Holding

The tribunal was justified in finding that the bonus had ripened into a customary bonus, and the workmen are entitled to a customary bonus of 10.5% of annual salary for the years 1974‑1977.

Summary

The workmen of Kettlewell Bullen & Co. claimed a customary bonus for the years 1974‑1977, arguing that the company had been paying a bonus since 1959, at a uniform rate of 10.5% of salary from 1965‑1973, before the Puja festival and irrespective of profits. The Industrial Tribunal held that this long‑standing, uniform, profit‑independent payment had ripened into a customary bonus and awarded the workmen a bonus of 10.5% of annual salary for 1974‑1977. The Calcutta High Court set aside the award, saying the payment was not uniform and was governed by Section 34(3) of the Payment of Bonus Act, 1965. The Supreme Court reversed the High Court, holding that the tribunal was correct: the payment constituted a customary bonus and the workmen were entitled to the 10.5% bonus for the disputed years. The appeal was allowed and the tribunal’s award restored.

Issues considered

Whether the bonus paid by the employer from 1959 to 1973, particularly at a uniform rate of 10.5% from 1965‑1973, constitutes a customary bonus under industrial law.
Whether reference to Section 34(3) of the Payment of Bonus Act, 1965 in the settlements converts the payment into a statutory profit‑bonus.
Whether the period and uniformity of the payment are sufficient to infer a custom or usage.
Whether the workmen are entitled to a customary bonus for the accounting years 1974‑1977 at the rate of 10.5% of annual salary.

Legislation cited

Industrial Disputes Act, 1947s. 10
Payment of Bonus Act, 1965s. 17, s. 34(3)

Subjects

Customary bonusIndustrial Disputes ActPayment of Bonus ActBonusPuja festivalUniform rateTribunal awardHigh Court reversalSupreme Court

Judgment

A WORKMEN OF KETTLEWELL BULLEN AND COMPANY LTD.
v.
/
KETTLEWELL BULLEN AND COMPANY LTD.

JANUARY 6, 1994

B [KULDIP SINGH AND S.C. AGRAWAL, JJ.]

Labour Law: Industrial Disputes Act, 1947: S.l<>-Customary Bonus-
Industrial dispute regarding Bonus paid to workmen under settlements befo1e
Puja festival i"espective of earning/profits from 1959 throughout and from
C 1965 to 1973 at a uniform rate of 10.5% of annual salary/wages-Claim for
customary bonus for the period 1974 to 1977-Held, Bonus paid to workmen
had ripened into customary bonus and they were entitled to it at the rate of
10.5% of annual salary/wages.

The Payment of Bonus Act, 1965: ss.17, 34(3)-Bonus not linked with
D earning/profits Payment of to workmen under settlements at a unifo~ rate
of 10.5% of annual salary/wages from 1965 to 197J-,-lleld, bonus had
ripened into customary bonus-Reference to s.34(3) in settlements would not . -t-
atter nature of payment so as to convert it into a. bonus paid under the Act.

E The respondent-company paid bonus to its workmen for the years
1959-1963 at'the rate of three-and-a-quarter months' basic pay, for the year
1964 at the rate of 4 per cent in accordance with the payment of bonus
ordinance 1965, and for the years 1965 to 1973 at a uniform rate of 10.SO
per cent of the salary or wages. The said bonus was generally paid before
the commencement of Puja Festival and irrespective of earning or profits.
F In the year 1979 the Government referred to the Tribunal the dispute ~
whether the workmen were entitled to customary bonus for the accounting
years 1974 to 1977.

