The main legal point established in the judgment is that an institution, even if not intended to generate profits at the time of its establishment, is not exempt from the liability to pay bonus if it is, in fact, generating profits. The burden of proof lies on the institution to establish its entitlement to any exemption from statutory liability.

C. HARI SHANKAR, J.

1. This writ petition, at the instance of M/s Shri Moolchand Khairati Ram Hospital & Ayurvedic Research Institute, challenges Award, dated 28 April, 2004, passed by the learned Industrial Tribunal-II, Karkardooma, holding the petitioner liable to pay bonus, to its employees, under the Payment of Bonus Act, 1965 (hereinafter referred to as “the Act”), for the year 1997-1998. The contention, of the petitioner, that it was exempt from the requirement of such payment, under sub-clause (c) of clause (v) of Section 32 of the Act [referred to, hereinafter, for the sake of expediency, as “Section 32(v)(c)”] of the Act, stands negatived by the learned Tribunal, relying on earlier judicial pronouncements including the judgments of the Supreme Court in Workmen of Tirumala Tirupati Devasthanam vs Management, AR 1980 SC 604 and, perhaps more significantly, State of T.N. v. K. Sabanayagam, (1998) 1 SCC 318.

2. The neat issue that arises for consideration in the present case, therefore, is whether the benefit of Section 32(v)(c) of the Act would enure, in law, in favour of the petitioner. If it does, the employees of the petitioner would, by operation of the said provision, stand excepted from the applicability of the provisions of the Act itself; consequently, no liability to pay bonus, under the Act, could be fastened on the petitioner.

3. Before proceeding further, it would be apposite to extract Section 32(v)(c) of the Act, forming, as it does, the linchpin of controversy in the present case, thus:

“32. Act not to apply to certain classes of employees. – Nothing in this Act shall apply to –

(i) xxxxxxx;

(ii) xxxxxxx;

(iii) xxxxxxx;

(iv) xxxxxxx;

(v) employees employed by –

(a) the India Red Cross Society or any other institution of a like nature (including its branches); (b) universities and other educational institutions;

(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit;”

4. The precise case of the petitioner is that it is an “institution established not for purposes of profit”; per corollary, its employees would stand excepted from the provisions of the Act.

5. The learned Industrial Tribunal has founded its judgment (impugned herein) on four judicial pronouncements, viz.

(i) National Dairy Development Board v. National Dairy Development Board Employees Union, 1988 I LLJ 456 (Guj),

(ii) State of T.N. v K. Sabanayagam (supra),

(iii) Tamil Nadu Water Supply & Drainage Board v. Tamil Nadu Water Supply & Drainage Board Engineers Association, 1998 I LLJ 931 (SC) and

(iv) Workmen of Tirumala Tirupati Devasthanam (supra).

6. It may be noted, here, that one of the principal planks of the reasoning of the learned Tribunal, in the impugned Award, is that, in law, if an establishment has, in earlier years, been granting bonus to its employees/workmen under the Act, it is not open to the establishment to suddenly discontinue payment of bonus, unless it applies, under the Act, and obtains exception, from such payment, thereunder. Taking stock of the fact that, prior to 1997-1998, the petitioner-Hospital had, in fact, been paying bonus to its employees under the Act, and no exception having been obtained, by it, from the liability to continue to so pay bonus to its employees, the learned Tribunal has concluded that the discontinuance of payment of bonus, by the petitioner-Hospital, to its workmen, was illegal.

7. A controversy, similar to the present, stands adjudicated vide my recent judgment in Batra Hospital Employees Union v. Batra Hospital and Medical Research, 2018 (168) DRJ 21. In that case, the learned Industrial Tribunal had held Batra Hospital and Medical Research Centre (hereinafter referred to as “Batra Hospital”) as exempt from the requirement of payment of bonus, being an institution “established not for purposes of profit” and, therefore, excepted from the applicability of the Act by virtue of Section 32(v)(c) thereof. I had, after examining