JAGANNATHA SHETTY, J. ( 1 ) THE decision in this petition under Art. 226 of the Constitution turns on the meaning to be given to S. 32 (vii) (a) and (b) of the Payment of bonus Act, 1965, shortly called the Act. Before we go to the facts, it is relevant to set out the section: -"32. Act not to apply to certain classes of employees-Nothing in this Act shall apply to- (vii)employees- (a) Who have entered before the 29th May, 1965, into any agreement or settlement with their employers for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits; or (b) who have entered or may enter after that date into any agreement or settlement with their employers for payment of such annual bonus in lieu of the bonus payable under this Act, for the period for which such agreement or settlement is in operation. " ( 2 ) THE petitioner firm styled as Bharat Timber Construction Co. . is a raising Contractor for several mines in Bellary District. As such raising contractor, the firm employs a number of employees. The employees out of goodwill have entered into agreements with the petitianer-firm. apparently under S. 34 (3) of the Act. S. 34 (3) provides :" 34 Effect of laws and agreements inconsistent with the Act.- (3) Nothing contained in this Act shall be construed to preclude employees employed in any establishment from entering into agreement with their employer for granting them an amount of bonus under a formula which is different from that under this Act : provided that any such agreement whereby the employees relinquish their right to receive the minimum bonus under S. 10 shall be null and void in so far as it purports to deprive them of such right. "the agreements are all of a similar type and are in similar terms. To understand the controversy better, we set out below one of such agreements :" AGREEMENT this is an agreement between the management of MIS. Bharat timber and Construction Co. , Hospet and their employees in Consolidated mining and Trading Syndicate, Bhujanganagar Mines Establishment entered into at Sandur on 5th March 1966. To understand the controversy better, we set out below one of such agreements :" AGREEMENT this is an agreement between the management of MIS. Bharat timber and Construction Co. , Hospet and their employees in Consolidated mining and Trading Syndicate, Bhujanganagar Mines Establishment entered into at Sandur on 5th March 1966. (1) There have been Very sweet and cordial relations between the Emyloyer Company and the Employees since the parties treat each other as partners in the journey of life and its vissicitudes, prosperity and progress and regard each others work as supplementary. (2) The Company in their other establishments has been distributing- cash, clothes, utensils and such other requisites of life year after year, to all its employees over and above their normal remuneration. The company has promised to apply this system to this establishment also. (3) The Company has been distributing food cereals at reduced rates or has been giving food allowances or free cereals and has promised to continue same from time to time as per exigency. Housing and medical aid also is provided and pure water supply also is given. (4) The Company has been giving helpful loans free of interest for occasions such as marriages, illness or death in the employee's family or pilgrimage of the employees. (5) The distribution of special cash emoluments by the Company irrespective of its earnings or losses has been found to be of great value to the employees of their other establishments. The company has agreed to apply this system to this establishment also and has also promised that at no time will they give less than what accrues to the employees under S. 10 of the Payment of Bonus Act of 1965. (6) The Company has agreed that the distribution of emoluments under the above clause shall be made after due recommendations by a Committee on which the employees are represented. (7) In consideration of all these above, it has been agreed to by all the employees of this Establishment that they prefer continuance of this mode of help by the Company to the maximum benefits which accrue to them under the payment of Bonus Act and therefore they hereby waive their rights under the Act. (8) This Agreement shall be for a duration of three years only, whereafter a new agreement shall have to be entered into. (8) This Agreement shall be for a duration of three years only, whereafter a new agreement shall have to be entered into. This agreement shall be effective from the date of commencement of this Mine, i. e. , 15th April, 1965. In witness whereof the employees' representatives have signed hereunder on one side and the employer-company on the other side. Employees Representatives. . Employer Company t. Sd|. Y. S. Patil for Bharat Timber and construction Co. , sd/. R. P. Dubey, attorney. "the said agreement was entered into on 5-3-1966. But it came into force retrospectively with effect from 15-4-1965. In consideration of the firm agreeing to distribute food cereals at reduced rates or giving food allowances or free cereals, providing housing and medical aid, supplying pure water, and affording like benefits on the occasions of marriages, illness or death in the employees' family, the firm and its employees entered into an agreement for payment of bonus at a rate not less than what accrues to the employees under S. 10 of the Act. There is thus no doubt that the agreement is saved by the proviso to section 34 (3) of the Act. ( 3 ) THE Regional Labour Commissioner who is the first respondent before us found fault with the petitioner for not maintaining the registers as required by S. 26 and Rule 4 of the Rules framed thereunder. Rule 4 provides:"4. Maintenance of registers.