i s.c.R. M/s. TULSIDAS KHIMJI v. THEIR WORKMEN (B. P. SINHA. c. J., K. SUBBA RAO, N. RAJAGOPALA AYYANGAR, J. R. MuDHOLKAR and T. L. VENKATARAM.A AIYAR, JJ.) Industrial Dispute-Bonus -Profit·sharing bonus- Cus-
tomary festival bonus-Quantum oj- Deductions from profits for income-tax purposes in partnership .firm-Nature of control of Supreme Court ovrr Tribunal-Importance of Rules of Supreme Court-Industrial Disputes Act, 1947 (14 of 1947).
The appellants are a registered partnership firm. The firm carries on business in the name of Messrs. Tulsidas Khimji. It has six partners. It carries on four different kinds of business. The respondents are workmen employed
under the firm. Disputes arose between the appellants and the respon· dents and the question referred to the Tribunal was the quan- tum of bonus payable to the respondents for the year ending October 30, 1958.
The relevant issue were whether the claim under reference should be restricted to a claim for profit-shar- ing bonus or customary bonus on the basis of implied terms of contract, and whether it was open to the respondents to claim bonus on the basis of the surplus profits and at the same time claim bonus on the ground of custom or practice
or implied terms and conditions of service, or whether the workmen should elect the basis on which they claimed bonus. The Tribunal held that the workmen were entitled to claim bonus on each of the three alternative bases, namel}, profit-sharing bonus, bonus as an implied term of service and customary or traditional bonus on the occassion of Divali. The Tribunal fixed the amount of bonus at one-fourth of the tofal basic wages earned by the workmen during the year
under reference, less the amount of bonus equivalent to one month's wages already paid for the year under reference. The Tribunal also held that the workmen had succeeded in proving their claim for traditional or customary bonus at the uniform rate of one month's basic wages plus dearness allow- ance. The Tribunal also held 1hat the amount deductable
on aHcnmt of inuuc 0 ta ~as a little O\Cr 5 ftr ctnt of the April 11. …. Tutsidat Khimji v. Their Workmen total amount of gross profits. The Tribunal also fixed the remuneration of the partners at Rs. 20,000 in all.
Against the award of the Tribunal, the appellants came to this Court by special leave. Held, (per Sinha, C. J., Subba Rao, Mudholkar and Venkatarama Aiyar, JJ., Rajagopala Ayyangar, J., dissenting) that a sum of Rs. 53,000 should b., allowed under the head of income-tax. It was not right to give the employers the double benefit of granting deduction on the basis of income-tax
payable by each partner in tespect of his share in the profits of the firm, and at the same time adding the registered firm tax which was paid by the firm in order to obtain certain
reliefs under the Income· tax Act which they would not other- wise have obtained. As regards the remuneration to be paid to the partners of the firm, the amount fixed by the Tribunal was found to be inadequate, but as this Court does not function as a regular court of appeal from the Tribunal and its function is merely to see that the law is being properly administered in accord- ance with the well· settled rules of natural justice, this Court refused to determine the amount of remuneration to be allowed to the partners.
The Tribunal was fully justified in coming to the con- clusion that the traditional or customary bonus had been established in this Case. What is important to negative a plea for customary bonus is the proof that it was made
ex gratia and accepted as such or that it was unconnected with any such occasion as a festival. This Court refused to allow the respondents to prove that a bonus could be granted as an implied term of contract of service.
Such a case had not been made out in the statement of the case. This Court is very strict in enforcing the rules of pleading as laid down in the Supreme Court Rules. Those rules have been laid down with a view to help the court in narrowing down the controversies between the parlies and also for the purpose of giving notice to the other side that a parti- cular question will be raised and that party should be ready to meet that particular point. This Court would not ordinarily permit any laxity in the matter of pleadings in this Court. The Graham Trading Go. (India) Ltd. v. Its Workmen,
[1960] 1 S C.R. 107, and B. N. Elias & Go. Ltd. Employees' Union v. B. N. Elias & Go, Ltd. [1960] 3 S.C.R. 382, re fcrred to. IS. C.R. The Asaociated Cement Companies Ltd. Dwarka v. Its
Workmen, [1959] S.CR. 925, approved. Per Ayyangar, ].-Though a firm is regarded as an entity for the purpose of income-tax, a partnership is not an entity at law and it is the partners who constitute the employers for all purposes other than income-tax.
It is the tax payable by the individual partners on their share income from the firm without taking into account any income derived by them from other sources and without allowing for any losses suffered by them in their other ventures that would constitute the item of income-tax payable by the employer which would be the
deductable head for the purposes of computing the available surplm. The registered fom tax paid by the appellant firm has to be added to the tax payable by the individual: part- ners on their share of the profits arriving at the total of the income-tax payable by the business. The amount of registered firm tax payable by the firm should he added to Rs. 53,000/- and odd payable by the partners individually in respect of their shares of profits and thus the sum deductable under the head 'Income-tax Payable, comes to Rs. 60,000.
The amount reasonably allowable for remuneration to the partners should be Rs. 40,000. This amount was arrived at hy considering the fact that the partners were working for the firm, and if they had not done so somebody else would
have been employed, and h(" would have been paid for hi work. The borms to be awarded to the respondents should be reduced from three months' basic wages to the basic wages for a period of two months.
The declaration granted by the Tribunal with regard to customary bonus is not justified and the same is set aside. Millowners' Associu:ion, Bombay v. Rashtriya Mill Mazdoor Sangh, 1950 L.L.J. 1247, Associated Cement Companies Ltd. v. Its Workmen, (1959] S.C.R. 925, Mfs. lspahani Ltd. Calcutta v. lsP,ahani Employees' Union, [1960] I S.C.R. 24, Graham
Trading Co. (India) v. Its Workmen, [1960] I S.C.R. 107 B. N. Elias & Go. Employees Union v. B. N. 1t'lias & Oo., '[1960] 3 S.C.R. 382 and The Management of Tooklai Experimentat Station v. Worlcm1m [1962] Supp. l S.C.R. 557, referred to. CIVIL APPEJ,J,ATF. .TumsnicTION : Civil Appeal
No. 503 of 1961. l9GI T ulsida Khirrgi v. Their w,rkmen Tu/siclas Ehimji v. Th1fr Workmen SinAa c. J. Appeal by special leave from the Award dated May 10, 1961, of the Central Government's Addi-
tional Industrial Tribunal, Bombay, in Heference (CGIT) No. 4 of 1960. 111. G. Setalvad, Atwrney-General of India, S. D. Vimadlal, J. B. Dadachanji, 0. G. Matlmr and Ravinder Narain, for the appellants.
