Case: Workmen Of Kottlewell Bullen &amp; Co.Ltd Vs. Kettlewell Bullen &amp; Co.Ltd

in the various settlements, it may be stated that the Bonus Act is confined, in its application, to profit bonus, and other kinds of bonus recognised in industrial law are not covered by the provisions of the Act. In Mumbai Kamgar Sabha, Bombay (supra) it has been held : The conclusion seems to be fairly clear, unless we strain judicial sympathy contrary-wise, that the Bonus Act dealt with only profit bonus and matters connected therewith and did not govern customary, traditional or contractual bonus. [p.608] 24. The same view was reiterated in Hukum Chand Jute Mills Ltd. v. Second Industrial Tribunal, West Bengal & others [1979(3) SCR 644], wherein it was held that the customary or contractual bonus were excluded from the provisions of the Act and it was laid down : The Bonus Act (1965) was a complete code but was confined to profit-oriented bonus only. Other kinds of bonus have flourished in Indian Industrial law and have been left uncovered by the Bonus Act. The legislative universe spanned by the said statute cannot therefore affect the rights and obligations belonging to a different world or claims and conditions. [p. 647] 25. In Hukam Chand Jute Mills Ltd. case (supra) while referring to Section 17 of the Bonus Act, this Court has observed : Section 17 in express terms refers to puja bonus and other customary bonus as available for deduction from the bonus payable under the Act, thus making a clear distinction between the bonus payable under the Act and `puja bonus or other customary bonus. So long as this Section remains without amendment the inference is clear that the categories covered by the Act, as amended, did not deal with customary bonus. [p. 649] 26. As indicated earlier the High Court has found that payments made under the settlements had no link with the profit. In the circumstances the reference to Section 34(3) of the Bonus Act in the Settlements would not alter the nature of the payment so as to convert it into a bonus paid under the said Act. The reference to Section 34(3) of the Bonus Act must be regarded as having been made by way of abundant caution to exclude the liability of the appellant for bonus under the Act, but that would not alter the nature of the payment. Moreover, Section 17 of the Bonus Act provides as under :- Section 17. Adjustment of customary or interim bonus against bonus payable under the Act - Where in any accounting year - (a) an employer has paid any Puja bonus or other customary bonus to an employee; or (b) an employer has paid a part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable. then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance. 27. In Mumbai Kamgar Sabha (supra) this Court has observed : For this reason it is provided in Section 17 that where an employer has paid any puja bonus or other customary bonus, he will be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him under the Act. Of course, if the customary bonus is thus recognised statutorily and, if in any instance it happens to be much higher than the bonus payable under the Act, there is no provision totally cutting off the customary bonus. The provision for deduction in Section 17, on the other hand, indicates the independent existence of customary bonus although, to some extent, its quantum is adjustable towards statutory bonus. [p. 607] This can only mean that if the bonus that was being paid by the respondent is found to be customary bonus then the respondent would be entitled to deduct the amount so paid from the amount of bonus payable to the employee by way of bonus under the Act in respect of that accounting year. 28. Shri G.B. Pai, learned senior counsel appearing for the respondent, placed reliance on the decision of this Court in Upendra Chandra Chakraborty and another v. United Bank of India, [1985(3) SCR 1057]. In that case, it was held that the bonus received by the workmen did have the characteristic of customary bonus as known to law. It was found that no bonus was paid for the years 1950 to 1958 and from 1959 onwards the rate had not been uniform and there was no evidence to show that the payment was unrelated to the profits and it was nobodys case that the bonus was not paid in any year of loss and it was also observed that the concept of any customary bonus was unknown to nationalised banks and that in all the nationalised banks which are wholly owned undertakings of the Government of India, the employees must be dealt with on a common denominator in the matter of bonus. Having regard to the aforesaid circumstances, it was held that although the payment was made in the month of September but that payment was not customary bonus. In our opinion the said decision had no application to the facts of the present case. 29. Having considered the award made by the tribunal as well as the judgments of the learned single Judge and the Division Bench of the High Court, we are of the view that in drawing an inference that the bonus that was being paid by the respondent-company to the appellants was customary bonus payable at the rate of 10.5 per cent of the salary or wages could be justifiably drawn by the tribunal having regard to the facts and circumstances of the case, and the High Court was in error in setting aside the award and holding that the bonus that was paid was not in the nature of customary bonus.