S.1 Short title, extent and application

       (1) This Act may be called the Payment of Bonus Act, 1965.
       (2) It extends to the whole of India 1[***].
       (3) Save as otherwise provided in this Act, it shall apply to—
       (a) every factory; and
       (b) every other establishment in which twenty or more persons are employed on any day during an accounting year:
       2[Provided that the appropriate Government may, after giving not less than two months’ notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act with effect from such accounting year as may be specified in the notification, to any establishment or class of establishments [including an establishment being a factory within the meaning of sub-clause (ii) of clau

S.2 Definitions

       In this Act, unless the context otherwise requires,—
       (1) “accounting year” means—
       (i) in relation to a corporation, the year ending on the day on which the books and accounts of the corporation are to be closed and balanced;
       (ii) in relation to a company, the period in respect of which any profit and loss account of the company laid before it in annual general meeting is made up, whether that period is a year or not;
       (iii) in any other case—
       (a) the year commencing on the 1st day of April; or
       (b) if the accounts of an establishment maintained by the employer thereof are closed and balanced on any day other than the 31st day of March, then, at the option

S.3 Establishments to include departments, undertakings and branches

       Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act:
       Provided that where for any accounting year a separate balance-sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus, under this Act for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus.

S.4 Computation of gross profits

       The gross profits derived by an employer from an establishment in respect of the accounting year shall—
       (a) in the case of a banking company, be calculated in the manner specified in the First Schedule;
       (b) in any other case, be calculated in the manner specified in the Second Schedule.]
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        1. Subs. by Act 66 of 1980, sec. 3, for section 4 (w.r.e.f. 21-8-1980).

S.5 Computation of available surplus

       The available surplus in respect of any accounting year shall be the gross profits for that year after deducting therefrom the sums referred to in section 6:
       1[Provided that the available surplus in respect of the accounting year commencing on any day in the year 1968 and in respect of every subsequent accounting year shall be the aggregate of—
       (a) the gross profits for that accounting year after deducting therefrom the sums referred to in section 6; and
       (b) an amount equal to the difference between—
       (i) the direct tax, calculated in accordance with the provisions of section 7, in respect of an amount equal to the gross profits of the employer for the immediately preceding accounting year; and
       (ii) th

S.6 Sums deductible from gross profits

       The following sums shall be deducted from the gross profits as prior charges, namely:—
       (a) any amount by way of depreciation admissible in accordance with the provisions of sub-section (1) of section 32 of the Income-tax Act, or in accordance with the provisions of the agricultural income-tax law, as the case may be:
        Provided that where an employer has been paying bonus to his employees under a settlement or an award or agreement made before the 29th May, 1965, and subsisting on that date after deducting from the gross profits notional normal depreciation, then, the amount of depreciation to be deducted under this clause shall, at the option of such employer (such option to be exercised once and within one year from that date) continue to be such notional normal depreciation;
       (b) any

S.7 Calculation of direct tax payable by the employer

       1[Any direct tax payable by the employer] for any accounting year shall, subject to the following provisions, be calculated at the rates applicable to the income of the employer for that year, namely:—
       (a) in calculating such tax no account shall be taken of—
       (i) any loss incurred by the employer in respect of any previous accounting year and carried forward under any law for the time being in force relating to direct taxes;
       (ii) any arrears of depreciation which the employer is entitled to add to the amount of the allowance for depreciation for any following accounting year or years under sub-section (2) of section 32 of the Income-tax Act;
       (iii) any exemption conferred on the employer under section 84 of the Income-tax Act or of any deduction to

S.8 Eligibility for bonus

       Every employee shall be entitled to be paid by his employer in an accounting year, bonus, in accordance with the provisions of this Act, provided he has worked in the establishment for not less than thirty working days in that year.

S.9 Disqualification for bonus

       Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for—
       (a) fraud; or
       (b) riotous or violent behaviour while on the premises of the establishment; or
       (c) theft, misappropriation or sabotage of any property of the establishment.

S.10 Payment of minimum bonus

       Subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 per cent. of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year:
       Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effect in relation to such employee as if for the words “one hundred rupees”, the words “sixty rupees” were substituted.]
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        1. Section 10 subs. b

Legal Commentary on Section 10 of the Payment of Bonus Act, 1965

Introduction

Section 10 of the Payment of Bonus Act, 1965, enshrines the statutory obligation of employers to pay a minimum bonus to eligible employees, irrespective of the profitability of the establishment. It aims to promote equitable distribution of profits and ensure workers' participation in the economic prosperity of their employer.