The Tribunal held that the bonus which was being paid by the
G mamagement had ripened into a customary bonus due to long usage and
for the years 1974 to 1977 the workmen were entitled to fixed customary
bonus at the rate of 10.S percent of their annual -salary or wages. The
respondent-company challenged the award by filing a writ petition before
the High Court. 1:1Ie Single Judge set aside the award holding that the
workmen had failed to establish that they were entitled to payment of
H customary bonus. In appeal, the Division Bench of the High Court, con-
22
- WORKMEN OF KB. & CO. v. KB. & CO.

firming the judgment of the Single Judge, held that the payment made by A
the management could not be regarded as customary bonus because it was
23

not being paid at a uniform rate throughout; the settlements of 1966, 1977
and 1973 were stated to have been entered into under s.34(3) of the
Payment of Bonus Act, 1965 and the bonus paid thereunder was bonus
contemplated under the Act. Hence the appeal by the workmen.
B
Allowing the appeal, this Court

HELD: 1.1. Having regard to the facts and circumstances of the case
the tribunal was justified in drawing an inference that the bonus that was
being paid by the respondent-company to the appellants was customary or C
traditional bonus on the occasion of Puja festival payable at the rate of
10.S per cent of the salary or wages. The tribunal rightly held that for the
years 1974 to 1977 the appellants were entitled to payment of customary
bonus at the rate of 10.5 per cent of the annual salary or wages earned by
each workman concerned in each such years. The High Court was in error D
in holding otherwise and setting aside the award. [32-H; 33-A·C]

1.2. The High Court was not right in holding that the bonus was not
being paid at a uniform rate throughout. The payment had been made by
the company by way of bonus over an unbroken series of years and the
said payment did not depend upon the earning and profits. Though during E
the years 1959 to 1963 it was paid at the rate of three and a quarter months'
basic pay 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 10.50
per cent of the salary or wages. The payment made during the years 1959
to 1964 could be ignored and on the basis of the payment made during the F
years 1965 to 1973 at the uniform rate of 10.50 per cent of the salary or
wages it could be said that payment was made at a uniform rate for an
unbroken period of 9 years from 1965 to 1973, which was a sufficiently long
period. f33-A-D] :-, ·-=- _ ,~

1.3. The payments made under the~settlements had no link with the G
profit. In the circumstances, reference to s. 34(3) of the Payment of Bonus
-"'\ Act, 1965 in the settlements 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 so iJtj to
convert it into a bonus paid under the Act. (34-H; 35-A] H
24 SUPREME COURT REPORTS (1994) 1 S.C.R.

A M/s. Tulsidas Khimji v. Their Workmen, [1963] 1 S.C.R. 675; Vegetable
Products Ltd. v. Their Workmen, A.I.R. (1965) S.C. 1499 and Mumbai
Kamgar Sabha, Bombay v. M/s. Abdulbhai Faizullabhai & Ors., [1?'76] 3
S.C.R. 591, relied on.

Upendra Chandra Chakraborty and Anr. v. United Bank of India,
B [1985] 3 S.C.R. 1057, held inapplicable.

2.1. Customary bonus differs from the bonus (as normally under-
stood) based on the general principle that labour and capital should share
the surplus porfits available after meeting prior charges. Customary
C bonus is also different from bonus c.Iaimed as an implied term of the
contract of employment.

· 2.2. 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.
D
Mis. Ispahani Ltd. Calcutta v. lspahani Employees' Union, [1960) 1
S.C.R. 24; The Graham Trading Co. (Indi.a) Ltd. v. Its Workmen, [1960) 1
S.C.R. 107 and Hukum Chand Jute Mills Ltd. v. Second Industrial Tribuna~
West Bengal & Ors., (1979) 3 S.C.R. 644, referred to.

E CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5224 of
1990.

From the Judgement and Order dated 17.11.1986 of Calcutta High
Court in Appeal No. 103 of 1983.

F Tapas Ray, H.K Puri, Sharad Puri and Jamshed Bey for the Appel-
lants.

G.B. Pai and Suman Khaitan for the Respondent.

