An appeal was filed by the appellant before the Employees' Provident Fund Appellate Tribuna, challenging the order dated 18.12.2012 passed by the EPF Authority under sections 7- A and 17- Q of the Act.

Brief Facts: Appellant's version is that it has been following the provisions of the Act since the day of allotment of PF Code. Gross salary of the employees, as per pay slips provided to them consists of basic wages house rent allowance etc. The appellant was depositing EPF contributions (employer's and employee's shares) in their respective accounts on the basic of basic wages. Version of the EPF Authority is that the appellant was not only deducting EPF contribution i.e employee,s share only from the basic wages but on the allowances and even in some cases at the rate more than the prescribed rate of EPF contribution but was remitting the EPF contributions in the accunts respective account of the employees at the prescribed rates thereby misappropriating a considerable amount for his own hains.

Reasons and Decision: The EPF Authority observed that undisputedly the employer has to pay EPF dues at the prescribed rate on the basis of basis wage and the employer has no liability to pay EPF dues on Allowances Appellant is receiving PF contribution on full minimum wages without splitting by making deductions from the wages of the emloyees as per agreement between appellant  and employees where as deposting the EPF contributios only on the basic of basic wages and allowances. The Act of the appellant reducing its statutory liability amounts to mislead its clients into paying a higher amount to wards EPF contributions on the total minimum wages thereby depriving the employees from their welfare. The doctrine of audi alteram patram has three basic essentials. Firstly a person against whom an order is required to be passed must be granted an opportunity of being heard, to provide a fair and transparent procedure and lastly, the authority concerned must apply its mind and dispose the matter by a reasoned or speaking order. Impugened order has been passed by following due procedure giving due opportunities to the appellant by the EPF Authority. Hence, appeal stands dismissed.

The members of our Association appreciate the gesture of the government towards achieving of goal to Ease of Doing Business in talking historic decision by reducing rate of ESI contributions. However the time has come that the rate of contribution of provident fund be reduced substantially. While considering and average wage of Rs.8000 per month, the lowest paid employee will have to shell out Rs.960 per month which is substantial and unaffordable since his/her immediate necessities/requirements are more demanding. with sweeping changed in lifestyles priorities have also changed too.

How an employee spends, how he saves his money as earned by him, should be left to him. The employer's share of contribution also be paid to the employee every month. Thought casting heavy financial liability by an employer towards its matching share of contribution, no employee apperciates this invisible gesture. This  aspect can be noticed that while attracting the candidates for employment or for retention of employees, the employers are compelled to mention this amount od EPF contribution as Cost to Company (CTC) Despite this reference in CTC, an employee is always concerned about his take home salary since deferred amount is not at all significant.

If the Scheme is not abolished it would be appropriate that insead of confiscating the hard earned wages the membership of the scheme should be optional for the employees.

Pro-Forma Suggested For

An agreement between a candidate (employee and his surety whereby the employee is sent aboard for training and he will complete the training and after completion he will serve the employer for a period of.................... and in case of his failure either to quit the training and employment before the stipulated period he will be liable for damages and his surety also stand liable .

Light work for ten weeks(Four weeks plus six weeks it she continues working) before the date of her expected delivery, if she asks for it.

Two nursing breaks in the course of her daily work until the child is 15 month old. No discharge or dismissal while she is on maternity leave.

No change,to her disadvantage, in of the condition of her service while on maternity leave.

Yes. A retired insured person can avail medical benefits on his/her superannuation for himself/herself and his or her spouce subject to the condition that he/she should deposit a sum of Rs. 120 per year in Advance with a certificate from the employer in form (available from local office) that he/she had been employed by him.

Those employees who are working for more than one employer on part-time basis are required to be covered under ESI Scheme and they can be covered by any one of the employer and you may keep a record of the employer who has covered such part-time employee including the name of the employee, code number of employee, name of employer, code number of employer as well as address of the employer.

If a worker has taken Annual Leave with wages, under section 79 of the Factories Act, 1948, from Friday to Tuesday, then Sunday (which is a weekly holiday), shall not be treated as Leave.

Rate of wages for the overtime work is required to be calculated by dividing gross monthly wages by 26, if actual working days in the month in which a worker has worked overtime, were 26.

