1994 (1) TMI 281 - SC - Indian Laws

Supreme Court Upholds Workmen's Customary Bonus Entitlement

The Supreme Court reinstated the Tribunal's decision, affirming the entitlement of workmen to customary bonus at a rate of 10.5% of annual salary or wages ... - Issues Involved:1. Entitlement to customary bonus for the years 1974 to 1977.2. Determination of the rate of customary bonus.3. Distinction between customary bonus and bonus under the Payment of Bonus Act, 1965.4. Validity of the Tribunal's award and subsequent judgments by the High Court.Detailed Analysis:1. Entitlement to Customary Bonus for the Years 1974 to 1977:The primary issue was whether the workmen were entitled to customary bonus for the years 1974 to 1977. The Tribunal found that the bonus had been paid since 1959, not based on profit calculations, and usually before the Puja festival. The workmen argued that this practice had ripened into a customary bonus. The High Court, however, set aside the Tribunal's award, stating the workmen failed to establish entitlement to customary bonus. The Supreme Court, upon review, reinstated the Tribunal's decision, affirming the entitlement based on long-standing practice.2. Determination of the Rate of Customary Bonus:The Tribunal determined that the customary bonus should be paid at the rate of 10.5% of the annual salary or wages, based on the historical payment patterns from 1965 to 1973. The Supreme Court upheld this determination, noting that the payment at a uniform rate of 10.5% over nine years was sufficiently long to infer a customary practice.3. Distinction Between Customary Bonus and Bonus Under the Payment of Bonus Act, 1965:The Supreme Court highlighted the distinction between customary bonus and statutory bonus under the Payment of Bonus Act, 1965. Customary bonus is not linked to profit calculations and is based on long-standing practice or tradition. The Court referred to previous judgments, including Graham Trading Co. v. Workmen and Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai, to emphasize that customary bonus can be inferred from continuous, uniform payments over a significant period, even if not linked to profits. The reference to Section 34(3) of the Payment of Bonus Act in settlements was deemed a cautious measure to exclude statutory liability but did not alter the nature of the payments as customary bonus.4. Validity of the Tribunal's Award and Subsequent Judgments by the High Court:The Tribunal's award was initially set aside by the High Court, which argued that the payments were not uniform and were linked to the Payment of Bonus Act. The Supreme Court, however, found that the Tribunal's inference of customary bonus was justified based on the evidence of continuous and uniform payments from 1965 to 1973. The Supreme Court concluded that the High Court erred in setting aside the Tribunal's award, reinstating the Tribunal's decision that the workmen were entitled to customary bonus at the rate of 10.5% for the years 1974 to 1977.Conclusion:The Supreme Court allowed the appeal, set aside the judgments of the Division Bench and the Single Judge of the High Court, and restored the Tribunal's award. The workmen were entitled to customary bonus at the rate of 10.5% of the annual salary or wages for the years 1974 to 1977. The parties were left to bear their own costs.