The Judgment of the Court was delivered by
G
S. C. AGRAWAL, J. 1. This appeal by the workmen of Kettewell
Bullen & Company Ltd. (hereinafter referred to as 'the workmen') involves
the question whether the workmen are entitled to Customary bonus at the )-
rate of 10.5 per cent of the total annual salary or wages in respect of the
H years 1974 to 1977.
WORKMEN OFK.B. & CO. v. K.B. & CO. [AGRAWAL, J.] 25

2. By order dated September 11, 1979 the Government of West A
Bengal referred to the Eighth Industrial Tribunal (hereinafter referred to
as 'the tribunal') the following dispute for adjudication under Section 10
of the Industrial Disputes Act, 1947 :

"Whether the workmen are entitled to customary bonus B
for the accounting years 1974, 1975, 1976 and 1977? If so,
at what rate?"

Before the tribunal it was submitted by the workmen that the bonus was
being paid to them since the year 1959 and that for the years 1959 to 1963 C
bonus was paid at the rate of three and a quarter months' basic wages and
for the years 1%5 to ~973 it was paid at the rate of 10.5 per cent of the
total annual salary or wages and that in the year 1964, it was paid at the
rate of 4 per cent on the basis of Payment of Bonus Ordinance, 1965. The
management disputed the said claim of the workmen and asserted that the D
workmen were not entitled to claim Customary Bonus and that they were
only entitled to Statutory Bonus at the rate of 4% payable under the
Payment of Bonus Act, 1%5 (hereinafter referred to as the 'Bonus Act').
The tribunal by its award dated April 16, 1982 found that the bonus was
paid by the management for a long period from 1959 onwards not on the
basis of the profit calculation and usually in the month of Sepember before E
Puja festival and that from 1%5 to 1973 it was being paid at the uniform
rate of 10.5 per cent, and, therefore, the bonus which was being paid by
the management had ripened into a Customay Bonus due to a long usage.
The tribunal held that the workmen were entitled to fixed Customay Bonus
at the rate of 10.5 per cent of the annual salary or wages .earned by each F
concerned workmen for the years 1974 to 1977. The said Award was
challenged by the management before the Calcutta High Court in a writ
petition filed under Article 226 of the Constitution. The said writ petition
was allowed by a learned single judge of the said High Court by judgment
dated September 21, 1982 whereby the learned single Judge set aside the
award made by the tribunal on the view that the workmen had failed to G
establish that they were entitled to payment of Customary Bonus. The said
decision of the learned single Judge was confirmed, in appeal, by a Division
Bench of the High Court by judgment dated November 17, 1986. The
present appeal is directed against the said judgment of the Division Bench
of the High Court. H
26 SUPREME COURT REPORTS [1994) 1 S.C.R.

A 3. Since the appeal relates to demand for customary bonus, it is
necessary to mention that customary bonus differs from the bonus (as
normally understood) based on the general principle that labour and
capital should share the surpulus profits available after meeting prior
charges. Customary bonus has also to be distinguished from bonus claimed
as an implied term of the contract of employment. The circumstances in
B which an implied agreement may be inferred have been laid down in Mis
Ispahani Ltd. Calcutta v. Ispahani Employees' Union, [1960) 1 S.C.R. 24, 28.

4. In The Graham Trading Co. (India) Ltd. v. Its Workmen, [1960) 1
C S.C.R. 107, bonus sought as a matter of tradition or custom, has been
distinguished from bonus payable as an implied term of employment and
it has been laid down that for determining whether the bonus is payable
by way of custom or tradition the following matters be taken into considera-
tion:

