http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: THE MANAGEMENT OF TOCKLAI EXPERIMENTAL STATIONREPRESENTED BY

       Vs.

RESPONDENT: THE WORKMEN AND ANOTHER(And connected appeal)

DATE OF JUDGMENT: 24/11/1961

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. KAPUR, J.L. SHAH, J.C.

CITATION:  1962 AIR  759            1962 SCR  Supl. (1) 545  CITATOR INFO :  D          1965 SC   1  (11,12,19)

ACT:      Industrial Dispute-Bonus-Puja  bonus-Basis of the claim-Profit bonue-Housing accommodation-House allowance.

HEADNOTE:      The   appellant,   a   research   institution established  for  the  purpose  of  improving  the quality of  tea, was  managed  by  the  India  Tea Assciation. The employees made claims, inter 558 alia,  for   (1)  free  housing  accommodation  or adequate allowance  in lieu thereof, and (2) grant of bonus.  The tribunal,  to which  the matter was referred  by   the   Government   considered   the financial position  of the  appellant and  came to the  conclusion   that  the   demand  for  housing accommodation was  not justified and that the ends of  justice  would  be  met  if  a  flat  rate  of enhancement of  Rs. 20/-  was awarded.  As regards the demand  for bonus  the tribunal  felt that  it would be  inexpedient to  apply the  formula which governed the decision of industrial claims for the payment of  bonus, but made an award directing the appellant to  pay puja  bonus to  its employees on the ground  that what  was described as puja bonus was being  given to  workmen  who  were  similarly situated as  also to the clarical staff working at the Indian  Tea Association  at Calcutta  and that refusing the workmen’s claim for bonus against the appellant would amount to discrimination. ^      Held, that  a demand  for  the  provision  of housing   accommodation    can    be    reasonably entertained where  it appeared  that the financial position of  the  employer  can  bear  the  burden involved,  that   under   the   present   economic conditions  prevailing   in   the   industry   the responsibility for providing housing accommodation

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

cannot be  placed solely  on the  shoulders of the employer, and that in due course the problem would have to  be tackled by the industry in cooperation with the State, which would have to bear a part of that responsibility.      The Patna  Electric Supply Co., Ltd. Patna v. The Patna  Electric Supply  Workers’ Union, [1959] Supp. 2. S.C. R. 761, relied on.      Held, further,  that before  a claim  for the grant of  puja bonus could be sustained it must be shown (1)  that it  was consistently  paid by  the employer to his employees from year to year at the same rate,  and (2)  that it had been paid even in years of  loss and  that it had no relation to the profit made  by the  employer during  the relevant year.      A claim  for puja bonus could also be made on the ground  that the  payment of such bonus was an implied term in the contract of employment.      The Graham  Trading Co.  (Indian) Ltd. v. Its Workmen, [1960]  1 S.C.R.  107 and  M/s.  Ispahani Ltd.,  Calcatta   v.  Ispahani  Employees’  Union, [1960] 1 S.C.R. 24, followed.      Industrial profit  bonus which is governed by the application  of the well known formula, cannot be awarded  unless a  specific year  for which the claim is  made is indicated and it is alleged that there is  available surplus  in the  hands of  the employer for that year. 559

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos. 459 and 460 of 1960      Appeals by special leave from the award dated March 10, 1959, of the Industrial Tribunal, Assam, in Reference No. 16 of 1958.      M. C.  Setalvad, Attorney  General for India, B. Sen,  S. N.  Mukherji and  B. N. Ghosh, for the management appellant  (in C. A. No. 459 of 60) and the respondent (in C. A. No. 460 of 1960).      S. T.  Desai, A. K. Dutt and Janardan Sharma, for the  workmen respondents  (in C. A. No. 459 of 60) and the appellants (in C. A. No. 460 of 1960).      1961. November  24. The Judgment of the Court was delivered by      GAJENDRAGADKAR, J.-Civil Appeals Nos. 459 and 460 of  1960 are  cross appeals and they arise out of an award pronounced by the Industrial Tribunal, Assam, in  an industrial  dispute referred  by the Assam  Government   for  its   adjudication.  This industrial  dispute   was   raised   against   the management of  the  Tocklai  Experimental  Station (hereafter called the Station) by its workmen. Six out of  the demands made by the workmen formed the subject  matter   of  reference.  In  the  present appeals we  are  concerned  with  three  of  them. Demand No.  1 (a)  was that  the employees’ junior staff of  the Station  should be  given pension in lieu of  the existing practice of paying gratuity. This demand has been rejected be the tribunal. The other demand  made by  the employees  was No. 3(b) and it had reference to the claim for free housing

