1960 (12) TMI 98 - SC - Indian Laws

Supreme Court rules Central Gov regulates insurance bonus payments, Industrial Tribunals not involved

The Supreme Court upheld the dismissal of a reference to an Industrial Tribunal regarding bonus payment disputes by employees of a General Insurance ... - Issues:Whether a dispute regarding bonus payment by employees of a General Insurance Company can be referred to an Industrial Tribunal under the Industrial Disputes Act, 1947.Analysis:1. The dispute arose when the workmen of an Insurance Company claimed additional bonus for the years 1954 and 1955, which was referred to the Industrial Tribunal. The Tribunal dismissed the reference based on a preliminary objection raised by the respondent regarding the limitations imposed by section 40C of the Insurance Act. The Tribunal also considered the relevance of section 31A of the Insurance Act in prohibiting the payment of bonus by insurers. The appellants challenged this decision before the Supreme Court.2. The appellants claimed additional bonus based on the available surplus of the respondent company, which the Tribunal did not consider due to the preliminary objection. The respondent had already paid bonus equivalent to two months' basic wages for each of the years in question.3. The respondent's preliminary objection was based on section 31A(1)(c) of the Insurance Act, which prohibits insurers from employing individuals whose remuneration includes a commission or bonus related to the general insurance business. The Tribunal found that the bonus claimed by the appellants would constitute a part of their remuneration, which is prohibited by this provision.4. An exception to this prohibition is proviso (vii) to section 31A(1)(c), which allows the payment of bonus to salaried employees of Insurance Companies on a uniform basis, subject to the Central Government's approval. The Central Government can prescribe the maximum amount of bonus that can be paid by the insurer.5. The provision ensures that the Central Government has the authority to decide whether bonus should be paid by an insurer based on its financial position. The legislative intent was to supervise and regulate the payment of bonus by Insurance Companies, with the Central Government having the final say on the matter.6. The appellants argued that proviso (vii) does not bar the Central Government from referring an industrial dispute regarding bonus for adjudication under the Industrial Disputes Act. However, the Court found that the legislative intent was to exclude the intervention of Industrial Tribunals in bonus payment matters and keep it within the Central Government's discretion.7. The Court emphasized that the payment of bonus by insurers is conditioned by the provisions of section 31A(1)(c) and proviso (vii), and the intervention of Industrial Tribunals was not intended. The Court noted that if an insurer refuses to comply with the Central Government's decision, there might be a lacuna in the law that the legislature should address.8. Referring to a similar case involving the Banking Companies Act, the Court held that bonus payment constitutes additional remuneration and falls within the prohibition of section 31A(1)(c). The Court upheld the Tribunal's decision to dismiss the reference and did not consider other arguments raised under section 40C of the Act.9. Consequently, the Court dismissed the appeal, upholding the Tribunal's decision, and ordered no costs to be paid.10. In conclusion, the Court affirmed that the legislative intent was to regulate bonus payments by Insurance Companies through the Central Government, and the Industrial Tribunals were not intended to intervene in such matters.