D
"(i) whether the payment has been over an unbroken series
of years; (ii) whether it has been for a sufficiently long
period, though the length of the. period might depend on
the circumstances of each case: even so the period may
normally have to be longer to justify an inference of
E traditional and customary puja bonus than may be the case
with puja bonus based on an implied term of employment;
(iii) the circumstance that the payment depended upon
the earning of profits would have to be excluded and
therefpre it must be shown that payment was made in
F years of loss. In dealing with the question of custom, the
fact that the payment was called ex gratia by the employer
when it was made, would, however, make no difference in
this regard because the proof of custom depends upon the
effect of the relevant factors enumerated by us; and it
would not be materially affected by unilaterial declara-
G tions of one party when the said declarations are mcon-
sistent with the course of conduct adopted by it; and (iv)
the payment must have been at a uniform rate throughout
to justify an inference that the payment at such and such
rate had become customary and traditional in the par-
H ticular concern". (pp.111, 112)
.....
(

WORKMEN OFK.B. & CO. v. K.B. & CO. [AGRAWAL,J.] 27

5. In Mis Tulsidas Khimji v. Their Workmen, (1963] 1 S.C.R. 675, A
Sinha, C.J., speaking for the majority, has held that the four 'so-called
conditions' laid down in the Graham Trading Company case (supra) are
not really in the nature of conditions precedent but are circumstances
which have been taken into account in this Court in that case for coming
to a conclusion as to whether or not the claim to customary or traditional B
bonus had been made out and that the observations in the Graham Trading
Company "must be understood as based on consideration of substance and
not of form". It was further observed :

"What is more important to negative a plea for customary
bonus would be proof that it was made a gratia, and c
accepted as such, or that it was unconnected with any such
occasion like a festival...... " (p.688)

6. In that case the appellant firm had an unbroken record of profits
year after year. The Court upheld the finding of the Industrial Tribunal
that the traditional or customary bonus had been established notwithstand- D
ing that it had not been shown, as it could not have been shown, that it was
paid in a year of loss.

7. In Vegetable Products Ltd. v.1heir Workmen, A.LR. 1965 S.C. 1499,
the observations in the Graham Trading Company case (supra) have been E
thus explained :

"The third circumstance lays down that it has to be proved
that the payment has been made even in years of loss. This
only means that where there have been years of loss,
payment should have been made in those years also. But F
it does not mean that where there has been no year of loss
at all and the concern has been fortunate enough always
to earn profit, there can be no customary or traditional
bonus connected with a festival like Puja, even though
payment at a uniform rate has been made for a larger
number of years. This circumstance should, therefore, be G
read only thus: in case there have been years of loss, it
must be proved that payment has been made in those years
also. The fourth circumstance mentioned above is to the
effect that payment should have been made at a uniform
rate throughout. That, however, does not mean. that H
28 SUPREME COURT REPORTS (1994J 1 S.C.R.

A uniformity should be established from the beginning to the
end. Take 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 but '--..
uniform rate has been made. In those circumstances, the
tribunal may well come to the conclusion that the payment
B was at a uniform rate ignoring the first years". (p.1501)

In Mumbai Kamgar Sabha, Bombay·v. Mis Abdulbhai Faziullabhai & On.,
[1976] 3 S.C.R. 591, this Court has dealt with the contention that cuatom
based bonus must be linked with some festival or other. Negativing the said
C contention it has been observed :

"Surely, communal festivals are occasions of rejoicing and
spending and emloyers make bonus payments to
employees to help them meet the extra expenses their
families have to incur. Ours is a festival-ridden society with
D many religions contributing to their plurality. That is why
our primitive practice of linking payment of bonus with
some distinctive festival has sprouted. As we progress on
the secular road, may be the Republic Day or the Inde-
pendence Day or the Founder's Day may well become the
occasion for customary bonus. The crucial question is not
E
whether there is a festival which buckles the bonus and
the custom. What is legally telling is whether by an un-
broken flow of annual payments a custom or usage had
flowered, so that a right to bonus based thereon can be
predicted. The custom itself precipitates from and is
F 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". (pp.600, 601)

G 8. Having set out the principles governing paym~nt of customary
bonus, we may now come to the facts of the present case.