We are engaged in the manufacture and marketing of garments.  Since ours is a intensive labour oriented establishment we pay minimum wages to our employees which are revised from time to time and also variable dearness allowance (VDA) is declared.  However, there are certain employees who are getting wages which more than the minimum rates of wages.  They also ask for the amount of DA as declared to be added in their wage packet.  Are we under obligation to make such payment?

No.  It is not necessary.  When the minimum wages are higher than the revised rates of wages or inclusive of variable dearness allowance than the employer is not under obligation to make payment to such employees.  The Supreme Court has held that when the total remuneration of an employee is more than the minimum rates of wages are fixed and/or revised VDA, the employer will not be under obligation to make such payment to such employees.

The recent judgment of the Supreme Court holding all allowances except HRA and overtime will form part of wages to attract provident fund contributions.  My query pertains as to whether the gratuity under the Payment of Gratuity Act would also be calculated on all the allowances?

No, since the Payment of Gratuity Act, 1972 is a self-contained an independent code as held by the Supreme Court.  The  definition of ‘wages’ under its section 2(s) categorically states that “except dearness allowance it will not include any bonus, commission, house rent allowance, overtime wages and any other allowance . Hence the enlarged definition of basic wages under Provident Fund Act would not have any impact on the wages as defined under Payment of Gratuity Act.

Claim of minimum wages – Workmen engaged through contractor raised claim before appropriate Government of Central Government – Petitioner challenged the notice issued by Central Government Authority under the Act – Held, workmen are employees of contractor and not of Bank – Hence, workmen are entitled to claim minimum wages payable by State Government and not by Central Government – Appropriate Government is the State and not Central Government – Contractor is covered under Section 2(b)(ii) and not under Section 2(b)(i) as an employer of the workmen – Petition is disposed of accordingly. Para 5

For Petitioner: Mr. Partha Sarathi Sengupta, Senior Advocate a/w other Advocates.

For Respondents: Mr. Raj Kumar Gaurisaria and Other Advocates

IMPORTANT POINTS

Workmen engaged by Bank through contractor are employees of contractor and not of Bank.

• Workmen are entitled to claim minimum wages payable by State Government and not by Central
• Government since the Appropriate Government is the State and not Central Government.

• Contractor is employer of the workmen covered under Section 2(b)(ii) and not under Section 2(b)(i) of the Minimum Wages Act, 1948.

JUDGMENT

PER ARINDAM SINHA, J.—1. A Private Bank has moved Court by this writ petition. It has challenged initiation of conciliation proceedings by respondent no. 3 to 6 on issue of minimum rates of wages payable by his client wholly without jurisdiction and ab initio void. Mr. Sengupta, learned senior advocate appears on behalf of petitioner-Bank and submits, his client is principal employer. Through contractor workmen are employed to render services required for security in his client’s ATM counters and other places. These workmen are not employees of the Bank. They are employees of the contractor. Any issue regarding their terms of employment, as a dispute to be adjudicated, must be between them and their employer. On such dispute resulting in a finding enforceable against their employer, corresponding obligation may arise upon his client as principal employer. He refers to annexure- ‘P9’ in the writ petition, being letter dated 6th March, 2018 issued by the authority under Government of India, Ministry of Labour & Employment, requiring his client to attend conciliation on dispute raised by West Bengal Thika Mazdoor Sangh & Others Union against purportedly, management of his client. According to him, this cannot be done since an issue arising in relation to Minimum Wages Act, 1948 requiring conciliation must be initiated by appropriate Government as defined in clause (b) of section 2 of said Act. It cannot be disputed that contractor is employer of these workmen. Contractor does not come within sub-clause (i) in clause (b) of section 2 of the said Act. Therefore, ‘contractor’ is covered by sub-clause (ii) in clause (a) of section 2. As such appropriate Government is State Government which, if feels necessary, might require initiation of conciliation proceedings. Hence, he seeks interference.

