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Petitioner: INDUSTRIAL DEVELOPMENT BANK OF PAKISTANEMPLOYEES' FEDERATION AND ANOTHER VS Respondent: INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN, .(
Court Name: National Industrial Relations Commission Judge(s): Rais Ahmed Jafri Title:INDUSTRIAL DEVELOPMENT BANK OF PAKISTANEMPLOYEES' FEDERATION AND
ANOTHER vs INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN, .( Case No.: Case No, 9(2) of 1980 Date of Judgment:1981-05-02 Reported As: 1981 PLC 429 Result: Order accordingly Judgment DECISION ' Industrial Development Bank of Pakistan Employees Federation has moved this application under section 34-A read with section 34 of the Industrial Relations Ordinance, 1969 against Industrial Development Bank of Pakistan. The petitioner Federation which is the Collective Bargaining Agent has alleged that before 1975 the officers were receiving two months substantive pay as bonus, while the workers employed by the respondent-Bank were being allowed three substantive salaries as bonus irrespective of the amount of profit and even in the years when the respondent-Bank incurred losses. The said bonus became a part of the terms and conditions of employment of the workers by virtue of long usage, and therefore the workers of the respondent-Bank have secured a guaranteed legal right which is protected under (Standing Order 10-C(4) of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 (hereinafter called the 'Standing Orders Ordinance'). It was further alleged that after the Wage Commission Award was announced in the year 1975 the said bonus at the rate of three months substantive salaries was not paid to the workers and instead a profit bonus was allowed to them. It is also alleged that while the workers were denied their bonus equal to three substantive salaries, the officers still continue to get their bonus equal to two substantive pays. After the payment of said bonus was refused by the Bank, the Federation on 17th November, 1976 took up the matter with the Deputy Managing Director of the respondent Bank. The attention of the respondent-Bank through another letter dated 13th March, 1978 was also invited to a Press Note issued by the Ministry of Finance on 5th October, 1975. 2. The petitioner Federation kept on pressing their right to receive the said bonus through various letters dated 18th March 1977, 13th February 1979, and 19th April, 1979. It is further alleged that
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respondent-Bank did agree in principle about the grant of the said bonus, but they insisted that they would get prior approval for payment of the same from the Ministry of Finance. On 3rd February, 1981 a telex was again sent to the Managing Director on this issue while on 10th February, 1980 another letter was given by hand to the Deputy Managing Director for the payment of said amount of bonus. The respondents finally on 15th June, 1980 turned down the demand for bonus in terms of the Standing Order 10-C (4) of the Standing Orders Ordinance. Copies of the above- stated correspondence have been placed on record. 3. It is also alleged that while the respondents continued to refuse the disbursement of the said bonus, the other Banks/Financial Institutions continued to pay the bonus to their workers over and above the bonus awarded by the Wage Commission in 1975. In this connection circulars of the State Bank of Pakistan, House Building Finance Corporation, Agricultural Development Bank of Pakistan and National Development Finance Corporation were attached with the statement of claim as Annexures A to A-3 respectively. 4. In support of their claim, Muhammad Basit Siddiqui, Secretary-General of the petitioner Federation examined himself. He corroborated the contents of the application and the statement of claim filed by the petitioner Federation. In his statement, he further clarified that the respondent- Bank had been paying to the workers a bonus equal to two substantive salaries from 1961, up to 1968. In the year, 1969, the Industrial Development Bank of Pakistan Employees Union raised an industrial dispute and amongst others raised a demand for the increase of the amount of the bonus from two substantive salaries to for substantive salaries. A notice raising the above demand by the Union has been produced. The reply to this notice given by the Deputy Managing Director to the General Secretary of the Industrial Development Bank of Pakistan Employees Union has also been brought on record. Through this letter it was communicated to the Union that the Management has recommended for three substantive salaries as bonus to the Board of Directors, the Central Government and the Annual General Meeting of the Share Holders of the Bank. Consequently the demand of bonus was accepted and the Bank agreed to pay three substanstive salaries as bonus to the workers vide circular dated 19th September, 1969. The said circular stated that the Board of Directors at its meeting held at Karachi on 18th September, 1969 has agreed to declare bonus for the financial year ended 30th June, 1969 to officers and staff of the Bank at the following rates :- ' Staff in category-I, two months' substantive pay as on 30th June, 1969. ' Staff in category-II, III and IV, three months' substantive pay Its on 30th June, 1969. 