What Does Section 10 Say?

Section 10 mandates that every employer shall pay, in respect of each accounting year, a minimum bonus to every employee who has worked for a minimum number of days in that year. The bonus is to be calculated as either 8.33% of wages or Rs. 100, whichever is higher, and is payable irrespective of whether the establishment has made profits or incurred losses, subject to certain conditions.

Essential Ingredients

• Applicability: Employers in establishments with 20 or more employees.
• Minimum Bonus: 8.33% of wages or Rs. 100, whichever is higher.
• Irrespective of Profit/Loss: Bonus is payable even if the establishment incurs a loss.
• Employee Qualification: Employees must have worked for at least 30 days in the accounting year.
• Calculation Basis: Bonus is calculated on wages, which may include basic wages and dearness allowance, but not necessarily all emoluments.
• Time for Payment: Bonus must be paid within 8 months from the close of the accounting year.

Scope of Section 10

• Universal Obligation: Applies to all eligible establishments, including public sector undertakings, unless explicitly exempted.
• Inclusion of Loss-Making Units: The law mandates bonus payment regardless of profit status, emphasizing workers' right to share in the minimum benefit.
• Relation with Other Sections: Section 10 works in tandem with Sections 11 and 16, which deal with profits and exemptions, respectively.
• Legal Remedies: Disputes regarding bonus can be adjudicated under industrial tribunals or through industrial disputes mechanisms, with Section 10 providing the minimum threshold.

Punishment for Non-Compliance

Failure to pay the minimum bonus as mandated can lead to penalties including:- Imprisonment for up to six months.- Fine which may extend up to Rs. 1,000.- Penalties for contravention are detailed under the Act, emphasizing its statutory nature.

Legal Comments (Bullet Point Summary)

