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wiser heads still to debate it in the perspective spelled hereinabove. In legal lexiconwe have a right to disagreement and even to be disagreeable but then the tenets ofbeneficient rule of construction must unfold to bring about the decisiveness andclarity of the concept consequent upon the 1984 amendment of Section 2(S) of thedefinition of "workman". Let this concept of "teacher" to be a "workman" not be atwo-way-street.

I IS PAYMENT OF BONUS APPLICABLE TO HOSPITALS?

- By D. Samuel Abraham, Sr. Law Officer, Legal Section, Directorate,Christian Medical College, Vellore-632 004, Tamil Nadu, INDIA.

There are arguments for and against the payment of Bonus to the employees of aHospital; the matter is still not decided definitely by the Judiciary. At the same time,in few cases, the Courts have declared that it is payable under the provisions of ThePayment of Bonus Act, 1965 and in few cases it was declared as not payable. Morefrequently, before the Labour Tribunals functioning in different parts of India andbefore the High Courts, the Authorized Representatives/Lawyers engaged by theTrade Unions quote the famous case Christian Medical College & Hospital v. CMCHospital Employees Union [Writ Appeal No.642 of 2002 in the High Court ofJudicature at Madras} in an attempt to convince a Presiding Officer or a Judge thatbonus is payable to the employees of an Hospital. Let us have an in-depth study ofthe legal position as on date.

It is true that a 2-Judge Bench of the Hon'ble High Court of Madras held thatBonus is payable to the employees of the Christian Medical College & Hospital(hereafter CMC) in their judgment dated 20.6.2003. Afterwards, the matter went onappeal before the Hon 'ble Supreme Court of India and during that time both theManagement and Union had arrived at a settlement whereby, inter alia, themanagement agreed to pay Christmas Gift Bonus to its employees and both theparties agreed to set aside the provisions of the judgment given by the High Court,Madras. The Hon 'ble Supreme Court has also held that because of the settlementarrived, the question of payment of bonus has not been decided in its present writappeal and closed the matter.

The question arises from the above matter is,-(i) Whether the judgment and order given by the High Court, Madras in CMCcase is ajudgement in rem or ajudgement in persona - This question is to beclarified.

(ii) whether the declared judgment given by the 2-Judge Division Bench of theHigh Court of Madras is applicable to other hospitals? If so, on what extent?

A careful perusal of the contents at para 33 contained in the CMC Bonus case mayreveal that the judgement is only applicable to CMC Hospital and not others. At para- 32, it is declared: .'

"we accordingly hold that the appellant (CMC) is not an educational institutioncoming under Section 32(5)(b) of the Payment of Bonus Act"

From the above, it is clear that the judgment is given only to the management &Union of the CMC, Veil ore and Other hospitals or its employees cannot cite this, asit is a judgment in Persona enforceable only against the parties to the disputes.

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Moreso, the High Court has not declared certain tests as to how and what extenthospitals are to pay Bonus, as in the case of Bangalore Water Supply and SeweragBoard v. Rajappa, A., A I R 1978 SC 548.

The second operating portion of the judgment declares,

"and secondly that the appellant is not a hospital which is run on non-profit basisand hold the issue against the Management"

With due respect to the Hon 'ble Judges, I am of the firm view that theobservations are not in good taste either under the existing law of the land or .subsequent declared laws of many High Courts in India. It is definitely against thtenets of the common law of the land. The Hon'ble judges are of the view that thCMC is a hospital which is running on profitable purpose! The observations arrather strange in two counts.

Firstly, the judgment has failed to appreciate the contents, stipulations containein the Societies Registration Act 1860 and the Tamil Nadu Societies RegistratioAct, 1975 with relation to the issue. Section 3 of the above Act, says, -

"any society which has for its object the promotion of education, literatur,Science, religion, charity, social reform, art, crafts, cottage industries, athleticssports (including indoor games) recreation, public health, social service, culturaactivities, the diffusion of useful knowledge or such other useful object"

The scope is still widened subsequently by framing Rules. A careful study of tryingredients of the above Section may definitely reveal that if there is any profimotive in your activities, such organization cannot be registered under thprovisions of the Societies Registration Act, but, either under The Companies Act1956 as a Limited Company or under any other laws.

Practically, Section 25(2) reads-

"No part of funds of a registered Society, shall be divided by way of bonus 0

divided or otherwise among its members."

Section 25(3) explains,-

"no payment shall be made out of the funds of a registered society to tHPresident or any other officer of the society by way of honorarium for anservice rendered by him to the Society."

In short, the real interpretation of these Sections is if-

(a) any money is paid to members of Society or its office bearers for the servicesrendered to it, it becomes unlawful. In other words, if the generated money froa Society is distributed among its members, it cannot exist as a Society. Still inlaymen's language, a Society cannot be registered if its main objective is makinprofit.

