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of <h1>Bangalore Water Board exempt from employee bonuses under Payment of Bonus Act</h1> <h3>Bangalore Water Supply and Sewerage Board Versus Workmen and Ors.</h3> The court determined that the Bangalore Water Supply & Sewerage Board qualifies as a 'Local Authority' under Section 32(iv) of the Payment of Bonus ... - Issues Involved:1. Whether the Bangalore Water Supply & Sewerage Board (Board) is a 'Local Authority' within the meaning of Section 32(iv) of the Payment of Bonus Act, and if so, whether it is exempt from the payment of bonus under the said Act to all its employees.2. Whether the Board is an institution established not for purposes of profit within the meaning of Section 32(v)(c) of the Bonus Act and is therefore not liable to pay bonus to its employees.3. Whether the provisions of Section 32(iv) of the Act are ultra vires of Article 14 of the Constitution of India.Detailed Analysis:1. Whether the Board is a 'Local Authority' within the meaning of Section 32(iv) of the Payment of Bonus Act:The court examined whether the Board qualifies as a 'Local Authority' under Section 32(iv) of the Payment of Bonus Act. The term 'Local Authority' is defined in the General Clauses Act, 1899, as an authority legally entitled to or entrusted by the Government with the control or management of a municipal or local fund. The court referenced the Supreme Court's decision in Union of India v. R.C. Jain, which outlined the distinctive attributes of a local authority: separate legal existence, autonomy, governmental functions, and the power to raise funds. The court found that the Board meets these criteria as it is a body corporate, functions in a defined area, has a representative character through a Consultative Committee, and has the power to levy rates, fees, and charges. Thus, the Board is deemed a 'Local Authority' under Section 32(iv) of the Payment of Bonus Act.2. Whether the Board is an institution established not for purposes of profit within the meaning of Section 32(v)(c) of the Bonus Act:The court considered whether the Board was established for profit. The Tribunal had found that the Board was not a profit-making body. The court referenced the Supreme Court's judgment in Workmen for Tirumala Tirupathi Devasthanams v. The Management, which applied the 'Dominant Purpose' test to determine the primary objective of an institution. The court agreed that the dominant purpose behind the establishment of the Board was not to earn profit. However, since the Board was already deemed a 'Local Authority' under Section 32(iv), the court found it unnecessary to delve further into this issue and left the question open.3. Whether the provisions of Section 32(iv) of the Act are ultra vires of Article 14 of the Constitution of India:The employees challenged the constitutional validity of Section 32(iv) of the Payment of Bonus Act, arguing that it discriminates between employees of a 'Local Authority' and those of other establishments. The court reiterated the principles governing Article 14, which allows reasonable classification based on intelligible differentia with a rational nexus to the object sought to be achieved by the statute. The court found that the classification under Section 32(iv) was reasonable as it distinguished employees based on the nature of their duties, regulatory control, and employment terms. The court noted that the employees of the Board are pensionable and have their salaries fixed based on agreements comparable to government employees, thus justifying the classification. The court concluded that the classification had a rational nexus with the object of the Act, which is to exclude establishments carrying out public duties from the burden of paying bonuses. Therefore, the challenge to the constitutional validity of Section 32(iv) failed.Judgment:1. Writ Petition No. 19528/1984 filed by the Bangalore Water Supply & Sewerage Board is allowed, and the award of the Industrial Tribunal dated 27-12-1983, which held the employees of the Board working at its Pumping Stations and Treatment Plants entitled to payment of bonus, is quashed.2. Writ Petitions Nos. 4550/85 & 16210/84, filed by the Workmen of the B.W.S.S.B., claiming a right to payment of bonus from the Board, are dismissed.3. The Reference made to the Labour Tribunal shall stand answered in the negative, and the claims of the employees are rejected.4. The parties shall bear their own costs.
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