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Section 46: Reference of disputes under this Code

The Code on Wages, 2019 (Act No. 29 of 2019) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VI: Payment of Dues, Claims and Audit
Competent Labour Forum
Act No. 29 of 2019
Section 45 All 67 Sections of Code on Wages, 2019 Section 47

Legal Commentary & Landmark Judgments: Section 46

Section 46 of the Code on Wages, 2019 creates a jurisdictional bridge between the Code and industrial dispute resolution machinery, establishing that bona fide disputes concerning the calculation, eligibility, or distribution of bonus, or the competitive applicability of Chapter IV to public sector units, constitute deemed industrial disputes referable to Industrial Tribunals or Labour Courts.

  • Deemed Industrial Disputes on Bonus: The section specifically singles out disputes concerning (a) fixation or eligibility for payment of bonus, and (b) applicability of Chapter IV to public sector establishments, treating them automatically as industrial disputes within the meaning of the Industrial Disputes Act, 1947 (or corresponding State industrial relations legislation).
  • Bypassing Summary Authority for Complex Industrial Adjudication: While Section 45 resolves straightforward wage and bonus defaults based on fixed statutory formulas, Section 46 reserves complex accounting disputes—involving gross profit computation, depreciation adjustments, direct tax deductions, and available surplus distribution—for specialized Industrial Tribunals.
  • Applicability of Industrial Relations Legal Machinery: Once a dispute is characterized under Section 46, all procedural provisions of the Industrial Disputes Act (or IR Code, 2020) apply, including conciliation before Conciliation Officers, government reference under Section 10, tribunal proceedings, and binding award enforceability.
Key Landmark Precedents:
  • Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate AIR 1958 SC 353: The Supreme Court formulated the classic definition of an industrial dispute, establishing that disputes concerning terms of employment and conditions of labor require collective adjudication before industrial tribunals.
  • Jalan Trading Co. (P) Ltd. v. Mill Mazdoor Sabha AIR 1967 SC 691: The Supreme Court affirmed that bonus disputes involving interpretation of statutory surplus and allocable shares are fundamentally industrial disputes requiring specialized tribunal adjudication.
  • Sanghi Beverages Pvt. Ltd. v. Industrial Tribunal (2000) 4 SCC 344: The Supreme Court held that where an employer disputes bonus liability on substantive accounting or jurisdictional grounds, the appropriate remedy is industrial adjudication via reference, rather than summary executive recovery.
Courtroom Practice & Strategic Litigation Guidance:

When faced with collective bonus demands or union disputes questioning the balance sheet surplus, employers should not allow matters to drift into Section 45 recovery proceedings. Instead, management should raise a formal industrial dispute or participate in conciliation to channel the matter toward an Industrial Tribunal under Section 46. This ensures full judicial discovery, expert evidence on balance sheet accuracy under Section 47, and formal determination of available surplus.

Section 45 All 67 Sections of Code on Wages, 2019 Section 47