5. In support of his contention that the management of the Bank continued to pay bonus at the rate of three months substantive pay to the workers from 1969 to 1975, Mr. Muhammad Basit Siddiqui produced the following documents :- (1) Annual Report of 1968-69. (2) Circular of 3-11-1971. (3) Circular of 11-14973. (4) Annual report of 1971.72, (5) Circular dated 1-1-1974. (6) Annual report of 1972-73. (7) Circular dated 8-1-1975. (8) Annual Report of 1973-74. 6. This witness also produced all the correspondence exchanged between the petitioner Federation and Bank on various dates through which the issue of bonus was agitated. He also produced final letter of the Management letter dated 15th June, 1980 showing their inability to pay the demanded bonus on the advice of the Government. The said witness also produced various circulars from the other banks and financial institutions who though covered by the Wage Commission Award paid
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additional bonus over and above the bonus awarded by the said Commission. In the Administration Circular No, 17 dated 28th July, 1979 the State Bank of Pakistan enhanced the rate of bonus payable to the officers and clerical and non-clerical staff as under :- {{TABLE}} (i) Clerical it non-clerical Two months' basic pay and staff. One months' gross salary annually. (i) Officers. Three months basic pay (ii) annually. 7. The circular issued by the House Building Finance Corporation dated 5th August, 1979 shows that the said Corporation allowed one months' gross salary to the workers. The Agricultural Development Bank of Pakistan vide their Circular No, 30/79 dated 22nd August, 1979 allowed three months basic pay to clerical and non-clerical staff. National Development Finance Corporation vide their Circular No, IL/56/ 79 dated December 30, 1979 decided to pay bonus as under :- (0 An amount equivalent to two months gross salary excluding overtime and Education Allowance for all the workers who are .Governed by the Wage Commission for Bank and Financial Institutions and who have served the Corporation continuously for one year or more on December 31, 1979. (ii) An amount equivalent to two months basic salary for all the officers who have served the Corporation continuously for a period of one year or more and who are in the service of the Corporation on December 31, 1979, 8. Contesting the claim, the respondents in their written statement submitted that the application under consideration is incompetent as the workers have no right guaranteed or secured Id them in respect of their claim as contained in the petition. It has been further submitted that the workers are not entitled to the payment of the said bonus except to the extent as provided for in the Wage Commission Award 1974-75. The petitioner Federation is not competent to raise an industrial dispute according to section 38-C of the Industrial Relations Ordinance, 1969. It has also been submitted that the respondent organisation is a statutory organization having been established under the Ordinance XXXI of 1961. This establishment has its own service rules and regulations applicable to the workmen employed therein. It is further alleged that the service rules and regulations have been framed under a statute and therefore Standing Orders Ordinance is not applicable to the respondent-Bank. It is further submitted that in the year 1974 under the provisions of the I. R. 0., 1969 a Wage Commission was constituted which gave its award. This award is to take effect from January 1, 1975 and is binding on the Management of the Bank and the Workmen for a period of three years. The Award decided all the terms and conditions of service. One of the terms was in respect of payment of bonus to the workmen concerned. The award on bonus is contained in paras. 283 and 284 as far as the respondents are concerned. Para. 283 of the said Award states that the bonus should be calculated according to the following formula and scales on the basis of the profits made in the preceding year :- Percentage of gross profits Amount of Bonus to the paid up capital. (i) Upto 100%One month's gross salary. (ii) More than 100% & upto 125%One month's gross salary & 1/2 month's basic. (iii) More than 125Y. & upto 175%One month's gross salary & one month's basic. (iv) More than 175%One month's gross salary & 2 months' basic. 9. Para. 283 of the Wage Commission Award further lays down that the payment of bonus, calculated as above shall be subject to the maximum limits of divisible profit prescribed in