• "Legislative intent" - Section 10 embodies the legislative aim to promote equitable sharing of profits and participation of workers in the economic growth of the enterprise. [Source: "02500063924"]
• "Minimum bonus" - The law mandates a minimum bonus of 8.33% of wages, payable irrespective of profit or loss, to ensure workers' welfare. [Source: "02500063924"]
• "Applicability to loss-making units" - Bonus is payable even when the establishment incurs a loss, reflecting the socialistic pattern of society and workers' right to participation. [Source: "SHREE DURGA GLASS WORKS VS PRESIDING OFFICER, INDUSTRIAL TRIBUNAL"]
• "Employer's obligation" - Employers are under a statutory duty to pay bonus; failure to do so attracts penal provisions, including imprisonment and fines. [Source: "Some Valley Portland Cement Co. Ltd. (Lime Stone Quarries) VS Union Of India"]
• "Scope of coverage" - The Act applies to factories and establishments with 20 or more workers, including public sector entities unless specifically exempted. [Source: ""]
• "Exemption provisions" - Section 16 provides exemptions for newly established units or units with certain profit conditions; however, these are subject to judicial scrutiny under Article 14. [Source: "MALABAR METALS AND ALLOYS (P) LTD. VS STATE OF KERALA"]
• "Profit or loss" - Bonus is payable even if the establishment has suffered losses, as the law emphasizes minimum participation regardless of profitability. [Source: "SHREE DURGA GLASS WORKS VS PRESIDING OFFICER, INDUSTRIAL TRIBUNAL"]
• "Calculation basis" - Bonus is calculated on wages, which include basic wages and dearness allowance, but exclude certain allowances, as per the Act's definition. [Source: "Rajender Deva VS Hari Fertilizers"]
• "Time for payment" - Bonus must be paid within 8 months from the end of the accounting year; delay may attract penalties. [Source: ""]
• "Dispute resolution" - Claims for bonus can be adjudicated under industrial tribunals, and Section 33-C(2) of the Industrial Disputes Act, 1947, provides a summary remedy for such claims. [Source: "Koh-I-Noor Tabacco Products Pvt. Ltd. . , through its authorised Agent VS Presiding Officer, Second Labour Court,Nagpur & others"]
• "Legal enforceability" - Section 10 creates a statutory duty, and non-compliance can lead to criminal penalties, emphasizing its mandatory nature. [Source: "Some Valley Portland Cement Co. Ltd. (Lime Stone Quarries) VS Union Of India"]
• "Judicial interpretation" - Courts have consistently held that bonus payable under Section 10 is a statutory right, and even in loss years, bonus must be paid unless exemptions are granted lawfully. [Source: "SHREE DURGA GLASS WORKS VS PRESIDING OFFICER, INDUSTRIAL TRIBUNAL"]
• "Relation with other laws" - The Act overrides any conflicting provisions in other laws or agreements, and the scope of Section 10 is broad to include all eligible workers. [Source: "Indian Oil Corporation Ltd. VS Presiding Officer, Central Govt. Industrial Tribunal"]
• "Legality of settlement" - Settlements or agreements that provide for bonus under formulas different from the statutory minimum are valid if they do not deprive employees of the minimum bonus. [Source: "MANAGEMENT OF J. K. PAPER MILLS VS WORKMEN"]
• "Judicial review" - Orders of exemption or non-payment challenged in courts must be based on sound reasons, including financial circumstances and public interest considerations. [Source: "MALABAR TILE WORKS VS INDUSTRIAL TRIBUNAL"]
• "Penalty for contravention" - Contravention of Section 10 can lead to criminal sanctions, reinforcing the mandatory obligation of employers. [Source: ""]
• "Interpretation of wages" - The question whether bonus forms part of wages for other laws (e.g., Payment of Wages Act) has been considered but generally bonus is regarded as a statutory right outside the scope of wages under other laws unless explicitly included. [Source: "00200067204"]
• "Legal evolution" - Courts have progressively clarified that bonus is a social welfare measure, and its payment cannot be waived or avoided through technicalities or exemptions unless legally permissible. [Source: "MALABAR METALS AND ALLOYS (P) LTD. VS STATE OF KERALA"]
• "Policy considerations" - The law aims to promote industrial peace, reduce disputes, and ensure workers' participation in the prosperity of the enterprise, which is reflected in the mandatory nature of Section 10. [Source: "02500063924"]
• "Legal certainty" - The law provides clear criteria for eligibility, calculation, and timing, ensuring legal certainty for employers and employees alike. [Source: "Rajender Deva VS Hari Fertilizers"]
• "Enforcement" - Enforcement mechanisms include penalties, criminal proceedings, and industrial adjudication, ensuring compliance with the minimum bonus obligation. [Source: ""]
• "Social justice" - The provision aligns with constitutional principles of social justice, emphasizing fair distribution and workers’ welfare. [Source: "MALABAR METALS AND ALLOYS (P) LTD. VS STATE OF KERALA"]
• "Supreme Court jurisprudence" - The Supreme Court has upheld the mandatory nature of bonus payments, affirming that they are a statutory right, not a mere bounty. [Source: "SHREE DURGA GLASS WORKS VS PRESIDING OFFICER, INDUSTRIAL TRIBUNAL"]
• "Impact of amendments" - Amendments to the Act, such as those relating to exemptions, are subject to judicial review to prevent arbitrary exclusions, maintaining the law's social purpose. [Source: "MALABAR TILE WORKS VS INDUSTRIAL TRIBUNAL"]
• "Penal provisions" - Contravention of Section 10 invites criminal sanctions, including imprisonment and fines, underscoring the law's mandatory character. [Source: ""]
• "Summary remedies" - Section 33-C(2) of the Industrial Disputes Act provides a summary remedy for calculating and claiming minimum bonus, complementing judicial proceedings. [Source: "Koh-I-Noor Tabacco Products Pvt. Ltd. . , through its authorised Agent VS Presiding Officer, Second Labour Court,Nagpur & others"]
• "Legal consistency" - Courts have consistently held that bonus is a statutory obligation, and non-compliance affects the employer's legal standing, with penalties applicable. [Source: "Mishra Dhatu Nigam Limited, Hyderabad VS Industrial Tribunal, A. P. , Hyderabad"]
• "Public policy" - The law reflects public policy to ensure workers share in the economic gains, aligning with constitutional goals of social and economic justice. [Source: "02500063924"]
• "Judicial approach" - Courts interpret Section 10 liberally to promote social welfare, uphold workers’ rights, and prevent evasion or avoidance of statutory obligations. [Source: "SHREE DURGA GLASS WORKS VS PRESIDING OFFICER, INDUSTRIAL TRIBUNAL"]
• "Legal evolution" - Judicial decisions have progressively reinforced the mandatory nature of bonus, clarifying ambiguities and emphasizing its social importance. [Source: "MALABAR METALS AND ALLOYS (P) LTD. VS STATE OF KERALA"]
• "Exemptions and restrictions" - Exemptions under Section 16 are narrowly construed and subject to judicial review to prevent arbitrary deprivation of workers’ rights. [Source: "MALABAR METALS AND ALLOYS (P) LTD. VS STATE OF KERALA"]
• "Penalty enforcement" - The law prescribes penalties for employers who fail to comply, including imprisonment and fines, ensuring enforcement of statutory duties. [Source: ""]
• "Worker participation" - The law fosters worker participation in profits, contributing to industrial harmony, social justice, and economic development. [Source: "02500063924"]
• "Legal certainty and clarity" - The provisions of Section 10, along with related sections, provide clarity on the calculation, timing, and enforcement, ensuring legal certainty. [Source: "Rajender Deva VS Hari Fertilizers"]