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

accommodation  or   adequate  allowance   in  lieu thereof. This demand has been partially allowed by the  tribunal  and  it  has  directed  that  house allowance in each case shall be raised at the flat rate  of  Rs.  20/-  instead  of  Rs.  101/-.  The decision of  the tribunal  in respect of these two demands did  not satisfy  the workmen  and  so  by special leave  of this Court they have filed Civil Appeal No. 460 of 1960. The demand of the 560 junior staff  for bonus  which was resisted by the Station  has   been  partially   allowed  by   the tribunal. It  has ordered  that the  Station shall give punja bonus at the same rate as the employees working for the Indian Tea Association at Calcutta are getting.  This part of the award is challenged by the  Station in  its appeal by special leave by Civil Appeal  No. 459 of 1960. That is how the two cross-appeals arise.      We will  deal first with the Station’s Appeal in respect  of bonus. The learned Attorney-General contends that  in making  the demand for bonus the workmen  have   entirely  misconceived   the  true position of  the industrial  law on the point, and he  argues  that  the  Assam  Government  was  not justified in  making the  reference in the form it has been  made and  the tribunal was not justified in making the award in the manner it has done. The workmen made  their  demand  for  bonus  in  these words: "The  Union requests  the  introduction  of bonus for  the  Tocklai  Staff  on  the  following grounds". Then  follow six  grounds. It  was urged that the Station is an arm of the tea industry and is maintained  by the  members of  the I.T.A.  who give bonus  to their  employees, that  the Station exists and  works for  the advancement  of the tea industry and increasing its profits and thus is an industry, that  the I.T.A.  employees at  Calcutta office are  given bonus, that the employees of the Bengal Chamber of Commerce receive bonus, that the employees of  Shamshernagar and Tulsipara branches of this  very Station  used to  be given  bonus so long as  these branches  were functioning and that the   personnel   of   the   scientific   research laboratories attached  to many industrial concerns receive bonus,  and so  the workmen in the present case were entitled to make a claim in that behalf. In appreciating  this claim  it  is  necessary  to state that  the Station  is a research institution established by  the Indian Tea Association to make research for  the purpose of improving the quality of 561 tea and  its production  and the  said Station  is managed  by   the  parent   Association   and   is maintained by  means  of  voluntary  subscriptions from members  of  the  said  Association.  Broadly stated the  ground on  which the  workmen  claimed bonus was  that the  employees of  the Association were receiving  bonus and  that the  personnel  of scientific   research    laboratories    similarly situated in  other industrial  concerns were  also given bonus.      When the  Assam Government  made the  present reference it  included within  the  scope  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

reference this claim of bonus along with the other claims made by the workmen. The issue referred for adjudication on this point was thus framed:           "2(a).  Whether   the  demand   of   the      employees  (Junior   Staff)  for   bonus   is      justified ?  If so,  at what  rate should the      same be paid ?"      The  tribunal   considered  this  demand  and partially allowed it by directing that the workmen should be  paid puja bonus at the same rate as the employees working  in the  I.T.A. at  Calcutta are getting.  In   dealing  with   this  question  the tribunal has  held that the Station is an industry within the  meaning of the Industrial Disputes Act and so  it could not resist the demand made by its workmen on  the ground that it is an academic body devoted  to  research  and  as  such  outside  the purview of  the Act. This position is not disputed before us  by the  Station because it is concluded by a  decision of  this  Court  in  The  Ahmedabad Textile Industry’s  Research  Association  v.  The State of  Bombay (1).  The tribunal  has, however, found in  favour of  the Station  that it would be inexpedient,  if  not  impossible,  to  apply  the formula which  governs the  decision of industrial claims  for  the  payment  of  bonus.  "There  are obvious  difficulties",  says  the  tribunal,  "in applying the  formula laid down by their Lordships of the  Supreme Court  to an  experimental station run 562 by the  Association"; but  it added that "it could not be overlooked that payment of bonus to members of the  experimental staff  is being  made by some companies". Then  the tribunal  referred  to  some instances where  bonus is  paid to workmen who, in the  opinion   of  the  tribunal,  were  similarly situated, and  it  came  to  the  conclusion  that refusing the workmen’s claim for bonus against the Station  would   amount  to   discrimination.  The tribunal then took into account the fact that what is described  as puja  bonus is paid to members of the  staff  of  the  Bengal  Chamber  of  Commerce because it  was admitted before it that the junior staff of  the Bengal  Chamber  of  Commerce  which presumably was also serving the I.T.A. at Calcutta was   receiving    a   fixed    annual    gratuity characterised as puja bonus. The tribunal conceded that the  claim for  this kind  of bonus  "may not directly satisfy  the requirements of law", but it added that  "the fact  that what  was described as puja bonus  was given  at the  sub-stations and is also given  to the  clerical staff  working at the I.T.A. at  Calcutta, supports  the demand  to this extent at  least that  the same  treatment may  be meted out  to them."  It is on this reasoning that the tribunal  ultimately made  the award in favour of the  workmen directing  the Station to pay puja bonus to its employees.      It  would   be  noticed   that   the   demand originally made  by the  workmen appears  to be in the nature  of a demand for bonus which is usually described as  industrial profit  bonus the payment of which  is governed  by the  application of  the well known  formula. Such  a demand  is invariably