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Standing Order 10-C of the West Pakistan (Standing Orders) Ordinance, 1968 as reproduced in Annexure 'V'. 10. Para. 284 of the Award reads as under :- "284. The bonus, calculated on the basis laid down above, shall be paid in one or more instalments as the Management concerned may decide. In the case of payment by instalments the first instalment should be paid within three months of the closing of the accounts for the preceding year. No bonus shall be paid by Banks/financial institutions to their employees if they do not earn profit so as to qualify for the payment of bonus as laid down above." 11. Referring paras. 283 and 284 quoted above it has been contended by the respondent Bank that the amount of bonus was linked with the percentage of gross profits to the paid up capital. It is also submitted that the amount of bonus as determined by the Wage Commission is being paid to the workers and since the award made it a condition that the payment of bonus shall be subject to maximum limits as prescribed in Standing Order 10-C of the Standing Orders Ordinance, 1968, the workers are not entitled to any other amount of bonus over and above this limit. It has further been contended that the Award was given in respect of bonus in supersession of all practices, customs or usages existing in the Organisation. In other words, it is submitted that award on bonus was a final determination as to the liabilities of the respondents regarding the payment of bonus. Reliance has also been placed on a Federal Government Press Note dated October 5, 1975 through which the method and the extent to which the amount of bonus is to be paid to the workers has been clarified. A copy of the Press Note was enclosed as Annexure 'A' to the reply statement, extract of which is reproduced below :- "9. Bonus.-Bonus shall be paid as per formula laid down in the Wage Commission's Award provided that in no case an employee shall get by way of bonus an amount less than what he got as bonus for the year ended December 31, 1974," 12. The respondent-Bank produced Manager, Administration Fazalur Rehman as their witness who has supported the stand taken by the Bank. In cross-examination, the witness admitted that the Bank is governed by a Board of Directors appointed by the Government. He also admitted that the bonus during the period 196) to 1974 was paid to the workers under the directions of the Board of Directors. 13. Briefly stated, the contentions of the petitioner Federation are as under :- (1) Respondent-Bank has been paying two substantive salaries as bonus from 1961 to 1969. (2) The respondent Bank has been paying bonus equivalent to three substantive salaries from 1969 to 1975. (3) The respondent-Bank refused to pay three substantive salaries as bonus to the workers and paid only one gross salary to them after the Wage Commission Award came into force in 1975 and thereafter since 1976 onward the respondent-Bank has refused to give three substantive salaries to the workers as bonus. (4) The respondent-Bank has been paying the claimed bonus at a uniform rate irrespective of the amount of profits and also in the event of losses. (5) The bonus equivalent to three substantive salaries has become a part of the terms and conditions of employment of the workers of the respondent-Bank because of long usage. (6) The workers are entitled to the said bonus under Standing Order 10-C(4) of the Standing Orders Ordinance. (7) The claimed bonus has become part of terms and conditions of service by virtue of an agreement in 1969 after a demand notice was served on the Bank. 14. To summarise the contention of the respondent-Bank they have contested the claim on the following grounds :-
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(1) The morkers are not entitled to three substantive salaries as bonus by way of long usage and custom. (ii) The provisions of Standing Orders Ordinance, 1968 are not applicable to the respondent-Bank as it is covered by statutory rules and as such the workers of the Bank have no right guaranteed or secured to them as far as the claim for payment of bonus in addition to the bonus payable or paid by the respondents in terms of the directive contained in the Award is concerned. (iii) That even if it is held that the workers were entitled to bonus as claimed by the applicant Federation by way of custom and usage, the Wage Commission Award supersedes all the terms and conditions prevailing before the Wage Commission Award and as such after the introduction of Wage Commission Award the terms and conditions would be governed by the Wage Commission Award itself. 