V.R.KRISHNA IYER, J.

(1) A narration of the skeletal facts, sufficient to get a hang of the four legal issues debated at the Bar in this appeal, by special leave, will help direct the discussion along a disciplined course, although the broader social arguments addressed have spilled over the banks of the jural stream.

(2) NAG Devi, a locality in the city of Bombay, is studded with small hardware businesses where pipes and fittings, nuts and bolts, tools and other small products, are made and/or sold. These establishments, well over a thousand, employ a considerable number of workmen in the neighbourhood of 5000, although each unit has (barring four), less than the statutory minimum of 20 workmen. This heavy density of undertakings and workers naturally produced an association of employers and a union of workmen, each recognising the other, for the necessary convenience of collective bargaining. Apparently, these hardware merchants huddled together in the small area, were getting on well in their business and in their relations with their workmen, and this goodwill manifested itself in ex gratia payments to them of small amounts for a number of years prior to 1965, when trouble began.

(3) ALTHOUGH rooted in goodness and grace, the annual repetition of these payments ripened, in the consciousness of the workers, into a sort of right - nothing surprising when we see in our towns and temples a trek of charity-seekers claiming benevolence as of right from shopkeepers and pilgrims, especially when this kindly disposition has been kept up over long years. The compassion of yesterday crystallises as the claim of today, and legal right begins as that which is humanistically right. Anyway, the hardware merchants of Nag Devi. made of sterner stuff, in the year 1965. abruptly declined to pay the goodwill sums of the spread-out past and the frustrated workmen frowned on this stoppage by setting up a right to bonus averring considerable profits for the industry (if one may conveniently use that expression for a collective coverage of the conglomeration of hardware establishments). The defiant denial and the consequent dispute resulted in the appointment of a Board of Arbitrators under S. 10A of the Industrial Disputes Act to arbitrate upon twelve demands put forward by the Mumbai Kamgar Sabha. Bombay (the union which represents the bulk of workers employed in the tiny, but numerous, establishments). The charter of demands included, inter alia, claim for 4 months wages as bonus for the year 1965. The arbitral board, however, rejected the demand for bonus. The respondents-establishments discontinued these payments thereafter and the unions insistence on bonus led to conciliation efforts. The Deputy Commissioner of Labour mediated but since his intervention did not melt the hardened mood of the employers, formal demands for payment of bonus were made by the union and government was persuaded to refer the dispute for adjudication to an industrial tribunal. The tribunal formulated two issues as arising from the statements of the parties and rendered his award dismissing the reference.

(4) AT this stage, it may be useful to set out the terms of reference made under S. 10(1) (d) of the Industrial Disputes Act, 1947 (for short, the I. D. Act), for adjudication by the tribunal:

1. 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 ?

2. Whether payment of bonus by the employers to their workmen has become custom 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?

Following upon the statements of parties, the tribunal framed two issues which ran thus:

1. Whether the Award of the Ar