# MANAGEMENT OF BOMBAY CO. LTD v. WORKMEN

- **Citation:** [1964] 7 S.C.R. 477
- **Court:** Supreme Court of India
- **Decided:** 1964-03-25
- **Case number:** Civil Appeal No. 583 of 1963
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, K. C. Das Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/management-of-bombay-co-ltd-v-workmen-3153
- **Pages:** 7

## Headnote

Industrial
Dispute-Christmas bonus-Implied
agreement-Test.
An industrial dispute arose between the appellant and
its workmen as to payment of bonus for the years 1957-58 and
1958-59. The dispute was referred for adjudication to the tribunal. The respondents claimed bonus on the basis that payment of some bonus at Christmas had become an implied con<lition of service between the appellant and its workmen. The
workmen claimed H months' wages for each year on the basis of
an implied term of service. On these facts the tribunal held
on the basis of the decision of this Court in MI s. Ispahani
Ltd. v. Ispahani Employees Union that payment of bouns at'
the rate of 1l: months' salary as an implied condition of service had been established. It is this award of the tribunal
which has been challenged before this Court.
Held: (i) Where the payment of bonus is connected with
a festival it is possible to infor that there is an implied condition to pay something at the time of the festival. even though
the payment has not been made at a uniform rate in previous
years. In the present case, the payment has not been uniform
over the years and before an implied term of service to pay
bonus can be inferred it must be shown that the payment was
connected with some festival. Therefore the tribunal was not
right in holding that there could be an implied condition of
service as to payment of bonus unconnected with any festival.
In the present case, though the amount paid in December
was originally called an advance, at least one month's salary
out of the so-called advance always r·emairned with the workmen and was treated as bonus connected with Chi:istmas
festival. On the facts of this case it was held that there was
an implied condition of service between the appellant and its
workmen that something would be paid every year about
Christmas time as festival bonus.
MI s. Ispahani Ltd. v. Ispahani Employees' Union, [1960]
1 S.C.R. 24, relied on.
(ii) In a case of payment which is made at different term
and is not at a uniform rate the duty of the court is to~ connect the payment with a festival (in this case Christmas). On
the evidence in this case it is clear that the minimum is only
one ll)onth's salary payable about Christmas time and this
was actually paid in 1951-52 and 1953-54. Therefore the payment of one month's salary as Christmas bonus is proved as
an implied condition of service between the appellant and ita
workmen on the admitted facts of this case.

## Text

7S.C.R.
SUPREME COURT REPORTS
477
MANAGEMENT OF BOMBAY CO. LTD.
v.
WORKMEN
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO AND K. C.
DAS GUPTA, JJ.]
Industrial
Dispute-Christmas bonus-Implied
agreement-Test.
An industrial dispute arose between the appellant and
its workmen as to payment of bonus for the years 1957-58 and
1958-59. The dispute was referred for adjudication to the tribunal. The respondents claimed bonus on the basis that payment of some bonus at Christmas had become an implied con<lition of service between the appellant and its workmen. The
workmen claimed H months' wages for each year on the basis of
an implied term of service. On these facts the tribunal held
on the basis of the decision of this Court in MI s. Ispahani
Ltd. v. Ispahani Employees Union that payment of bouns at'
the rate of 1l: months' salary as an implied condition of service had been established. It is this award of the tribunal
which has been challenged before this Court.
Held: (i) Where the payment of bonus is connected with
a festival it is possible to infor that there is an implied condition to pay something at the time of the festival. even though
the payment has not been made at a uniform rate in previous
years. In the present case, the payment has not been uniform
over the years and before an implied term of service to pay
bonus can be inferred it must be shown that the payment was
connected with some festival. Therefore the tribunal was not
right in holding that there could be an implied condition of
service as to payment of bonus unconnected with any festival.
In the present case, though the amount paid in December
was originally called an advance, at least one month's salary
out of the so-called advance always r·emairned with the workmen and was treated as bonus connected with Chi:istmas
festival. On the facts of this case it was held that there was
an implied condition of service between the appellant and its
workmen that something would be paid every year about
Christmas time as festival bonus.
