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PETITIONER: HUKAM CHAND JUTE MILLS LTD.

       Vs.

RESPONDENT: SECOND INDUSTRIAL TRIBUNAL, WEST BENGAL & ORS.

DATE OF JUDGMENT11/04/1979

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. TULZAPURKAR, V.D. PATHAK, R.S.

CITATION:  1979 AIR  876            1979 SCR  (3) 644  1979 SCC  (3) 261

ACT:      Payment of  Bonus Act,  1965-Customary and  contractual bonus-If excluded  by the Act-Amending Act 23 of 1976-Effect of.

HEADNOTE:      The appellant  mills had been paying customary bonus to its employees  for a  number of  years.  Consequent  to  the amendment of  the Bonus  Act, 1965 in 1976 by Act 23 of 1976 the management  denied the  customary bonus  claimed by  the workmen, whereupon  the dispute  regarding "customary  bonus for the  year 1976"  was referred by the State Government to the  Industrial   Tribunal.  The   Management’s  plea   that customary bonus  was no  longer  payable,  in  view  of  the provisions of  the 1976  Amendment,  was  negatived  by  the Tribunal.      In the  appeal to this Court it was contended on behalf of the  appellant that the Bonus Act as amended by Act 23 of 1976, annihilates  all species  of bonus including customary and contractual bonus.      Dismissing the appeal, ^      HELD: 1.  The Bonus  Act (1965)  though a complete code was confined  to profit-oriented bonus only. The other kinds of bonus  that have flourished in Indian industrial law have been left  uncovered  by  the  Bonus  Act.  The  legislative universe spanned  by  the  said  statute  cannot  therefore, affect the  rights and  obligations belonging to a different world or claims and conditions. [647-E]      2. The  amending Act, 23 of 1976 amended the long title of the Bonus Act to provide for the payment of bonus "on the basis  of   profits  or   on  the  basis  of  production  or productivity, and  for  matters  connected  therewith."  The inference  that   flows  therefrom   is  that  customary  or contractual bonus  goes beyond  the pale of the amending Act which modifies the previous one by bringing within its range bonus on  the basis  of  production  or  productivity  also. [648G-649B].      3. Section  17 of the Bonus Act in express terms refers to puja  bonus and  other customary  bonus as  available for deduction from  the bonus payable under the Act, thus making

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a clear  distinction between the bonus payable under the Act and "puja  bonus or other customary bonus". This section has been left  intact. So  long as  this section remains without amendment the inference is clear that the categories covered by the  Act, as  amended, do  not deal with customary bonus. [649-C]      4. Section  31A relates to bonus linked with production or productivity in lieu of bonus based on profits. It speaks nothing of the other kinds of bonus. [649-G]      5. The  Bonus Act  (1965) does  not deal with customary bonus and  is confined to profit-based or productivity-based bonus. The  provisions of  the Act have no say, on customary bonus and cannot, therefore, be inconsistent therewith. 645 Conceptually, statutory bonus and customary bonus operate in two fields and  do not cash with each other. [649H-650A]      In the  instant case,  both parties  have  agreed  that throughout they  have been dealing with customary bonus only and whenever there has been a settlement or agreement it has been not  the source  of the  right but  the  quantification thereof. The  claim was  rooted in  custom but quantified by contract. It  did not  originate in  any agreement,  but was organised by  it. The  customary bonus as claimed is neither impaired nor  eliminated by  the 1976 Amendment Act. [650 C, B]      Mumbai  Kamgar   Sabha,  Bombay   v.   M/S.   Abdulbhai Faizullabhai &  Ors. [1976]  3 SCR  591 at  608-609  &  612; Sanghi Jeevaraj  Ghewar Chand  &  Ors.  v.  Secetary  Madras Chillies, Grains  Kirana Merchants  Workers’ Union  and Anr. [1969] 1 SCR 366; referred to.