G. H Ago.i·wala and K. R. Ghoudhry, for the respondent,. 196'..'. April 11. The Judgment of 1:)inha, C.J., Subb1t R1w, i\Iudholkar and Aiyar, JJ, was delivered by Sinha, C. .J., Ayy.~ngar, .r:, delivered a separate
Judgement. SINHA., C. ,T.-This appeal, by special leave, is directed against the award dated May LO, 1961, made bv the Central GovPrnmPnt's Additional Industri~l Tribunal (Shri l'alim M.
Merchant) Bombay, in Reference No. 4 of 1960, on a reference mAde by the Central Government under cl. ( d) of sub-s. (l) nf s. l 0 of the Industrial Disput~s Act (XIV of 19-17). The main point in controversy
between the parties relates to the question of bonus, both traditional or customary bonus and profit- sharing bonus. The apella.nts a.re a partnership firm, regis- tered under the Indian Partnership Act, 1932, and
have their office at 46, Veer Nariman Road, Fort, Bombay 1. The firm carries on business in the name of MeEBrs. Tulsidas Khimji and for the relevant year endfd October 31, 1958, the
partners were (1) Shri Karsondas Tulsidas ( 2) Shri Ranchhodas Goeuldas (3) Shri Na.randas Tulsidas (4) Shri Moolsing KBrsondas (5) Shri Shantu Kar- sondas and (6) Shri 11'arendia F anchhodas. They
are <'losely related to one another. The first two 11a1tnus aforHaid have bctn aHudatcd 11ith tlit flim fm al:~ut 40 y<aIF, the third for al:cut 1 S.C.R. 35 years, the fourth for about 15 years, the 5th for
about 8 years and the 6th for about 5-6 years. At all material times, the six partners had been work- ing for and in the interest of the firm, which carried on different kinds of business, nf1mely, (l) Clea.ring
and Forwarding Agents, (2) Godown Keepers, (3) Insurance Agents and (4) Cotton Supervisors and Controllers. For carrying on these different kinds of business, they maintained four different and dis-
tinct departments. The respondents are workmen employed under the firm. The question referred to the Tribunal was "quantum of bonus payable to workmen for the year ended October 31, 1958". A
number of issues were raised before the Tribunal, of which it is only necessary to notice the 4th and the 5th issues, which are as under: "4. Whether the claim under reference should be restricted to a claim for profit-shar-
ing bonus or customary bonus or on basis of implied terms of contract? 5. Whether it is open to the workmen to claim bonus on the basis of surplus profits, and at the same time claim bonus on the
ground of custom and practice or implied terms and conditions of service? Or whether the workmen should elect the basis on which they claim bonus? The union of the workmen had claimed profit-
sharing bonus at the rate of6 months' wages (inclu- sive of Dearness Allowance) and traditional or cus- tomary bonus at a rate, which is not clear but which may be said to be either three months' or one
month's wages, plus dearness allowance, on the occasion of the Dewali festival. The difficulty in clearly stating the case for the workmen is that they were not clear in their own minds as to whether
they were claiming the customary or traditional bonus as one of the implied terms of their employ- ment or for the special festival occasion of DewaU. TU/sidas ·'Xhimj{ · v. Their W Orkm.n ·
Sinha C. J~ Tulsitlu Khimji v. Tlrl ir W ,rkmen Sioh• C. J; It was not even clear whether the claim for 6 month's wageR, inclusive of dearness aJIQwance, was the total claim for bonus or was in addition to the
traditional or customary bonus, either implied or as fe~tival bonus on the occasion of Dewali. 'J hat a.ccounts for the form of tho issues set forth above. The appellants conceded only one month's basic
wages as bonus which had already been paid, and contested the claim for traditional or customary bonus either as an implied term of contract of ser- vice or as a feetival bonus. As there was some con-
fuRion about the claim of the respondents, the Tri- bunal, after referring to a number of documents and oral statements, came to the conclusion that the respondents had claimed by way ofma.ximum bonus,
6 month's wages on a profit-sharing basiR, and that the minimum was the claim for customary or tr.1di. tional bonus of three months' basic wages and one month's dearness allowance. On Issue No. 4, the
Tribunal decided that those were alternative claims, and that it was not necessary for the workmen to elect any one of the alternatives. The Tribunal pointed out that till the decision of this Court in the
case of The Graham Trading Oo. (India) Ltd. v. Its Workmen(') a clear distinction was not made in respect of claim for bonus as an implied term or condition of service and at a customary or traditi-
onal bonus, and the respective tests to determine them. The Tribunal, therefore, held that the workmen were entitled to claim bonus on each of the three alternative basis, namely,
{I) Profit. sharing bonus, (2) bonus as an implied term of ser· vice and (3) customary or traditional bonus on the occasion of Dewali. The Tribunal pointed out that the appellants had already paid to its workmen
bonus equivalent to one month's basic wages, which amounted to Rs. 20,780/-. In order to determine the question of the first kind of bonus, namely, profit-sharing bonus, the Tribunal had to determine
(I) (1960) I S·C.R. 107, 1 S.C.R. the available surplus. In order to do. that, it had to grant certain deductions from the gross profits. The appeJlante claimed deductions under a numb<'r
of heads, but ·we are concerned only with two out of them, namely, (l} whether the appellants' claim for deduction of 51 % out of the grnss pro.fits on accounts of Income-Tax was justified, and (2) what
should be the amount of remuneration for the six partners, in respect of which also deduction may be granted. The Tribunal decided that the amount of tax payable by the firm, as such, should be deducted
and nQt as claimed by the appellant. On that basis, the Tribunal found that the amount deductable on account of Incorue-Tax would come to a little over 5% of the total amount of the gross profits.
As regards the remunerations of the partners, the Tri- bunal fi:xed a lumpsum of twenty thousand rupees, on a. basic which is not easily discarnible from the award, and may be said
to be more or Iese conjectural. After making provision for the prior charges ou the amount of the residuary surplus, the Tribunal came to the conclusion that a bonus equivalent to l /4th of the
total basic wages earned by the workmen during the year under reference, i.e., tho year ended Octo- ber 31, 1958, would be justifi1,d. tr, then turned to the question of the alternative claim of the work-
men to three months' basic wages, plus one month's dearness allowance, eithn as an implied term of conditions of service or as customary or traditional bonus. On a consideration of the decisions of this
Court, and other decisions of High Courts and Tribunals, it came to the conclusion that though the respondents may not have succeeded in establishing their claim on the basis of implied terms .of con-
tract, they had succeeded in proving their claim for tra.ditional or customary bonus at a unirorm rate of one month's basic wages plus dearness allowance. In the result, the Tribunal awarded to the workmen
bonus equivalent to I/4th of the total ba.sio wages, TulsidtU Irltimji v. Thiir Workmln Sinlt• C. J, Their ivorkme11 Sin/la C. J. [1963) l<.>ss the amount of bonus equivalent to one month's
"·ages already paid for the year under reference, on the same terms and conditions as had been prescri- l)('<l in the award in rPgpert of the previous Y"•U eud·1d October 31, Hl57.
