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Judgment
Mohan, J.—The workmen are the petitioners before me. The first respondent-management is a transport concern started some time in 1938
and has made substantial progress. There are about 75 permanent workmen in the respondent-concern. They raised an industrial dispute regarding
bonus for the years 1971-72 and 1972-73.
The demand was that they were entitled to what is called customary or traditional bonus paid at the time of Deepavali festival every year equivalent
to three months'' total wages for each of the two years concerned They also stated that right from the inception of the concern they were getting
bonus, initially at the rate of one month''s salary, which was increased to two months'' salary, then in 1961-62 it was paid at 20 per cent and in
1962-63 at 22 per cent of the total wages. From the financial year 1963 64, on the basis of an agreement entered into u/s 18(1) of the Industrial
Disputes Act (hereinafter referred to as the Act), it was increased to 25 per cent. Then, when a further demand was made in 1956-67 again, a
settlement was entered into u/s 12(3) of the Act agreeing to pay three months'' salary as bonus. This was operative till 1970. But, only when the
demand was made for bonus for the years in question, viz., 1971-72 and 1972-73, dispute arose, which was referred for adjudication before the
Tribunal. The workmen based their claim on the ground that they were entitled to customary bonus for in the alternative based on implied condition
of service. The contention of the management was that no customary bonus was ever paid, nor again was it correct to state that the workmen
would be entitled to bonus based on the implied condition of service. On the contrary, even in the agreement entered into as late as 1967, it was
clearly provided that the terms of bonus in the previous settlements would be revisable, if special circumstances intervene whereby the financial
status or the other conditions of the management would be affected. They filed statements of profit and loss accounts to show that it was not
possible to comply with the demand of the workmen. There, upon, the issue relating to the payment of bonus was referred for adjudication u/s
10(2) of the Act, which issue read as follows:
To fix the quantum of bonus for 1971-1972 and 1972-1973.
Under I.D. No. 58 of 1973, this was taken up for adjudication by the Industrial Tribunal, Madras Before the Tribunal the two questions arose for
determination. One was to put it broadly (a) whether the workmen would be entitled to any kind of bonus outside the pale of the Payment of
Bonus Act, 1965, and (b) if so, whether they were entitled to the customary bonus or bonus based on implied condition of service. The second
question was about the actual quantum of bonus.
The Tribunal was of the view that under the Payment of Bonus Act, 1965, having regard to the language of Section 1, Clause (4) the workmen
would not be entitled to any bonus outside the Act. Since there was no interdict on such bonus, it also came to the conclusion having regard to the
documentary evidence let in, that the claim of the union, viz., for 25 per cent of the earnings as customary or traditional bonus and also that it was
an implied condition of service, could not be true. This is how the present writ petition arises before me.
Mr. S. Ramaswami, learned Counsel, in attacking this award submits as under:
(1) The view of the Tribunal that there cannot be any payment of bonus after the passing of the Payment of Bonus Act, 1955. in the sense ''out side
the Act'' cannot be supported in view of the decision of the Supreme Court in The Mumbai Kamgar Sabha, Bombay Vs. Abdulbhai Faizullabhai
and Others, .
(2) The Tribunal has confused itself between two kinds of bonus, viz., (i) the customary bonus and (ii) bonus based upon implied condition of
service. The fact that varying quantum were paid during all these years would itself clearly show that it was an implied condition of service. It is also
customary bonus, because it was linked at all times to the Deepavali festival. In fact, the agreement entered into would clearly spell out the payment
during Deepavali. Without under standing the scope of either, the Tribunal has rejected the claim of the union. Hence, the matter must be remanded
for a fresh adjudication on this issue, since as per the decision of the Supreme Court the claims relating the customary bonus or bonus based on
implied condition of service are tenable even after the passing of the Payment of Bonus Act, 1965.
Mr. M.R. Narayanaswamy, though prefaced his argument stating that having regard to the earlier decisions of the Supreme Court it may not be
correct to state that after the Payment of Bonus Act, 1965, bonus could be claimed outside the pale of this Act, he did not seriously press this
point. In fact, he stated that he was arguing his case on the basis that such a claim is tenable in view of the decision in The Mumbai Kamgar Sabha,
Bombay Vs. Abdulbhai Faizullabhai and Others, Proceeding to continue, he said that unlike the terms of reference of the case that arose before the
Supreme Court, the only point of reference in the present case was with reference to the quantum for the yean 1971-72 and 1972-73. Therefore,
having regard to the limited scope of reference, the question about the existence of the bonus based upon custom or bonus based on implied
condition of service could not be agitated upon, Even assuming that it could be adjudicated upon inasmuch as the parties did not lead any oral
evidence, it should be held that the custom has not been proved nor again could bonus be based upon implied condition of service during merely
from the varied amounts paid by way of bonus during the very many years. It has to be impleaded and proved. That proof is not forthcoming.
