By the present petition the Chamber of Commerce and Industry seeks to impugn an order passed by the Sind Labour Court No. III, whereby the petitioners were directed to pay statutory bonus to the workmen employed by the petitioners. The workmen who in the present petition before me are represented by their Union namely the Chamber of Commerce and Industry Employees' Union were so represented before the Labour Court. For the sake of brevity the petitioners are hereinafter referred to as "the Chamber" while the respondent-Union is referred to as "the Union". I have heard Mr. Wazir H. Rizvi, Advocate for the petitioners and while the Presiding Officer of the Sind Labour Court No. III has not defended the petition, the respondent-Union was represented before me by Mr. Muhammad Anis, Advocate.
2. Briefly the facts of the case are that the Union made an application before the Labour Court for a direction to the Chamber to pay statutory bonus for the year 1974-75 to the employees of the Chamber. The application was made under section 34 of the Industrial Relations Ordinance -of 1969 read with Standing Order 10-C in the Schedule of West Pakistan (Standing Orders) Ordinance, 1968. The Chamber did not demur the fact of employment of such employees but preliminary objections were raised by the Chamber before the Labour -Court to the effect that the Chamber was not such an establishment as is envisaged by Standing Order 10-C and further that within the meaning of the same Standing Order that Chamber was not such employer who could be ordered to pay any bonus. Additionally, the payment was objected to on the ground that during the year 1974-75 the Chamber had earned no profit and for such reason could not be compelled to pay any bonus. The controversy before me has also centered around these two contentions.
3. The first question that needs to be resolved is whether the Chamber is a "commercial establishment" and if so whether it could be termed as "employer" within the meaning of section 2 of West Pakistan (Standing Orders) Ordinance, 1968. It has been contended by Mr. Wazir Rizvi that the Chamber is a trade organisation within the meaning of section 2(12) of the Trade Organisations Ordinance XLV of 1961. The said provision reads as follows ;---- "2. Definitions.--In this Ordinance, unless there is anything repugnant in the subject or context,- . . . . . (12) "Trade organisation" means an association which-
(a) is capable of being formed as a limited company within the meaning of the Act ;
(b) is formed or intended to be formed with the object of promoting any trade, commerce or industry or any group or class thereof, or for representing for any purpose, in any manner and to any extent, any trade, commerce or industry or any group or class thereof ; and
(c) prohibits payment of any dividend to its members and applies or intends to apply its profits or other income for achieving its objects."
It was further contended that the Chamber had been registered under section 26 of the Companies Act, 1913 as a company for promoting a "useful object" Which intends to apply its profits only to promotion of a subject and prohibits the payment of any dividends to its members. It has been further urged that the Chamber is also exempted from payment of income-tax in ; pursuance of provision of section 60 of Income-tax Act. Mr. Wazir Rizvi has also pressed into service paragraph 4 of the Memorandum of Association under, which the Chamber was established. This paragraph reads as follows:- "(4) The income or property of the Chamber whensoever derived shall be applied solely towards the promotion of the objects of the Chamber as set forth in the Memorandum of Association and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend or bonus or otherwise, howsoever, by way of profit to the persons who, at any time are or have been members of the Chamber or to any of them or to any person claiming through any of them. Provided that nothing herein contained shall prevent the payment in good faith of remuneration to any officer or servants of the Chamber, to any member thereof or other person in return for any service actually rendered to the Chamber or the payment of interest on money borrowed from any member of the Chamber."
It has also been contended that the Chamber is sustained by subscription by its members although it charges fees for weighment of merchandise and even for examination of the quality of the same.
4. On the other hand the contention of Mr. M. Anis on behalf of the Union is that the Chamber is a "commercial establishment" within the meaning of the Standing Orders Ordinance because it performs functions in the nature of commercial agency. It is contended that the Chamber also does the work of advertisement for which it obtains returns in addition to the fees for weighment and examination as to quality of merchandise. It is contended that the balance-sheets submitted by the petitioner show that the Chamber is a commercial establishment and earns profit. In addition, it is contended that section 26 of the Companies Act only prohibits payment of dividend to the members and what the employees claim is not a dividend but remuneration for their services. By a reference to paragraph 4 of the Memorandum of Association it has been contended on behalf of the Union that the clog on payment of dividend or bonus does not prevent the Chamber from payment of remuneration to any officer or servant of the Chamber or to any person in return for any services.
5. The words "commercial establishment" are defined in clause (b) of section 2 of the West Pakistan (Standing Orders) Ordinance to mean an establishment which carries on among others the business of advertising or commercial agency or maintains an office for the benefit of a commercial establishment or industrial establishment, or employs workmen. The words "commercial agency" are not defined in the Standing Orders Ordinance but Black's Law Dictionary attempts to give a definition which reads that commercial agency means a mercantile agency and mercantile agencies are defined as follows; "Establishments which make a business of collection of information relat--ing to the credit, character, responsibility and reputation of merchants, for the purpose of furnishing the information to subscribers."
On being asked the learned Advocate for the petitioner has stated before me that often the Chamber does advise its members in the matters relating to financial stability of some party and matters of like nature. Obviously these are functions relatable to mercantile agencies existing the world over. Even the memorandum of association of the Chamber details such objects which advance and protect the right of its members. Even clause. (6) of section 2 of Trade Organizations Ordinance XLV of 1961 contemplates that a Trade Organisation, such as the Chamber, is to maintain an office for promotion of some trade or commerce or industry.
