Judgment

VAIDIALINGAM, J. :- These two appeals, by special leave, are directed against the common Award, dated June 30, 1970, of the Additional Industrial Tribunal, Bangalore, in two References, A.I.D.S. 6 and 8 of 1966.

2. On December 8, 1965, the Government of Mysore referred to the Industrial Tribunal for adjudication the following questions :

"Is the Management of the Bangalore Woollen, Cotton and Silk Mills Company Limited, Bangalore, justified in announcing payment of one month s basic wages as advance against wages for the half-year ending June 1965 instead of declaring this payment as an advance against payment of bonus as was being done all these years?

If not, what other relief the workers are entitled to?"

3. This was numbered as Reference No. A.I.D. 6 of 1966, Civil Appeal No. 1291 of 1967 is directed against that part of the order of the Tribunal regarding this Reference.

4. On March 5, 1966, the Government of Mysore referred to the same Tribunal for adjudication the following question:

"Whether the demand of the workers of Bangalore Woollen, Cotton and Silk Mills Co., Ltd., Bangalore, for additional bonus for the years 1962 and 1963 at the rate of 2 months additional bonus and 4 months additional bonus on total wages respectively is justified?

If not, to what other relief or reliefs are the workmen entitled?"

5. This Reference was numbered as A.I.D. 8 of 1966, Civil Appeal No. 1292 of 1967 is directed against that part of the order of the Tribunal regarding this Reference. Both the appeals are by the Company.

6. We will first take up Civil Appeal No. 1291 of 1967. The appellant was making two payments of bonus every year, one for the half-year ending 30th June and half-year ending 30th December. The accounting year is the calendar year. The half-yearly payments were unilaterally declared by the appellant and not on the basis of any agreement between the parties. The quantum of bonus that was paid for each half-year was also not constant. Half-yearly payments were made at the end of the half-year when the working result of the said year was known and if there was sufficient profit to pay bonus. The payment of bonus for the half-years also depended upon the approximate estimate that the Directors used to make about their prospective future earnings for the next half-year. According to the appellant the bonus amounts were paid out of profits. As the Payment of Bonus Act, 1965 (hereinafter to be referred to as the Act) had come into force on August 28, 1965, the appellant issued a circular to the effect that for the half-year ending June 30, 1965, payments will be made as advance of wages equivalent to 1/6th of the basic earnings of the employees. In this circular there is a reference to the Payment of Bonus Ordinance, 1965, promulgated on May 29, 1965 and that under the terms of the Ordinance, bonus is payable only within a period of 8 months from the end of the accounting year. The circular further states that no bonus is payable for the accounting year 1965 until the accounts for the year are closed. It was further mentioned that the amounts are paid as advance wages in view of the representations made by the employees. The circular further mentioned that the amounts paid as advance wages will be set off against the bonus that may be found payable for the accounting year 1965 and that if no bonus is payable, the amount paid will be adjusted against the wages due for any month after March, 1966.

7. The issue of the above circular led to the unions concerned raising a dispute with the management that the payment of bonus at the end of each half-year has become a condition of service of the workmen as the same was being paid for several decades without any relation to profits. The appellant was charged by the unions of having changed the conditions of service by offering to make payments as advance against wages instead of payment by way of bonus. As conciliation proceedings failed, the workmen resorted to a strike in Decembe