The Pondicherry Housing Board Employees' Union & Ors. v. The Government of Pondicherry

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 19.1.2009C O R A M :THE HONOURABLE MR. JUSTICE K. CHANDRUW.P.No.19376 of 19981. The Pondicherry Housing Board Employees' Union, rep.by its Secretary Mr.Rathina Subramanian, Anna Nagar Pondicherry Housing Board Complex, Pondicherry-5.

The Pondicherry Housing Board Staff Union, rep.by its Secretary Mr.D.Francis, Anna Nagar, Pondicherry Housing Board Complex, Pondicherry. .. Petitioners-vs-1. The Government of Pondicherry, rep. by Chief Secretary, Government of Pondicherry, Pondicherry.2. The Pondicherry Housing Board, rep.by its Chairman, Anna Nagar, Pondicherry Housing Board Complex, Pondicherry. .. RespondentsPRAYER : Petition filed under Article 226 of the Constitution of India praying for the issuance of a writ of mandamus directing the second respondent to pay statutory minimum bonus of 8.33% each year besides exgratia payment on par with exgratia payment paid to the employees of public sector undertakings of Pondicherry StateGovernment. For petitioner: Mr.Venkatraman for M/s.Aiyar and DoliaFor R2: Mr.Gandhi, SC for Mr.R.G.Narendhiran For R1: Mr.T.Murugesan, GP (Pondy)***** https://hcservices.ecourts.gov.in/hcservices/

O R D E R The two petitioners are two trade unions functioning under the second respondent management. In the present writ petition, they are seeking for a direction to the second respondent to grant the statutory minimum bonus of 8.33% every year together with theexgratia payment paid to the employees of the public sector undertaking under the first respondent Government. 2. Notice of motion was ordered by this Court on 08.12.1998.On behalf of the second respondent, a counter affidavit dated13.8.2007 has been filed. The first petitioner herein has also filed a rejoinder dated 02.10.2001.

It is claimed by the petitioner union that they had sent arepresentation dated 09.10.1998 demanding minimum statutory bonus under the Payment of Bonus Act 1965 (for short 'Bonus Act'). Thesecond respondent by their reply letter dated 23.10.1998 stated that they were not eligible for bonus for the year 1997-98 and they will be paid only the gift as announced by the first respondent Government.

It is the stand of the petitioner union that the second respondent was created by Pondicherry Housing Board Act, 1973which came into existence from 05.5.1975. It is also a ''state"within the meaning of Article 12 of the Constitution. It was further submitted that the second respondent is an ''industry"under section 2(j) of the Industrial Disputes Act, 1947 (for short'ID Act'). It is also a ''Corporation" in terms of section 2(1)of the Bonus Act. It was further stated that the second respondent was not exempted under section 32(v)(c) of the Bonus Act, which reads as follows:-''32. Act not to apply to certain classes of employees.-Nothing in this Act shall apply to-(i) to (iv) omitted(v)employees employed by -(a) and (b) omitted(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit. "

Heavy reliance was placed upon the application of the saidAct to the Tamil Nadu Housing Board and also the resultant judgment of the Supreme Court in this regard. Mr.G.Venkataraman, learned counsel for the petitioner referred to the decision of the https://hcservices.ecourts.gov.in/hcservices/ Supreme Court in State of Tamil Nadu -vs- K. Sabanayagam and others reported in 1998 -I-LLJ 214 = (1998) 1 SCC 318. In that case, though a contention was raised by the Tamil Nadu HousingBoard and the State of Tamil Nadu that the provisions of the BonusAct will not apply to the Housing Board, in view of the exemption granted under section 32(v)(c), the Supreme Court repelled the said contention on the ground that the Tamil Nadu Housing Boarditself had sought for a specific exemption under section 36 of the Bonus Act. Therefore, in view of waiver and estoppel, they cannot plead for an exemption under section 32(v)(c).

In the counter affidavit filed by the second respondent, it is stated that the Pondicherry Housing Board will not come under Section 32(iv), which reads as follows:-''32. Nothing in this Act shall apply to - (i)to (iii) omitted(iv) employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a StateGovernment or a local authority".

But, however, in paragraph 10 of the counter affidavit, it was averred as follows:-''10. This respondent respectfully submits that in sofar as the paragraph 7 is concerned, it is respectfully submitted that the Board is not a commercial organisation like other public sector undertakings of Pondicherry State Government to merit consideration of payment of ex-gratia on par with such undertakings. Unlike other public sector undertakings PondicherryHousing Board is governed by a separate legislationPondicherry Housing Board Act, 1973, with the main object of providing for the execution of housing and improvement scheme. There is no trade or business carried on by the Pondicherry Housing Board. Acquiringlands, constructing houses and providing the same tolandless person on ownership or rented basis for nominal price or rent are the functions of Pondicherry HousingBoard. The Board does not run the business on commercial line. " https://hcservices.ecourts.gov.in/hcservices/

