Labour Court in the High Court. He was also the Secretary of the Union when leave was granted, but he informed us that the Union does not have any office- bearers at the moment. Therefore, he challenged Mr. Farooq's right to represent Khyber's workmen.
68. In these circumstances we heard him also and he merely repeated the submissions of Mr. Minto, but unlike Mr. Minto, he placed great reliance on the High Court's finding that Khyber's agreement of 8-1-1973 with its workmen was void. Now, what is void cannot create any rights; therefore, if this agreement was void, it could not confer any rights on Khyber's workmen. This might not be relevant in the instant case, because the workmen have received their bonus under the agreement which they denounce as void. But the question is of principle and if we uphold the view of the High Court, it may have disastrous consequences for workmen in other cases.
69. Mr. Ziaullah was not able to help us on this aspect of the case, but fortunately for him, the agreement of 8-1-1973 was not entered into in order to defeat the law. As it was also not for any consideration which was fraudulent or immoral or was prohibited by law, it was not hit by section 23 of the Contract Act and was not void. On the contrary, as the provisions of the order were ambiguous, the agreement was a fair and equitable bargain struck by the parties, because they were both in doubt about their rights under the order and, so Khyber's workmen are entitled the 2J months' wages as bonus under this agreement. Additionally, because the agreement was a fair and equitable bargain in order to get over the ambiguities in the order, I am not able to agree with the view of the learned Judge that Khyber was not entitled to file a writ petition, because it was trying, through its writ petition, to perpetrate an injustice. That the agreement was partially hit by the mandatory provisions of the order is another matter, but this only means that the rights and liabilities of the parties under this agreement are superseded by the order to the extent to which the agreement is inconsistent with the order.
70. As I have not been able to agree with the view of the learned Judges that bonus paid to Khyber's workmen had become part of their wages, the next question for determination is whether this bonus had been paid out of Khyber's profits. Now, as I pointed out, Khyber's claim that bonus was paid only out of its profits is supported by its profit and loss accounts for the relevant years. It is true that its profits have been fluctuating very considerably, and although it was making huge profits in 1968, and 1969, the bonus paid by it in those years was less than the bonus paid by it in subsequent years when its profits had declined sharply. Therefore, the contention of the workmen was that the bonus was paid to them was not a profit bonus, because it did not vary with the profits made by Khyber. It is true that the bonus paid did not vary with Khyber's profits, but far from furnishing a grievance to labour, the policy of giving a steady bonus, regardless of fluctuations in profits, is in the interest of workmen and should be encouraged. In any event, although there were sharp fluctuations in Khyber's profits, this does not alter the fact that bonus had been paid only out of profits, therefore, nothing turns on the objection raised by the workmen.
71. However, in January, 1971, Khyber had entered into an agreement to pay a bonus of two months per year for the three years, 1971-73. As its financial year ended on the 30th of June, it is obvious that the bonus for 1971 and 1972 was offered by Khyber on the basis of its estimate of its profits for the future. Would this alter the fact that bonus for these years was paid out of profits of these years? I do not think so, because there is nothing to .Prevent an employer from agreeing to give a bonus for future years on the basis of his estimate of his profits. And, that is all that Khyber did. No doubt, if its assessm ent of its future prosperity had been erroneous, it would have had to pay the price of its error, which might have been heavy, but this does not mean that the bonuses were not paid out of profits, nor would the fact that bonus had been paid on the basis of its estimate of future earnings convert the bonus into wages. Therefore, the finding of the learned Judges that the bonus paid by Khyber was "entirely free from the consideration of the company making profits" is not correct.
72. Mr. Ziaullah.Then pointed out that a bonus had been paid by Khyber on 10-10-1963 although it was making losses at that time. Mr. Ziaullah did not explain the circumstances under which this bonus was paid, but even if- the bonus was paid, when Khyber was making losses, the use of the term "bonus" for this payment itself indicated, prima facie, that the payment was of a nature which "the parties contemplate will not continue indefinitely" and so nothing turns on the payment of this bonus.
73. 1, therefore, accept Mr. Irshad Hasan's submission that Khyber was paying bonus out of its profits and that the finding to the contrary by the learned Judges of the Peshawar High Court is not correct, Now, as Khyber was paying bonus out of its profits, the effect of clause (4) of the order is only that Khyber is not relieved of its obligation to pay the agreed bonus, and, on the other hand, as clause (1) only fixes the minimum share of Khyber's workmen in Khyber profits, Khyber is entitled to set off the amount paid by it under its agreement of 8-1-1973 against its liability for the statutory bonus. Therefore, with respect, the finding of the High Court that Khyber is liable for the statutory bonus in addition to the agreed bonus is not correct, and the judgment of the learned Judges has to be set aside.
74. I now turn to the appeal against Pakistan Tobacco. Although Zafar Hussain Mirza, J., dissented from the reasons given in Khyber's judgment for holding that workmen were entitled to the statutory bonus in addition to the agreed bonus, he nonetheless held that workmen are entitled to the statutory bonus in addition to the agreed bonus and he reached this conclusion for two reasons.
75. The first reason was that any other view would lead to anomalous consequences, because it would entitle the employer to repudiate his liability for the agreed bonus if it was higher than the statutory bonus. The learned Judge has not explained how any other view would lead to such anomalous consequences and with respect his apprehension that anomalous consequences would have followed from his taking a different view is based on a misreading of the order. The second reason given by the learned Judge was that the words "other than" in clause (4) of the order meant apart from. I have examined this clause in detail, but'even on the footing that the words "other than" mean apart from, this does not lead to the conclusion that the statutory bonus was in addition to the agreed bonus, because clause (4) is only a saving clause and there is nothing in it to support the view that the statutory bonus has to be paid in addition to the agreed bonus. Therefore, the judgment of the learned Judge was rightly set aside by the Division Bench of the Sind High Court.
76. However, in setting aside the judgment of Zafar Hussain Mirza, J., the learned Judges of the Division Bench held that there was no question of the workers being entitled to two profit bonuses and that they had to accept "either a settlement profit bonus or statutory profit bonus". Mr. Minto criticised these observations and for the response I have given I cannot agree with the proposition laid down by the learned Judges that workmen cannot claim the statutory bonus in addition to the agreed bonus. They can, to the extent to which the agreed bonus falls short of the statutory bonus. But, learned counsel also criticised the observation that workmen had to elect between the two bonuses, and in this connection he pointed out.That situations would frequently arise in which workmen, who were entitled to the statutory bonus, would not be able to qualify for the agreed bonus. The submission is correct, and it only illustrates the fallacy in the view that workmen are entitled to only one bonus out of their employer's profits. Therefore, with all respect to the learned Judges, I agree with Mr. Minto that their judgment is based on a misreading of the order.
77. ANWARUL HAQ, C. J.-I agree.
78. MUHAMMAD HALEBM, J.-I agree. s. A. H.Orderaccordingly.