Putting it in a rhetoric fashion, the counsel would state that if really the workmen were entitled to customary bonus as to right where was the need
for settlement u/s 18(1) of the Act or again u/s 12(3) of the Act. Again under Ext. M5 if really there was a custom relating to bonus or if it was an
implied condition of service, a clause enabling the management to revise a settlement in relation to its financial status would not have been entered
into. This gives a direct lie to the very custom pleaded by the workmen''s union. It is further urged that if, on the basis of the various documents
produced before the Tribunal, it had come to a reasonable conclusion that no custom relating to payment of bonus had been made out nor
payment of bonus had been made out nor payment of bonus based on implied condition of service had been established, this Court, though could
come to a different conclusion on the construction of those documents, cannot interfere, so long as the conclusion arrived at by the Tribunal is
reasonable. In support of this learned Counsel relies on Agnani v. Badri Das and Ors. 1963 I L.L.J. 684.
Mr. Ramaswami, in reply, would submit that the demands at the various points of time related only to the quantum but the basis was never
disputed, nor again at any point of time did the management ever con-tend that the payment of bonus was in lieu of their liability under the Payment
of Bonus Act, nor was it contended by the management that it was related only to the profit of the concern.
Having regard to the above arguments two questions arise before me:
(1) Whether the workmen are entitled to bonus outside the Payment of Bonus Act, 1965 ?
(2) Whether the custom relating to payment of bonus had been established, or have the workmen succeeded in providing the payment of bonus
based upon implied condition of service ?
As regards the first question which is one relating to law, I think the case of the petitioner is unassailable. In The Mumbai Kamgar Sabha, Bombay
Vs. Abdulbhai Faizullabhai and Others, ; the Court posed ''''inter alia"" the following questions, viz.;
(c) Was there, apart from profit--based bonus, customary bonus or bonus as a condition of service ?
(d) If answer to (c) is in favour of the workmen does the Bonus Act interdict such a demand since it does not provide for those categories of
bonus and confine itself to profit-based bonus, or docs the Bonus Act speak on the topic of bonus of all species and, therefore, stands four square
between a claim for bonus and its grant, unless it finds statutory expression in the provisions of that Act.
In answering these two questions, it was held at page 200, in paragraph 36 thus:
The end product of our study of the anatomy and other related factors is that the Bonus Act spreads the canvas wide to exhaust profit-based
bonus but beyond its frontiers is not void but other cousin claims bearing the caste name ''Bonus'' flourish-miniatures of other colours; The Act is
neither proscriptive nor predicative of other existences.
Lower down it held in paragraph 37,
We hold that the Bonus Act speaks, and speaks as a whole Code on the sole subject of profit-based bonus but in silent on and cannot, and
different kinds of bonus such as the one oriented on custom. We confess that the gravitational pull on judicial construction of Part IV of the
Constitution has, to some extent influenced our choice.
Ultimately, in paragraph 42, at page 204, it was held:
We hold that the Bonus Act (as it stood in 1965) does not bar claims to customary bonus or those based on conditions of service.
Before I part with this case, it is also necessary for me to note that the points for adjudication that arose before the Industrial Tribunal in the
decision cited, were as follows:
Whether the establishments (mentioned in the annexure) have been giving bonus to their workmen till 1965? If so, how long before 1965 have
the employers been giving bonus to their workmen? And at what rate?
Whether payment of bonus by the employers to their workmen has become customs or usage or condition of service in these establishments? If
so, what should be the basis on which employers should make payment of bonus to their workmen for the years ending on any date in 1966,
1967, 1968 and 1969.
Therefore, it can be seen that specific point referred for adjudication about the existence of bonus based on custom, did arise. In the instant case,
the only point in issue which was referred for adjudication was to fix the quantum of bonus for 1971-72 and 1972-73. From this point of view the
question relating to the basis of the claim, viz.. that it is based on custom or based on condition of service, could not have been validly adjudicate
upon. However, the parties have entered on trial relating to this issue also and naturally the Tribunal went into this question:
Having regard to the authoritative pronouncement of the Supreme Court extracted above, the petitioner succeeds on this point. But this success
on the question of law alone does not enable to assail the award of the Tribunal.