Against this award, t:he firm has come up in appeal. There is no cross appeal by the workmen, even though, on the findings recorded by the Tribunal, they were found entitled to three months'
wages by way of profit sharing bonus and one month's wages plus dearness allowance by way of traditional or customary bonu8 on the occasion oi Deu·ali. Substantially, three questions were raised
before us on behalf of the appellants, namely, (I) that deduction for income-tax, in order to arrive at the actual figure of available surplus, should have been, not on the basis of what income-tax is actually
payable or has been is in respect of the registered firm, but on a notional b11sis, which may be analogous to the case of a registered company, or on the basis of the Tax payable on the lumpsum
income of 1.95 lakhs by an unregistered firm, or on some other basis which may have some resemblance to what each one of the partners has to pay in respect of his income : (2) that the
partners' remuneration should not have been fixed by the Tribunal at Rs. 20,000/-, by a rule of thumb, but should have been fixed on the basis of reasonable remuneration which the firm should pay to the partners for
running its business in the four departments, aforesaid. In this connection, it was said that if Rs. 96,000/-, as claimed by the appellants, was thought to bfl too high, a figure of Rs. 48,000/-
which is half the amount claimed, would be highly reasonable in the facts and circumstances of the business of the firm; and ( 3) that the Tribunal had mtsdirected itself in arriving at a finding that
1 S.C.R. the workmen had succeeded in establishing their claim to traditional or customen Lonus at a uniform rate of one month's ba~ic wages plus dearnPss allowance. We shall take up the points in the order
indicated above. It is not contested on behalf of the respondents that some deduction has to be made on acC'ount of income-tax, but their learned counsel has contended that the tax should he
what the firm as s-uch has to pay by way of income- tax. It was said in this connection that a registerhd firm is a legal entity for the purposes of income-tax, and that the Tribunal was perfectly justified in
giving credit only for the mm of about. Rs. 10,000/-, worked out on that basis. On thA other haLd, it was contended on behalf of the appellants that 51.5%, or whatover may be the actual rate of
income-tax payable by a comp3.ny should have been deducted. Alternatively, it was argued that 7 aunas in a rupee would be a fair basis. In our opinion, it would not be ri~ht to equate ::i registered
firm to a company for the purpose of deduction of income-tax. It is trun that the income-tux dedurtion has to be made on a niJtirmal ba.,is. as laid down by a BL'nch of 5 Judges in this Court, in
The Associated Cement Companies Ltd., Dwarka Ceme11t Works, Dwad,·a v. Its Workmen (1). But even so, the notional basis must have relevance to the law of income-tax in rnspect of firms. In this conn1•ction,
the following :tlteniatives were suggested nn behalf of the appellants, namely, (I) income-tax at 7 armas in a rupee, which will wipe off about rupees 85 thousand or about 45° ~ of the profit8; l2) a sum
of about H.s. 53,0UO/· odd on the basis of income-t1x payable on an income of J .!:J5 lakbs 0f the firm on the footing of the pa1tners 1nying the tax at the ·tppropriate rate on their shares of the income,
this would account for ab0ut 27~ ~ of the profits, after adding the ten thousand rupees. which is a (l) (19~9) S.C.R. 925, Tutsid•s Khimji v. Their Workmen Sinha C. J. T •. lsid1s Khimji
v. T11eir Wo kmtn Sinha C. J. registered-firm tax, a.s already indicated; (3) tax of one lakh forty thousand odd on the basis of the firm being unregistered, which the income-tax authorities are entitled to do in certain circums-
tances this would account for about 70% of the profits; ( 4) income tax amounting to roughly 68 thousand rupe~s, plus ten thousand rupees in respect of registered-firm tax, on the basis of the
tax payable by the partners on the income of the registered firm at the rate applicable to their world income, on their shares in the firm. We have no hesitation in rejecting the first euggestion of
deducting about 7 annas in the rupee because that will be on the ha.sis of a tax on a corporation, the basis which we have already rejected as unfair. Even more unacceptable is the suggestion of
knocking off a lakh a.nd 4 thousand rupees, which ha~ the effect of setting apart the major share of the profits for income-tax on a highly notional basis. Tbe 4th alternative of taking into account
the world income of the partners of the firm would be equally unjust and unfair to the workmen in the case of the members of the firm being very rich persons. This course would be highly objectionable
from another point of view, which is a very impor- tant considera•.ion, namely, that in order to determine the bonus payable for a particular year of working of the firm, the word income of the
partners of the firm may have to be determined in the first instance, which process may take years. As the appellants themselves have rightly stated that the deduction on account of income tax has to
be on a notional basil~, the basis has got to be such as to be readily ascertainable, and that can only be done by ma.king calculations on the profits of the firm itself, for the particular year. The last
alternative of allowing deduction under this head of calculating inc.Jme tax on the actual figures of the- profits of each of the partners separately appearR to be rea.sona.ble, because the figures
l S.C.R. are known and the tax of each constituent members of the firm can he easily calculated on the basis of his share. But it has been argued on behalf of the respondents that the amount of
income-tax payable by th~ firm as such, viz., about Rs. 10,000/- should be permissible dedu.~tion and not what each partner had to pay on his share of the profits, because it is the firm which is the
employer and which can claim deduction under this head. But this contention cannot be pushed to its logical conclusion because a firm is not a legal person within the meaning of the Industrial
Disputes Act. It is the partner of the firm who are the employers. It, is that fact that has to be taken into account in considering the question of income- tax, evon as in other matters like remuneration, etc.;
i.e., the amount of bx pityable by each: partner, q·ua the business of the firm, irrespective of their other sources of income or loss, because notional is quit different from the actual, though not wholly
dissociated from it. But the question still arises whether the registered-firm tax can also be added to the figure of income-tax arrived at by the pro- cess just indicateJ. In our opinion. it would not•
be right to give the employers the double benefit of granting deduction on the basis of income-tax payable by each partner in respect of his share in the profits of the firm, and at the same time adding
the registered-firm tax, which is paid by the firru in order to obtain certain reliefs under the Income Tax Act, which they would not otherwise have obtained. Hence, as a result of the foregoing con·
siderations, the sum of 53 thousand rupet•s, in' round figures, should be allowable under thiH h<·ad of income-tax. Even that figure, it was admitted, would represent about one quarter of the profits.