15. Before drawing conclusion from the evidence discussed above it may be stated that the petitioner Federation has conceded that the claim for bonus it not made by way of fresh industrial dispute under section 34-A of the Industrial Relations Ordinance but is based on guaranteed right under section 34 of the said Ordinance. The first point that comes for determination is that whether or not the respondent-Bank is covered under the provisions of the Standing Orders Ordinance, 1968. The learned counsel appearing on behalf of the respondent-Bank has argued that application is not maintainable under section 34 of the I. R. 0., 1969 as no right has been guaranteed to the workers of the Bank on the ground that the Bank has its own statutory rules. It has been contended that the Bank was established in 1961 under Industrial Development Bank Ordinance, 1961. It has also been contended that the Bank has framed its own rules and regulations incorporating the 1975 Wage Commission Award therein and therefore under the first proviso of section (1) of the Standing Orders Ordinance, 1968 the provisions of the said Ordinance will not apply to respondent Bank. The said proviso is reproduced below :- "Provided that nothing in this Ordinance shall apply to industrial and commercial establishments carried on by or under the authority of the Federal or any Provincial Government where statutory rules of service, conduct or discipline are applicable to the workmen employed therein." 16.A refusal of the above proviso would reveal that in order to attract this proviso it is necessary that establishment should be carried on by or under the authority of the Federal or Provincial Government, In this regard it may be stated that the respondent-Rank came into existence by virtue of Industrial Development Bank Ordinance, 1961. Section 3(2) of the Industrial Development Bank Ordinance, 1961 lays down that the Bank shall be a body corporate by the name of Industrial Development Bank of Pakistan having perpetual succession and a common seal with power subject to the provisions of this Ordinance to acquire, own and dispose of any property and shall by the said name, sue and be sued. In subsection (3) of section 2 it has been laid down that the Bank shall be deemed to be a banking company for the purposes of the Banking Companies (Inspection) Ordinance, 1946 (IV of 1946) the Banking Companies (Restriction of Branches) Act, 1946 (XXVII of 1946) the Banking Companies (Control) Act, 1956 (XXXII' of 1956) and any other law for the time being in force relating to Banking Companies. Under section 4(1) it has been laid down that the share capital of the Bank shall in the first instance, be three crores of rupees divided into three lakh fully paid up shares of one hundred rupees each and may, with the approval of the Central Government be increased from time to time by the Board. Under subsection (2) of section 4 it has been laid down that fifty-one per cent. Of the shares issued at any time shall be subscribed for the Central Government and the remaining shares shall in the first instance, be offered to the shareholders of the Corporation other than the Central Government and if such shares are not subscribed for by such shareholders, be offered for public subscription. Section 12 lays down that the general direction and superintendence of the affairs and business of the Bank shall vest in a Board of Directors of the Bank constituted in accordance with section 13 which may exercise all
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such powers and do all such acts and things as may be exercised or done byothe Bank and are not by this Ordinance expressly directed or required to be done by the Bank in the general meeting. It has also been laid down that Board in discharging its functions shall act on commercial considerations with due regard to the interest of industry and commerce and to the public interest generally. Under subsection (3) of section 12 it has also been laid down that in the discharge of its functions the Board shall be guided on the question of policy by the instructions, if any, given to it by the Central Government which shall be the sole Judge as to whether a question is a question of policy. The Board of Directors under section 13 is to consist of a Chairman and six persons to be appointed by the Central Government. 17. From the above it would be seen that the respondent Bank is a Joint Stock Company and the Board of Directors have fully control to run the business and carry on the functions of the Bank. The Federal Government has no authority except on a question of policy. Moreover respondent-Bank is a Banking Company within the definition of the commercial establishment as given in section 2(b) of Standing Orders Ordinance, 1968 and under subsection (3) of section 2 of the Industrial Development Bank Ordinance, 1961, it has been laid down that the Bank shall be deemed to be a banking company under any law for the time being in force relating to Banking Companies. The proviso of section 1 of the Standing Orders Ordinance is therefore not attracted as the Bank is not carried on by or under the authority of the Federal Government. The respondent-Bank is therefore covered under the Standing Orders Ordinance, 1968. It may be mentioned that I draw support in my view from two decisions reported in 1975 PLC 1 and PLD 1976 Kar. 1176 which apply with full force and where in a similar issue it was held that National Shipping Corporation and Investment Corporation of Pakistan despite their own rules and regulations are covered under the Standing Orders Ordinance, 1968. 