# HUKUM CHAND JUTE MILLS LTD v. SECOND INDUSTRIAL TRIBUNAL, WEST BENGAL & ORS

- **Citation:** [1979] 3 S.C.R. 644
- **Court:** Supreme Court of India
- **Decided:** 1979-04-11
- **Bench:** V. R. Krishna Iyer, V. D. TuLZAPURKAR, R. S. Pathak
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hukum-chand-jute-mills-ltd-v-second-industrial-tribunal-west-bengal-ors-7659
- **Pages:** 7

## Headnote

Payment of BonuJ A.ct, 1965-Customary and contractual bonus-If excluded
by the Act>-A.mending A.ct 23 of 1976-Efject of.
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 moo.agement 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 tho provisions of the 1976 Amendment, WM negatived by the Tribunal.
In the appeal to this Court it was contended on behalf of the appellant
D
that the Bonus Act as amended by Act 23 of 1976, annihilate! all epecies of
bonu! including customary and contractual bonu?i.
E
Dismissing. the appeal,
HEID: 1. The Bonus Act (1965) though a complete code was confined
to profit-oriented bonw only.
The other kinds of bonu! 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 Bonuo
Act to provide for the payment of bonus
11on the bMi! of profits Ol" on tbs
basis of production or productivity, and for maA.te~ connected therewith." The
inference that flows therefrom i! that customary or contractual bonus goes
F
beyond the pale of the amending Act which modifi°' the previous one by
bringing within its range bonu?i on the basis of production or produttivity
also.
!648G-649B].
G
H
3. Section 17 of the Bonus Act in express terw rerfers to puja bonus ~nd
other customary bonus as available for deduction from thC: bonus payable under
the Act, thus making 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 cuaton1ary
bonm. (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 kindlil of bonus.
[649-GJ
5. The Bonus Act (1965) doe. not deal with cu•tomary bonus and i1 confiaed
to profit-based or productivity~based bonm. The provi?iion! of the Act have
no say, on customary bonus and cannot, therefore, be inconsistent therewith.
•
)!'. ..
J
•
•
HUKAM CHAND JUTE MILLS V. INDUSTRIAL TRIBUNAL
6 4 5
(Krishna Iyer, I.)
Conceptually, statutory bonus and customary bonus operate in two fields arid
do not cash with each other. [649H-650AJ
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, Bl
Mumbai Kamgar Sabha, Bombay v. M/S. Abdulbhai Faizullabhai & Or..
[1976] 3 SCR 591 at 608-609 & 612; Sanghi Jeevarai Gh'e'war Chand & Ors. v.
Secr~tary Madras Chillies, Grains Kirana Merchants Workers' Union and Anr.
[1969] I SCR 366; referred to.
CIYIL 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.
A
B
c
G. B. Pai, R. C. Shah, S. R. Agarwal, 0. P. Khaitan and Praveen
D
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 Associati