The next question that fall1:1 to be determined is what amount should be allowed under the ht"ad Remuneration to the partners of the firm'. I'n this 196! TuUrlas Khimji v. The;r Jr or km u
Sinha C •. J, Tu/sidas Khimji v. Th1it Wortmen Sinha G. J. SUPREME UOURT REPORTS (l963J connection, it has been found by the Tribunal that• ~ the olaim of the partners that they devoted their
whole time to the business of this firm only, is not correct; and that the individual partners, on their own account, and certainly as partners of another firm, have been carrying on their other business
activities. It has also to be borne in mind that the partners have not been able to adduce any reliable date to determine the amount of time and energy which they devote to the business of the
firm in question. It is equally true that the sum of Rs. 20,000/- fixed by the Tribunal, under this head, amounting roughly to IO% of the gross prof- its is more or less conjectural. We know that the
sum of Rs. 4,60,000/· represents roughly the wage bill for the year in question. Comparing the sum • allowed by way of remuneration to the partners to this figure, it appears to us that the amount fixed
by the Tribunal errs on the said of inadequacy. But this Court is not in a position to come to any definite conclusion of its own the record as it stands, assuming that it is open to this Court to
record a finding, which is more or less one of fact, in disagreement with the finding of the Tribunal. It must be added that this Court does not function as a regular Court of Appeal from the Tribunal.
Its function is merely to see that the la.w is being properly administered, in accordance with well settled rules of natural justice. Hence, we would not embark upon a fruitless task of determining a
figure which will not have any substratum of solid facts and figures to support our conclusion. The remaining question of traditional or custo- mary bonus has been pressed upon us on behalf of
the appellants. It has been argued that the Tribu- nal has not followed. the rulings of this Court on the question of a b'.mus of the kind we are now dealing with. 'fhe Tribunal has come to the con-
clusion that the workmen have proved that bonus at a uniform rate of one month's basic wages plus 1 S.C.R. dearness allowance, on the occasion of Dewali, has been paid throughout the period of more than 15
years, between 1940-41 and 1956-57. That is a finding of fact. But it has been contended that according to the judgments of this Court, in order to establish the claim for a bonus of this kind,
four conditions must be fulfilled, namely, ( l) that the payment bas been made over an unbroken series of years; (2) that it has been so made for a. sufficiently long period, (3) that the paytnent has
been made at a uniform rate throughout, and (4) lastly, that it has been paid even in years of loss, and did not depend upon the earning of profits. It has been found by the Tribunal that the first three
conditions, if they can be so called, have been ful- filled, but that the last one has not been established and could not be established because the firm was singularly fortunate in having an unbroken record
of profits, year after year. It was vehemently argued on behalf of the appellants that as this last condition bas not been fulfilled, the Tribunal was not justified in law in coming to the conclusion that
the olaim of tradition11l or customary bonns at the rate indicated above had been established. In our opinion, this contention is not acceptable for several reasons. Firstly, the four so-called conditions are
not really in the nature of condirions precedent but are circumstances which have been taken into account by this court in The Graham Trading Oo. (I rulia) Ltd. v. I ts TV orkmen (1)
for oomtng to a conclusion as to whether or not a claim to customary or traditional bonus had been ma.de out. In the case just referred to, this Court pointed out that the Tribunal hBs to consider
those four circumstances. That those are circums- tances, and not conditions precedent, is shown by the fact that this Court has nointed out that the length of the period will depend .. upon the circums-
tances of each case. A condition precedent, as (1) (1960) I S.C. R. 107. l96i Tit/sidas Khimji v. Tf.eir Workmen Su.hu C. J. 196Z Tv.lJidaa Khirnji v. Their ltt1rl111en SUPHEME COURT REPORTS [1963)
Euch, has to be more definite than one which dflpends upon the circumstA.nce~ of each case. Secondly, there is no rational ground for hol,;ing that payment even when there were losses is a
condition precedent because, as has happened in this case a company or a firm ma.y have an unbroken record of profit~ ever since it started working. Hence, if it were to be held as a condi-
tion precedent, payment of bonus satifying the three conditions aforesaid but not this one, for however long a period, would have to be held as insufficient to establish the claim for this kind of
bonus. Between profits and loss in a particular year, there may be a very small gap. The loss may be of one rupee; and similarly profits may be equally nominal. The third alternative, which may
be supposed, is neither loss nor profit. According to the appellants' contention, the <'ase for such a bonus is made out in the first supposition of a nominal lo~s, but not of the second or the third alter-
natives. The law cannot be founded on such unsubstantial considerations. The question in such cases is always one of substance, and not of form. We cannot, therefore accept the submission that loss substantial or other-
wise is a sine qua non. The observations of this Court in the decisions referred to above must be understood as based on considerations of substance and not of form. Such a bonus has reference to
a special occasion like a festival, for example, the Pujas in Bengal and the Dewali in Western India- oecasiona which arc genarally utilised by employers to rewaro! the services of their employees. Hence
in our opinion, what is more important to nega. tive a plea for customary bonus would be proof that it was made ex gratia, and accepted as such, or that it was unconnected with any such oocasion
like a festival, as laid down by this Court in the 1 S.C.R. SUPREME COURT REPOR'£S case of B.N. Elias & Oo. Ltd. Employee,s' Union v. B.N. Elias & Oo. Ltd. (1). In our opinion, therE'fore,
the Tribun'.11 was fully justified in finding that the traditional or customarv bonus had been estab- lished in this case, notwithstanding that it had not been shown, as it could not have been shown,
that it was paid in a year of loss. On behalf of the respondents an attempt was made to show th~t such a bonus could be granted as an implied term of contract of service. But as such a case
has not been made in the statement of the case in this Court, we did not allow thQt case to be made out at the time of the arguments. We must make it clear that this Court has to be very strict in
enforcing the rules of pleading, as ]aid down in the rules of this Court bearing on the question of statement of case <if the parties. These rules have been la.id down with a view to help the Court in
narrowing down the controvercies between the parties and also for the purpose of giving notice to tho other side that a particular question will be rai3ed, and that that party should be ready to
meet that particular point. This Court wou Id not ordinarily permit any laxity in the matter of pleadings in this Court, and litigants and their legal advisers must take note of what we. have said
so often in the course of arguments in a number of cases coming before us recently. Lt remains to consider wh11.t is the effect of our finding on the first question relating to deciuc-
tion on account of income-tax on the award made by tho Tribunal. At page 129 of volume I of the papC'r book, there is a statement of the profits of tho firm between the years 1943-44 and 1957-58
and at page 157 of the reasons of .the Tribunal in volume II appears a tabular statement of the bonus paid for the curn·sponding period of years, which has t:onsistently heen equivalent. to three months'
(.l) llY60] :i S.C.R. 3fl2. Tulsidas K!iimji v. Their Wo1km•11 Sinha C. J. Tulsidos Kh~mji T/Jeif Wr,rkm.en Sinh4 C. J. basic wages, which is the bonus allowed in respect of the year in question also. This was so in spite of
the fact that the profits have fluctuated considera- bly from year to year. Even after payment of the bonus as directed by the Tribunal, and making allowance for the higher amount of income-tax as