-Every employer shall prepare and maintain the following registers, namely;- (a) A register showing the computation of the allocable surplus referred to in clause (4) of S. 2 in Form 'a'; (b) a register showing the set-on and set-off of the allocable surplus, under S. 15, in Form 'b'; c) a register showing the details of the amount of bonus due to each of the employees, the deductions under Ss. 17 and 18 and the amount actually disbursed, in Form 'c'. "the petitioner firm by a letter dt. 30-11-1967 informed the first respondent that it has entered into an agreement with its employees and therefore it is excluded from the operation of the Act. The contention was not accepted by the first respondent. He, therefore, sent a letter dt. 20-12-1967 (Ext. "the petitioner firm by a letter dt. 30-11-1967 informed the first respondent that it has entered into an agreement with its employees and therefore it is excluded from the operation of the Act. The contention was not accepted by the first respondent. He, therefore, sent a letter dt. 20-12-1967 (Ext. E) to the petitioner, referring to the provisions of S. 32 (vii) (a) and (b) and stating:" I have to say, in this connection that proviso (b) is to be read with reference to proviso (a ). A very careful reading of the words "such annual bonus" occurring in proviso (b) stand for the words " Annual bonus linked with production or productivity " occurring in proviso (a), The agreement entered into by the employees with your raising contractors M/s. Bharal Timber and Construction, with regard to the payment of bonus is not linked with production or productivity. Hence the employees are not covered by S. 32 (vii) (b) of the act. As such, your contention that the agreement is covered by the provisions of that section is not tenable. Therefore, it is reiterated that your raising contractors are required to maintain the various records registers vide Item-XII of the Inspection Report cited and their non-maintenance would render themselves liable for legal action. "this was followed by his subsequent letter dt. 30-5-1970 (Ext. L), threatening to take penal action against the petitioner if the non-compliance with the provisions of the Act continued any longer. It is stated before us that some criminal prosecution has already been launched against the petitioner. It is at that stage that the petitioner has approached this Court for relief under Art. 226, for quashing the above said Exts. E and l and also for consequential orders. ( 4 ) ON behalf of the petitioner Mr. S. K. Venkataranga Iyengar urged that the interpretation given by the respondents to the provisions of the section is not correct. He submitted 'that the agreement in question is valid and saved by the proviso to S. 34 (3) of the Act, as the minimum bonus payable under the agreement does not fall short of the requirement of s. 10. S. K. Venkataranga Iyengar urged that the interpretation given by the respondents to the provisions of the section is not correct. He submitted 'that the agreement in question is valid and saved by the proviso to S. 34 (3) of the Act, as the minimum bonus payable under the agreement does not fall short of the requirement of s. 10. He further added that clauses (a) and (b) of S. 32 (vii) of the Act are independent of each other and the expression "such annual bonus" occurring in clause (b) has no connection or relation to the bonus linked with production or productivity, occurring in clause (a ). Mr. B. Ramachandra Rao for the respondents repeated the stand taken by the authorities in their correspondence with the petitioner-firm and urged that the petitioner-firm is not excluded from the operation of the provisions of the Act by entering into the agreement in question. ( 5 ) CLAUSE (a) of S. 32 (vii) refers to the agreement or settlement entered into by the employees before the 29th May, 1965, for payment of an annual bonus linked with the production or productivity in lieu of bonus based on profits. Clause (b) of that Sectioin refers to the employees who have entered or may enter into any agreement or settlement with their employers after the 29th May, 1065, for payment of 'such annual bonus' in lieu of the bonus payable under the Act. S. 32 excludes such employees from the enforcement of the Act and that exclusion continues to operate during the period of continuance of such agreement or settlement. If the construction suggested for the respondents is accepted, it would be opposed to the intention of the legislaure as is apparent from the statute. It is therefore, necessary to have a little background of the history of 'the Act in order to understand why clauses (a) and (b) are set out in the above terms. A reference to the history of the Act is permissible for the limited purpose of appreciating the mischief the Parliament had in mind and the remedy which it wanted to provide for preventing that mischief, and not for the purpose of aiding the Court in construing the provisions of the Act. (See M/s. Sanghvi Jeevaraj Ghewar Chand v secretary, Madras Chillies, Grains Kirana Merchants Workers Union, AIR. 1969 SC. 530. . (See M/s. Sanghvi Jeevaraj Ghewar Chand v secretary, Madras Chillies, Grains Kirana Merchants Workers Union, AIR. 1969 SC. 530. . ( 6 ) IN the above said case, the entire history has been set out. We only repeat herein, what is necessary for the purpose of this case. The practice of paying bonus as an ex gratia payment had its early roots in the textile industry in Bombay and Ahmedabad. In 1917 and 1918, an increase of 10 and 15 per cent of wages was granted as war bonus to the textile workers by the employers. In October, 1920, a Committee appointed by the Bombay Mill Owners recommended to the member Mills payment of bonus qual to one month's pay. Similarly, bonus was declared in 1921 and 1922. It appears that trading conditions in the industry having deteriorated, the mill-owners declared in July 1923 that they would be unable to pay bonus for 1923. Thereupon, a strike began which became general towards the end of January 1924. In February 