2. Mr. Gaurisaria, learned advocate appears on behalf of Union of India and submits, notice dated 25th May, 2017 of ‘strike’ was issued by Bengal Provincial Banks’ Contract Employees’ Association with copy marked to an authority of Central Government. This ‘strike’ was intended against petitioner- Bank in relation to which Central Government is appropriate Government. Hence, Central Government initiated conciliation proceedings in which petitioner- Bank has refused to participate. There should be direction for it to participate in conciliation proceedings, failing which there may be failure report and further action taken in accordance with law.

3. Mr. Paul, learned advocate appears on behalf of respondent no. 11 and submits, no notice under section 9-A of Industrial Disputes Act, 1947 was given by the Bank, on effecting downward revision in minimum wages paid to workmen through contractor. The Bank was paying minimum wages per Central rate. It then decided and implemented payment of minimum wages at State rate but without statutory notice. Whether or not dispute exist is to be ascertained in conciliation proceedings, which the Bank is not attending and has challenged by way of this writ petition. He submits further, dispute is really by reason of position taken by the Bank. So, therefore, appropriate Government is Central Government in relation to it. Mr. Paul relies on section 21 in Contract Labour (Regulation and Abolition) Act, 1970 to submit, contractor has failed to make payment of wages at Central rate which is why sub-section (4) in section 21 stands attracted and applicable to petitioner-Bank. As such, there should be no interference.

4. Mr. Roy, learned advocate appears on behalf of Kolkata Zilla Security and Allied Services Workmen’s Union and submits, though his client is a participant in the conciliation proceedings but petitioner has not implemented it. He submits, conciliation proceedings were initiated in year, 2017. It is only now that the Bank has come up with this challenge. It should be thrown out on ground of delay.

5. It will appear from above submissions that there is no dispute raised regarding workmen being employees of contractor. Contractor, it appears, has caused downward revision in pay in line with making applicable minimum wages payable at State rate, being below Central rate. This was effected in tandem, on the Bank having so reduced. However, so far as the dispute is concerned it is between workmen-employees against their employer, contractor. Contractor, it has been successfully demonstrated, comes under sub-clause (ii), clause (b) of section 2 of Minimum Wages Act, 1948. Facts in this case are similar to facts in case decided by order dated 3rd August, 2011 by a learned Single Judge of this Court in WP 4895 (W) of 2011 [Susanta Naskar v. Union of India], as relied upon by Mr. Sengupta.

6. In facts and circumstances aforesaid, this Court finds appropriate Government in relation to contractor, against whom dispute can be raised by workmen, is State Government. Aggrieved workmen must approach State Government for redressal, whether initially by conciliation or straightway reference of apprehended dispute. Petitioners are entitled to declaration that they are not obliged to attend conciliation proceedings initiated by Central Government.

7. Kolkata Zilla Security and Allied Services Workmen’s Union is added as party. Petitioner is given liberty to amend cause title in Court, to be countersigned by Assistant Court Officer. Amended copy of writ petition must be served on added respondents.

Union claimed bonus for drivers and technical personnel – Management denied in terms of Section 32(v)(b) of the Act – Management was registered under Motor Transport Workers Act, 1961 (MTW Act) – Tribunal awarded 20% bonus with interest @ 18% per year – Held, dominant persona of the management is an educational institution, attracting exemption under Section 32(v)(b) of the Act and also as MTU (Motor Transport Undertaking) – There is no admission by management that it derives profit from services of transportation – Employees are not entitled to bonus – Hence, impugned order is set aside – Writ petition is allowed. Para 55

B. PAYMENT OF BONUS ACT, 1965 – Sections 32(v)(b):- When employees entitled to bonus – Held, when an institution is operating on a purely commercial basis, its dominant purpose shifts from being the dissemination of education to the generation of profit, the institution would be commercial industry – Its employees would be entitled to bonus under the Act otherwise not. Para 55

WORDS & PHRASES:-  Profiteeing’ and ‘Profit making’ – Profit making is accepted to be a legitimate exercise, necessary for sustenance of all institutions, even those engaged in charitable or philanthropic activities, including those’ disseminating education, whereas ‘profiteering’ is defined as ‘taking advantage of usual or exceptional circumstances to make excessive profits, e.g., selling of scarce or essential goods at inflated prices during time of emergency or war’, is frowned upon. Para 52