determined by us, the appellants are left with a substantial amount by way of their share of the profitP. It would thus appear that the Tribunal has not been too generous to the workmen when it
allowed a consolidated bonus of three months' basic wages minus the amount already paid to them. In the result, the appeal fails and is dismissed "ith costs. AYYANGAR, J.-I regret my inability to agree
in the order proposed by my Lord the Chief Justice 'lhe facts of the case and the points in dispute· arising for decision have been exhaustively set out in that judgment and I consider it unnecessary to
repeat them. It will be seen that the controversy is confined to two matters: (1) the quantum of the profit-bonus, if any to which the respondents would be entitled, for Samvat year 2013 (1956-1957) and
(2) the correctness of th~ declaration by the Tribu- nal in its award now under appeal that the respon- dents are entitled to customary or festival bonus on the occasion of Diwali, and these I shall deal in
that order. Taking up first the question of profit-bonus, its quantum admitted depends upon the surplus avail· able for distribution. The Tribunal has awarded a bonus equivalent to three months' basic wages, this
including the bonus equivalent to one month's basic wage already paid by the appellant-firm. The figure of 3 months' basic ,wages has been derived by following t.he formula enunciated by the Full Bench
of the Labour Appellate Tribunal in Mill Owners' Association, Bombay v. Rashtriya MiU Mazdoor Sangh(') which has received the approval of this (I) [1950] L.L.J. 1247. 1 S.C.R. SUPREME CO~JRT RFiPORTS
Court in several decision of which it is sufficient to refer to the Associated Cement Companies Ltd. v. I ts Workmen (1 ). '£he gross profit i.e., the net prorit earned by the firm dul'ing the relevant year
after adding back items which are inadmissible for the purpose of calculating bonus for workmen for that year was Rs. 1,95,060/·. Both the parties before us accepted this figure as correct d.nd the
only dispute related to the items to be deducted from it for the purpose of ascertaining the residuary surplus available for distribution among tile parties entitled to a share in it. Out of this sum of
Rs. l,~5,060/- the Tribunal deducted the following: I. For income tax. 10,305/- 2. For return on partners' capital. \J,810/- 3. For return on working capital. 5,595/- 4. Remuneration for the six
partners. 20,000/- 45,710/- which left a residuary surplus of Rs. 1,49,350/- out of which bonus equivalent to three months' basic wages absorbing Rs. 62,340/- was awarded to the workmen leaving Rs. 87,010/· as the share of the
employer and the Tribunal added that the latter "would be adequate share for the Company providing Rs. 4,250/- for gratuity and ta.king into consideration the income tax rebate on the a.mount
of bonus awarded.'' Out of the four items of deductions those in controversy before us are two ( 1) the quantum of the income tax deduotable, and (2) the remunera- tion allowable to the partners. As regards the first
item, viz., income tax payable, I am in respectful agreement with the reasoning and conclusion of my (1) (1959) s.c.R. 925. 196Z Tu/1idas Khimji – Their Workmen r .4jyangar J. 1911 —
Tvl,;das KAimJi Th1ir W ,rtm1n Lord the Chief Justice that where the employer is a firm that is Registered under s. 26-A of the Indian Income Tax Act the income t.ax that the <'mployer
is entitled to deduct, is not the "Registered firm tax" on the gross profits of the firm but the tax that would be payable on the share income of each partner. Both the learned Attorney-General for
the appellants and Mr. Aggarwal& for the workmen laid stress on the fact that the deduction from gross profits of income tax for computing the available surplus has been referred to by this Court as a
"notional" item (vide e.g. p. 281 1960 3 S.C.R. 378) and each of them developed an argument founded on this description. Helying on the "notional" character of the tax deduction, the learned Attorney
General contended that the figure deducted ought to be the some whether the employer was a com- pany, firm or any other unit of assessment, viz., 7 annas in the Rnpee at one age and 51% when
the income tax payable by a company was raised to that figure. Mr. Aggarwala on the other band sub- mitted that in the case of a registered firm one should iguore the tax the individuals composing the
firm were under an obligation to pay on the profits desired but the Tribunal had to tak11 into account that only "the registered firm tax" which had been imp010d on registered firm ever since the Finance
Act of 1956. I consider that both these arguments proceed on a mis-apprehension or a misunder· 1tanding of the real import of the expression "Notional" in the context in which the term has been
used by this Court. The expression "notional" has been used to distinguish it from the actual tax pay- able by the employer for the year for which profit- bonus is being calculated and the reason why the
actual tax paid was discarded as a proper deduction was thus explained by this Court in the Associated Cement Coy's case. "Tho formula for awarding bonus to workmen is based on two considerations;
first that Labour is entitled to claim a share in the 1 S.C.R. trading pro.fits of the industry because it has partially contributed to the same, ……… In conse- quanco in working out the formula it RhO'llrl not be
ign0red that the formula proceeds to deal with the labour's claim for bonus on the basis that the rele- vant year for whioh bonus is claimed is a self· sufficient unit and the appropriate accounts have to
be made on the notional basis in respect of the said year. It is because the bonus year is taken as a unit self -sufficient by itself that the refund amount received by the employer being the refund paid by
him in previous yearf is not included on the credit side ………. Similarly, the same principle governs losses incurred in previous years which the employer is entitled to have claimed under s. 24(2)during the
bonus year ……… Similarly, that the employer was not required to pay tax during the bonus year as a result of the adjustment of previou11 yea.r's unabsorbed depreciation has no relevance in
determining the available surplus from the trading profits of the bonus year. It is on the same ground viz.; that the unit is the bonus year a.nd the trading profits of that year determining the quantum of
bonus available that the initial and additional depreciations besides a statutory depreciation are held not allowable". But after these factors which are either exoep- tional being either special reliefs for the purpose
of aiding an industry or reflecting the credits or debits attributable to different year are eliminated, one has to work out the actual tA.x payable on the income under the relevant provisions of the Income
Tax Act before the figure of available surplus which could be distributed between the employer and the workmen could be ascertained. The rate of 7 anna.s in the Rupee was applied by this oourt to
cases where the employer was company to whom that rate applied under the then Income Tax Act, and not as any ''notional" figure to be deducted. Tulsidas Kht"!f 4 v. Th1ir Workmen AJ'JG'llG' J,
I96Z Tulsidas Kliimji v. Their Wt rkmen It has to be borne in mind that the calculations are for the purpose of ascertaining the available surp- lus and so have to be rdated to the amount avail-
able after payment of the tax. The fact that certain items such as, for instance, the penalty payable for defaults under the Income Tax Act or credits received thereunder which are unrelated to
the normal tax payable on the income derived by the employer are ignored, does not imply that the amount deductible under this head is wholly unrelated to the provisions of the Income Tax Act
or to the amount that would be ava.ilable as surplus in an idealised condition, i. e. after elimination of the inadmissible factors. ft is only in that sense that the figure is notional i. e. in the sense that it
does not take into account the actual tax payable. But it is real and otherwise then notional if the irrelevant fectors are excluded. It is for this reason that I find no basis for the argument that in the case
of an employer such as the one we are concerned with, the ra~e of tax applicable to companies for the year in question is relevant as affording any basis for computing the amount decluctible under the
head "income tax". I therefore reject without hesi- tation the main submission of the learned Attorney General. For the same reason I consider that the conten· tion urged by Mr. Agarwala should also be rejected.
