Holding

The Payment of Bonus Act, 1965 is not exhaustive; attendance or customary bonuses are outside its purview and may be paid in addition to the statutory bonus.

Summary

Workmen employed by Shri Baidyanath Ayurveda Bhabhan Pvt Ltd were receiving an attendance bonus and claimed that they were also entitled to a bonus under the Payment of Bonus Act, 1965 for the year 1966-67. The Industrial Tribunal held that the attendance bonus, being a customary payment, was payable in addition to the statutory bonus and awarded it accordingly. The Patna High Court, relying on an earlier Supreme Court decision, vacated the award on the ground that no separate attendance bonus could be claimed when the statutory bonus was payable. The Supreme Court examined the scope of the Bonus Act and, citing the Mumbai Kamgar Sabha case, held that the Act is not exhaustive and does not preclude customary or attendance bonuses. Accordingly, the Court restored the Tribunal’s award, directed payment of interest at 9% per annum, and allowed the appeal.

Issues considered

Whether workmen are entitled to a bonus under the Payment of Bonus Act, 1965 in addition to an attendance bonus already being paid.
Whether the Payment of Bonus Act, 1965 is exhaustive of all types of bonus and thus bars the payment of customary or attendance bonuses.
Whether the High Court was correct in vacating the Industrial Tribunal’s award on the basis of the earlier Supreme Court decision.

Legislation cited

Subjects

Payment of Bonus Actattendance bonuscustomary bonusIndustrial Tribunalexhaustive legislationinterest awardSupreme CourtPatna High Court

Judgment

•.
927

BAlDYANAtH AYURVEDA BHAWAJ'l
MAZDOOR UNION, PATNA A
v.
MANAGEMENT OF SHRI BAIDYANATH
AYURVEDA BHAWAN PVT. LTD. & ORS.
B
· November 24, 1983

[D.A. DESAI, R.B. MISRA, AND RAN,GANATH MISRA, JJ.]
_.,d' •
Paymtnt of Bonu< Act 1965

Act whether exhaustive on the law relating to bo11us-•Aitendance bonus' c
being paid prior to Apt-Employees whether entitled to 'attendance bonus' over ·
::~1
and abo'1'2 profit bonus payable under the-Act.
=; '\.
~
The 'workmen wOrking in the establislurtcnt of the first respondenl were
~ ·being paid- 'attendance bonus'. The question \VhcilH'r the \VOrkmen were

-·,
I entitled to payment of boilus under the Pay1nent of Bol1us Act, 1965, over
I and 8.bove the 'att~nda~ce bortlls' was referred to adjudication under Section 10
•; of the I~dustrial ri!sputes Act 1947. The Tribunal held i~ favour of the

ii1
. "' workmen. Before the High Court the en~ploycr coritended that when . bonus
was being paid under the Act· the workrnen were not entitled to separate
'attendance bonus'. .The High Court, relying on th~ decision of this Court.

j -(_
in·_~angki Jeeva;aj Ghewar Chand & Or.~. v. Secretary, MiJdras Chillies, Gtains E
Kirana Mer,nh.ants Workers' Union & Anr: (1969) 1 S.C.R. -366 held that the
wOrkmen we"re npt entitled to payment of 'attendance bonus'.
~ Allowing the appeal,
=1
~

'HELD : I. Both the Tnbunal and the High Coµrt aoncurrently lie Id·

iii
# - ..
that the. workineh in t11e establiShment had been. receiving 'attendance bonus'
_