9. With regard to payment of bonus for the year 1959 a dispute was
raised by the workmen and the same was discussed in joint conference of
the representatives of the workmen as well as the management before the
H Conciliation Officer and a settlement was reached on July 25, 1962 whereby
WORKMENOFK.B.&CO. v. K.B.&CO.(AGRAWAL,J.) 29

the parties mutually agreed to settle not only the bonus issue for 1959 but A
also to enter into an agreement of bonus for all the years uptO and
including 1966. The relevant terms of the said settl~ment are as under :

"(a) All workmen of Messrs Kettlewell Bullen & Co.
working at 21, Strand Road, Calcutta-1, will be paid three
and a 'quarter months' Basic Salary as Bonus for each of B
the years 1962 to 1965 (both inclusive). The calculation of
Bonus will be as under :
\

during the yearx 3.1/4
Total Basic Salary receiver =
12
c
(b) The above quantum of Bonus will be paid irrespective
of working results of the Company during the years 1962
to 1966 (both inclusive) which will, however, not be treated
as a condition of service for further years.
D
The Union also agrees not to make any demands for
any additional Bonus of any kind during these years as
stated hereinabove.

(c) Regarding the quantum of Bonus for the years 1959,
1960 and 1961, it is also agreed that all the Workmen of E
Kettlewell Bullen & Co. Ltd., working at 21, Strand Road,
Calcutta-1, will receive the said quantum of Bonus on the
same conditions as specified in clauses (a) and (b) above
of this agreement.

( d) The quantum of Bonus agreed upon for the years 1959 F
to 1961 (both inclusive) will be paid in two equal instal-
ments, one in the month of September, 1962 and another
in the month of April, 1963.

( e) Bonus in respect of each of the years 1962 to 1966
G
(both inclusive) will be paid in each of the succeeding
years before the pujas".

10. While the said settlement was in operation, the Payment of Bonus
Ordinance, 1965 was promulgated on May 29, 1965. Relying upon the
provisions contained in the said Ordinance, the management refused to H
30 SUPREME COURT REPORTS [1994] 1 S.C.R.

A honour the settlement and for the year 1964 bonus was paid at the rate of
4%.

11. On October 15, 1966 the parties the workmen and the manage-
ment· entered into another Settlement covering the period of five account-
ing years, i.e., 1965 to 1969 (both inclusive), whereby it was agreed as
B under:

"(a) All the clerical and subordinate staff of the Company
working at 21, Strand Road, Calcutta-1, will be paid bonus
in respect of each of the accounting years 1965 to 1969
c (both inclusive) at the rate of 10.1/2 per cent (ten and half
percentum) of the total salary and wages (salary and
dearness allowance only and excluding attendance bonus,
overtime, or any other allowance or payment) earned by
them during each of the relevant accounting years ending
1965 to 1969 (both inclusive).
D
(b) Bonus as aforesaid for each of the accounting years
mentioned in clause (a) above will be paid in the next
succeeding year approximately two week before t.he
pujas".
E In the said Settlement, it was stated that it had been arrived at in terms of
Section 34(3) of the Payment of Bonus Act, 1965.

12. The said settlement was followed by Memorandum of Settlement
dated September 20, 1971 covering the accounting years ending 31st
F December, 1970, 31st December, 1971 and 31st December, 1972. Under
the said Settlement it was agreed as under :

"(a) All the clerical and subordinate staff of the Company
working at 21, Strand Road, Calcutta-1, will be paid Bonus
in respect of each of the accounting years ending 31st
G December, 1970, 31st December, 1971 and 31st Decem-
ber, 1972 (all inclusive) at the rate of l0.1/2% (ten and a
half percentum) of the total salary and wages (basic and
dearness allowance only and excluding attendance bonus,
overtime or any other allowance or payment) earned by
H them during the said accounting year.
y-
WORKMEN OF KB. & CO. v. KB. & CO. [AGRAWAL, J.) 31

(b) Bonus as aforesaid or each of the accounting years A
mentioned in clause (a) above will be paid to the
~
employees in the next succeeding year approximately four
weeks before the Pujas."