If the income tax payal-ile has to be related to the actual available surplus, taking the business as a unit and after eliminating the factors that are not relevant for determining the tax payable for the
bonus year in question and in respect of that business income, we must necessarily reach the conclusion that it is the tax payable by the seve· ral partners who constitute the firm on their
share Income from the business t,hat affords a real basis for computing the deduction under this head. In saying this I have not overlooked the 1 S.C.R. fact that for the purpose of the Indian Income Tax
Act a firm is a unit of assessment and that in the case of a registered firm there is a special ''regist- ered firm'' tax payable by that unit since 1956. Though a firm is re~arded as an entity for the
purpose of Income Tax Act, it is undeniable that a partnership is not an entity at law and it is the partners who constitute the employers for all purpose other than for income tax. It is in this view
that I concur in the opinion expressed by my Lord the Chief Justice that it is the tax payable by the individual partners on their share income from the firm without taking into account any income
derived by them otherwise i. e. their word income, without allowing for any losses suffered by them in their other ventures, that would constitute the item of income tax payabl.e by the employer which
would be the deductable head for the purpose of computing the available surplus. I, however, do not agree with my Lord that the registered firm tax paid by the appellant-firm is not to be added to the tax payable by the indivi-
dual pa1tners on their share of the profits in arriv- ing at the total of the income tax payable by the business. As regards firms rf"gistered under s. 26-A of the Income tax Act the position since 1956 is briefly
this. Income tax as specially low rates is assessable on the profits of a registered firm, but not super tax. The partners of the registered firm are liable to be chargC'd in their individual assessments to both
income tax and super tax in respect of their share of profits derived from the firm. There is thus an element of double taxation-in the case of regi- stered firms, in respect of income tax but not for
supPr tax and only a partial relief against the clouble taxation is afforded bys. 14(2) (a.a) of the Income Tax Act. What I desire to point out is that the "registered firm tax" is as much a tax
Tul1idas Khimji v. Their W 1rAm1n T11lsidas Khimji Th1i1 W°'lcmien Ayyangar J. paid by the partners together and is as much a deduction out of the surplus profits available for distribution as the income tax paid by the partners
inrlividually. I do not therefore see any basis for the distinction between the "registered firm tax" pa.id by the partners together and the individual income tax payable on their share income by each
of the partners. In my opinion, subject to the rebate allowed under s. 14 (2) (aa) the amount of "registered firm tax" payable by tho firm should be added t'l th" Rs. 53, 000/- and odd payable by
the partners individually in respect of their share of profits. Mn king allowance for the rebate I would, therefore, compute the sum deductible under the hearl "income tax paya.blev at Rs. 60,000/-.
The next item in dispute is as regards the sum allowed as the remuneration for the six part- ners for carrying on the work of his firm. I res- pectfully agree with the conclusion of my Lord
that the figure of Rs. 20,000/- allowed by the Tribunal is not based on any relevant evidence but is merely a conjectural figure and cannot, therefore, be accepted. The proper way to
have approached the question would have been for the parties to have led evidence as to what would have been the reasonable remuneration payable to strangers if the work had been entrusted to and performed by such
persons. It is common ground that neither of the parties nor the Tribunal a.pproched the problem from this point of view. In this state of circums- tances two courses would bc open to this Court
( l) that the matter be remitted to the Tribunal, so that parties might adduce necessary evidence on these lines for a satisfactory finding to be re- corded, or (2) determine the figure ourselves.
Mr. Aga.rwala learned counsel for the workmen suggested that if we did not agree with the finning of the Tribunal that Rs. 20,00~/-was rea.sonablll I S.C.R. remuneration for the six p'.l.rtners to have attended
to the work of the firm, we might rema.nd the ca.se to the Tribunal far evidence being led· and freRh findings reached and an award passed on the basis of such findings. The learned Attorney-General
on the other hand, suggested that as the appeal was concerned, with the bonus only for one yea.r and that as evidence on these lines would be led if any question arose in regard to the later years,
it was not necessary that the parties should be driven to incur more expenses in further proceed- ings before the Tribun:11 and that in the interests of both the parties we might ourselves record a
finding as regards the figure which we considered reasonable taking into account the m 1terials al- ready on the record. He further pointed out that though Lefore the Tribunal the appellants had
claimed Rs. 96,000/- as the reasonable remunera- tion allowable to these partners he was prepared to step down the claim to Rs. 48,000/- if that would be accepted by the respondents. Though Mr.