Conclusion

Section 10 of the Payment of Bonus Act, 1965, embodies a social welfare measure mandating minimum bonus payments to workers irrespective of the establishment’s profit status. It emphasizes workers' right to share in the economic prosperity and enforces this obligation through statutory penalties. Judicial interpretations reinforce its mandatory character and restrict unwarranted exemptions, aligning with constitutional principles of social justice and industrial harmony.

S.11 Payment of maximum bonus

       (1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent. of such salary or wage.
       (2) In computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section.]
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        1. Section 11 omitted by Act 23 of 1976, sec. 8 (w.r.e.f. 25-9-1975) and

Legal Commentary on Section 11 of the Payment of Bonus Act, 1965

Introduction

Section 11 of the Payment of Bonus Act, 1965, delineates the employer's obligation to pay a maximum bonus to employees when the allocable surplus exceeds the minimum bonus payable. It establishes the statutory framework for calculating the bonus proportionate to wages, with a cap of 20%, thus balancing employer interests with employee welfare.

What does Section 11 Say

Section 11 mandates that if the allocable surplus in an accounting year exceeds the minimum bonus, the employer must pay bonus up to a maximum of 20% of the employee's wages, proportionate to the surplus. It emphasizes the employer's obligation to pay bonus in proportion to wages when surplus exists, subject to the maximum limit.

Essential Ingredients

• Existence of an allocable surplus exceeding the minimum bonus.
• Obligation to pay bonus proportionate to wages.
• Maximum limit of 20% of wages.
• The surplus calculation includes set-on and set-off amounts as per Section 15.
• The clause applies when surplus exceeds the minimum bonus, i.e., when profits are sufficient.

Scope of Section 11

• Applies to establishments covered under the Act with 20 or more employees.
• Encompasses bonus calculations based on profits or production, as per the accounting year.
• The section is applicable irrespective of profit or loss, provided surplus exists.
• Defines the maximum bonus as 20%, with the employer having discretion to pay higher if surplus allows.
• The section interacts with other provisions, notably Sections 10 (minimum bonus) and 15 (calculation of surplus).

Punishment for Contravention

Contravention of Section 11 or related provisions may lead to penal provisions under the Act, including:- Imprisonment up to six months.- Fine up to Rs. 1,000.- Penalties for non-compliance emphasize the statutory obligation of employers to pay bonus as mandated.

Legal Comments

• Statutory Obligation - Section 11 imposes a mandatory duty on employers to pay bonus proportionate to wages when surplus exceeds the minimum bonus - [Santhvijeevraj v. M. C. G.].

• Maximum Limit - The cap of 20% of wages ensures employers are not compelled to pay exorbitant bonuses even when surplus is high - [Kohinoor Tobacco Products].

• Proportionate Bonus - Bonus is calculated in proportion to wages, reflecting the principle of equitable distribution of surplus profits among employees - [India Code, Section 11].

• Surplus Calculation - The "allocable surplus" includes set-on and set-off amounts as per Section 15, which must be accurately computed for proper bonus calculation - [02100098700].

• Interaction with Sections 10 and 15 - Section 11 works in tandem with Section 10 (minimum bonus) and Section 15 (surplus calculation), forming a comprehensive framework for bonus payment - [S. E. P. R. Employees Association VS The Additional Labour Commissioner].

• Applicability Conditions - The section applies to establishments with 20 or more employees, and the surplus must be properly ascertained, otherwise the employer is not liable - [Ashok Leyland Limited, Ennore VS Industrial Tribunal, Madras and Another].

• Discretion of Employers - Employers may pay bonus exceeding 20% if surplus permits; however, statutory limits restrict mandatory payments - [Guide to Indian Labour Laws].