, from before. 'Attendance bonus' being outsi~e the purview of the Bonus Ac_t,
) the High··court was not right in vacating the award of the Tribunal.
,.
'"\( [928 E-F, 931 AJ
1
~. ln G/Jewar Chand•s case on which the High Court relied, the question
"'1 was not whether after the Bonus Act can1e into force; the other types of .bonus G
hitherto paid caused to be payable. This question was directly considered· in
Mumbai Kamgar Sabha, Bombay v M/s Abdulblzai Faizullab!zai & Ors. (1976)
3 SOR 591 and held that the Act leaves untouched-customary ·bonus ..
. ,• [929 A-B, 930 HJ
H
3~ In the illstant case, if.the employer had not chalienged the award the
workn1Cn would have had the benefit of the bonus n1ore than a decilde b.1ck.
T_hiit justifi'es the awarding of interest at 9% per annum. (931 B·CJ
•
. . . .
928 SUPRBMB COURT REPORTS .(i984) i s.c.il:
CIVIL APPELL,TB JURISOICTION : ·civil. Appeal No. 1851· of
A ,.1974.

Appeal by: pecial Leave.from·the Judgment and Order dated
the 24th October, 1973 of the Patna High Court in C.W.J.C. No. 613
·ofl970, ·
8 R.K. Garg and V.J. FrMcts for the Appellent. -
..
.L.C. Goya/ for the Respondents.·
•
The Judgment of the Court was delivered by
r
c RANGA.NA TH M1SRA, J. This appeal by special leave . is directed '
against the decision of the Patna f;Iigh Court quashing an award of r'
the Industrial Tribunal of Bihar in exercise of jurisdiction under
·~
../

Article· 227 of the Constitution and the workmen's union has carried ·
the appeal. ·
D
Two disputes were referred to adjudicatio~ under section 10 of
.,t
(he Industrial Disputes Act but the.appeal is confined to only one, ··~

viz., "whether the workmen are entitled.to payment of bonus for the. ..>,. ,I
year 1966-67 under the Payment of Bonus Act. over and above the f
'attendance bonus' which is being paid in this establishment? If· so» t
E . what should be the quantum of bonus 1". The Tribunal found that \_ ~
the workmen were entitled to attendance bonus over and above the
bonus payable under the Payment of Bonus Act, 1965 ('Act for
short), and specified the amount as required under the reference. _f
...,....
•'.The employer challenged the Award . before the High Court and
contended that no separate attendance l:>onu.s 1vas payable when
·F
··bonus 1vas ·being paid under. the Act. A Division Bench of the-
.: High Court came to hold, concurring with the Tribunat;t~at the·
workmen in the e<tablisbmenf had been receiving attendance bonus
. from before and proceeded to examin.e w.bether such attendance
bonus was included in. the bonus payable to the workmen under the
r
G Act or could be claimed over and above the. statutory bonus. Relying
·.on the observations of this Court in Sanghi Jeevaraj Ghewar C~and
·.&. o;s. v.. Secretary, Madr(ls Chillies., Grains Kirana Merchants
Worker's Union.& Anr.('), the Con.rt 9ame to the conclusion that the
wo,kmen were not entitled to payment of attendance bonus for the
I
B
. year
. 1966-67 and a.ccordingly vacated tlie .Award.
.

-·----· __________ .;.___;.....
(I) •1969) I S.C.ll. 366 .

.
BAIOYANAT~ UNION 'v. MANAGEMENT (Ranganath Misra, J.) . 9~.

- f:
Jn Ghewar Chand's case (supra) #as rightly' observed by the
High Court the question for consideration was not whether after ·the
Act'came .into force and statutory bonus bec.ai:ne payable, other types
of bonus hitherto paid ceased to be·payable. · On the other hand, in
'
a later case Mumbai Kamgar Sabha, . Bombay v. M/s. Abdulbhai ...
Faizullabhai & Ors.('). this Court considere<j .the question directly.·
The later case also referred to Ghewar Clwnd's case and "ultimately
held :
·•
• "It is clear filrther from the long title of the: Bonus
Act of 1965 that it seeks to provi<le for bonus to pprsons
employed 'jn certain establishments'-not jn all ·establi-
shments. Moreover, customary bonus does ·not require
calculation of profits, available surplus, because it is a
payment founded on Jong usage . and justified often by ·
spending on festivals and the Act 'gives no guidance to
fix. the quantum df festival bonus; nor does it: expressly
wish such a usage. The. conclusion• seems to be fairJy.
clear, unless we ·strain judicial sympathy contrarywise,
that the Bonus· Act dealt with only profit bonus and
matters connected therewith and did not govern custo-;
mary,traditional or .contractual bonus."
I
Referring to Ghewar Chand's cas.e, Krishna Iyer, J. ii) this latter case E
"' indicated ·: · ··