First of all, in my view, no foundation had been laid for proving the payment of bonus based on custom. Learned Counsel for the petitioner
would urge that year after year, it was related to the festival of Deepavali and, therefore, it must be presumed to be a customary bonus. But this
cannot be accepted in view of the decision of the Supreme Court above cited. At page 193 of the report, their Lordships state:
Ours is a festival ridden society with many religions contributing to their plurality. ""That is why our primitive practice of linking payment of bonus
with distinctive festival has sprouted. As we progress on the secular road, may be the Republic Day may well become the occasion for customary
bonus. The crucial question is not whether there is a festival which buckles the bonus and the custom. What is legally telling is whether by an
unbroken flow of annual payments a custom or usage has flowered, so that a right to bonus based thereon can be predicated. The custom itself
precipitates from and is proved by the periodic payments induced by the sentiment of the pleasing occasion, creating a mutual consciousness, after
a ripening passage of time, of an obligation to pay and a legitimate expectation to receive.
Are all these tests are satisfied in this case? My answer should be in the negative. No oral evinence was let in except to file a few of the documents.
In Ext. W1 there were three demands and demand No. 1 related to bonus at the rate of five months'' wages. In Ext. M. 2 the demand was for six
months'' wages as bonus. In neither of these exhibits is there a mention of the so-called custom. Then, under Ext. M. 3 the workmen had agreed to
receive bonus at the rate of 25 per cent of the full wages for the years 1964-65 and 1965-66. Here custom is not mentioned. Likewise, in Ext. M.
4 six months'' wages have been demanded. Then under the agreement Ext. M. 5 dated 7-10-1967 the workers agreed to receive for the years
1967-68, 1968-69, 1969-70 and 1970-71 bonus at the rate of 25 per cent of the full wages. Clause 6 of Ext. M. 5 is relevant for our purpose
and it reads:
But if any special circumstances intervene whereby the financial status or the other conditions of the Management are affected, then the
Management will be at liberty to revise the above terms of the settlement suitably in accordance with the circumstances then prevailing.
The very authority of the Management to revise the terms of the settlement under Ext, M5 which is relatable to the financial status of the
Management, in my view, comes in the way of the so-called custom as sought to be made out before the Tribunal and before me. However,
learned Counsel for the petitioner would urge that the financial status would have nothing to do with the pront and loss of the concern. I am unable
to accept this interpretation. Certainly the financial status cannot be divorced from profit. Therefore, it is clear that payment of bonus was relatable
only to the profit that was being received as shown in the statements of account of the profit and loss.
I may now note the genesis of the trouble leading to the present dispute. On 6-9-1972, under Ext. M. 6 the workmen demanded bonus at 30
per cent for the year 1971-72 fifteen days before the coming Deepavali festival. But that was not agreed to by the management stating that they
were pre pared to pay only 15 per cent and that too on condition that it is accepted by the workmen. No settlement was possible and that aspect
and hence the reference. Therefore, even at that point of time, there was no claim either on the basis of custom or on the basis of implied condition
of service. Merely because varied rates came to be paid by way of bonus, it does not mean that the Court could be called upon to imply such a
condition of service. Therefore, learned Counsel for the respondent is correct in his contention that neither of the claims had been proved. From
this point of view, it is not necessary for me to go into question as to how the Tribunal has approached this matter. Again, it may not be necessary
for me to go into the question whether a different conclusion could be arrived at on a reading of the various documents, and, therefore, it is
needless form to refer to his citations made on behalf of the respondent, viz. Agnanai v. Badri Das 1963 I L.L.J. 684. The Tribunal has correctly
pointed out with reference to Ext. M. 9 that the Management had made it very clear in paragraph 8 of that letter that the claim of payment of
Customary Bonus after 1965 is thoroughly insensible and that for the year 1971-72 bonus would be paid as per the Act. Further, in para 11 of the
said exhibit, the management had also stated that if the workmen went on strike, they would not accept the suggestion made on 13-8-1973, they
would, viz. payment of bonus at 15% per annum and that the position would be completely altered if the strike materialised and thereafter their
only obligation would be to pay bonus as per the Act and nothing more. Therefore, it would be clear that only as a matter of compromise the
bonus was paid and not upon any customary or traditional practice. The Tribunal has also pointed out that nowhere, has the Management admitted
such a customary or trasitional practice with regard to the payment of bonus. Therefore, learned Counsel for the petitioner is not correct in his
statement that what was negotiated between the parties either under the settlement u/s 18(1) or under the settlement u/s 12(3) of the Act, was only
quantum and not the basis.
For the above discussions that the award is valid I conclude the writ petition fails, and is dismissed. No costs.
However, I may observe that the Management may consider whether it would be worthwhile recovering the 12� per cent bonus already
paid to the workmen for each year.