Case: Graham Trading Company (India) Limited Vs. Their Workmen

1. This is an appeal by special leave in an industrial matter. The appellant is the Grahams Trading Co. (India) Ltd. (hereinafter called the company). There was a dispute between the company and its workman about bonus, which was referred by the Government of West Bengal by its order of December 17, 1953 to the Second Industrial Tribunal. Though the order of reference did not specify the year for which the bonus was in dispute, it is common ground between the parties that the dispute was for bonus for the yearThe case of the workmen, who are respondents before us, was that the company had been paying one months bonus invariably from 1940 to 1950. In 1951, one months bonus was paid in October and half a months further bonus was paid in December. In 1952 one months bonus was paid. The demand that the workmen made in their letter of August 27, 1953, was for three months bonus. The company replied that payments in past years had been entirely ex gratia and as there was loss in 1953 it was not possible to make any ex gratia payment that year. The workmen then contended in their letter of September 21, 1953 that the sole object of bonus which had been granted up to that year was to meet puja expenses and that the payment of this bonus had become customary and a term of employment. The matter, could not be settled between the parties and that is how the dispute was referred for adjudication.The companys case was that payment of bonus had all along been ex gratia depending upon profits except in a few years. But in those years it was also made clear that the payment was ex gratia and without creating any precedent for future. Therefore, there was neither a term of employment nor any custom, which put any obligation on the company to pay any bonus in a year of loss.The question was considered by the Industrial Tribunal from three aspects. Firstly, it considered whether any bonus was payable for this year as profit bonus, on the basis of the Full Bench formula evolved in Mill-Owners Association, Bombay v. Rashtriya Mill Mazdoor Sangh, Bombay, 1950-2 Lah LJ 1247 .(FB) (LATI-Bom) and it came to the conclusion that there was no available surplus of profit to justify such bonus. It then considered the remaining two aspects, namely whether puja bonus could be awarded either as an implied term of employment according to the decision in Mahalaxmi Cotton Mills Ltd., Calcutta v. Mahalaxmi Cotton Mills workers Union, 1952 Lab AC 870 (LATI) or on the basis of custom. It seems to have mixed up the discussion on these aspects and having come to the conclusion that puja bonus could not be awarded in this case on the basis of an implied term of employment it proceeded to dismiss the claim on the basis of custom also.The workmen then went up in appeal to the Labour Appellate Tribunal, which allowed the appeal. The decision of the Appellate Tribunal has also mixed the two aspects of puja bonus, namely, whether it is based on an implied term of employment or on custom; but it came to the conclusion that there was sufficient evidence to establish custom and therefore ordered payment of one months basic wage as puja bonus. It was also inclined to the view that the companys accounts showing loss were not reliable and there might even be a case for profit bonus; but eventually it granted one months basic wages as customary puja bonus. Thereupon the company filed an application for special leave to appeal to this Court, which was allowed; and that is how the matter has come up before us.

Court's reasoning:
8. The condition that the payment should have been made in years of loss also to exclude the hypothesis that it was paid only because profits had been made, has also been satisfied, for the evidence is that payments were made in at least two years of loss. Lastly, the condition that payment should have been at a uniform rate has also been satisfied because one months basic wage is the quantum of bonus from 1940 right up to 1952 without any change. It is true that in December 1951 further bonus for half a month was paid; but that year was a year of profit in which cloth-bonus for half a month was specially paid. Thus the rate so far as the puja bonus is concerned has always remained uniform at one months basic wage. It is true that the workmen pitched their demand too high for three months bonus in 1953. But that does not in our opinion betract from the inference to be drawn from the facts, proved in this case. All the conditions, therefore, of a customary and traditional bonus are satisfied in this case and there is no reason to interfere with the order of the Appellate Tribunal, though we should like to make it clear that we do not agree with the observations of the Appellate Tribunal in connection with the profits bonus aspect of the matter.