Aggarwa.la first appeared to consider that Rs. 48,000/ · was reasonable, he however, la•,ter stuck to the po@ition that if we did not accept the finding of the Tribunal ·that Rs. 20,00;l/- was reasonable,
remuneration the case should be sent back for a computation on the basis -of further evidence which the parties might adduce. Bearing in mind that the dispute before us relatt:s only to one ye ~r a.n:l that the parties m~ght
adduce m lre satisfactory evidence in regard to latter years if there should be a dispute, I consider that it would not be worthwhile as it would impose an unnecessary strain on the parties, to have the
matter rell!.itted to tho Tribunal for a fresh finding on the Issue. In the circumsta.noes, I consider that the best course would be for this Court to determine the reasonable remuneration on the basis
of the materials already on record. It is in evidence that the · managerial staff, who &re undoubtedly working under the ~a.rtners, I96S Tulsitlin KhimJl v. Their Workmen Ayyangar J,
T ulsid"s Khimji 1l1lr Workm1n were paid a remuneration of R~. 750/-p. m. That, in may opinion would afford some indication of the scale or wag-es in this concern payable to the super-
ior staff. If a paid manager instead of a partner were employed. his remuneration would reasonably be taken as Rs. 1,000/-P.M. Now there were four sepa- rate departments in this concern carrying on four
different types of business, viz. Clearing & Forwar- ding Agents, Godown-keepers, Insurance Agents and Cotton Supervisors and Controllers. If four per- sons hr.d been employed in each of these depart-
ments as superior Supervisory staff the remunera- tion payable to them would be Rs. 4, 000/-a month or Rs. 48,000/- for a year. H.\ving regard to this mode of approach I consider that the figure sugges-
ted by the learneJ Attorney General was reasonable and I was therefore not surprised that !\Ir. AggM· wala at first seemed to agree that this would be a reasonable figure. I would only add that even if
Pach of the heads of the four departmEnte were paid only Rs 750/ -P.M. the total remuneration would come upto Rs. 36,000/· I, therefore, consider that the amount reasonable under this head cannot
in any event be less than Rs. 40,000/-. I would therefore increaoe the item •Remuneration of partners' in the i..ward now under appeal from Rs. 20,000/- to Rs. 40, 000/-. I shall now proceed to con!ider the effect of
these revisians on (a) the surplus available for distribution, and (bl the fair share which could be allowed to labour for being distributed as bonus. On the basis of the revised figures the frvsh cum-
putation would be : Gross profit : 1,95,060/- Les~ 1. Income-tax H0,000/· 2. Return on partners' capital 9,810/- 3. Return on working ca pita! 5,5i:Jij/- 4. Remuneration for the partners 40,000/-
1,15,405/- -I I S.C.R. Net availablA surplus 79,655/- or roughly 80,000/-. Even if this is·divided equally between the employer and labour, making no provision for reserves etc. it would yield only Rs. 40,000/- as the
share .of labour available for distribution as bonus. The total a mount which would be payable if a. bonns ofa month's basic wages were awarded would be Rs. 20, 780/-. The utmost that could be allowed
to labour would be a bonus equivalent to two months' basic wages and eTen t1tking into account the conceBsion that the learned Attorney-General made that the return on partners' working capital
be computed not at 9 per cent as the Tribunal has done, but at 6 per cent; the result would not, be very different, for that would add only Rs. 3000/- and odd rupees to the surplus pool. In my opinion
therefore, the bonus that should be awarded to the respondents should be redur.ed from three months' basic wagAs to basic wages for a period of 2 months' which would absorb Rs. 41, 560/- and leave some-
thing Jess than Rs. 40,000/- to the employer ins- tead of the Rs. 87,000/- which the Tribunal consi- dered as a reasonable apportionment for the employer. The next matter in controversy is whether
the Tribunal was right in declaring that the work- men were entitled to customary festival bon~s of one months' basic wage on the occasion of Diwali. The qu9stion of customary bonus has been the
subject of oonsideration by this Court on more than three occasions. Before referring to these decisions it is necessary to restate some facts which are not in controversy: (I) It is an admitted fact
that a bonll'~ h!l.s been p1.id of one month's basic wage from Sa.mwat year 1997 (1940-41) to Samwat year 2013(1956-57) i. e., continuously and without any break until diFlputes arose in respect of the
year now in controversy-1957-58. (2) Though there is some little controversy as to the precise Tu/siias K'himjl v. Their Workmm Tufsidas Klzi,11jl v. Th1ir W orlmrtn AyyangorJ. day when it was paid in relation to the Diwali
festival-whether it was on that day or the day succ- eeding etc., it is common ground that it was paid at or !tbout the tim"l of Diwali and obviously to enable the workmen to meet the <'Xtra expenses
which the festivPJ involved, This has to be taken along with the fact that Dhvali is one of the most or the most important Hindu festival in the Bombay area, { 3) th,it during the several years for
which we hitve cvidenc0 i. e. from 1940 onwards the firm has brien making more than adequate profits to enabl~ it to pay thi~ amount as bonus. In other words, during all thc,se Jong years there has not
been any year when the firm has either sustained a loss or has be"n in receipt of less than adequate profits to just.ify this payment of bonus of one month's basic wage. In the light of these admitted. facts the very
narrow point of controversy before us turns on whether it is or it is nut a necessary essential pre- requisite for the establishment of a claim to custo- mary festival bonus that it should have been paid
in a year of loss or at least in a year when there was no adequate profit to justify the payment. The requisite conditions for the workers to establish a claim to customary bonus have been laid
down in at least threfl decisions of thia Court to be immediatelv referred to. It was, however, not the contention 'of any of the parties that these rulings were erroneous or required reconsideration. The
only point urged before us by either side was as to the proper construction of the requirements as laid down in these decisions. I am emphasizing this because in the appeal before us the court is not
called upon to decide afre~h the circumstances in which customary bonus would be payable but its task is only to construe the previous decisions of this Court as to the conditions laid down in them
as necessary for establishing such a. custom. I S.C.R. The point on which the learned Attorney- General for the appellants laid stress was that each one of the decisions of this Court had laid down as
one of the essential condition for the establishment uf a. right to customary bonus t.hat the said pay- ment should have been made in '- year in which there was loss and as admittedly th'.is condition was
not satisfied in the case of the appellants' business, the declaration granted by the Tribunal was un- justified. I shall now proceed to rafer to the authori- ties : Messrs I spahani LW,. Calcutta v. I spahani
Empl,oyee's Union (1) and Graham Trading Oo. (India) LW,. v. Its Workmen (2 ) were heard by the same Bench and the judgment in both were delivere::l by Wanchoo .J., the earlier on May 6, 1959 and the
latter on the next day. One of the points involved in Ispahani's nase was whether thA workmen '\T'ere entitl<'d to Puja bonus for 1953. It was an appeal by special leave from a judgment of the Labour
Appellate 'fribun<tl, Calcutta. Toe Industrial Tri- bunal had held that it had not been established that puja bonus ht;Ld been paid at uniform rates for a sufficient! v long and unbroken period, and rejec-
ted the claim for puja bonus for 1953. There was an appeal by the workmen against this award of the Tribunal which was allowed by the Labour Appel- late Tribunal which held that the claim to puja
bonus had been established. This decision of the Appellate Tribunal was upheld by this Court. Wanohoo, J., summarised the facts upon which this finding was based, in these terms :
''In the circumstances, it was established in this case that (1) the payment was unbro- ken and (2) it was not paid ont of bounty due to profits having arisen, for it was paid in some years of l,oss also''.
(I) [ 1960J I SC.~. 24. ( 2) [191iOJ I S.C.R. 107 •. Tulsiios ElKllfll Thllr W er Ji mm Tulsitlas Ehi"!il Th1ir W orkmins Ay)atflJarJ. fn the decision rendered the next day-Graham Tra-
ding Co. v. I ta Workmen (1) the learned Judge made a more elaborate examination of the conditions for the establishment of a claim to festival bonus. He first drew a distinction between puja bonus as an implied
term of employment on the one hand and as a customary or a traditional payment on the other. He observed: "It is, however, clear that puja bonus which is usually paid in Bengal is of two
kinds ; viz. (1) where it is paid as an implied term of employment ……… and (2) where it is paid as a customary and traditional payment ……………… We have considered the tests to
be applied where it is a case of payment on an implied term of employment in Messrs. Ispahani Ltd. v. Ispahani Employees' Union and we need not repeat what we have said there. In the present case it has heed pointed
out by the company that payments which had bPen made in the past years from 1940 to lll52 could not be considered as based on an implied term of employment in the circumstances of
this case ……… The question, however, whether the payment in this case was customary and traditional, still remains to be considered. In dealing with puja bonus based on an implied
term of employment, it was pointed out by us in Messrs. lspahani Ltd. v. Ispahani Emplo- yees' Union that a term may be implied, even though the payment may not have been at a uniform rate throughout and the Industrial
Tribunal would be justified in deciding what should be the quantum of payment in a parti- cular year taking into account the varying payment made in previous year .. But when the question of customary and ·traditional
bonus arises for adjudication, the considera- tions may be somewhat different. In such a c1J r1960J 1 s.c.R. 107' 1 S.C.R. SUPHEM:E COURT REPORTS case, the Tribunal will have to consider (i)
whether the payment has been over an unbro- ken series of years ; (ii) whether it has been for a sufficiently long period, though the length of the period might depend on the cir-
cumstances of each case : even so tlrn period may normally have to be longer Lo justify an inference of traditional and customa.ry puja bonus than may be the case with puja bonus based on an implied term of employment;
(iii) the circumstance that the payment depenrled upon the earning of profits would ha1.Je to be exclud,ed and the ref ore it must be shown that payment was made in years of loss ……… (iv)
the payment must have been at a uniform rate throughout to justify an inferenr.e that the payment at such and such rate had become customary and traditioual in the particubr concern. It will be seen that these tests a.:e
in substance more stringent than tlw tests applied for proof of puja bonus as an i:nplied term of employment." Later, dealing with the facts from which the Court drew an inference that the workmen had established
the right to customary bonus and particularly eon- dition (iii) italicised earlier, the learned Judge added: "The condition that the payment should have been made in years of loss ali;o to ex-
clude the hypothesis that it was paid only because profits had been made, has also been satisfied, for the evidence is that payments were made in at least two years of loss." The third case of this Court in which the point
arose was Elia Oo. Employees' Union v. Elias and Oo. (1) in which also the judgment of the Court was delivered by Wanchoo, .T. The appeal before this (1) ~1960) 3 s.c.R. 382. Tu/sidas Khimji
v. T/,sir W' rkmsn Ayyangar J. Tulaiias Khimj i Th1i1 W nkmen .Ayµn1~r J. SUPREME COlJftT REPORTS [1963] Court was hy special lc:we from an award of the Industrial Tribunal and the case of the appellants –
the employees was tha,t they were entitled to a bonus irrespective of profit on a scale which they set out: The Tribnnal negatived the case of the employees to bonus on all the three grounds upon
which bonus was payable, viz., profit bonus, as an implied condition of service and thirdly as custo- – mary bonus. Dealinir with the question of customa· ry bonus of one month's basic wa.ges of the Subor-
dinate staff, the learned Judge said : "This payment of one month's basic wage as bonus at puja appears to have continued uninterrupted from the time it started in 1942 or thereabout upto the time the dispute arose
in 1954. The payment was invariably of one month's basic wage and it appears that it was paid e>en in a year of loss." On this ground the appeal was allowed it regard to this item.
Lastly, in the ,11 anagement of Tookln.i Experimental 8trttion v. Workmen, (1) the judgment was pronounced by Gajendragadkar, J. (who in<Ji· dentally was a member of the Bench which decided
each of the three earlier cases). Dealing with Puja bonus the learned Judge observed : "Customary puja bonus undoubtedly pre· vails in many industries in Bengal but there are certain tests w hieh have to be applied in
determining the validity of the claim. The amount by way of puja bonus, it must be shown, has been consistently paid by the emp- loyer to his employees from year to year at the ~amP rate, that it has benn paid even in
year ofloss and that it has no relation to the profit made by the employer during the rele· vant year. The course of cond1rnt spreading over a reas0nably k.ng period between the (I) [1962] l S.C.R. 557,
1 S.d.R. Sl1P&EME COURT REPORTS employer and the employees in the matter of payment of puja bonus is of considerable im- porta.nce in de'.lling with the claim of custo- mary puja bonus (vide The Graham Trading
Co. (India.) Ltd. v. Its Workmen)." The question now for considemtion is whether on these authorities, reasonably construed it is or it is not a necessary condition for the establishment
of a claim to customary bonus th".l.t it has been paid in a year of loss. The extracts that I have made from the judgment of this Court in the Graham Trading Co.'.s case where it is referred to a~s the
third condition and the specific reference to loss in the three other decisions, particularly bearing in mind the fact tha.t the same members of the Court had taken part in these several decisions, and
Gajendraga.dkar, J. took part in all the four, I feel unable to hold that the learned Judges did not in- tend this to be an essential condition. In the Graham case the reason for the insistence of this
conditions is stated viz. that it is only a payment during a year when there is loss that would nega- tive the payment being a bounty. In these circums- ta.noes I do not consider it possible to , construe
these judgments as laying down that payment dur- ing a year of loss was merely a relevant circums- tance and not a necessary condition. If~ as I lrnve pointed out earlier, what the Court is now called on
to do is only to construe theso dechions, and not consider the question afresh, I feel compelled to hold that in these several decision this Court did lay down that this was a sine qua non for making good
the claim. It was suggested during the course of the argu- ment that there was no difference between a. loss of one rupee for the year and a profit of a similar sum—-. and that if the decisions were literally understood
it would lead to an unreasbt1abJe result, forwhersas Tu/sidas Khimji , .. Their Workmen A.Jy :ngar J, T ulsl~"-' Khimji v. TMir 1' Of' km en t,he claim wonld be excluded in the event of a loss-
even though the same be nominal, even the existen- ce of a nominal profit would enable the claim to be established. I agree that we are not construing a statute and that in the context in which the con-
dition has been laid down, viz., that it should negative the vayment being by way of bounty, the expression loss should be understood in the sense of an inadequacy of profit which would not justify the
payment of that bonus. But where the profits are adequate to enable the payment of the bonus, it appears to me that these decisions clearly lay down that the right to customary bonus is not established;
for atl explained in the Graham Trading Coy's case, the piiyment being by way of bounty would not then be oxcluded. In this connection it has to be borne in mind that when the right to customary
bonus is held to be established, the workmen are entitled to it in future years even in an year of loss and a.fortiori so in a year when the profits are inadequate to justify that payment.
In these circumstances it stands to reason that there must be an earliar year in which payment has been made in such circumstances as to serve as a precedent for the future, i.e., to establish the custom for payment
iu later years. Is in the present case it is admitted that there has been an adequacy of profits to justify the payment of one month's bonue during Diwali during all the earlier years the declaration granted
by the Tribunal i8 without justification and the finding in that regard has to be set aside. The result therefore is that I would allow the appeal in part, reduce the profit bonus to basic
wages for two months including the one month's basic wage as bonus already paid, and delete the declaration as to customary bonus. BY CouRT-ln view of the judgment of the majority,
the appeal stands dismis!ed with Costs.