MI s. Ispahani Ltd. v. Ispahani Employees' Union, [1960]
1 S.C.R. 24, relied on.
(ii) In a case of payment which is made at different term
and is not at a uniform rate the duty of the court is to~ connect the payment with a festival (in this case Christmas). On
the evidence in this case it is clear that the minimum is only
one ll)onth's salary payable about Christmas time and this
was actually paid in 1951-52 and 1953-54. Therefore the payment of one month's salary as Christmas bonus is proved as
an implied condition of service between the appellant and ita
workmen on the admitted facts of this case.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 583
of 1963. Appeal by special leave from the Award dated
June 18, 196-2 of the Industrial Tribunal, Ernalrulam, in Industrial Dispute No. 38 of 1960.
1964
.Jfarch 2/Y
478
SUPREME COURT REPORTS
[1964]
1964
G. B. Pai, J. B. Dadachanji, 0. C. Mathur and RavinManagement of der Narain, for the appellant.
Bombay Co. Ltd.
v.
Workmen
J anardan Sharma, for the respondents.
March 25, 1964. The judgment of the
livered by
Court was deWanchoo,J.
· W ANCHOO, J.-This is an appeal by special leave from
the award of the Industrial Tribunal, Ernakulam. A dispute
arose between the appellant and its workmen as to payment
of bonus for the years 1957-58 and 1958-59, and was referred for adjudication to the tribunal. The respondents claimed bonus on two grounds: (i) on the basis of profits earned
by the appellant, and (ii) on the basis that payment of some
bonus at Christmas had become an implied condition of service between the appellant and its workmen. It may be mentioned that the .claim was for four months' wages for each
year on the basis of profit bonus. The alternative claim was
for 1 t months' wages for each year on the basis 0La11 implied term of service. We may also mention that the appellant had paid two months' basic salary as bonus for the
year 1957-58, and one month's basic pay as bonus for the
ye21r 1958-59. The appellant contended that there was no
surplus available on the basis of the Full Bench formula
applied in such cases and therefore no profit bonus could
be paid. It also contended that no bonus was .payable as
an implied term of service.
The tribunal found on an application of the Full Bench
formula that there was no available surplus in either
of the two years and therefore no bonus was payable as
profit bonus. It then went into the question whether any
bonus was payable as an implied condition of service and
relying on the decision of this Court in Messrs. Ispahani
Lid. v. lspahani Employees' Union(') held that payment of
bonus at the rate of 1 t months' salary as an implied condition of service had been established. It therefore ordered
the appellant to pay that amount after taking into account
one month's salary already paid by it. It is this award of
the tribunal which has been brought before us by special
leave.
The main contention on behalf of the appellant are
two-fold:
(I) It is urged that the tribunal erred in holding that
payment of bonus as an implied condition of service need
· not be attached to any festival;
(2) On the undisputed facts of this case, the tribunal
was not right in holding that a case had been made out for
(') [1960] 1 S.C.R. 24.
7 S.C.R.
SUPREME COURT REPORTS
479
payment of some bonus as an implied condition of service,
and in any case, even if a case had been made out for payment of some bonus, it could not be at the rate of 1 ! months'
salary.
Turning to the first contention raised on behalf of the .
appellant, we are of opinion that the tribunal was not
right in holding that there could be an implied condition of
service as to payment of bonus unconnected with any festival. In lspahani's case(') the question raised was whether
there was an implied condition of service for payment of
some bonus at the time of puja festival in Bengal. In that
connection this Court laid down the tests for holding when
it could be said that there was an implied condition of service for payment of some bonus in connection with some
festival. This Court also pointed out that it was not necessary in order to establish an implied condition of service as
to payment of some bonus at the time of a festival like puja
in Bengal that the amount paid in connection with the festival should be uniform, and that in the absence of a uniform
rate an implied agreement to pay something could be inferred. Now where the payment is connected with a festival it is possible to infer that there is an implied condition
to pay something at the time of the festival, even though
the evidence discloses that in previous years payment has
not been made at a uniform rate. But it is difficult to see
how the principle which applies to a case of payment at
the time of a festival can be extended to infer an implied
term of payment where the payment has been made entirely
unconnected with any festival and at rates which have
varied from year to year. We are therefore of opirtion that when
this Court laid down that there was an implied condition
of service to pay something about the time of puja festival
in lspahani's case('), it was clear that such implied condition
of service could be inferred where the rate of payment was
not uniform only when such payment was obviously connected with some festival. In the· present case also, the paymeμt
has not been uniform over the years and therefore before an implied term of service to pay bonus can be inferred it must
be shown that the payment was connected with some festival. It would in our opinion be impossible to lrlfet an implied condition of service where payment has nc1t been uniform ·in the past, unless sucb payment can be connected
with some festival. We are therefore of opinion that the tribunal was wrong in holding that an inference could be
drawn for payment of bonus as an implied condition of service in the circumstances of the present case wheli the payment was not uniform iii· the past even though it ·was not
connected with any festival
.