NON-PROVIDING OF DOCUMENTS :- Effect of – Held, no adverse inference can be drawn for non-providing copies of financial of Institution since Section 32(v)(b) does not refer to ‘profitability’ as a factor to be taken for benefit of Bonus by the employees. Para 53

PAYMENT OF BONUS ACT, 1965 – Sections 32(v)(b):- 

Interpretation – Held, the Statute, though a welfare legislation, would have to be construed strictly – No insertions or interpolations is justified – Petitioner is entitled to exemption as per Section 32(v)(b) of
the Act. Para 46

For Petitioner: Mr. S. Ravindran, S.C. for Mr. P. Nehru, Advocate.

For Respondent No. 2: Mr. Balan Haridas, Advocate.

IMPORTANT POINTS

When dominant persona of the management of an educational institution is not deriving profit from its services like that of transportation, the drivers and technical personnel for bonus under the Payment of Bonus Act, 1965 is not justified since such an institution is exempted under Section 32(v)(b) of the Act.

• When an educational institution is operating on a purely commercial basis, its dominant purpose shifts from being the dissemination of education to the generation of profit, it would be commercial industry making its employees entitled to bonus under the Act.

• ‘Profiteeing’ and ‘Profit making’ have different terminologies i.e., profit making is accepted to be a legitimate exercise, necessary for sustenance of all institutions, even those engaged in charitable or philanthropic activities, including those disseminating education, whereas ‘profiteering’ is defined as ‘taking advantage of usual or exceptional circumstances to make excessive profits, e.g., selling of scarce or essential goods at inflated prices during time of emergency or war’, is frowned upon.

• No adverse inference can be drawn for non-providing copies of financials of Institution since Section 32(v)(b) of the Payment of Bonus Act, 1965, does not refer to ‘profitability’ as a factor to be taken for benefit of Bonus by the employees.

• The Payment of Bonus Act, 1965, though is a welfare legislation, would have to be construed strictly without any insertions or interpolations.

ORDER

DR. ANITA SUMANTH—1. The Management of Satyabama University (in short ‘Management/Institution’) challenges an award passed by the Industrial Tribunal (in short ‘Tribunal’) dated 24.03.2017.

2. The genesis of the matter was a claim statement filed by Pudhiya Jananayaga Vagana Ottunargal Matturm Techniciangal Union (in short ‘Union’) in I.D.No.33 of 2014 on 28.11.2015, to which a counter was filed by the Management on 29.12.2015. After completion of pleadings, the impugned award was passed accepting the claim of the Union.

3. The dispute referred to the Tribunal is as follows:

[Vernacular Omitted]

Roughly translated, the claim relates to bonus that the members of the Union believe that they are entitled to.

The case of the Union, comprising of drivers and technical personnel, is that they are entitled for bonus under the provisions of the Payment of Bonus Act (in short, ‘Bonus Act’) under which the Management is bound to pay bonus to its employees. The Management runs buses for the transportation of its students, teaching and non-teaching staff to the University, both morning and evening, and collects, according to the Union, substantial transportation fee from the students as well as the employees using the facility, in addition to the tuition fee collected from the students. As such, it is entitled to share the profits from such transport fee.

5. Before the Conciliation Officer, a stand was taken by the Management to the effect that the Bonus Act would not apply in the light of the exemption provided in terms of section 32(v)(b) thereof. This claim was sought to be rubbished by the Union on the ground that the University was run on commercial lines and is hugely profitable and the Institution is thus liable to share its profits with the union members. The Union also argued that the Institution was registered as an Undertaking under the Motor Transport Workers Act 1961 (in short ‘MTW Act’) and for this reason also, was entitled to bonus for its members.

6. The Tribunal was swayed by the arguments of the Union coming to the conclusion that the Institution was not just profitable, but was indulging in profiteering and thus would not be entitled to the exemption sought for by it. The claim of bonus by the Union of 20% along with interest at 18% for the year 2012-13 was granted by application of the doctrine of casus omissus and appending the words, ‘not-for-profit’ to Universities and Educational institutions exempted from the payment of bonus in terms of Section 32(v)(b).