" ... so viewed, we are able to <\iscern no impediment ·
in reading Ghewar Chand ·as confined to profit-bonus,·
leaving room for non-statutory play of customary bonus.
The case dealt with ·a bonus claim ·by two sets of
· workmen, based on ·.profit of the. business but the
.. workmen fell outside the. a~bit of .the legislation by .
. express exclusion oi exemption. Nothing relating to
•··. any other type of bonus a'rose and· cannot be· ·impliedly,
J1eld to have been. decided. The governing principle we . G
have to . appreciate as a key to..the. understanding of·
Ghewar Chand· is that it relates to a· case of profit- bonus
urged under !lie Industrial Disputes· Act by two sets of
orkmen, employed by establishments which are· either
.exclud.ed ar exempted from the .Bonus Act. 'The major H

(I) [19761 3 s.c.R. 591.
930 . SUPREME ,COURT REPORTS (1984)1 s.c.ll.

inarticulate premise of the statute is that it deals with-
and only withl!:..profit'based bonus as has been. explained
at some length earlier. There is no categorical provision
in the Bonus Act nullifying all other kinds of bonus, nor
does such a conclusion arise by necessary implication,
The ruling undoubtedly lays down the Jaw thus :
B
'Considering the history of the legislation, the
background and the circumstances in which the Act
was enacted, the object of the Act and its sc:hem~,
•ii is not possible to accept the construction suggested
·,on behalf of the respondents that the Act is not an
exhaustive Act dealing comprehensively with the .
subject-matter of bonus in all its .aspects or that
Parliament still .left it open · to th6se to whom the ·
Act does not apply by reaso.n of its provisions ·either
- as to exclusion or exemption to ~ai.se a dispute· with
D regard to bonus through industrial adjudication
under the Industrial Disputes Act 'or other corres··
"ponding law'.

·But this. statement, contextually construed, means
E that profit-bonus no( founded on the provisions of the
Bonus Act and by resort to an adventure 'in ·industrial
dispute under the Industrial Disputes Act is no longer
'permissible. When Parliament has expressly excluded or
exempted certain categories from the. Bonus Act, they
are bowled out so far as profit-based bonus is conc.erned:
F You cannot resurrect profit-bonus by a backdoor method, ,,
viz., resort to the machinery of the Industrial Uisputes
Act."

Upon a' further .analysis of Ghewar Chand's case. Iyer, J.
G , concluded by sayjng : ·

''.A discerning and concrete analysis of the scheme of
the Act and the reasoning of the Court leaves us in no
, doubt that it leaves untouched customary bonus."
H ' . :~

We concur with this conclusion.
•

BAIDYANATH UNION v. MANAGEMENT (RanganathMisra, J.) . 93r

On the finding by the Tribunal as also the High Court that
attendance bonus was being paid from before and it being outside A
the. purview of the Act, the High Court wa~ not right in vacating . the
the Award. The appeal ·m1ist succeed and (be award on this score
ruis to be restored. If the employer had not challenged the Award, ;.
the workmen would have had the benefit of the bonus more than a
decade back. That justifies awarding of interest. While allowing B
f
the appeal of the workmen with costs, we direct that tlie. amount
found by the Tribunal for being given as attendance bonus shall
carry interest at the.rat~ of 9% per. annum from the due d.ate till
~'
" .disbursement. Hearillg fee is assessed at Rs. 2,000.

Appeal allowed.
c
N.V.K.

l

•