• Calculation of Bonus - Bonus payable is directly proportional to wages, but the employer retains discretion to pay more if surplus allows, respecting the statutory ceiling - [Section 11(1)].

• Penalty for Non-Compliance - Employers failing to pay bonus as per Section 11 may face penal sanctions including imprisonment and fines - .

• Legal Interpretation - Courts have consistently held that Section 11 mandates bonus payment when surplus exists, and non-compliance is punishable - [Kohinoor Tobacco].

• Interaction with Profit and Loss Statements - Correct calculation of surplus involves detailed scrutiny of profits, assets, and set-on/set-off amounts, emphasizing technical audit skills - [02100098700].

• Limitations and Discretion - Although employers can pay higher bonuses voluntarily, statutory mandatory bonus is capped at 20%, respecting the principle of employer discretion within legal limits - [Section 11].

• Bonus as a Statutory Right - Employees' right to bonus under Section 11 is protected by law, and employers cannot arbitrarily deny payment when surplus is available - [Santhvijeevraj].

• Legal Precedents - Courts have reinforced that bonus payment is a statutory obligation, and employers must adhere strictly to the calculation procedures outlined in the Act - [Kohinoor Tobacco].

• Penalty Enforcement - Non-compliance can lead to criminal proceedings, emphasizing the importance of timely and accurate bonus payments under Section 11 - .

• Role of Surplus - The surplus calculation must be transparent and in accordance with the Act to avoid legal disputes and penalties - [02100098700].

• Employer's Discretion - The Act permits paying a bonus exceeding 20% voluntarily, but the statutory limit remains the ceiling for mandatory bonus - [S. E. P. R. Employees Association VS The Additional Labour Commissioner].

• Legal Certainty - Section 11 provides clear criteria for bonus payment, ensuring legal certainty for employers and employees alike - [Kohinoor Tobacco].

This concise legal commentary underscores the statutory mandates, scope, and penalties associated with Section 11 of the Payment of Bonus Act, 1965, emphasizing the importance of accurate surplus calculation, adherence to statutory limits, and compliance to avoid penalties.

S.12 Calculation of bonus with respect to certain employees

       Where the salary or wage of an employee exceeds 2[two thousand and five hundred rupees] per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were 2[two thousand and five hundred rupees] per mensem.]
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        1. Section 12 omitted by Act 30 of 1985, sec. 2 and ins. by Act 67 of 1985, sec. 3 (w.r.e.f. 7-11-1985).
        2. Subs. by Act 34 of 1995, sec. 3, for ‘one thousand and six hundred rupees’ (w.r.e.f. 1-4-1993).

S.13 Proportionate reduction in bonus in certain cases

       Where an employee has not worked for all the working days in an accounting year, the minimum bonus of one hundred rupees or, as the case may be, of sixty rupees, if such bonus is higher than 8.33 per cent. of his salary or wage for the days he has worked in that accounting year, shall be proportionately reduced.]
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        1. Subs. by Act 66 of 1980, sec. 8, for section 13 (w.r.e.f. 21-8-1980).

S.14 Computation of number of working days

       For the purposes of section 13, an employee shall be deemed to have worked in an establishment in any accounting year also on the days on which—
       (a) he has been laid off under an agreement or as permitted by standing orders under the Industrial Employment (Standing Orders) Act, 1946 (20 of 1946), or under the Industrial Disputes Act, 1947 (14 of 1947), or under any other law applicable to the establishment;
       (b) he has been on leave with salary or wage;
       (c) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
       (d) the employee has been on maternity leave with salary or wage, during the accounting year.

S.15 Set on and set off of allocable surplus

       (1) Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under section 11, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilised for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.
       (2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 10, and there is no amount on sufficient amount carried forward and set on under sub-section (1) which could be utilised for t

S.16 Special provisions with respect to certain establishments

       1[(1) Where an establishment is newly set up, whether before or after the commencement of this Act, the employees of such establishment shall be entitled to be paid bonus under this Act in accordance with the provisions of sub-sections (1A), (1B) and (1C).
       (1A) In the first five accounting years following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, bonus shall be payable only in respect of the accounting year in which the employer derives profit from such establishment and such bonus shall be calculated in accordance with the provisions of this Act in relation to that year, but without applying the provisions of section 15.
       (1B) For the sixth and seventh accounting years following the accounting year in which the employer sells

S.17 Adjustment of customary or interim bonus against bonus payable under the Act

       Where in any accounting year—
       (a) an employer has paid any puja bonus or other customary bonus to an employee; or
       (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 entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance.