In the said Settlement also it was stated that it was arrived at under Section
34(3) of the Payment of Bonus Act, 1965 B

13. On September 26, 1974 the parties entered into another settle-
ment in respect of the accounting year ended 31st December, 1973 and
agreed as under :

"(a) All the clerical and subordinate staff of the Company
c
working at 21, Strand Road, Calcutta-1, will be paid Bonus
in respect of the accounting year ended 31st December,
1973 at the rate of 10.50% (ten and a half percentum) of
the total salary and wages basic and dearness allowance
only and excluding attendance bonus, overtime, or any D
other allowance or payment earned by them during the
said accounting year."

14. In that Settlement also it was provided that it was arrived at under
Section 34(3) of the Payment of Bonus Act, 1965.
E
15. Before the tribunal Shri Kasi Nath Banerjee, General Secretary
of the Employees' Union, had appearned as a witness and has stated that
the bonus was being paid since 1959 before the commencement of Puja.

16. From the settlements referred above and the evidence that was
produced before tribunal it appears that (i) bonus was being paid by the F
appellant ever since the year 1959, (ii) for the years 1959 to 1963 bonus
was paid at the rate of 3.1/4 months' basic pay, (iii) for the year 1964, bonus
was paid at the rate of 4 per cent in accordance with the Payment of Bonus
Ordinance, 1965, (iv) for the years 1965 to 1973, bonus was paid at the rate
of 10.50 per cent of the salary or wages, and (v) the said bonus was G
generally paid before the commencement of Puja festival.

17. The tribunal has found that :
-"
"Bonus was paid by the management for a long period
from 1959 onwards not on the basis of profit calculation H
32 SUPREME COURT REPORTS (1994) 1 S.C.R.

A and usually in the ILOnth of September before the Puja
Festival and the facts and circumstances prove that there
was continuous payment of bonus since 1959 at a relevant
time without calculation of profits according to the salary.
and wages since 1959, and the payments were made from
1965 to 1973 at the rate of 10.5% under Section 34(3) of
B the Payment of Wages Act at a uniform rate and that too
before the Puja Festival and not being based on any
calculation of the profit and loss of the company. rhe only
possible inference in such circumstances is that the
management paid bonus which has ripened into a cus-
c tomary bonus due to long usage from 1959 onwards cover-
ing a period of 15 years."

18. The learned Judges on Division Bench of the High Court have
also observed :

D "However, we may point out that we are of the opinion
that from the varioll.5 agreements it was clear that
provisions for payment were being made irrespective of
the quantum of profit and loss."

19. It can, therefore, be said that the payment had been made by the
E management of the respondent by way of bonus over an unbroken series
of years and the said payment did not depend upon the earning and profits.

20. The learned Judges on the Division Bench have held that the said
payment could not be regarded customary bonus for the following reasons:
F (i) it was not being paid at a uniform rate throughout, and

(ii) the settlements that were entered into on October 15,
1966, September 20, 1971 and September 20, 1973 stated
that the said settlements were entered into under Section
G 34(3) of the Payment of Bonus Act, 1965 and that the
bonus paid under the said settlements was bonus con-
templated under the Payment of Bonus Act.

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 Oiat
H though during the years 1959 to 1963 it was paid at the rate of three and
WORKMEN OFKB. & CO. v. KB. & CO. [AGRAWAL,J.) 33

) a quarter months' basic pay (which amount, as pointed out by the learned A
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 10.50 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 B
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 con-
clusion 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
c
during the years 1965 to 1973 at the uniform rate of 10.50 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 1973.