6. The arguments based on the Chamber having been registered under section 26 of the Companies Act or being exempted from payment of income-tax are equally without substance. All that is contemplated by section 26 is that a company formed in pursuance of that provision is prohibited from paying a dividend to its members and such prohibition could not be equated with payment of remuneration to employees Similarly exemption under section 60 of the Income-tax Act would not operate as a bar on or exemption from payment of remuneration or bonus to employees;
7. My attention has also been drawn to the balance-sheets of the Chamber which have been placed on the record. Such balance-sheets disclose that the Chamber has been charging its members for parking of vehicles, for advertisement in the Trade Journal, for photostat service and for measurement. It cannot, on such premises, be said that the Chamber is a non-profit-making association or is not a commercial agency. The mere fact of the Chamber paying no dividend would not be sufficient to hold that it is not a commercial establishment within the meaning of section 2 of the West Pakistan (Standing Orders) Ordinance. In that context Mr. M. Anis has also submitted that even for the previous years the Chamber was directed by a Labour Court to pay bonus to its employees and such orders of the Labour Court had not been challenged ; which would operate as estoppel by conduct. Mr. Wazir Rizvi has not challenged the factual assertion to such extent but since this point regarding liability to pay has been considered in this judgment at length it is not necessary to enter this question.
8. The next contention on behalf of the petitioner is that Standing Order 10-C would not apply for the reason that the Chamber had not made any profit in the year 1974-75. This circumstance has to be considered in the light of factual background. In the two years preceding the year 1974-75 the Chamber made profits but had paid no bonus until the Labour Court directed the Chamber to make the payment. Payment of bonus for these two years was made during the year 1974-75 and the bonus payable on account of the previous two years was shown as expenditure in the year 1974-75 and by such contrivance the year has come to be shown as a year in which Chamber had incurred a loss. Standing Order 10-C states as follows :-- "10-C. Paym ent 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."
On a plain reading of the provision reproduced above it would appear that the employer has to pay the bonus in relation to profits for each year within three months of the closing of that year.
Standing Order 10-C does not appear to admit delay in payment as the same could, in several cases, be utilized for circumventing the provisions of the statute. To give an example if accumulated bonus for three years, which would be about 90 per cent, of the profits for one year, could be causing delay in payment, be deducted in the accounts of the fourth year it would deprive the workmen of their benefit at least once in four years. The provision is couched in language that makes payment of the bonus mandatory for each year and within three months, as delay in payment might always defeat the rights of workmen. The provision, needless to say, is a beneficial provision and has to be interpreted in a manner that should advance the remedy and curb the mischief. It was plainly the duty of the Chamber to have deducted the bonus for the previous years in the balance sheets for those years rather than carry forward the liability to, the succeeding years in order to defeat the rights of employees for obtaining the bonus at least for one year out of three years. Mr. Wazir Rizvt has relied on a decision by a learned Single Judge of this Court in the case of Commissioner of Income--tax v. Piracha Textile Mills Ltd. (PLJ 1973 Kar.144) and the case of " Commissioner of Income-tax v. Kalyan Mal Mills Ltd. (53 I.T R 573). The latter case of the Supreme Court of India followed an earlier case from the same Court viz. Commissioner of Income-tax v., Swadeshi Cotton and Flour Mills (53 I T R 134). In both these cases which arose in litigation between the Income-- tax Department and the assessee the ratio is that the amount claimed as bonus has to be taken into consideration by the assessing Authority in determining the profits of business for the assessm ent year. The learned Advocate contended that since Assessing Authority by virtue of the provisions of section 10 of the Income-tax Act was bound to recognize the reduction in profits by reason of payment of, bonus the same principle should be imported even in the present case. I am afraid I am unable to agree with such proposition as the same would be in violation of the terms and spirit underlying Standing Order 10-C that makes payment of bonus to employees compulsory for each year in that year. These cases are clearly distinguishable and the spirit underlying the different statutes makes it necessary to distinguish between the two situations.
Additionally, the learned Advocate for the petitioners also relied on subsection (3) of section 87-C of Companies Act to sustain an argument that net profits of a company have to be calculated after deductions are made for the usual working charges. Even this provision is, no warrant for the proposition that bonus payable for the past years could be carried forward to the balance-sheet of a succeeding year because as stated above such mode of accounting would defeat the very purpose of Standing Order 10-C.
9. The learned Advocate for the petitioners has, in addition, challenged the maintainability of the application made by the Union by relying on section 34 of the Industrial Relations Ordinance. It is contended that this section can be pressed into service only for the enforcement of any right that is guaranteed or secured to the Collective Bargaining Agent by or under any law or any award or settlements' The argument is sought to be expanded by stressing that a right to collect bonus vested only in the workmen and not in the Collective Bargaining Agent so that the application under section 34 was not maintainable at the instance of the Union. This argument is equally misconceived. By a reference to clause (b) in subsection (12) of section 22, Industrial Relations Ordinance it would appear that the Collective Bargaining Agent is entitled to represent all or any of workmen in any proceedings There can be no manner of doubt that the application under section 34 of the Industrial Relations Ordinance was a proceeding in relation to the workmen in an establishment namely the Chamber. It would, therefore be idle to think that the. Union could not have represented the workmen in the proceedings for the mere reason that the proceedings were not taken to obtain any benefit for the Union itself but for its members. On the other hand if the argument of the -learned Advocate were to be 'accepted it would lead to multiplicity of litigation and for similar relief each workman would have the necessity of filing and prosecuting separate proceedings under section 25-A of the Industrial Relations Ordinance or any other remedy which the workmen may seek. Apart from the workmen losing their wages for instituting and/or attending the proceedings, the main purpose of the existence of- Collective Bargaining Agent would be defeated. Such agency is designed to promote the welfare of the workers collectively and section 22 of the Industrial Relations Ordinance appears to recognize the same.
10. Having considered all the aspects of this case I am of the view that this petition merits to be dismissed and is accordingly dismissed with costs.