1924, a bonus dispute Committee was appointed by the Government of Bombay to consider the nature of, the conditions and the basis of bonus which had been granted to the employees in the textile mills and to declare whether the employees had established any enforceable claim, customary, legal or equitable. The Committee held that they had not established any enforceable claim, customary, legal or equitable, to an annual payment of bonus which could be upheld in a Court, The years that followed were years of depressions and no major dispute about bonus arose, although bonuses were given on ad hoc basis by a few industrial undertakings. During the Second World War, managements of textile mills paid cash bonus equivalent to a fraction of the surplus profit but this was also voluntary payment to keep labour contented. Disputes for payment of bonus for the years 1948 and 1949 arose in the Bombay textile industry. On the said dispute having been referred to the Industrial Court that Court expressed the view that since both labour and capital contributed to the profits of the industry both were entitled to a legitimate return out of the profits and evolved a formula for charging certain prior liabilities on the gross profits of the accounting year and awarded a per centage of the balance as bonus. The Industrial Court excluded the mills which had suffered loss from the liability to pay bonus. In appeals against the said awards, the Labour Appellant Tribunal approved broadly the method of computing bonus as a fraction of the surplus profit. According to this formula, which has since been referred to as the Full Bench formula, the surplus available for distribution is to be determined after debiting cer. tain prior charges from gross profits, viz. , (1) provision for depreciation, (2) reservation for rehabilitation, (3) return of 6 per cent on paid-up capital, and (4) return on working capital at a rate lower than the one on the paid-up capital. The said formula was generally approved by the Supreme Court in associated Cement Companies, Ltd. v. Its workmen, AIR. 1959 SC. 967. Thereafter, the Supreme Court accepted the formula in several cases. The principal features of the formula are that each year for which bonus is claimed is a self contained unit, that bonus is to be computed on the profits of the establishment during that year, that the gross profits are to be determined after debiting the wages and dearness allowance paid to the employees and other items of expenditure against total receipts as disclosed by the profits and loss account, and that against such gross profits the aforesaid four items are to be deducted as prior charges. The formula was not based on any legal right or liability, its object being only to distribute profits after reasonable allocation for the aforesaid charges, Attempts were thereafter made from time to time to have the said formula revised but they were rejected first in ACC's case (2) and again in the ahamedabad miscellaneous Industrial Workers' Union v. The Ahamedabad Electricity co. , Ltd. , AIR 1962 SC 1295. where it was observed that the plea for revision raised an issue which affected all industries, and therefore, before any change was made all industries and their workmen had to be heard and their pleas considered. The Court, therefore, suggested that the question of revising the formula should be 'comprehensively considered by a high powered commission'. Taking up the aforesaid suggestion, the Government of india appointed a Commission, by its resolution dt. The Court, therefore, suggested that the question of revising the formula should be 'comprehensively considered by a high powered commission'. Taking up the aforesaid suggestion, the Government of india appointed a Commission, by its resolution dt. December 6, 1961, the terms of reference whereof were, inter alia, (1) to define the concept of bonus and to consider in relation to industrial employment the question of payment of bonus based on profits and recommend principles for compensation of such bonus and methods of payment; (2) to determine what the prior charges should be in different circumstances and how they should be calculated; (3) to determine conditions under which bonus payment should be made unitwise; (4) to consider whether there should e lower limits irrespective of loss in particular establishment and upper limits for distribution in one year, and if so, the manner to carry forward the profits and losses over a prescribed period; and (5) to suggest an appropriate machinery and method for settlement of bonus disputes. After an elaborate enquiry, the Commission made the following amongst other recommendations: - (i) That bonus was paid to the workers as share in the prosperity of the establishment and that the basic scheme of the bonus formula should be adhered to viz,, determination of bonus as a percentage of gross profits reduced by the following prior charges, viz. , normal depreciation allowable under the Indian Income Tax Act including multiple shifting allowance, income tax and super tax at the current standard rate applicable for the year for which tax is to be calculated but not super profits tax, return on paid-up capital raised through preference shares at the actual rate of dividend payable, on other paid up capital at 7 percent and on reserves used as capital at 4 per cent. The commission did not recommend provision for rehabilitation. (ii) That 60 per cent of the available surplus should be distributed as bonus and excess should be carried forward and taken into account in the next years; the balance of 40 per cent should remain with the establisment into which should merge the saving in tax on bonus and the aggregate balance thus left to the establishment should be used for payment of gratuity, other necessary reserves, rehabilitation in addition to the provision made by way of depreciation in the prior