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

made, and  has to  be  made,  by  reference  to  a particular  year   because   the   formula   which determines claims  for profit bonus postulates the examination of  the available surplus in the hands of the  employer from  which bonus may be directed to be  paid to  the employees.  A claim for profit bonus cannot 563 be validly  made unless  a specific year for which the claim  is made  is indicated and it is alleged that there  is available  surplus in  the hands of the employer  during that  year. It is unfortunate that this  elementary aspect was overlooked by the workmen when  they made the claim and has not been noticed even  by the Assam Government when it made the reference  in  respect  of  this  claim.  This serious infirmity  in the claim is present even in the award  made by  the tribunal because the award does not  say for  what year  the bonus  should be paid, and  like the  claim made  by the workmen in very general  terms for  the introduction of bonus the award  also  seems  to  make  a  direction  in similar terms  for the  payment of  bonus. In  our opinion, this  is a patent infirmity in the award. Profit bonus, it is hardly necessary to emphasise, can be  awarded only  by reference  to a  relevant year and a claim for such bonus has, therefore, to be made  from year  to year  and has to be settled either amicably  between  the  parties  or,  if  a reference is  made, it  has to  be  determined  by industrial adjudication.  A general  claim for the introduction of  profit bonus  cannot be  made  or entertained in  the form in which it has been done in the present proceedings.      Besides, the  other serious  infirmity in the award is  that when  a claim  for profit bonus was made the  tribunal has  proceeded  to  grant  puja bonus and  that too  solely on the ground that the refusal to  grant the  said claim  would amount to discrimination.  In   our  opinion,  the  approach adopted by  the  tribunal  in  dealing  with  this alternative claim  for puja  bonus which  was  not made  in   the  demand  and  which  had  not  been expressly referred  to the  tribunal  is  entirely erroneous. The  claim for  puja bonus  proceeds on entirely different  considerations. Customary puja bonus undoubtedly  prevails in  many industries in Bengal but  there are  certain tests which have to be applied in 564 determining the  validity of the claim. The amount by of  way of  puja bonus,  it must  be shown, has been consistently  paid by  the  employer  to  his employees from year to year at the same rate, that it has been paid even in years of loss and that it has no relation to the profit made by the employer during the  relevant year.  The course  of conduct spreading over  a reasonably  long period  between the employer  and the  employees in  the matter of payment  of   puja  bonus   is   of   considerable importance in  dealing with the claim of customary puja bonus  [Vide: The  Graham Trading Co. (India) Ltd. v.  Its Workmen  (1)]. A claim for puja bonus can also  be made  in a  proper case of the ground that the  payment of such bonus is an implied term