18. It may further be stated that the rules alleged to have been framed by the respondent-Bank have not been placed on record and therefore it is not known if the rules framed by the Federal Government under the Industrial Development Bank of Pakistan Ordinance, 1961 or the regulations made thereunder by the Board of Directors contain any provision regarding the payment of bonus by way of usage to workers. 19. Having held that the Standing Orders Ordinance, 1968 is applicable to the respondent-Bank, it is to be seen if bonus as claimed by the Federation has become a part of terms and conditions of the employment of the workers of the respondent-Bank by way of usage according to clause (4) of Standing Order 10-C of the said Ordinance. Clause (1) of Standing Order 10-C lays down that 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 wages payable to them. Clause (2) of Standing Order 10-C lays down the rate at which the bonus is to be paid. Clause (3) lays down that the bonus payable to the worker entitled thereto under clause (I) shall bear to his monthly wages the same proportion as the total bonus payable by the employer bears to the aggregate of wages referred to in paragraph (a) of clause (2) and shall be paid either in cash or in N. I. T. Units of equivalent value at the option of said workman. Under clause (4) it has been laid down that nothing in this section shall be deemed to affect the right of any workman to receive any bonus other than that payable under clause (1) to which he may be entitled in accordance with the terms of his employment or any usage or any settlement or an award of a Labour Court established under the Industrial Relations Ordinance, 1969. As stated above the claim for bonus is made by the petitioner Federation mainly on the basis of usage. It is admitted by the parties that the workers and officers of the Bank were given bonus equal to two months substantive salaries from the years 1961 to 1968. In the year 1969 an industrial dispute under section 26(1) of the I. R.
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0. Was raised. Amongst other demands, it contained a demand for bonus equal to for substantive salaries. In the letter dated 12th March, 1969 (Exh. A. W. 1/1) written to the Bank, the General Secretary of I. D. B. P. Employees Union stated as under :- "You will appreciate that we have already submitted a twenty-point demand charter to you keeping in view of the Board's Meeting to be held on 13th March, 1969 so as to enable you to discuss the relevant demands with the Board Members and reach a final solution thereby. Our demands are merger of dearness allowance with Basic salary, Promotion of staff, for annual bonuses, 30% House Rent, Change of cadres of Stenographers and typists, medical facilities to dependents, conveyance allowance and ad hoc relief etc. It is not within or knowledge what decisions you have taken to fulfil or demands or what arrangements have been made to put or demands to the Board. ' We have received a telegram from the General Secretary of!. D. B. P. Employees Union of or Dacca Office (copy enclosed). The telegram is self-explanatory. ' As we have submitted or demand charter to you in consultation with or Union of Dacca Office, we feel it necessary to request you to put forward or major demands to the Board on 13th March, 1969 for their consideration and immediate acceptance of or demands. These demands are :- (i) (ii) WO Four annual bonuses. (iv) ---------------------------- ft 20. The respondent-Bank on 13th March, 1969 addressed a letter to the General Secretary of the Union an extract of which is reproduced below :- "With reference to or letter dated the 13th March, 1969 and the discussion held today, we have to advise that the following matters have been agreed to by the Bank. (1) Ad-hoc relief. (2) Immediate promotion. (3) Medical facilities. (4) House Advance. (5) Change of cadres. 21. In the last para. Of the said letter it was stated that "the management will recommend to the Board of Directors the Central Government and the Annual General Meeting of Share-holders of the Bank grant of three bonuses for staff upto and including category II". This letter was followed by a Staff Order No, 43/69 dated 19th September, 1969 in which it was stated that the Board of Directors at its meeting held at Karachi has been pleased to declare bonus for the financial year ended 30th June, 1969 to officers and staff of the Bank at the following rates :- (I) Staff in category I two months substantive pay as on 30th June, 1969. (a) Staff in categories II, III and IV three months substantive pay as on 30th June, 1969. 22. From the above correspondence it will be clear that the Union raised a demand of getting for bonuses. The Management replied that the Bank has agreed to recommend to the Board of Directors grant of three bonuses. The demand of three bonuses was submitted to the Board of Directors.…
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