charges, annual provision required for redemption debentures, etc. , (iii) That minimum bonus should be 4 per cent of the total basic wage and dearness allowance paid during the year or Rs. 40 to each employee, whichever is higher and in the case of children the minimum should be equivalent to 4 per cent of their basic wages and dearness allowance, or rs. 25 whichever is higher; (iv) That the maximum bonus should be equivalent to 20 per cent of the total basic wage and dearness allowance paid during the year. The Government of India accepted the majority of the commission's recommendations as is clear from the statement of objects and reasons of the Act. With a view to implement the recommendations of the commission, as accepted by the Government, the Payment of Bonus Ordinance, 1965, was promulgated on 29-5-1965. The said Ordinance was replaced by the Act. That is why we find a reference to the date 20-5-1965 in clauses (a) and (b) of Section 32 (vii ). Section 32 with which we are concerned, is based on the recommendations of the Commission contained in paragraphs 4, 6, 15, 20, 17. 9, 17. 16, 17. 19 and 17. 22 of its report. The recommendation of the Commission relating to the linking of bonus based on profits with productivity [production, reads thus:"4. 6. In view of the objections to the proposal by large sections of employers as well as by almost all the unions, and the practical difficulties inherent in any such proposal, we are unable to recommend that the concept of bonus based on profits should be replaced by an annual bonus linked with production or productivity. It is doubtless that properly devised incentive systems in manufacturing concerns form a useful part of the wage structure and would help to increase production, but, they cannot bet suggested as a substitute to replace the annual profit sharing bonus. . . . . " ( 7 ) APPARENTLY, clause (a) of S. 32 (vii) was intended to save agreements or settlements entered into by employees with their employers for payment of annual bonus linked with production or productivity in lieu of bonus based on profits, provided they were entered into before 20-5-65, that is, before the promulgation of the Ordinance. The purpose underlying clause (b) appears to be different. The purpose underlying clause (b) appears to be different. It relates to an agreement or settlement entered into after 29-5-1965 regarding the payment of annual bonus in Lieu of the bonus payable under the Act. The bonus payable under the Act is referable to what is provided under ss. 10 and 11. S. 10 provides for the payment of a minimum bonus while s. 11 provides for the maximum. The former provides for the payment of four per cent of the salary or wage earned by the employee during the accounting year or forty rupees whichever is higher, whether there are profits in that year or not. Under S. 11, the maximum bonus provided is twenty per cent of such salary or wages, where, in respect of any accounting year, the allocable surplus exceeds the minimum bonus payable. The Act does not provide for the payment of bonus linked with production or productivity. The Act guarantees the minimum bonus to an employee under S. 10 of the Act irrespective of the profit or loss. These are the main principles of the Act and they have to be borne in mind while interpreting the Section before us, the provisions of which are not explicit. It seems to us reasonably plain that the word 'such' preceding the expression 'annual bonus' referred to in clause (b), cannat be limited to 'annual bonus linked with production or productivity" occurring in clause (a ). If it is otherwise, it would have been unnecessary for the draftsman to have provided the said two clauses with the date 29-5-1965 as the dividing line. ( 8 ) LET us now see the meaning to be attached to the word 'such'. Generally, the word 'such' or 'said' refers to its last antecedent matter. The principle is well stated in Craies on Statute Law, Seventh Edition, page 90 as follows: " The word 'such' in an enactment must be taken to refer to some previous provision or matter, whatever the result of so doing may be. " now, turning to S. 32 (vii) (b), before the words "such annual bonus", we. find the following matter " any agreement or settlement with their employers for payment of----" In the context, it must be taken that the expression "such annual bonus" must refer to the bonus agreed to be payable under the agreement or settlement entered into after the 29-5-1965. find the following matter " any agreement or settlement with their employers for payment of----" In the context, it must be taken that the expression "such annual bonus" must refer to the bonus agreed to be payable under the agreement or settlement entered into after the 29-5-1965. ( 9 ) FOR confirmation of our view, we may now turn to Sec. 34 (3) of the Act. It gives wide liberty to the employees in any establishment for entering into an agreement with their employer for getting bonus at a rate different from the one payable under the Act, subject to the condition that such agreement or settlement shall not provide for a bonus less than the minimum guaranteed by S. 10. If, therefore, we limit the agreement or settlement falling under clause (b) in S. 32 (vii) only to the payment of bonus linked with production or productivity, the scope of Section 34 (3) would be whittled down unnecessarily. ( 10 ) WE, therefore, reject the contention for the respondents. ( 11 ) IN the result, we allow the writ petition. The only proper order to be passed in the writ petition, in our opinion, is not to quash the notices issued by the respondents but to issue an order in the nature of mandamus directing the respondents not to enforce he provisions of the act during the currency of the agreement in question on the petitionerfirm. ( 12 ) THE petitioner is entitled to its costs. Advocate's fee Rs. 100. 00. --- *** --- .