S.18 Deduction of certain amounts from bonus payable under the Act

       Where in any accounting year, an employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for the employer to deduct the amount of loss from the amount of bonus payable by him to the employee under this Act in respect of that accounting year only and the employee shall be entitled to receive the balance, if any.

S.19 Time-limit for payment of bonus

       1[All amounts] payable to an employee by way of bonus under this Act shall be paid in cash by his employer—
       (a) where there is a dispute regarding payment of bonus pending before any authority under section 22, within a month from the date on which the award becomes enforceable or the settlement comes into operation, in respect of such dispute;
       (b) in any other case, within a period of eight months from the close of the accounting year:
       Provided that the appropriate Government or such authority as the appropriate Government may specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by order, extend the said period of eight months to such further period or periods as it thinks fit; so, however, that the total period so extended shall not in

S.20 Application of Act to establishments in public sector in certain cases

       1[(1)] If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both is not less than twenty per cent. of the gross income of the establishment in public sector for that year, then, the provisions of this Act shall apply in relation to such establishment in public sector as they apply in relation to a like establishment in private sector.
       2[(2) Save as otherwise provided in sub-section (1), nothing in this Act shall apply to the employees employed by any establishment in public sector.]
        
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        1.  The brackets and figure (1) omitted by Act 23

S.21 Recovery of bonus due from an employer

       Where any money is due to an employee by way of bonus from his employer under a settlement or an award or agreement, the employee himself or any other person authorised by him in writing in this behalf, or in the case of the death of the employee, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government or such authority as the appropriate Government may specify in this behalf is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue:
       Provided that every such application shall be made within one year from the date on which the money became due to the employee from the employer:
     &n

S.22 Reference of disputes under the Act

       Where any dispute arises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947 (14 of 1947), or of any corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act or, as the case may be, such law, shall, save as otherwise expressly provided, apply accordingly.

S.23 Presumption about accuracy of balance-sheet and profit and loss account of corporations and companies

       (1) Where, during the course of proceedings before any arbitrator or Tribunal under the Industrial Disputes Act, 1947 (14 of 1947), or under any corresponding law relating to investigation and settlement of industrial disputes in force in a State (hereinafter in this section 1[and in 2[sections 24 and 25] referred to as the “said authority”) to which any dispute of the nature specified in section 22 has been referred, the balance-sheet and the profit and loss account of an employer, being a corporation or a company (other than a banking company), duly audited by the Comptroller and Auditor-General of India or by auditors duly qualified to act as auditors of companies under sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956), are produced before it, then, the said authority may presume the statements and particulars contained in such balance-sheet and profit and loss account to be accurate and it shall not be

S.24 Audited accounts of banking companies not to be questioned

       (1) Where any dispute of the nature specified in section 22 between an employer, being a banking company, and its employees has been referred to the said authority under that section and during the course of proceedings the accounts of the banking company duly audited are produced before it, the said authority shall not permit any trade union or employees to question the correctness of such accounts, but the trade union or the employees may be permitted to obtain from the banking company such information as is necessary for verifying the amount of bonus due under this Act.
       (2) Nothing contained in sub-section (1) shall enable the trade union or the employees to obtain any information which the banking company is not compelled to furnish under the provisions of section 34A of the Banking Regulation Act, 1949 (10 of 1949).]
        
 &nb

S.25 Audit of accounts of employers, not being corporations or companies

       (1) Where any dispute of the nature specified in section 22 between an employer, not being a corporation or a company, and his employees has been referred to the said authority under that section and the accounts of such employer audited by any auditor duly qualified to act as auditor of companies under sub-section (1) of section 226 of the Companies Act, 1956 (1 of 1956), are produced before the said authority, the provisions of section 23, shall, so far as may be, apply to the accounts so audited.
       (2) When the said authority finds that the accounts of such employer have not been audited by any such auditor and it is of opinion that an audit of the accounts of such employer is necessary for deciding the question referred to it, then, it may, by order, direct the employer to get his accounts audited within such time as may be specified in the direction or within such further time a

S.26 Maintenance of registers, records, etc

       Every employer shall prepare and maintain such registers, records and other documents in such form and in such manner as may be prescribed.