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1118 of 1978.      Appeal by  Special Leave from the Order dated 12-5-1978 of the  Second Industrial  Tribunal, West Bengal in Case No. VIII-169/77 G.O. No. 3000 IR dated 26-7-77.      G. B. Pai, R. C. Shah, S. R. Agarwal, O. P. Khaitan and Praveen Kumar for the appellant.      M. K.  Ramamurthi, D.  T. Sen Gupta, S. R. Gupta and P. K. Chakravorti for Respondent No. 3.      M.  K.   Ramamurthi,  and  Ramesh  C.  Pathak  for  the Intervener (The Bank of Tokyo Staff Association).      The Judgment of the Court was delivered by      KRISHNA IYER, J.-Industrial jurisprudence, based on the values  of   social  justice   which  is   integral  to  our Constitution, has  been built  around  several  legislations enacted by  Parliament, one of which is the Payment of Bonus Act, 1965,  (the Bonus  Act, for short). The bonus branch of labour law,  however, is not exhausted by this enactment and has been  replenished by  judge-made law, drawing sustenance from practice  and precedent,  custom and  contract. Against this backdrop,  we have to state and assess the single issue strenuously canvassed  before us by the appellant-management challenging the  award of the Industrial Tribunal and urging that  the   Bonus  Act,  as  amended  by  Act  23  of  1976, annihilates all  species of  bonus including  customary  and contractual bonus.  The claim of the Union of Workmen is for customary bonus,  the reference  to industrial  adjudication relates to  customary bonus, and the special leave to appeal granted by  this Court is confined to customary bonus as the common basis and focuses on the sole legal issue of negation of that  kind of  bonus by  virtue of  the provisions of the

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amending Act 23 of 1976. 646      The matrix  of minimal facts necessary to highlight the limited controversy  may lay  bare the crucial issue we have to decide.  The appellant is a jute mill in Bengal employing several thousand  workers but we are directly concerned here with a  dispute between  the Management and the employees in its head  office. Certain indisputable facts, fundamental to the case,  make a useful beginning. Customary bonus has been claimed, conceded  and settled  between the parties for long years since  the early  sixties at least. From time to time, this  demand   has  been   the  subject   of  dispute   and, fortunately, of  agreed solution  right down to 1975. But in 1976-the year  in which  Art. 43A  making  participation  of workers in  Management of  industries was  made a  Directive Principle   in   our   Constitution-the   Bonus   Act   was, paradoxically, amended restricting workers claim to Bonus by Act 23  of 1976  although much  of the  curtailment has been cancelled by  the  next  Amending  Act,  1977.  Anyway,  the changes  wrought   by  the  1976  amendment  emboldened  the Management to  deny the  legality of Customary bonus claimed by the  workmen. This  conflict led  to a  reference by  the State Government to the Industrial Tribunal of the following dispute:             "CUSTOMARY BONUS FOR THE YEAR, 1976"      What is  material to  notice is that the demand and the denial, the reference and the adjudication and, finally, the special leave  itself revolved  round customary  bonus.  The specific case  of the  Management was  that customary  bonus could no longer be payable, in view of the provisions of the 1976 amendment.  A statutory fatality was sought to be spelt out of  its provisions before the Tribunal and before us. We emphasize this  to exclude  a hazy, though half-hearted plea mentioned by  Shri G. B. Pai for the appellant that here the bonus was  based on agreement and no agreement as such could avail in view of s. 34, read with s. 31A, (as amended by the 1976 Act).  Apart from  the law  relied on,  it is  somewhat starting that  bonus paid  by settlement between the parties qua customary  bonus at  least since  1962-63 (see page 4 of the Paper  Book) should  be anathematized  as  untenable  in 1976, suggesting  that labour  law, viewed  from the  social justice angle,  is making  headway steadily  backwards. Even so, we will examine the law as the statute speaks.      The payments  over the  years have  been  of  customary bonus. The  demand for  1976, which  alone directly concerns us, is  also for customary bonus. The dispute referred is of customary bonus.  The legal  objection urged is to customary bonus. The  award has  upheld the  tenability  of  customary bonus. The  special  leave  petition  complained  about  the legality of customary bonus and 647 the order  granting leave clinched the issue by treating the dispute as  one for  customary bonus.  Likewise, throughout, the only  defence of the management was the lethal impact on customary or  other bonus, save profit or productivity-based bonus of  Act 23  of 1976.  So  the  sole  question  is  the soundness of  the legicidal  impact of the 1976 amendment on the customary  bonus claim  which otherwise  was valid  and, indeed, was  honoured  by  the  appellant  by  progressively escalating rates  by agreement.  This part  of the narration may be concluded by excerpting the order granting leave:           "Mr. Pai  states  on  behalf  of  the  petitioner-      Management that  if  they  fail  on  the  legal  issue,      namely, because  of the  amendment  in  the  Bonus  Act      customary bonus  is not payable, then they will not ask