7. Before me, learned counsel reiterated their respective stands as before the Tribunal.

8. The case of the Management as projected by Mr. Ravindran, learned senior counsel for Mr. P. Nehru, learned counsel for the petitioner is simple and hinges on the exemption provided under section 32 of the Bonus Act specifically 32(v)(b) which exempts Universities and other Educational Institutions from payment of bonus to its employees.

9. Learned Senior Counsel urges the Court to adopt the literal language of clause (v)(b) of section 32 pointing out that there is no qualification whatsoever in the clause as regards the profitability of the educational institution or that it was, allegedly, run on commercial lines. He draws comparison with clause (v) (c) of section 32, which exempts Chambers of Commerce and other organisations from the payment of bonus, upon condition that such organizations not operate for purposes of profit. Thus the Legislature was, according to him, conscious of profit earning apparatus and had made a specific differentiation between the two clauses, deciding, in its wisdom, to purposely omit reference to ‘profits’ in clause (v)(b) of Section 32.

He takes me through the judgments of the Supreme Court in the case of Unnikrishnan J.P. and others v. State of Andhra Pradesh and others, (1993) 1 SCC 645) and P.A. Inamdar and others v. State of Maharashtra and others, (2005) (6) SCC 537 to demonstrate the evolution of the law as far as activities of educational institutions are concerned.

10. In Inamdars’ case the Full Bench of the Supreme Court had categorically stated that profiteering should not be indulged in, whereas profitability cannot be objected to as it is required to sustain the Institution and run it on competitive lines. Thus he would urge that the exemption to educational institutions in section 32(v)(b) should be extended only to those institutions that do not profiteer and those that are run with the dominant purpose of education alone and not profit making, as a commercial venture. The Institution in point, according to him, is guilty of the latter.

11. Secondly, he submits that the Institution itself is registered as an ‘undertaking’ under the provisions of the Tamil Nadu Motor Transport Workers Act 1961. He refers to various judgments to show that in a case where the Institution comprises within itself a Motor Transport Undertaking (in short ‘MTU’) as in the present case, the entity would assume the character of an MTU entitling the employees to bonus. The exemption under Section 32(v)(b) thus becomes unavailable to the Institution.

12. Parallelly, and contradicting his earlier stand regarding the integration of the two personas, he also states that the two roles, one as a MTU and the other as an educational institution, are severable and the services rendered by members of Union should be regarded as services rendered by third party drivers/technicians. The logical conclusion from such an argument is that if the drivers/technicians are to be looked upon as third party service providers, they would fall outside the definition of ‘employees’ for the purpose of payment of bonus and the claim of the Union members liable to be rejected straight away and at the threshold.

13. Thirdly, he refers to the provisions of the University Grants Commission Act 1956 (in short ‘UGC Act’), to state that the definition of ‘University’ does not include a deemed University. Admittedly, the Institution in the present case, is a deemed University and hence, according to the Union, stands outside the ambit of the exemption.

14. The Union relies on the following decisions:

1. Workmen of Tirumala Tirupathi Devasthanam v. Management and another, (1980) 1 SCC 583

2. Christian Medical College & Hospital v. The Presiding Officer and others, (2003 3 CTC 158)

3. P.A. Inamdar and others v. State of Maharashtra and others, (2005 6 SCC 537)

4. The Management of Christian Medical College (CMC Association, Vellore) Ida Scudder Road, Vellore 4, Rep. by its Secretary v. Government of Tamilnadu and another
(W.A.No.1607 of 2015, dated 26.06.2018 passed by this Court)

5. Vipulbhai M. Chaudhary v. Gujarat Cooperative Milk Marketing Federation Limited and others, (2015 8 SCC 1)

6. R.C. Gupta and others v. Regional Provident Fund Commissioner, Employees Provident Fund Organisation and others, (2018 14 SCC 809)

7. Unnikrishnan v. State of Andhra Pradesh, (1993) (1) SCC 645)

8. Pondicherry Housing Board Employees Union v. Government of Pondycherry, (2009
(3) LLN 473)

9. ESI Corporation v. Sri Gangaram Trust Society, (FAO No.284 of 2011 dated 17.01.2014)

10. Queen’s Education Society v. Commissioner of Income tax, (2015 (8) SCC 47)

11. Pradeep Phosphates v. State of Orissa, (AIR 2018 SC 2108)

12. Dental Council of India and another v. Hari Prakash and others, (2001 8 SCC 61)

13. Indian Dental Association, by is Secretary, Kerala and Another v. Union of India, by its Secretary, Delhi and Others, (ILR 2003 KAR 4564)

14. Central Bureau of Investigation, Bank Securities and Fraud Cell v. Ramesh Gelli and others, (2016 3 SCC 788) In all, he urges this Court to dismiss the Writ Petition confirming the award passed by the Tribunal.