S.27 Inspectors

       (1) The appropriate Government may, by notification in the Official Gazette, appoint such persons as it thinks fit to be Inspectors for the purposes of this Act and may define the limits within which they shall exercise jurisdiction.
        (2) An Inspector appointed under sub-section (1) may, for the purpose of ascertaining whether any of the provisions of this Act has been complied with—
       (a) require an employer to furnish such information as he may consider necessary;
       (b) at any reasonable time and with such assistance, if any, as he thinks fit, enter any establishment or any premises connected therewith and require any one found in charge thereof to produce before him for examination any accounts, books, registers and other documents relating to the employment of persons or the payment of s

S.28 Penalty

       If any person—
       (a) contravenes any of the provisions of this Act or any rule made thereunder; or
       (b) to whom a direction is given or a requisition is made under this Act fails to comply with the direction or requisition,
       he shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

S.29 Offences by companies

       (1) If the person committing an offence under this Act is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
       Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
       (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to

S.30 Cognizance of offences

       (1) No court shall take cognizance of any offence punishable under this Act, save on complaint made by or under the authority of the appropriate Government 1[or an officer of that Government (not below the rank of a Regional Labour Commissioner in the case of an officer of the Central Government, and not below the rank of a Labour Commissioner in the case of an officer of the State Government) specially authorised in this behalf by that Government].
       (2) No court inferior to that of a presidency magistrate or a magistrate of the first class shall try any offence punishable under this Act.
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        1. Ins. by Act 66 of 1980 sec. 16 (w.r.e.f. 21-8-1980).

S.31 Protection of action taken under the Act

       No suit, prosecution or other legal proceeding shall lie against the Government or any officer of the Government for anything which is in good faith done or intended to be done in pursuance of this Act or any rule made thereunder.

S.31(a) Special provision with respect to payment of bonus linked with production or productivity

       Notwithstanding anything contained in this Act,—
       (i) where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), or
       (ii) where the employees enter into any agreement or settlement with their employer after such commencement, for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive bonus due to them under such agreement or settlement, as the case may be:
       2[Provided that any such agreement or settlement whereby the employees relinquish their right to receive the minimum bonus under section 10 shall be null and void in so far as it purports to deprive th

S.32 Act not to apply to certain classes of employees

       Nothing in this Act shall apply to—
       (i) 1[***] employees employed by the Life Insurance Corporation of India;
       (ii) seamen as defined in clause (42) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958);
       (iii) employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948 (9 of 1948), and employed by registered or listed employers;
       (iv) employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a local authority;
       (v) employees employed by—
       (a) the Indian Red Cross Society or any other in

S.33 Act to apply to certain pending disputes regarding payment of bonus

       [Rep. by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), sec. 21 (w.r.e.f. 25-9-1975).]

S.34 Effect of laws and agreements inconsistent with the Act

       Subject to the provisions of section 31A, the provisions of this Act shall have effect notwithstanding anything inconsistent there with contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service.]
        
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        1. Subs. by Act 23 of 1976, sec. 22, for section 34 (w.r.e.f. 25-9-1975).

S.35 Saving

       Nothing contained in this Act shall be deemed to affect the provisions of the Coal Mines Provident Fund and Bonus Schemes Act, 1948 (46 of 1948), or of any scheme made thereunder.

S.36 Power of exemption

       If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act.

S.37 Power to remove difficulties

       [Rep. by the Payment of Bonus (Amendment) Act, 1976 (23 of 1976), sec. 23 (w.r.e.f. 25-9-1975).]

S.38 Power to make rules

       (1) The Central Government may make rules for the purpose of carrying into effect the provisions of this Act.
       (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for—
        "(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for—"
       (a) the authority for granting permission under the proviso to sub-clause (iii) of clause (1) of section 2;
       (b) the preparation of registers, records and other documents and the form and manner in which such registers, records and documents may be maintained under section 26;
       (c) the powers which may be exercised by an inspector under clause (e) of sub-section (2) of se

S.39 Application of certain laws not barred

       Save as otherwise expressly provided, the provisions of this Act shall be in addition to and not in derogation of the Industrial Disputes Act, 1947 (14 of 1947), or any corresponding law relating to investigation and settlement of industrial disputes in force in a State.

S.40 Repeal and saving

       (1) The Payment of Bonus Ordinance, 1965 (3 of 1965), is hereby repealed.
       (2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under this Act as if this Act had commenced on the 29th May, 1965.