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

in  the  contract  of  employment  [Vide:  Messrs. Ispahani Ltd.,  Calcutta  v.  Ispahani  Employees’ Union(2). Such  a claim  again  would  necessarily involve  the  consideration  of  several  relevant facts none  of which has been alleged or proved in the present  proceedings. Therefore,  the decision of the tribunal awarding puja bonus to the workmen cannot be  sustained.  Indeed,  in  awarding  puja bonus to  the workmen  the tribunal  has failed to consider that  it was  making out  an entirely new and inconsistent case for the workmen and granting the said  claim without  any proof of the relevant facts which  would support  such a  claim.  It  is rather surprising  that even  when the tribunal by its award  wanted to  grant the  demand  for  puja bonus it  did not think it necessary to clarify at what rate the said bonus was to be paid. The award is absolutely  vague in  that behalf  and that  is another infirmity  in the award. Since that is the only  point  in  Civil  Appeal  No.  459  of  1960 preferred by  the Station  we must  hold that  the appeal succeeds  and must set aside the award made by the tribunal under issue No. 1 (a).      Before we  part with this appeal, however, we ought to add that after special leave was granted 565 to the Station to prefer its appeal it applied for stay of  the award  directing the  payment of puja bonus and  stay  was  granted  by  this  Court  on condition that  the amount of puja bonus should be paid by  the Station  to its  employees  on  their furnishing security  to the  satisfaction  of  the management. Accordingly  the Station  has paid  to its  workmen   puja  bonus  for  three  years.  We suggested to  the learned Attorney General that in case his  appeal were  to succeed  the Station may consider whether  it would  partially  forego  its claim to  recover the amount already paid by it to its workmen,  and  the  learned  Attorney-General, after consulting  his client, has stated before us that the  Station would  forego one-third  of  the total amount paid by it to its employees under the orders of  this Court.  This one-third  amount, we were told,  is in the neighborhood of Rs. 65,000/- The learned  Attorney-General also stated that the balance of two-third amount which it would recover from its employees can be paid by each one of them either by  easy instalments or at the time when he would receive  his gratuity or provident fund; the employee may  exercise his  option in that behalf. It appears that some of the employees who received the said  amount have  left  the  service  of  the Station and  at that time have refunded the amount received by them. The Station would be prepared to give back  to such employees one-third of the said amount. In  our opinion,  the attitude  adopted by the Station  in this  matter is  very fair  and it would relieve  the workmen from their liability to return one-third  of the  total amount received by them in pursuance of the orders of this Court.      That takes us to Civil Appeal No. 460 of 1960 preferred by  the workmen.  Mr. S.  T. Desai,  who argued this  appeal, could not seriously press the workmen’s case against the refusal of the tribunal to allow  their demand  for pension in lieu of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

existing  practice   of  paying   gratuity.  On  a consideration 566 of the  relevant facts  the tribunal  came to  the conclusion that  this demand  was  not  justified, and, in our opinion the conclusion of the tribunal is well founded. Then, as regards the other demand which is  the subject-matter  of  the  appeal  the tribunal has  increased the  house allowance  at a flat rate of Rs. 20/- instead of Rs. 10/- and this increased rate  has been  paid by  the Station  as from the  date when  the award became enforceable. Mr. Desai  contends that  the tribunal should have made   an    award   granting   the   demand   for accommodation or  in the  alternative should  have awarded larger  amount by  way of house allowance. We are  not impressed  by this  argument. A demand for the  provision of housing accommodation can be reasonably entertained  where it  appears that the financial position  of the  employer can  bear the burden involved  in the  said  demand.  Under  the present  economic  conditions  prevailing  in  the industry the  responsibility for providing housing accommodation cannot  reasonably be  placed solely on the  shoulders of  the employer.  In due course the problem may have to be tackled by the industry in co-operation  with the  State. The  State  will have to  bear a part of that responsibility [Vide: The Patna  Electric Supply  Co. Ltd., Patna v. The Patna Electric  Supply Workers’  Union (1))].  The tribunal has  considered the financial position of the Station, the urgency of the damned made by the workmen, and  has come  to the conclusion that the demand for housing accommodation was not justified and that  the ends of social justices would be met in the  present case if a flat rate of enhancement of Rs.  20/- is  awarded.  It  is  true  that  the Station gives housing accommodation for members of the senior  staff but  as the tribunal has pointed out there  are special reasons how more favourable terms have  to be offered to senior research staff in order  to get  the services of properly trained and properly  equipped personnel.  In our opinion, the tribunal was right in refusing 567 to draw an analogy between the requirements of the senior research  staff and  the junior  staff with whose claims  the tribunal was dealing. Therefore, we are  not satisfied  that there is any substance in the  grievance made  by the workmen against the award passed  by the  tribunal in respect of house allowance. The  result is  Civil Appeal No. 460 of 1960 fails and is dismissed.      There would  be no  order as to costs in both the appeals.                            Appeal No. 459 allowed.                          Appeal No. 460 dismissed.