19. Having heard learned counsel, I am of the view that this Writ Petition deserves to be allowed, for the reasons set out below.

20. The payment of bonus is, in terms of section 10 of the Bonus Act, premised on the sharing of profits with the employees of an Organisation/Institution. Employee is defined in section 2(13) as follows:

2. Definition.—In this Act, unless the context otherwise requires,—

(13) “employee” means any person (other than an apprentice) employed on a salary or wage not exceeding 1 [three thousand and five hundred rupees] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied;

21. Employer is defined in section 2(14) as follows:

(14) “employer includes- (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and

(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;

22. There is no dispute on the position that the petitioner and the second respondent, the Management/ Institution and members of the Trade Union, are employer and employee in terms of section 2(14) and 2(13) of the Bonus Act respectively. There is also no dispute on the position that the members of the Union are paid competitive salaries, in excess of the prescription under the Minimum Wages Act. These findings of fact emanate from the impugned order of the Tribunal.

23. I first address the arguments of Mr. Haridass on the constitution of an Undertaking in terms of the MTW Act. The argument appears to be that once constituted as a Motor Transport Undertaking under the aforesaid Act, the entire Institution/Organisation assumes such character, thus entitling the members of the Union to claim and receive bonus from the Institution/Undertaking. Reliance is placed on the decision of the Division Bench of this Court in the case of The Management of Christian Medical College (supra).

24. The Bench, in the aforesaid matter, was dealing with the following prayer: ‘For the reasons stated in the accompanying affidavit, it is respectfully prayed that this Hon’ble Court may be pleased to issue a Writ of declaration, or any other Writ or direction in the nature of a Writ under Article 226 of the Constitution of India that the Motor Transport Workers Act, 1961, does not apply to the petitioner institution and thereby render justice.’

25. The Bench noted the definition of a MTU, in terms of Section 2(g) of the MTW Act, as follows:

A ‘motor transport undertaking’ means a motor transport undertaking engaged in carrying passengers or goods or both by road for hire or reward, and includes a private carrier; After an exhaustive analysis of the cases on point (See M.C. Mehta v. Union of India and others, (2000 (9) SCC 519), Tata Iron and Steel Co. Ltd v. District Transport Officer and Others, (2015 (11) SCALE 570) and Father Raymond Coelho v. Labour Inspector, Office of Regional Joint Labour Commissioner, (1997 (2) WLN 118) and the provisions of the Motor Transport Workers Act, 1961, the Bench concludes that it was only in circumstances where the facility of transportation was offered for hire or was rendered for reward that the entity would assume the character of a Motor Transport Undertaking. In the case of CMC (supra), the Bench noted that though the facility of transportation was offered only to the students and staff of the college itself, the averment that the transport service had, in fact, been rendered for a fee had not been controverted, but had been accepted by the Management. Thus, the Bench concluded that the facility of transport was being provided for hire or reward and the entity would thus be construed as a Motor Transport Undertaking. This is a question of fact, as to whether the Institution operated for hire or collected a separate fee/reward for such services.

26. I now examine the repercussion of the above case to the case on hand. The allegation in the present case is that the Institution earns substantial fees/collection from the facility of transport offered to its students and staff. Though the financials of the Institution have been sought, the same have not been produced till date. The Institution does not dispute that a fee is collected for such service, but maintains that such fee is only for the purpose of meeting the running costs as well as the costs incurred for the management of this facility and the same is not being run on commercial lines.