(') [11i6o] 1 S.C.R./ 24.
1964
Management of
Bombay Co. LjiJ.
v.
Workmen
Wanchoo,J.
1964
M a:nagement o.f
.Bomboy Co. Ltd.
v.
Workmen
Wanchoo~J,
480
SUPREME COURT REPORTS
[1964]
But that in our opinion does not dispose of the matter.
The evidence shows that payment of some bom.;s began to
be made from the year 1945·46 in which year bonus varying from one month to 3! months' salary was paid in this
branch. It may be added that the appellant has a number of
other branches in other parts of the country. What we are
saying in this case is only concerned with the Cochin branch
and may not necessarily be applicable to other branches
of the appellant, the facts of which are not before
us. From 1946-47 to 1949-50, it appears that some lumpsum
was paid, though the amount is not exactly known. It is
also not clear whether during the years 1945-46 to 1949-50
paymen_t was made about Christmas time, as there is no
evidence •either way. In 1950-51 it appears that It months'
salary was paid as bonus. No payment appears to have been
made in that year about Christmas time, though it is said
that 1 t months' salary was paid as bonus sometime afterwards. From 1951-52 right upto 1958-59, payment was
made at the rate of one month's salary to two months' salary
about Christmas time. It is clear therefore that at any rate
since 1951-52 payment is connected with Christmas festival, though there is no clear evidence as to the earlier payments being connected with Christmas. At the same time
there is no clear evidence that those payments were not connected with Christmas even though payment\ for the year
1950-51 might have been made sometime, after Christmas.
On the whole therefore it seems to us that it is possible to
infer that the payments which began from 1945-46 and have
been made throughout upto 1958-59 were in all probability
connected with Christmas festival. This inference in our
opinion is strengthened by the fact that from 1951-52 undoubtedly payments were connected with Christmas and
were always made about Christmas time, even though there
was adjustment on some occasions later on by payment of
more amount or by reduction of the amount already paid
by deducting some part of it from la.1er salary. We are
therefJre of opinion that we can infer from the evidence on
the record that the payment in the present case is connected
with Christmas festival. Therefore even though the tribunal
was wrong in holding that the payment need not be connected with any festival in a case like the present where the
rate has not been uniform, the respondents have made out
a case of payment of some bonus as an implied condition
of service C'6nnected with a festival subject to what we say
on the second contention raised on behalf of the appellant.
The appellant however contends that it has· not been
proved that the paylnent of bonus was in connection with
the Christmas festival on the undisputed evidence in this
I '
I.
~\.
';
7 S.C.R
SUPREME COURT REPORTS
481
case. Now the evidence is that something used to be invariably paid at least from 1951-52 about Christmas time. Later
on something mote was paid in some years. In one year
nothing more was paid and in three years the appellant took
back part of the payment which had been made. The appellant's contention is that the payment before Christmas which
has been established in this case was only an advance in
connection with the festival which was later adjustable from
the salary of the workmen. It is true that when the payment was made it was designated as an advance. For
example, when payment was made in December 1953, it was
designated as an advance and it was stated in the notice
that it would be treated as advance against any bonus and
in the event of no bonus as advance against salary. Even
so, the evidence shows that the so-called advance was never
recovered in full. Sometimes more was paid in addition
to
what
had
been
paid
in
December.
Once
nothing more was paid but the amount already paid
in December was not recovered. Three times something was
recovered from what was paid in December; even so a minimum of one month's .salary out of the so-called advance
in December was always left with the workmen. So though
the amount paid in December was originally called an advance, at least one month's salary out of the so-called advance
:always remained with the workmen and was treated as
bonus connected with Christmas festival. The fact that the
payment was originally called advance would not detrad
-from the conclusion that some amount was really paid as
bonus in connection with Christmas festival.