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]21. As regards the first reason given by the High Court that the bonus was not being paid at a uniform rate throughout, it may be stated that though during the years 1959 to 1963 it was paid at the rate of three and a quarter months basic pay (which amount, as pointed out by the learned Judges of the High Court, varied between 10.81 per cent to 12.95 per cent of total salary or wages) and in the year 1964 it was paid at the rate of 4 per cent but in subsequent years from 1965 to 1973 it was paid at a uniform rate of 10.5 per cent of the salary or wages. As noticed earlier, in Vegetable Products Ltd. (supra), it has been held it is not necessary that the uniformity in the rate should be established from the beginning to the end and in a case where for the first few years payment at a certain rate was made but later on for a much larger number of years payment at a somewhat different rate had been made, the tribunal could well come to the conclusion that the payment was at a uniform rate ignoring the first few years. Having regard to the said decision, the payment made during the years 1959 to 1964 could be ignored and, on the basis of the payment made during the years 1965 to 1973 at the uniform rate of 10.5 per cent of the salary or wages it could be said that the payment was made at a uniform rate during the period 1965 to 197322. The question is whether the said period was sufficiently long to draw an inference about the payment being customary in nature. In the Graham Trading Company (supra) the payment had been made continuously from 1940 to 1952 at the rate of one months wages and this Court upheld the claim of the workmen for bonus as a customary and traditional payment. In Vegetable Products Ltd. (supra) bonus was paid from 1954 to 1961 and the said payment was at a uniform rate (30 days wages) from 1956 to 1961. In view of the said payment at a uniform rate from 1956 to 1961 the Industrial Tribunal had held that there was a custom of payment at the rate of 30 days wages as bonus before Puja in the said concern. This Court, however, found that payment was made without dispute and without condition from 1956 to 1958 and that in 1959 the payment was madea and accepted as such and that in 1960 and 1961 the payment was made on condition that it would be adjusted towards the profit bonus of the previous year and was accepted as such. The Court, therefore, set aside the conclusion of the Tribunal that payment of customary or traditional bonus was established. In the instant case there was payment of a uniform rate of 10.5% of salary or wages for an unbroken period of nine years, from 1965 to 1973, which was a sufficiently long period, and the tribunal could have reasonably drawn an inference that the said payment was customary or traditional bonus on the occasion of Puja festival23. With regard to the other reasons given by the High Court, namely, reference to Section 34(3) of the Bonus Act in the various settlements, it may be stated that the Bonus Act is confined, in its application, to profit bonus, and other kinds of bonus recognised in industrial law are not covered by the provisions of the Act24. The same view was reiterated in Hukum Chand Jute Mills Ltd. v. Second Industrial Tribunal, West Bengal & others [1979(3) SCR 644], wherein it was held that the customary or contractual bonus were excluded from the provisions of the Act26. As indicated earlier the High Court has found that payments made under the settlements had no link with the profit. In the circumstances the reference to Section 34(3) of the Bonus Act in the Settlements would not alter the nature of the payment so as to convert it into a bonus paid under the said Act. The reference to Section 34(3) of the Bonus Act must be regarded as having been made by way of abundant caution to exclude the liability of the appellant for bonus under the Act, but that would not alter the nature of the payment28. Shri G.B. Pai, learned senior counsel appearing for the respondent, placed reliance on the decision of this Court in Upendra Chandra Chakraborty and another v. United Bank of India, [1985(3) SCR 1057].In that case, it was held that the bonus received by the workmen did have the characteristic of customary bonus as known to law. It was found that no bonus was paid for the years 1950 to 1958 and from 1959 onwards the rate had not been uniform and there was no evidence to show that the payment was unrelated to the profits and it was nobodys case that the bonus was not paid in any year of loss and it was also observed that the concept of any customary bonus was unknown to nationalised banks and that in all the nationalised banks which are wholly owned undertakings of the Government of India, the employees must be dealt with on a common denominator in the matter of bonus. Having regard to the aforesaid circumstances, it was held that although the payment was made in the month of September but that payment was not customary bonus. In our opinion the said decision had no application to the facts of the present case29. Having considered the award made by the tribunal as well as the judgments of the learned single Judge and the Division Bench of the High Court, we are of the view that in drawing an inference that the bonus that was being paid by they to the appellants was customary bonus payable at the rate of 10.5 per cent of the salary or wages could be justifiably drawn by the tribunal having regard to the facts and circumstances of the case, and the High Court was in error in setting aside the award and holding that the bonus that was paid was not in the nature of customary bonus.