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TMI Blog1994 (1) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of three and a quarter months' basic wages and for the years 1965 to 1973 it was paid at the rate of 10.5 per cent of the total annual salary or wages and that in the year 1964, it was paid at the rate of 4 per cent on the basis of Payment of Bonus Ordinance, 1965. The Management disputed the said claim of the workmen and asserted that the workmen were not entitled to claim customary bonus and that they were only entitled to statutory bonus at the rate of 4 per cent payable under the Payment of Bonus Act, 1965 (hereinafter referred to as the 'Bonus Act'). The Tribunal by its award dated April 16, 1982 found that the bonus was paid by the Management for a long period from 1959 onwards not on the basis of the profit calculation and usually in the month of September before Puja festival and that from 1965 to 1973 it was being paid at the uniform rate of 10.5 per cent, and, therefore, the bonus which was being paid by the Management had ripened into a customary bonus due to a long usage. The Tribunal held that the workmen were entitled to fixed customary bonus at the rate of 10.5 per cent of the annual salary or wages earned by each workman concerned for the years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oof of custom depends upon the effect of the relevant factors enumerated by us; and it would not be materially affected by unilateral declarations of one party when the said declarations are inconsistent with the course of conduct adopted by it; and (iv) the payment must have been at a uniform rate throughout to justify an inference that the payment at such and such rate had become customary and traditional in the particular concern. 1 2 (1960) 1 SCR 107 : AIR 1959 SC 1151 : (1959) 2 LLJ 393 5. In Tulsidas Khimji v. Workmen3 Sinha, C.J., speaking for the majority, has held that the four 'so-called conditions' laid down in the Graham Trading Co. case2 are not really in the nature of conditions precedent but are circumstances which have been taken into account in this Court in that case for coming to a conclusion as to whether or not the claim to customary or traditional bonus had been made out and that the observations in Graham Trading Co.2 must be understood as based on consideration of substance and not of form . It was further observed: (SCR p. 688) [W]hat is more important to negative a plea for customary bonus would be proof that it was made ex gratia, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... religions contributing to their plurality. That is why our primitive practice of linking payment of bonus with some distinctive festival has sprouted. As we progress on the secular road, may be the Republic Day or the Independence Day or the Founder's Day may well become the occasion for customary bonus. The crucial question is not whether there is a festival which buckles the bonus and the custom. What is legally telling is whether by an unbroken flow of annual payments a custom or usage has flowered, so that a right to bonus based thereon can be predicted. The custom itself precipitates from and is proved by the periodic payments induced by the sentiment of the pleasing occasion, creating a mutual consciousness, after a ripening passage of time, of an obligation to pay and a legitimate expectation to receive. Having set out the principles governing payment of customary bonus, we may now come to the facts of the present case. 8. With regard to payment of bonus for the year 1959 a dispute was raised by the workmen and the same was discussed in joint conference of the representatives of the workmen as well as the Management before the Conciliation Officer and a settlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lary and dearness allowance only and excluding attendance bonus, overtime, or any other allowance or payment) earned by them during each of the relevant accounting years ending 1965 to 1969 (both inclusive). (b) Bonus as aforesaid for each of the accounting years mentioned in clause (a) above will be paid in the next succeeding year approximately two weeks before the Pujas. In the said settlement, it was stated that it had been arrived at in terms of Section 34(3) of the Payment of Bonus Act, 1965. 11. The said settlement was followed by Memorandum of Settlement dated September 20, 1971 covering the accounting years ending December 31, 1970, December 31, 1971 and December 31, 1972. Under the said settlement it was agreed as under: (a) All the clerical and subordinate staff of the Company working at 21, Strand Road, Calcutta 1, will be paid bonus in respect of each of the accounting years ending December 31, 1970, December 31, 1971 and December 31, 1972 (all inclusive) at the rate of 10 1/2 per cent (ten and a half per centum) of the total salary and wages (basic and dearness allowance only and excluding attendance bonus, overtime or any other allowance or paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm rate and that too before the Puja festival and not being based on any calculation of the profit and loss of the Company. The only possible inference in such circumstances is that the Management paid bonus which has ripened into a customary bonus due to long usage from 1959 onwards covering a period of 15 years. The learned Judges on Division Bench of the High Court have also observed : However, we may point out that we are of the opinion that from the various agreements it was clear that provisions for payment were being made irrespective of the quantum of profit and loss. It can, therefore, be said that the payment had been made by the Management of the respondent by way of bonus over an unbroken series of years and the said payment did not depend upon the earning and profits. 16. The learned Judges on the Division Bench have held that the said payment could not be regarded customary bonus for the following reasons- (i) it was not being paid at a uniform rate throughout, and (ii) the settlements that were entered into on October 15, 1966, September 20, 1971 and September 20, 1973 stated that the said settlements were entered into under Section 34(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment was made on condition that it would be adjusted towards the profit bonus of the previous year and was accepted as such. The Court, therefore, set aside the conclusion of the Tribunal that payment of customary or traditional bonus was established. In the instant case there was payment at a uniform rate of 10.5 per cent of salary or wages for an unbroken period of nine years, from 1965 to 1973, which was a sufficiently long period, and the Tribunal could have reasonably drawn an inference that the said payment was customary or traditional bonus on the occasion of Puja festival, 19. With regard to the other reason given by the High Court, namely, reference to Section 34(3) of the Bonus Act in the various settlements, it may be stated that the Bonus Act is confined, in its application, to profit bonus, and other kinds of bonus recognised in industrial law are not covered by the provisions of the Act. In Mumbai Kamgar Sabha, Bombay5 it has been held: (SCR p. 608 : SCC p. 848, para 35) The conclusion seems to be fairly clear, unless we strain judicial sympathy contrary wise, that the Bonus Act dealt with only profit bonus and matters connected therewith and did not govern cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounting year and the employee shall be entitled to receive only the balance. 22. In Mumbai Kamgar Sabha5 this Court has observed: (SCR p. 607: SCC p. 847, para 33) For this reason it is provided in Section 17 that where an employer has paid any Puja bonus or other customary bonus, he will be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him under the Act. Of course, if the customary bonus is thus recognised statutorily and, if in any instance it happens to be much higher than the bonus payable under the Act, there is no provision totally cutting off the customary bonus. The provision for deduction in Section 17, on the other hand, indicates the independent existence of customary bonus although, to some extent, its quantum is adjustable towards statutory bonus. This can only mean that if the bonus that was being paid by the respondent is found to be customary bonus then the respondent would be entitled to deduct the amount so paid from the amount of bonus payable to the employee by way of bonus under the Act in respect of that accounting year. 23. Shri G.B. Pai, learned senior counsel appearing for the respondent, placed reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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