Based upon this averment, Mr.R.Gandhi, learned SeniorCounsel for the second respondent submitted that the exemption available under section 32(v)(c) will be available to the Pondicherry Housing Board as it is an institution not intended for profit. He also submitted that this is not a case where the HighCourt can grant a direction under Article 226 of the Constitution. The only course open to the trade union is to raise an industrial dispute under the provisions of the ID Act. A reference was made to section 22 of the Bonus Act, which reads as follows:-''22. Reference of disputes under the Act.- Where any dispute arises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act or, as the case may be, such law, shall save as otherwise expressly provided, apply accordingly. "

Per contra, Mr.G.Venkataraman, learned counsel for the petitioner relied upon the judgment of the Supreme Court in Housing Board of Haryana -vs- Haryana Housing Board EmployeesUnion and others reported in 1996 (1) LLJ 833 = (1996)1 SCC 95. Inthat case, the Supreme Court rejected the contention that the Haryana Housing Board was a local authority and hence exempted by virtue of section 32(iv) of the Bonus Act. In paragraphs 35 and 36of the said judgment, the Supreme Court dealt with that issue, which reads as follows:-''Para 35. It will be seen that the Legislature itself has given the Board limited status of “local authority” only for the purpose of Land Acquisition Act as also the parent Act, namely, the Haryana Housing Board Act,1971, under which the Board has been constituted and established. The Legislature has given this status onlyfictionally as the Board, in reality, is not a “local authority” and that too only for a limited purpose. TheLegislature could well have given this status to the Board for purposes of other Acts also including the Payment of Bonus Act but this has not been done and consequently the Board cannot, specially in view of what has been stated above, be treated as “local authority”, under the Payment of Bonus Act. https://hcservices.ecourts.gov.in/hcservices/ Para 36. There does not, therefore, appear to be any reason to differ from the view expressed by the learnedSingle Judge or by the Division Bench (in appeal) of the Punjab and Haryana High Court that the Board is nota “local authority” as it does not possess the attributes indicated by this Court in the case of R.C.Jain3.

In view of the Haryana Housing Board's case, the contention raised by the second respondent that it comes within the exemption provided under section 32(iv) will stand rejected. But the case of the petitioners that they are eligible to get bonus in the light of the Tamil Nadu Housing Board case cannot be accepted as the case was relied on by the courts on grounds of waiver and estoppel and not on the merits of the exemption pleaded and in terms of section 32(v)(c) of the Bonus Act. 11. Thereafter, the learned counsel for the petitioner placed reliance upon the judgment of the Division Bench of this Court in Tamil Nadu Water Supply and Drainage Board Engineers Associationetc. -vs- State Government of Tamil Nadu and Tamil Nadu WaterSupply and Drainage Board reported in 1991-2-LLJ 394 in which exemption under section 32(v)(c) claimed by the Tamil Nadu WaterSupply and Drainage Board was considered. The following is the conclusion reached by the Division Bench, which is found in paragraphs 12 and 13, and they are as follows:-''

We have no manner of doubt that the respondentBoard has been established to serve the public interest by ensuring better amenities of life and raising the standard of life of the community as a whole. LearnedSingle Judge has referred to the functions of the Boardand its powers and rightly held that the purpose behind the functions of the Board is to provide protected drinking water supply and drainage facilities, but this also cannot be disputed that the Board has got its own assets and liabilities, that it has got its own method of recovery of the cost of the schemes, making investment and constituting its funds by ''all monies received by and on behalf of the Board..., all proceeds of land or any other kind of property sold by the Board, all charges, all interest, profits and other money accruing to the Board and all monies and receipts", deposited into the public accounts of the Government under such detailed head of accounts as may be prescribed or in the ReserveBank of India, State Bank of India or any corresponding new bank as defined in the Banking Companies (Acquisitionand Transfer of Undertaking) Act,1970.

In this context, it is necessary to refer to the relevant provision of the Tamil Nadu Water Supply and Drainage Board Act,1971, which concluded the issue by foreclosing an exemption under section 32(v)(c) of the Bonus Act and may be compared with asimilar provision found in the Pondicherry Housing Board Act,1973. Those two provisions are extracted below:-TWAD Board Act, 197134. ''Board's funds:- (1) TheBoard shall have its own fund. (2) omitted. (3) All moneys received by oron behalf of the Board by virtue of this Act, all proceeds of land or any other kind of property sold by the Board, all charges, all interest, profits and othermoneys accruing to the Boardshall constitute the fund of the Board. Pondicherry Housing Board Act,197373(1). The Board shall have and maintain its own fund to which shall be credited.-(a) omitted. (b) all moneys received by or on behalf of the Board under this Act including the sale proceeds of lands and other kinds of property sold by the Board, all rents and all interests, profits, or other moneysaccruing to the Board under this Act.