27. I do not propose to delve into a fact-finding exercise to determine whether the fee collected for transport is only to meet costs or intended to generate profit as it is both beyond the scope of and unnecessary for the purposes of the issue raised before me. The Institution is, admittedly, registered as a MTU as, in terms of Section 5 of the MTW Act, being an entity that employs more than five (5) motor transport workers. However, the factum of registration as a MTU, by itself, therefore, does not advance the case of the Union for entitlement to bonus.

28. Then again, even if I were to assume that the fee collected for transport did generate a profit, I am of the categoric view that the dominant purpose of the Institution remains the dissemination of education and it thus continues to retain the character of an Educational Institution/University. Thus, even assuming the worst against the Institution, that it has made a profit from the transport facility offered, the exemption set out in terms of Section 32(v)(b) cannot be effaced or negated. The attempt of the Union appears to be that once the Institution assumes the character of a MTU, the employees, that is, the members of the Union, would become entitled to bonus. I disagree, as even if it were to be as suggested and urged by the Union, the payment of bonus would continue to be governed by the special enactment, the Payment of Bonus Act. Simultaneous therewith, the character of the Institution as a deemed University will also remain unaltered notwithstanding that the Institution is a MTU for the purposes of the MTW Act.

29. I do not see the two different personalities assumed by the Institution, one as a deemed University and the other as a MTU, militating against each other or one stepping into the shoes of the other. On the other hand, I see happy co-existence of the two personas with there being no doubt in my mind, that the persona of the Petitioner as an educational Institution remains dominant and unaltered, thus attracting the exemption provided under Section 32(v) (b) of the Bonus Act. Thus, even if I were to accept this argument of the Union, nothing turns upon the same, that could persuade me or that leads to the conclusion that bonus is payable to the members of the Union.

30. The Union has relied on the judgement of the Supreme Court in the case of Workmen of Tirumala Tirupathi Devasthanams (in short ‘TTD’) v. The Management and another, (1980 1 SCC 583). The TTD was registered as an Undertaking under the MTW Act. The question that arose in that case was, firstly, whether the Motor Transport Undertaking had subsumed/merged itself with the TTD so as to constitute one single unit and secondly, whether the resultant unit was one that operated for purposes of profit so as to attract the exemption provided under section 32(v)(c) of the Bonus Act. The Bench remanded the issue to the Tribunal for decision afresh, in the following terms:

‘2. The Tirumala Tirupathi Devasthanam, a vast and unique religious organisation in the country, is certainly net founded for making profit and attracts people who want to offer worship to Shri Venkateshwara but then the specific question with which we are concerned is whether the transport operation by the administration falls within the category of institutions within the meaning of Section 32(5)(c). Is the Transport Department so merged in and integrated with the Devasthanam as to be incapable of independent identity? Is the Transport Industry run by the Devasthanam sufficiently spread as to be treated as an institution in itself? There is no doubt, as the Tribunal has rightly held, that it is an industry but the further question arises whether it is an institution in the context and within the text of the Payment of Bonus Act. This question has not been properly appreciated by the Tribunal. Secondly, assuming that it is an institution, it does not necessarily follow that Section 32 is excluded. On the other hand, there must be proof that the Transport Department (a) is an institution; and (b) established not for the purpose of profit, The Tribunal has not correctly appreciated the import of this letter requirement. It has been found that profits made in some years are ploughed back whether that may mean. It is also found that the motive for running the industry of transport was to afford special facilities for the pilgrims. These by themselves do not clinch the issue whether the institution has been established not for purposes of profit, nor are we satisfied that merely because in the administrative report of the Devasthanam, there is mention of the transport establishment as a remunerative enterprise, that is decisive of the issue.

3. The Tribunal has to decide whether the Transport Department, having regard to the features of its administration, the sources of its finance, the balance-sheet that is drawn up and the disposal of the profits, can be considered to be an institution in itself whether it has nexus with the Davasthanam or not. The fact that it is run by the Devasthanam, does not keep it out of its being an institution. This aspect has not been considered and must be decided de novo.