There is no evidence to show that this amount was paid
~x-gratia. In this connection our attention is drawn to what
happened in April 1954. Then a notice was given about payment of additional bonus which was called ex-gratia. The
evidence however shows that in 1953-54 one month's salary
was paid in December and in addition half a month's salary
was paid later on and it was this additional half month's
salary which was designated as ex-gratia payment. There is
nothing to show that the payment made in December was
ever designated as ex-gratia
payment. It could hardly be
so designated for it was usually called an advance which
was claimed as recoverable though the whole of it was never
recovered. In spite of the payment made in December being
called an advance, we are of opinion that on the evidence
in this case it is clear that part of the advance was made as
a bonus in connection with Christmas festival. It is therefore established on the evidence that there was an implied
condition of service between the appellant and its workmea
that something would be paid every year about Christmas
time as festival bonus.
L.'P(D)!SCI-16
1961
Ma._.,.e of
Boml>ay
Oo. LIL
v.
Workmen
Wanclwo, I.
482
SUPREME COURT REPORTS
[1964}
1964
The next question to which we turn is the mmmmm
Jl•tlf1!1•;;;;;;;
of
amount which has to be paid as an implied condition of serBomJJay
Oo. Ltd. vice. Here again the evidence shows that the minimum that
w v;.
has been paid, at any rate since 1951-52, is one month'&
or men
salary. Sometimes more has been paid, but one month's
Wanchoo, J.
i;alary seems to have been paid in connection with Christmas
for an unbroken· period of time, which is long enough to
permit an inference that there is an implied condition of
service for payment of one month's salary as festival bonu&
connected with Christmas in this branch of the appellant.
We cannot agree with the tribunal that the evidence shows
a minimum payment of It months' salary at the time of
.Christmas. It is true that if we take into account what wai;
p:aid later also over the entire period from 1950-51, the
minimum is l! months' salary; but in a case of payment
which is not at a uniform rate we have to connect the payment with a festival (in this case Christmas). We can therefore only look at the payment made in December to decide
what is the minimum which may be treated as a condition
of service. Once it is proved that there was an implied condition of service, some amount has to oe paid under the said
implied term; what the minimum would be in that behalf
must be decided as a question of fact. On the evidence in
this case it is clear that the minimum is only one month's.
salary payable about Christmas time and this w.as actually
paid in 1951-52 and 1953-54, though in other years more
was paid which was later liable to adjustment. We therefore·
hold that there is an implied condition of service between
the appellant and its workmen that one month's salary as
the minimum would be paid as Christmas bonus to the work-·
men about Christmas tiine. The decision of the tribunal
therefore allowing 1 ! months' salary as the minimum must
be modified and we hold that payment of one month's.
salary as Christmas bonus is proved as an implied conditio11
of service between the appellant and its workmen on the
admitted facts of the case. The minimum of one month's
basic salary has to be paid even if there is loss in any give11
year. We may add that though this is the minimum, it would
be open to the appeUant to pay more if its profit position
justifies the payment of more. But we cannot agree with the
tribunal that in the year 1958-59, the profit position of the
appellant justifies payment of more than the minimum. It
has been found t)lat in .that year there was actually a small
loss of Rs. 8,000 /- suffered by the appellant. Therefore even
though the tribunal may be justified in awarding a reasonable amount as festival bonus once it is proved that somethinghas to be paid as an implied condition of servioe towards
such bonus, it cannot be said in this case that the tribunal
was justified in giving anything beyond the minimum for
"1 S.C.R.
SUPREllE COURT REPORTS
483
this was a year of loss. We are therefore of opinion that
196,
the amount awlllded as festival bonus for the year 1958-59 Managem'111 •!
should be reduced to one month's salary and order accord- Bombay Oo. IM.
mnlv
v.
~,.
Wr.rlme11
Before we part with this appeal we should like to add
Wanclwo, 1.
that there was no stay order by this Court in this case. The
i:xtra am\)Ullt of 15 days' salary awarded by the tribunal has
already been paid to the workmen. Mr. Pai has assured us
that he would advise his client that the additional amount
S> paid may not be recovered back in the circumstances.
We therefore partly allow the appeal in the manner indicated above. In the lircumstances we pass no order as to
Clllllb..
Appeal partly allowed.