The logical conclusion is if the generated money from an organization idistributed to its promoters and share holders, it is called profit; it can be registereunder the provisions of The Companies Act, 1956 or Partnership Act, 1958Therefore, the word 'profit' comes to play only if it is distributed to those whoinvested a 'Share' prior or during the functioning of a company. If the generateqrevenue/income is not distributed back, it is not a 'profit' and such activities canonly be registered under the provision of Society Act. In short, anestablishment/institution cannot be registered under the provisions of Societies

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Registration Act, if one of its main objectives is profit-making. Practically, noRegistrar will register your Society if you declare that it is a society for profit-making.

From the above analogy, the Christian Medical College Vellore Association,being registered under the Societies Registration Act, 1860, subsequently under theprovisions of Tamil Nadu Societies Registration Act, 1975, cannot be consideredas profit making organization as held by the Hon 'ble judges in the above case.

Secondly, Section 32(v) of The Payment of Bonus Act, 1965 which clearlyexempts the application of the Act to the following institutions·

"employees employed by--

(a) the Indian Reel 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 wel fare

institutions) established not for purposes of profit;"

In this connection, it may be more appropriate to quote the case law settled inIndraprastha Medical Corporation Ltd. v. NCT of Delhi & Ors. In this, theHon'ble judge Mr. Justice Markandey Katju as the Chief Justice of the High Courtof Delhi observed, .

"A hospital was neither an industrial establishment nor a workshop ascontemplated in Section 2(e) of the Industrial Employment (Standing Orders)act, 1946 read with Section 2(ii) of the Payment of Wages Act, 1936. The mainfunction of a Hospital such as the appellant here was to give medical treatment tothose suffering from disease. It was not one in which articles were produced oradapted"

Thirdly, an institution established not-for-purposes-of-profit can only beregistered under the provision of Societies Registration Act, 1860 subsequentlyTamil Nadu Societies Registration Act, 1975. Christian Medical College, Vellore,being a Society registered under the above statute cannot be an establishment for-purposes-of-profit as contended in the judgment. The moment the "profit makingaspect comes in" it will be categorized as a company to be registered under TheCompanies Act.

Fourthly, if the surplus accrued from any transaction is more than the cost, itdoes not immediately make "profit" unless that portion is distributed or paid back tothe promoters or share holders. Any institution registered under the provisions ofSocieties Registration Act, is prohibited to do so but to invest again to further itsmain objectives.

In its recent judgment, the Hon 'ble High Court of Madras in The Managementof Hindustan Bible Institute and College, Kilpauk, Chennai-Itl v. B.Krishnamurthy & Ors., it was held that a hospital registered under the Societies .•Registration Act, which shows the main object of the Society is not to make anyprofit, need not pay bonus under the provision of Bonus Act. Hon 'ble Justice K.Chandru has further held that the onus of proving that institution is making profitwill be on the Petitioner-Union Iworker and not the institution.

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Fifthly, the judgment has conveniently failed to note the Five-Judge Bench of theHon 'ble Supreme Court of India in State of Uttar Pradesh v. Jai Bir Singh, 2005LLN 115 SC, wherein the Apex Court has observed,

"too much importance was given to workman vis-a-vis the employer. This viewrun counter to the practice of the Labour Courts to award reinstatement toworkmen with full back wages together with attendant benefits. This leniency ofthe Labour Courts took away the substratum of the funds or the corpus fundsavailable for business in an organization. Such funds are helpful for expansionactivities, which, in turn, may generate more employment."

"A worker-oriented approach, unmindful of the interest of the employer wouldbe one-sided approach".

It must be taken as a note of caution to the Judicial Officers who are too lenientand enthusiastic to help the workers at the cost of an enterprising businessman whois also one of the responsible citizens of this Society.

It must be noted carefully, for academic purpose that the above Bench wasunanimous in passing this judgment in Jai Bir Singh case, whereas another Five-judge Bench, which gave over-expansive definition during 1978 in the BangaloreWater Supply case, (supra) (which enlarged the definition "industry" and brought"hospitals" within the scope of "industry") was divided in its opinion as three judgesconcurring and two judges deferring the judgement - whereas one judge whoconcurred was to retire the next day itself1

To conclude, the following points are to be kept in mind in respect of the aboveIssues:

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(i) The judgment and order passed by the Hon 'ble High Court of Madras in CMCcase cannot be enlarged to other hospitals as it is e judgement in persona; neverthe less even that was not implemented by both the parties at present inpursuance of a settlement.

(ii) There is a caution given by the 2-Judge Bench of the High Court, Delhiholding hospitals cannot be placed on equal footing with an industry or tradingcompany. A better and gentle treatment is necessary for an institution where sickand suffering humans are taken care of and where human life is at stake whencompared to a place where machines are installed and goods are manufactured.

(iii) At the same time, there is no bar, for Parliament/State Legislatures to bringany welfare schemes exclusively for the employees of hospitals depending upontheir condition of service. It is the domain of the Parliament/Legislature to act.Instead, the Hon 'ble Judges, need not enlarge the jurisdiction of laws which weremainly brought to regulate the working conditions of employees in industrial andtrading companies in India.

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