4. Likewise, merely because it is an institution, the Transport Department does not cease to be one established ‘not for purposes of profit’ that has got to be made out on its merits. The institution may be designed for profit although it may make or may not make profit. The institution’ profits or earnings may be used for other charitable purposes. That also does not determine finally the character of the institution. Was the institution ‘not one for purposes of profit’, motives apart? If it was one, definitely not for earning profit, but merely as an ancillary facility for pilgrims to reach and to return, Section 32(5) will exclude the institution. If we may tersely put it, the dominant purpose of the Transport Department will be the decisive factor.’

31. The case on hand is distinguishable simply for the reason that we are not concerned with the provisions of 32(v)(c) that exempts certain Institutions from the payment of bonus, subject to the condition that they do not generate profit, but 32(v)(b) that touches solely upon the activity of impartation of education, which the petitioner before me, admittedly does, the generation of profit not being a factor for consideration. The issue regarding the constitution of the Institution as a MTU under the MTW Act is answered as aforesaid.

32. The Union also cites the decision of this Court in The Christian Medical College and Hospital (supra). In this case, while holding that the College was entitled to the exemption under Section 32(v) (b), the Hospital was held to be a Commercial Institution, one generating profits, thus not entitled to the exemption provided in terms of section 32(v)(b) of the Bonus Act.

33. I now move on to the merits of the claim of exemption under section 32(v)(b) as canvassed by the Management.

34. The relevant statutory provision under which exemption is claimed is extracted below:

32. Act not to apply to certain classes of employees.— Nothing in this Act shall apply to—

(i) employees employed by any insurer carrying on general insurance business and the employees employed by the Life Insurance Corporation of India;

(ii) seamen as defined in clause (42) of section 3 of the Merchant Shipping Act, 1958 ( 44 of 1958);

(iii) employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), and employed by registered or listed employers;

(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 State Government or a Local authority;

(v) employees employed by — (a) the Indian Red Cross Society or any other institution of a like nature (including its branches);

(b) universities and other educational institutions;
(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit;

(vi) employees employed through contractor on building operations;

(viii) employees employed by the Reserve Bank of India;

(ix) employees employed by — (a) the Industrial Finance Corporation of India;

(b) any Financial Corporation established under section 3, or any Joint Financial Corporation established under section 3A, of the State Financial Corporations Act, 1951 (63 of 1951);

(c) the Deposit Insurance Corporation;

(d) the National Bank for Agriculture and Rural Development;

(e) the Unit Trust of India;

(f) the Industrial Development Bank of India;

(fa) the Small Industries Development Bank of India established under section 3 of the Small Industries Development Bank of India Act, 1989;

(ff) the National Housing Bank;

(g) any other financial institution (other than a banking company), being an establishment in public sector, which the Central Government may, by notification in the Official Gazette, specify, having regard to –

(i) its capital structure;

(ii) its objectives and the nature of its activities;

(iii) the nature and extent of financial assistance or any concession given to it by
the Government; and

(iv) any other relevant factor;

(xi) employees employed by inland water transport establishment operating on routes passing through any other country.’

35. Reliance is placed by the Management on the provisions of Section 32(v)(b) above. Even before adverting to this point in detail, I may make reference to a preliminary submission of the Union to the effect that the Institution in question will not be covered by the exemption clause seeing as it is only a ‘deemed’ university that does not fall within the ambit of ’University’ as defined by the University Grants Commission Act, 1956 (in short ‘UGC Act’). The provisions of the aforesaid Act however would establish otherwise. A ‘University’ is defined in Section 2(f) as follows:

(f) ‘University’ means a University established or incorporated by or under a Central Act, a Provincial Act or a State Act, and includes any such institution as may, in consultation with the University concerned, be recognised by the Commission in accordance with the regulations made in this behalf under this Act.

36. According to the Union, the definition does not include a deemed University which then stands outside of the ambit of the exemption in section 32(v)

(b) of the Bonus Act. However, the provisions of Section 3 of the UGC Act state thus:

3. The Central Government may, on the advice of the Commission, declare by notification in the Official Gazette, that any institution for higher education, other than a University, shall be deemed to be a University for the purposes of this Act, and on such a declaration being made, all the provisions of this Act shall apply to such institution as if it were a University within the meaning of clause (f) of section 2.

37. In the present case, the Notification issued by the UGC in the case of the Institution reads thus: