{"id":190329,"date":"1962-03-05T00:00:00","date_gmt":"1962-03-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/jardine-henderson-ltd-vs-the-workmen-and-another-on-5-march-1962"},"modified":"2016-03-08T19:24:18","modified_gmt":"2016-03-08T13:54:18","slug":"jardine-henderson-ltd-vs-the-workmen-and-another-on-5-march-1962","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/jardine-henderson-ltd-vs-the-workmen-and-another-on-5-march-1962","title":{"rendered":"Jardine Henderson Ltd vs The Workmen And Another on 5 March, 1962"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Jardine Henderson Ltd vs The Workmen And Another on 5 March, 1962<\/div>\n
Equivalent citations: 1963 AIR 474, \t\t 1962 SCR Supl. (3) 582<\/div>\n
Author: K Wanchoo<\/div>\n
Bench: Wanchoo, K.N.<\/div>\n
           PETITIONER:\nJARDINE HENDERSON LTD.\n\n\tVs.\n\nRESPONDENT:\nTHE WORKMEN AND ANOTHER\n\nDATE OF JUDGMENT:\n05\/03\/1962\n\nBENCH:\nWANCHOO, K.N.\nBENCH:\nWANCHOO, K.N.\nGAJENDRAGADKAR, P.B.\nSARKAR, A.K.\n\nCITATION:\n 1963 AIR  474\t\t  1962 SCR  Supl. (3) 582\n CITATOR INFO :\n F\t    1969 SC 998\t (17)\n RF\t    1976 SC1455\t (20)\n\n\nACT:\nIndustrial Dispute--Bonus--Available  Surplus--Determination\nof--Closing Bonus--Implied term of agreement or condition of\nservice--Customary bonus.\n\n\n\nHEADNOTE:\nThe appellant is a company carrying on business in  Calcutta\nand  had  been paying a bonus called closing  bonus  to\t its\nworkmen\t at the rate of one month's pay from 1948  to  1957,\nbut  as\t the profits of the appellant considerably  fell  in\n1958,  the  quantum of closing bonus was reduced to  half  a\nmonth's\t pay;  consequently,  a reference was  made  to\t the\ntribunal for decision, whether the management was  justified\nin  reducing the quantum of closing bonus to half a  month's\npay  in\t 1938.\tThe workmen claimed that closing  bonus\t had\nbeen paid at a uniform rate from 1948 to 1937 and had become\nan  implied  condition of service between  the\tworkmen\t and\nappellant  ;  in the alternative,. the claim  was  that\t the\npayment\t had acquired the character of customary  bonus\t and\nwas not dependent upon profits earned by the appellant.\t The\ntribunal  held,\t that the payment of closing bonus  had\t not\nbecome\tan implied condition of service and also held,\tthat\nthe  bonus  could not be held to be a customary\t bonus.\t  It\nheld that there was sufficient available surplus to  warrant\npayment of one month's pay as profits bonus and ordered that\nhalf a month's basic salary, be further paid as profit bonus\nto the workmen for the year in dispute.\nHeld, that the fact that a company declares dividend at more\nor  less  than six percentum is no reason for  changing\t the\nrate  of  interest allowed under the Full Bench\t formula  on\npaid-up capital.\nHeld, further that customary bonus is always connected\twith\nsome  festival.\t As closing bonus is not connected with\t any\nfestival it cannot be treated as customary bonus of the kind\ndealt with the Graham's case.\nGraham\tTrading Co. Ltd. v. Its workmen, (1960) 1 S.  C.  R.\n107,  B.  N. Elias and Co. Ltd.\t Employee's Union v.  B.  N.\nElias and Co, Limited.<\/a> (1960) 3 S. C. R. 382 and  Associated\nCement Companies Ltd.  V. Its Workmen,<\/a> (1959) S. C. R.\t925,\nreferred to.\nIn the present case during the whole of the period from 1948\nto 1957 when closing bonus was paid there was no loss\n583\nincurred by the appellant.  Further the bonus was paid\tonly\nafter the trading results of the year were known.\nHeld, that taking all circumstances into account It  appears\nthat closing bonus had been paid on the basis of the trading\nresults\t of the previous year and depended upon the  profits\nearned in the previous year, and it could not be held,\tthat\none  month's pay as closing bonus was payable as an  implied\ncondition  of  service irrespective of profit  made  by\t the\nappellant.\nM\/s  Isphani Ltd Calcutta v. Isphani Employees Union  (1960)\nC. R. 24, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION Civil Appeal No. 359 of 1961.
\nAppeal by special leave from the award dated April 18, 1960,
\nof  the Third Industrial, Tribunal west Bengal, in case\t No.
\nVIII 153 of 1959.\n<\/p>\n
B.Sen, Sukumar Ghose and B. N. Ghosh, for the appellant.
\nD. N. Mukherjee, for the respondent No.1.\n<\/p>\n
1962.  March 5. The Judgment of the court was delivered by
\nWANCHOO,  J.-This  appeal by special leave arises out  of  a
\nquestion of bonus referred by the Government of West  Bengal
\nto  the\t Third\tIndustrial Tribunal.   The  appellant  is  a
\ncompany\t carrying  on business in Calcutta and\tthe  dispute
\nrelates to closing bonus for the year 1958.  It appears that
\nthe  appellant\thad been paying, a, bonus which\t was  called
\nclosing bonus. to its workmen at the rate of one month’s pay
\nfrom 1948 to 1957.  In 1958, however, as the profits of\t the
\nappellant fell consider. ably, the quantum of closing, bonus
\nwas reduced to half a month’s pay.  In consequence a dispute
\nwas  raised  by the respondents workmen represented  by\t two
\nunions\tand their claim was that they should have been\tpaid
\none month’s bonus as usual.  Consequently reference was made
\nto  the tribunal and the question for decision\twas  whether
\nthe management was
\n584<\/span>
\njustified in reducing the quantum of closing bonus to half a
\nmonth’s pay in 1958.\n<\/p>\n
The  case  of the workmen was that the\tappellant  had\tbeen
\npaying\ttwo  kinds  of bonuses to  its\tworkmen\t each  year,
\nnamely,\t (1) Puja bonus which ,was paid usually\t before\t the
\nPuja  festival, and (ii) closing bonus which was paid  after
\nthe  close of the financial year ending on March  31st\teach
\nyear.  The workmen claimed that closing bonus had been\tpaid
\nat  a  uniform rate from 1948 to 1957 and this\tpayment\t had
\ntherefore become an implied condition of service between the
\nworkmen and the appellant ; in the alternative the claim was
\nthat  the  payment had acquired the character  of  customary
\nbonus  and  was\t not dependent upon profits  earned  by\t the
\nappellant.\n<\/p>\n
On  the other band the contention of the appellant was\tthat
\nthe  payment  of  closing bonus at a  uniform  rate  of\t one
\nmonth’s\t pay for ten years previous to 1958 had not in\tfact
\nturned\tthe payment into an implied condition of service  as
\nthis bonus was of the nature of profit bonus and its payment
\ndepended  upon\tthe profits made by the appellant.   It\t was
\nurged  further that the very fact that this bonus  was\tpaid
\nafter the accounts for the year were made up and the  profit
\nascertained  showed  that  it was  a  bonus  depending\tupon
\nprofits\t ;  the circumstance that it was paid at  a  uniform
\nrate  for sometime was only fortuitous, particularly as\t the
\nappellant  had\tincreased  the Puja  bonus  as\tits  profits
\nincreased in order to help the workmen at festival time.  As
\nto  the alternative case of customary bonus,  the  appellant
\ncontended  that\t this  bonus  had  no  connection  with\t any
\nfestival  and was paid after the state of profits earned  by
\nthe appellant was known and therefore could not be  demanded
\nas  a customary bonus.\tFinally, appellant pleaded  that  if
\nclosing\t bonus\twas treated as pro-fit bonus  there  was  no
\navailable surplus to justify the grant of
\n585<\/span>
\nany further amount as bonus besides half a month’s pay which
\nthe appellant had already given to the workmen.
\nThe  tribunal  came to the conclusion that it had  not\tbeen
\nproved\tthat  the  payment of closing bonus  had  become  an
\nimplied\t condition of service and in that connection  relied
\non the decision of this Court in Messrs.  Isprahani  Limited
\nCalcutta  v. Ispahani Employees Union.<\/a> (1) Further, it\theld
\nthat the bonus could not be held to be a customary bonus  as
\nthere  was nothing to show that it had been paid even  in  a
\nyear of loss.  It therefore negative the case of the workmen
\nthat closing bonus of one month’s pay was payable every year
\nafter  the  accounts  were  closed  either  as\tan.  implied
\ncondition of service or as a customary bonus.  The  tribunal
\nthen  we,.it  into the question whether any  further  amount
\nbesides\t half a month’s pay which had already been  paid  by
\nthe  appellant as bonus could be awarded as profit bonus  on
\nthe  basis of the Fall-Bench formula approved by this  Court
\nin  the Associated Cement Companies Limited v.\tIts  Workmen<\/a>
\n(2).   It  held that there sufficient available\t surplus  to
\nwarrant\t payment  of one month’s pay as\t profits  bonus\t and
\ntherefore  ordered  that  half a, month’s  basic  salary  be
\nfurther paid as profit bonus to the workmen for the year  in
\ndispute., It is this decision of the tribunal which has been
\nassailed before us by the appellant.\n<\/p>\n
So far as profit bonus is concerned, the main contention  on
\nbehalf\tof the appellant is that the tribunal went wrong  in
\nallowing  2 1\/2 per centum interest on paid-up\tcapital\t and
\nthat it’shoud have allowed, 6 per  interest,  which  is\t the
\nusual  amount  allowed under the  Full-Bench  formula.\t The
\nreason\twhy the tribunal allowed 2 1\/2 Per  centum  interest
\nwas  that  the\tappellant, had paid dividend at\t 2  1\/2\t per
\ncentum in that year as its
\n(1) [1960] 1 S.C.R. 24.\n<\/p>\n
(2) [1959] S.C.R, 925.\n<\/p>\n
586<\/span><\/p>\n
profits\t bad  show a considerable fall.\t We are\t of  opinion
\nthat  the  tribunal  was wrong in allowing only\t 2  1\/2\t per
\ncentum\tinterest on paid-up capital on the ground  that\t the
\nactual dividend declared by the appellant was only 2 1\/2 per
\ncentum\tfor  that  year.   The\treturn\ton  paid-up  capital
\nprovided in the Fall-Bench formula is not linked with actual
\ndividends that might be declared by a company.\tMany a\ttime
\ncompanies declare dividends higher than six per centum.\t But
\nunder  the formula they are usually allowed six\t per  centum
\ninterest  on paid-up capital. irrespective of the  dividends
\ndeclared.   It\tis  only where a company  can  make  out  an
\nexceptional  case  for\tallowing more than  six\t per  centum
\ninterest  on  paid-up capital that the\ttribunal  can  award
\nmore.  Similarly it is only when an exceptional case is made
\nout for allowing less than six per centum interest that\t the
\ntribunal  would\t be justified in allowing less.\t We  are  of
\nopinion\t that the fact that a company declares\tdividend  at
\nmore  or less than six per centum is no reason for  changing
\nthe  rate of interest allowed tinder the Full-Bench  formula
\non paid-up capital.  In the present case no reason has\tbeen
\nshown  besides the fact that the dividend declared was\tless
\nthan  six  per centum to reduce the usual rate\tof  interest
\nfrom six per centum to 2 1\/2 per centum We are therefore  of
\nopinion that the tribunal should have allowed six per centum
\ninterest  on  paid-up capital in this case  and\t that  would
\nincrease  the amount due under this head from Rs. 5 lacs  to
\nRs. 12 lacs.  It is not disputed by learned counsel for\t the
\nrespondents  that if six per centum interest is\t allowed  on
\npaid-up\t capital in this case as is usually done there\twill
\nbe  no justification for allowing more as profit bonus\tthan
\nwhat  the  appellant has already given.\t In the\t result\t the
\ntribunal’s award of half a month’s further wages as bonus on
\nthe  ground  that there is available surplus to\t justify  it
\nmust be set Aside.\n<\/p>\n
587<\/span><\/p>\n
Learned\t counsel for the respondents however submitted\tthat
\neven  though no further bonus could be allowed on the  basis
\nof the Full-Bench formula, the workmen were entitled to\t one
\nmonth’s pay as closing bonus either as an implied  condition
\nof  service  or as a customary bonus.  So far  as  customary
\nbonus is concerned, it is enough to say that customary bonus
\nof  the nature dealt with in Graham Trading Co. Ltd. v.\t Its
\nWorkmen<\/a>(1)  is always connected with some festival.  In\t the
\npresent case it is not in dispute that the closing bonus  is
\nnot  connected\twith any festival and  therefore  cannot  be
\ntreated\t as  customary\tbonus  of the  kind  dealt  with  in
\nGraham’s case.\tThis was pointed out by this Court in B.  N.
\nElias & Co. Ltd.Employees’ Union v. B.N.Elias & Co. Limited,<\/a>
\n(2) where it was observed that it was difficult to introduce
\nthe  payment  of customary bonus between  employer  and\t em-
\nployees\t where\tterms of service are governed  by  contract,
\nexpress or implied, except where the bonus may be  connected
\nwith  a\t festival,  whether puja in  Bengal  or\t some  other
\nequally important festival in any other part of the country.
\nTherefore as closing bonus is admittedly not connected\twith
\nany  festival it cannot be allowed as a customary  bonus  of
\nthe type considered in Graham’s case(3).\n<\/p>\n
Turning\t now to the question whether payment of one  month’s
\npay  as\t closing bonus has become an  implied  condition  of
\nservice, the first point to be noticed is that closing bonus
\nwas  always paid after the trading results of the year\twere
\nknown.\t Under these circumstances it would not be  improper
\nto infer that closing bonus was dependent upon profits\tmade
\nby the appellant, for it was paid only after profits for the
\nprevious  year\thad been ascertained.  In the  present\tcase
\nduring\tthe whole of the period from 1948 to 1957  when\t the
\nclosing bonus was paid
\n(1) [1960] 1 S.C.R. 107.\n<\/p>\n
(2) [1960] 3 S.C.R. 382.\n<\/p>\n
(3)  [1960] 1 S.C.R. 107,
\n588<\/span>
\nthere was no loss incurred by the appellant.  As was pointed
\nout in Ispahani’s case the fact that bonus was paid during a
\nyear  of  loss also would be an\t important  circumstance  in
\ncoming\tto  the\t conclusion that payment  was  a  matter  of
\nobligation  based on an implied agreement.  In\tthe  present
\ncase that important circumstance is absent.  The absence  of
\nthis  circumstance  along with the fact that the  bonus\t was
\npaid  only after the trading results of the year were  known
\nand  therefore in all probability depended upon the  profits
\nwould show that it could not be a matter of obligation based
\nupon implied agreement.\n<\/p>\n
Besides\t it appears that this company formerly\tbelonged  to
\nanother\t owner and merged with the appellant in 1946.\tWhen
\nthe former company was the owner it does not appear that  it
\npaid  any  closing bonus as such from 1940  to\t1945.\tEven
\nafter  the appellant took over no payment was made  in\t1946
\nand  1947.  It was only from 1948 after the trading  results
\nfor  the year ending on March 31, 1948 were known  that\t one
\nmonth’s\t basic\twages began to be paid as closing  bonus  in
\naddition  to  puja bonus which was originally  paid  at\t the
\nrat(, of one month’s basic wages but which was gradually in-
\ncreased to two months’ basic wages from 1955.  For the\tyear
\nin  dispute the appellant has paid two months’\tpuja  bonus;
\nbut  it reduced the closing bonus from one month to  half  a
\nmonth’s\t basic\twages because of the fall in  profits  which
\nfell from Rs. 27 lacs in 19,57 to a little over Rs. 15\tlacs
\nin- 1958.  It is clear therefore that the closing bonus\t has
\nnot  been  paid from the beginning when the  appellant\ttook
\nover  the  business of the previous company, though  it\t was
\npaid  at  a  uniform  rate from 1948 to\t 1957.\t It  may  be
\nmentioned  that\t in  1959 when profits\twent  up  again\t the
\nappellant has paid one month’s pay as closing bonus.  Taking
\ntherefore all the circumstances into account it appears that
\nclosing bonus has
\n 589<\/span>
\nbeen  paid  on\tthe  basis of the  trading  results  of\t the
\nprevious  year and depended upon the profits earned  in\t the
\nprevious year.\tIn the circumstances it cannot be held\tthat
\none  months  pay as closing bonus is payable as\t an  implied
\ncondition of service irrespective of the profit made by\t the
\nappellant.   It seems to have been of the nature  of  profit
\nbonus, even though it may. have been paid at a uniform\trate
\nfor ten years.\n<\/p>\n
We  therefore allow the appeal, set aside the order  of\t the
\ntribunal and reject the claim of the workmen for any closing
\nbonus over and above that paid by the appellant for the year
\n1958.\tIn  the circumstances we order the parties  to\tbear
\ntheir own costs.\n<\/p>\n
Appeal allowed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Jardine Henderson Ltd vs The Workmen And Another on 5 March, 1962 Equivalent citations: 1963 AIR 474, 1962 SCR Supl. (3) 582 Author: K Wanchoo Bench: Wanchoo, K.N. PETITIONER: JARDINE HENDERSON LTD. Vs. RESPONDENT: THE WORKMEN AND ANOTHER DATE OF JUDGMENT: 05\/03\/1962 BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. SARKAR, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-190329","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nJardine Henderson Ltd vs The Workmen And Another on 5 March, 1962 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/jardine-henderson-ltd-vs-the-workmen-and-another-on-5-march-1962\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Jardine Henderson Ltd vs The Workmen And Another on 5 March, 1962 - 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