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Unit 9: Payment of Bonus Act, 1965

14. Every ................... shall be deemed to be a public servant within the meaning of the Indian Notes
Penal Code (45 of 1860).
15. For contravention of the provisions of the Act or rules the penalty is imprisonment upto
................... months or fine up to ` 1000, or both.



Case Study Mumbai Kamgar Sabha, Bombay vs M/s Abdulbhai
Faizullabhai & Ors on 10 March, 1976

considerable number of workmen were employed by a large number of small
businessmen in a locality in the city. Prior to 1965, the employers made ex-gratia
A payment to the workers by way of bonus which they stopped from that year. A
Board of Arbitrators appointed under s. 10A of the Industrial Disputes Act, to which the
bonus dispute was referred, rejected the workers demand for bonus. The dispute was
eventually referred to an Industrial Tribunal which in limine dismissed the workers’
demand as being barred by res judicata, in view of the decision of the Arbitration Board.
The Tribunal in addition. held that bonus so far paid having been founded on tradition and
custom, did not fall within the four-corners of the Bonus Act which is a complete code and
came to the conclusion that the workers were not entitled bonus. On appeal to this Court
it was contended that (i) the appellant-Union not being a party to the dispute had no locus
standi, (ii) the claim of the workmen not being profit-based bonus, which is what the Bonus
Act deals with, the Act has no application to this case; and (iii) since no case of customary
or contract bonus was urged before the Arbitration Board such a ground was barred by the
general principles of res judicata.

Dismissing the appeal
In an industrial dispute the process of conflict resolution is informal, rough and ready and
invites a liberal approach. Technically the union cannot be the appellant, the workmen
being the real parties. There is a terminological lapse in the cause title, but a reading of
the petition, the description of the parties, the grounds urged and grievances aired, show
that the battle was between the workers and the employers and the Union represented
the workers. The substance of the matter being obvious, formal defects fades away.
Procedural prescriptions are handmaids, not mistresses of justice and failure of fair play is
the spirit in which Courts must view processual deviances. Public interest is promoted by
a spacious construction of locus standi in our socio-economic circumstances, conceptual
latitudinarianism permits taking liberties with individualisation of the right to invoke the
higher courts where the remedy is shared by a considerable number, particularly when they
are weaker. In industrial law collective bargaining, union representation at conciliations,
arbitrations, adjudications and appellate and other proceedings is a welcome development
and an enlightened advance in industrial life. [597G] In the instant case the union is an
abbreviation for the totality of workmen involved in the dispute. The appeal is, therefore,
an appeal by the workmen compendiously projected and impleaded through the union.
[598D] [592]
The demands referred by the State Govt. under s. 10(1) (d) of the Industrial Disputes Act,
specifically speak of payment of bonus by the employers which had become custom or
usage or a condition of service in the establishments. The subject matter of the dispute
referred by the Govt. dealt with bonus based on custom or condition of service. The
Tribunal was bound to investigate this question. The workers in their statements urged
that the demand was not based on profits or financial results of the employer but was
based on custom. The pleadings, the terms of reference and the surrounding circumstances
Contd...

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