Supreme Court of India
Mumbai Kamgar Sabha, Bombay v. Abdulbhai Faizullabhai
Whether the Payment of Bonus Act ruled out claims to bonus based on custom or on conditions of service.
Decided under an earlier law
The Court decided this case under the Payment of Bonus Act, 1965. Section 69 of the Code on Wages, 2019 repeals the Payment of Bonus Act, 1965. The Court's words are shown below, with the Code provision this library lists the case on. This library does not say whether the decision holds good under the Code.
What the Court decided
Each point is this library's summary, followed by the Court's own words, checked word for word against the Supreme Court's typed copy of the judgment (JUDIS file 5703). The pinpoint gives the page of the Supreme Court Reports and the margin letter (A to H) printed beside the line where the words begin.
The Bonus Act dealt fully with profit-based bonus only; it did not do away with other kinds of bonus, such as bonus based on custom.
We hold that the Bonus Act speaks, and speaks as a whole Code, on the sole subject of profit-based bonus but is silent on, and cannot therefore annihilate by implication, other distinct and different kinds of bonus such as the one oriented on custom.
[1976] 3 S.C.R. 591, at 609 C · open the report at p. 609 The Act, as it stood in 1965, did not bar claims to customary bonus or to bonus based on conditions of service.
We hold that the Bonus Act (as it stood in 1965) does not bar claims to customary bonus or those based on conditions of service.
[1976] 3 S.C.R. 591, at 613 D · open the report at p. 613 The Act let an employer deduct customary bonus already paid from the bonus payable under the Act, which showed that customary bonus existed independently of it.
For this reason it is provided in s. 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.
[1976] 3 S.C.R. 591, at 607 F · open the report at p. 607 The provision for deduction in s. 17, on the other hand, indicates the independent existence of customary bonus although, to some extent, its quantum is adjustable towards statutory bonus.
[1976] 3 S.C.R. 591, at 607 G · open the report at p. 607
The earlier provision and the Code
Payment of Bonus Act, 1965, section 17
The judgment refers to this section but does not quote it, so the two texts are not compared here. Read the Act.
Code on Wages, section 37
Adjustment of customary or interim bonus against bonus payable under this Code In force
Where in any accounting year,—
(a) an employer has paid any puja bonus or other customary bonus to employee; or
(b) an employer has paid a part of the bonus payable under this Code to an employee before the date on which such bonus becomes payable,
then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Code in respect of that accounting year and the employee shall be entitled to receive only the balance.