22. The question is whether the said period was sufficiently long to D
\- - draw an inference about the payment being customary in nature. In the
Graham Trading Company (supra) the payment had been made continously
from 1940 to 1952 at the rate of one month's wages and this Court upheld
the claim of the workmen for bonus as a customary and traditonal 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. E ..
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 con-
dition from 1956 to 1958 and that in 1959 the payment was. made ex-gratia
F
and accepted as such and that in 1960 and 1961 the payment was made on
condition that it would be adjusted towards for profit bonus of the previous
year and was accepted as such. The Court, therefore, set aside the con-
clusion 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 G
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 festival.

23. With regard to the other reason given by the High Court, namely, H
.··~

..
34 SUPREME COURT REPORTS [1994) l S.C.R.

A reference to section 34(3) of the Bonus Act in the various settlements, it
r--
may be stated that the Bonus Act is confined, in its application, to profit 1

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 :

B "The conclusion seems to be fairly clear, unless we strain
judicial sympathy contrarywise, that the Bonus Act dealt
with only profit bonus and matters connected therewith
and did not govern customary, traditional or contractual
bonus." (p.608)
c 24. The same view was reiterated in Hukum Chand Jute Mills Ltd. v.
Second Industrial Tribunal, West Bengal & Ors., [1979) 3 S.C.R. 644, wherein
it was held that the customary or contractual bonus were excluded from
the provisions of the Act and it was laid down :

D "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
E
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 :

F "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 distinc-
tion 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
G 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 circumstan-
H ces the reference to Section 34(3) of the Bonus Act in the Settlements
WORKMEN OF KB. & CO. v. K.B. & CO. [AGRAWAL, J.) 35

would not alter the nature of the payment so as to convert ~~ into a bonus A
paid under the said Act. The reference to Section 34(3) of the liO::!!'> 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 : -
B
"Section 17. Adjustment of customary or interim bonus
against bonus payable under the Act. Where in any ac-
counting year-

(a) an employer has paid any Puja bonus or other cus-
tomary bonus to an employee; or
c
(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 entitlec to deduct the amount
D
of bonus so paid from the <;lllOUnt of bonus payahle by
him to employee under this Act in respect of that account-
ing year and the employee shall be entitled to receive only
the balance."
E
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 pai.d from the amount of bonus payable by him under F
the Act. Of course, if the customary bonus is thus recog-
nised 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 ins. 17, on the other hand, indi-
G
cates the independent existence of customary bonus al-
though, to some extents, its quantum is adjustable towards
statutory bonus." (p.607)

This can only mean that if the bonus that was being paid by the rei.pondent
is found to be customary bonus then the respondent would be entitled to H
36 SUPREME COURT REPORTS {1994) 1 S.C.R.

A deduct the 'dlllount so paid from the amount of bonus payable to the
empl<YJie by way of bonus under the Act in respect of that accounting year.

28. Shri G.B. Pai, learned senior counsel appearing for the respon-
dent, placed reliance on the decision of this Court in Upendra Chandra
Chakrabortyand Anr. v. United Bank of India, [1985) 3 S.C.R. 1057. In that
B case, it was held that the bonus received by the workmen did not 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 nobody's case that the bonus was
C 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
natonalised banks which are wholly owned undertakings of the Govern-
ment of India, the employees must be dealt with on a common denomina-
tor in the matter of bonus. Having regard to the aforesaid circumstances,
it was held that although the payment was made iii the month of September
D but that payment was not customary bonus. In our opinion, the said
decision has 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
E 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 circumstan-
ces 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.
F
30. The appeal is, therefore, allowed. The judgment and order of the
Division Bench of the High Court dated November 17, 1986 in Appeal No.
103 of 1983 as well as that of learned single Judge dated September 21,
1982 in Matter No. 754 of 1982 are set aside and the award dated April
G 16, 1982 made by the Eighth Industrial Tribunal holding that for the years
1974 to 1977 the appellants were -entitled to payment of customary bonus
at the rate of 10.5 per cent of the annual salary or wages earned by each
concerned workmen in each such years is restored. The parties are left to
bear their own costs. -

R.P. Appeal allowed.