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    for the  trial of  that issue on merits and straightway      they will pay the customary bonus they have been paying      as per  the agreement  dated 20-3-1975. In view of this      undertaking we  grant special  leave to appeal and even      if the appellants succeed in this appeal, they will not      ask for costs against the workmen concerned."      The Bonus  Act (1965)  was  a  complete  code  but  was confined to profit-oriented bonus only. Other kinds of bonus have flourished  in Indian Industrial law and have been left uncovered by the Bonus Act. The legislative universe spanned by the  said statute  cannot therefore affect the rights and obligations belonging  to a  different world  or claims  and conditions.  This   has,  in  the  Mumbai  Kamgar’s  case(1) exhaustively dealt  with the  anatomy of  the Bonus Act, its functional  scope   its  modalities   and  its   operational frontiers to reach the following conclusion:           "It is  clear further  from the  long title of the      Bonus Act of 1965 that it seeks to provide for bonus to      persons employed ’in certain establishments’-not in all      establishments.  Moreover,  customary  bonus  does  not      require  calculation  of  profits,  allocable  surplus,      because it  is a  payment founded  on  long  usage  and      justified often  by spending  on festivals  and the Act      gives no guidance to fix the quantum of festival bonus;      nor does  it expressly  wish away  such  a  usage.  The      conclusion seems  to be  fairly clear, unless we strain      judicial sympathy  countrarywise, that  the  Bonus  Act      dealt with  only profit  bonus  and  matters  connected      therewith and  did not govern customary, traditional or      contractual bonus. 648           The end  product of  our study  of the anatomy and      other related factors is that the Bonus Act spreads the      canvas wide  to exhaust  profit-based bonus  but beyond      its frontiers  is not  void other cousin claims bearing      the caste  name ’bonus’  flourish-miniatures  of  other      colours  !   The  Act   is  neither   proscriptive  nor      predicative of other existences."      After dealing  with Ghewar  Chand’s case(1),  the Court arrived at the final view that           "A discerning  and concrete analysis of the scheme      of the  Act and the reasoning of the Court leaves us in      no doubt that it leaves untouched customary bonus."(2)      This  ruling  has  our  concurrence  and,  indeed,  the principal plea  of Shri  Pai, counsel  for the appellant, is that the  effect of the 1976 amending Act has been left open in that decision and that is precisely the justification for his submission  that the new provisions nullify all kinds of claims of bonus except profit-or-productivity-based bonuses, having regard  to ss.  31A and  34A brought into the statute Act.      Counsel made his goal-oriented submissions by taking us through the  new provisions.  As we have stated earlier many of the  statutory modifications brought about in 1976 in the then  wisdom  of  Parliament  have  been  repealed  and  the original position  restored in  1977 by  the later wisdom of the new  Parliament. However, we are concerned only with the import and  effect of the few provisions incorporated by Act 23 of  1976. The fundamental fact which we must reiterate is that the  Bonus Act before the 1976 amendment had nothing to say on  bonus not  oriented on  profit. What  then  was  the departure made ? Did it travel beyond the broad territory of the original statute and invade other forms of bonus ? Apart from the clauses which we will presently deal with, a key to the understanding of the changes is the long title. The long