## Text

A
B
c
644
HUKUM CHAND JUTE MILLS LTD.
v.
SECOND INDUSTRIAL TRIBUNAL, WEST BENGAL & ORS.
April 11, 1979
[V. R. KRISHNA IYER, V. D. TuLZAPURKAR AND R. S. PATHAK, JJ.]
Payment of BonuJ A.ct, 1965-Customary and contractual bonus-If excluded
by the Act>-A.mending A.ct 23 of 1976-Efject of.
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 moo.agement 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 tho provisions of the 1976 Amendment, WM negatived by the Tribunal.
In the appeal to this Court it was contended on behalf of the appellant
D
that the Bonus Act as amended by Act 23 of 1976, annihilate! all epecies of
bonu! including customary and contractual bonu?i.
E
Dismissing. the appeal,
HEID: 1. The Bonus Act (1965) though a complete code was confined
to profit-oriented bonw only.
The other kinds of bonu! 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 Bonuo
Act to provide for the payment of bonus
11on the bMi! of profits Ol" on tbs
basis of production or productivity, and for maA.te~ connected therewith." The
inference that flows therefrom i! that customary or contractual bonus goes
F
beyond the pale of the amending Act which modifi°' the previous one by
bringing within its range bonu?i on the basis of production or produttivity
also.
!648G-649B].
G
H
3. Section 17 of the Bonus Act in express terw rerfers to puja bonus ~nd
other customary bonus as available for deduction from thC: bonus payable under
the Act, thus making 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 cuaton1ary
bonm. (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 kindlil of bonus.
[649-GJ
5. The Bonus Act (1965) doe. not deal with cu•tomary bonus and i1 confiaed
to profit-based or productivity~based bonm. The provi?iion! of the Act have
no say, on customary bonus and cannot, therefore, be inconsistent therewith.
•
)!'. ..
J
•
•
HUKAM CHAND JUTE MILLS V. INDUSTRIAL TRIBUNAL
6 4 5
(Krishna Iyer, I.)
Conceptually, statutory bonus and customary bonus operate in two fields arid
do not cash with each other. [649H-650AJ
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, Bl
Mumbai Kamgar Sabha, Bombay v. M/S. Abdulbhai Faizullabhai & Or..
[1976] 3 SCR 591 at 608-609 & 612; Sanghi Jeevarai Gh'e'war Chand & Ors. v.
Secr~tary Madras Chillies, Grains Kirana Merchants Workers' Union and Anr.
[1969] I SCR 366; referred to.
CIYIL 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.
A
B
c
G. B. Pai, R. C. Shah, S. R. Agarwal, 0. P. Khaitan and Praveen
D
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).
E
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, bas been built
around se¥~ral 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
frem practice and precedent, custom and contract. Against this back·
drop, 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
custorr.ary 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 amel)ding Act 23 of 1976.
F
G
H
D
E
JI
646
SUPREME COURT REPORTS
(1979] 3 S.C.R.
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 Managem~nt 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 Jaw relied on, it is somewhat startling 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
>
•
~
.J
'».
ill .-
•
•·
HUKAM CHAND JUTE MILLS V. INDUSTRIAL TRIBUNAL
647
(Krishna Iyer, !.)
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 l 976 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 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 app::al 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(')
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 bonns to p::rsons 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 Qn 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.
(I) [1976] 3 S.C.R. 591, 608-609.
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
648
SUPREME COURT REPORTS
[1979] 3 S.C.R.
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('), the Court arrived
at the final view that
"A disc~rning 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."(')
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 a'nd that is precisely
the justification for his submission that the new provisions nullify all
kinds of claims of bonus except pmfit-or-productivity-based bonuses,
having regard to ss.
31 A 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 197 6
amendment
bad
nothing to say on bonu~ 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 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
(I) [1969] I S.C.R. 366.
(2) [1976] > S.C.R. 591, 612.
I •
•
•
~· .
•
'
I
HUKAM CHAND JUTE MILLS V. INDUSTRIAL TRIBUNAL
6 4 9
(Krishna Iyer, !.)
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 "pujd' 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 reads. 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
A
B
c
D
E
were made before 29th May, 1965 or after would now stand superseded; and (ii) s. 24 shall be subject to the provisions of s. 3 lA
newly inserted.
F
We may straightway dispose of the argument based on s. 3 JA.
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. 31 A sha1!
have operation but it speaks nothing about the other kinds of bonus
G
and cannot, therefore, be said to h~ve the sp,in-off benefits claimed
by the appellant.
Similarly, the submission that ·an 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 incontestible now-that the Bonus Act ( 1965)
does not deal with customary bonus and is confined to profit-based
H
or productivity-based bonus, the provisions of the Act have no say
3-330SCI/79
650
SUPREME COURT REPORTS
[1979] 3 s.c.R.
A
on customary bonns and cannot, therefore, be inconsistent therewith.
B
c
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 d~aling 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 agreerp.ent, 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 df the matter have
D
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.
I
•