Case Note & Summary
The dispute arose between the workmen of a manufacturing company and their employers regarding the entitlement to bonus for the years 1954, 1955, and 1956. The employees claimed that their right to bonus had become an implied term of service or, alternatively, a customary bonus. The company had been making ex gratia payments since 1942, but these payments were not regular, and in 1956, no payments were made at all. The tribunal initially ruled against the employees, stating that the payments were not a condition of service and were strictly ex gratia. The employees appealed, arguing that the payments constituted a customary bonus, relying on a precedent case. The Supreme Court analyzed the nature of the payments and concluded that while the ex gratia payments could not imply a term of service, one specific payment made at Puja time had become customary. The court ordered the company to pay one month's basic wage as Puja bonus for 1956 while dismissing the rest of the appeal. The parties were directed to bear their own costs.
Headnote
A) Industrial Law - Bonus Entitlement - Implied Term of Service - Industrial Dispute Act, 1947 - The court held that payments made as ex gratia cannot imply a term of service for bonus entitlement, as they were accepted as such by employees. Therefore, the claim for bonus based on an implied agreement failed. (Paras 1-5). B) Industrial Law - Customary Bonus - Industrial Dispute Act, 1947 - The court recognized that a payment of one month's basic wage as bonus at Puja time had become customary and traditional for subordinate staff, thus ordering its payment for the year 1956. (Paras 6-10).
Issue of Consideration
Whether the employees were entitled to bonus as an implied term of service or as a customary bonus.
Final Decision
The Supreme Court partially allowed the appeal, recognizing the entitlement to one month's basic wage as Puja bonus for the year 1956, while dismissing the rest of the claims. The parties were ordered to bear their own costs.
Law Points
- bonus entitlement
- implied term of service
- customary bonus
- ex gratia payments
- industrial dispute resolution