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title of  the Bonus  Act was  also amended  in 1976  and the substituted one runs thus:           "An Act  to provide  for the  payment of  bonus to      persons employed in certain establishments on the basis      of  profits   or  on   the  basis   of  production   or      productivity and for matters connected therewith."      The clear  light that  we glean from the new long title is  contrary   to  the   intent  of   Shri  Pai’s  argument. Specifically, the new 649 long title  purports to provide for the payment of bonus "on the basis  of profits  or on  the  basis  of  production  or productivity  and  for  matters  connected  therewith".  The emphatic  inference   flows  therefrom   that  customary  or contractual bonus  goes beyond  the pale of the amending Act which modifies the previous one by bringing within its range bonus on  the basis  of  production  or  productivity  also. Nothing  more-unless   the  text  expressly  states  to  the contrary. It  is important  to remember  that s.  17 of  the Bonus Act  has been  left intact.  That Section  in  express terms refers  to puja  bonus and  other customary  bonus  as available for  deduction from  the bonus  payable under  the Act, thus  making a  clear  distinction  between  the  bonus payable under  the Act  and "puja"  bonus or other customary bonus. So long as this Section remains without amendment the inference is  clear that  the categories covered by the Act, as amended, did not deal with customary bonus      Strong reliance was placed by counsel for the appellant on new  s. 31A  read with substituted s. 34. It is proper to read s. 34 at this stage:           "34. Subject to the provisions of section 31A, the      provisions   of    this   Act    shall   have    effect      notwithstanding   anything    inconsistent    therewith      contained in  any other law for the time being in force      or in  the terms of any award, agreement, settlement or      contract of service." The only  changes that we notice as between this Section and its predecessor  are (i)  that agreements,  settlements  and contracts of service inconsistent with the provisions of the Act regardless  of whether  they were  made before 29th May, 1965 or  after would  now stand  superseded; and  (ii) s. 24 shall be subject to the provisions of s. 31A newly inserted.      We may  straightway dispose of the argument based on s. 31A.  That  relates  to  bonus  linked  with  production  or productivity in  lieu of  bonus based on profits. We are not concerned with  such a situation and we agree that in regard to productivity  bonus s.  31A shall  have operation  but it speaks nothing  about the  other kinds  of bonus and cannot, therefore, be  said to have the spin-off benefits claimed by the appellant. Similarly, the submission that all agreements inconsistent with  the Bonus  Act shall  become  inoperative also has no substance vis-a-vis customary bonus. The fallacy is simple.  Once we agree-and this is incontestable now-that the Bonus  Act (1965) does not deal with customary bonus and is confined to profit-based or productivity-based bonus, the provisions of the Act have no say 650 on customary  bonus and  cannot, therefore,  be inconsistent therewith. Conceptually, statutory bonus and customary bonus operate in two fields and do not clash with each other.      We have  reached the  end of  journey because the focal point of  the debate  is as  to whether  customary bonus, as claimed in  this case, is impaired or eliminated by the 1976 amendment Act.  Moreover,  both  parties  have  agreed  that throughout they  have been dealing with customary bonus only

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and whenever there has been a settlement or agreement it has been not  the source  of the  right but  the  quantification thereof. The  claim was  rooted in  custom but quantified by contract. It  did not  originate in  any agreement,  but was organised by  it. We  are,  therefore,  satisfied  that  the appeal must fail.      We should have unhesitatingly directed costs to be paid by the  management-appellant to  the respondent-workmen; but during the  course of the hearing we were far from impressed with the  attitude taken  up by  the respondent.  While  the merits of  the matter have to be decided indifferent to such factors, costs  are discretionary  and we are constrained to dismiss the appeal, directing both the parties to bear their respective costs. N.V.K.                                     Appeal dismissed. 651