IMPORTANT POINT
Payment of Bonus – Workmen of Union are liable to receive their bonus under Payment of Bonus Act – Paying some amount as ex-gratia, as a measure of charity to workmen, is not a ground to avoid paying bonus.

JUDGMENT :

SUDHANSHU DHULIA, J.

1. Leave granted.

2. The appellant before this Court is a trust presently known as ‘Workshop for Rehabilitation and Training of the Handicapped Trust’, or ‘WORTH’. Prior to the year 1985, the name of this trust was ‘Swedish Red Cross Rehabilitation Trust’ as it was initially established by the Swedish Red Cross Society. This trust has been doing charitable activities, including the rehabilitation of leprosy-cured patients and other specially abled persons.

3. For our purpose, it is an admitted fact that since 1985, the trust is also engaged in many industrial activities which are in the nature of commercial activities, such as the manufacture of automobile parts and parts for industrial machineries. This is purely a commercial venture, and it is again an admitted fact that from the manufacturing and sale of these parts, which is done in its factories, profits are being generated. These profits, for our purposes and for the purpose of the Payment of Bonus Act, 1965 (hereinafter ‘Bonus Act’), are known as ‘surplus’. Thus, though the factory may be under the control of a trust, but it is also governed under the Factories Act, 1948.

4. It is again an admitted fact that the workmen who are employed in the factories in various capacities largely comprise of such workers who have been cured of Leprosy or are otherwise differently abled. These workmen have a union known as “WORTH Trust Workers Union” (hereinafter referred to as ‘Union’). In the year 1998, this Union raised an industrial dispute demanding bonus and ex-gratia for the year 1996-97 and ultimately, the dispute was referred to the Industrial Disputes Tribunal, Chennai as per Section 10(2) of the Industrial Disputes Act, 1947 read with Section 22 of the Bonus Act. The claim of the workmen union was based on the fact that its members are workmen who are working in the factories governed by the provisions of the Factories Act, 1948 and Industrial Disputes Act, 1947 and thus, the Payment of Bonus Act¹[Section 1(3)(a) of the Payment of Bonus Act makes the Act applicable to every factory. It reads as follows:

Section 1: Short title, extent and application-

(1) …..

(2) …..

(3) …..it shall apply to-

(a) every factory;…] is applicable to them.

5. Before the Tribunal, the Respondent-Union claimed a bonus at the rate of 20% and ex-gratia at the rate of 5% on the annual earning of a worker. The Tribunal partly allowed the claim of workmen and held that workmen’s demand for bonus and ex- gratia is justified. Tribunal ordered that workmen are entitled to a bonus of 8.33 % on their annual earnings and further, the Tribunal also held that workmen are entitled to an ex-gratia amount, which they have already been receiving from the appellant. This award was challenged before the High Court by the appellant. The learned Single Judge bench upheld the award of the Tribunal but modified the relief to the extent that the bonus shall be awarded after deducting the amount already paid as ex-gratia. Thereafter, the Writ Appeal, filed by appellant challenging the findings of the Single Judge, was also dismissed vide the impugned order dated 20.03.2019. Aggrieved, the appellant is before us.

6. We have heard both sides and perused the material on record.

7. Let us first understand the scheme and applicability of the Bonus Act. The practice of paying bonus in India originated during the First World War when some textile mills started giving bonus to their workers under the Defence of India Rules. Later in 1960, at the meetings of the Eighteenth Session of the standing Labour Committee of the Government of India, it was agreed that a Commission be appointed to evolve norms for payment of bonus. Consequently, a Bonus Commission was appointed and thereafter, the Government of India promulgated an Ordinance accepting recommendations of the Bonus Commission with some modification. This ordinance was later replaced by the Payment of Bonus Act, 1965. In this regard, the Statement of Object