BARODA BOROUGH MUNICIPALITY versus ITS WORKMEN

Citation: [1957] 1 S.C.R. 33 · Decided: 13-11-1956 · Supreme Court of India · Bench: NATWARLAL HARILAL BHAGWATI

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Judgment (excerpt)

-
S.C.R. 
SUPREME COURT REPORTS 
33 
must pay the costs of the respondents, one .set of hear-
ing fee to be equally divided amongst th<! three res-
pondents. 
Appeal allowed in part. 
BARODA BOROUGH MUNICIPALITY 
v. 
ITS WORKMEN 
(BHAGWATI, 
VENKATARAMA 
AYYAR, s. K. DAS 
and GoVINDA MENON JJ.] 
Industrial Dispute-Bonus-One department of a municipality 
Jiaving surplus earnings-Whether workers engaged in that depart-
ment can claim bonus-Bombay Municipal Boroughs Act, 1925 (Bom. 
Act XVlll of 1925). 
The Baroda Electric Supply Concern was owned and managed 
by the State· of Baroda. 
Immediately before the merger of the 
State in the Province of Bombay, the State made a gift of the 
Concern to the Baroda Municipality to provide it with a new source 
of revenue as aid from the State might not be continued after the 
merger. 
Later in 1951, the workmen employed in the electricity 
<lepartment demanded bonus and 
the 
dispute 
was referred for 
adjudication. The bonus was claimed on the basis that the elec-
tric Concern was a commercial concern, that it was making huge 
profits and that the workmen were entitled to bonus as a share in 
the profits. 
The municipality resisted the demand, inter alia, on 
the grounds that the earnings of one department could not be 
treated as profits of the municipality, and that as a whole the 
municipal budget for the relevant period was a deficit budget. 
Held, that the workers employed in the electricity department 
of the municipality were not entitled to the bonus claimed. Accord-
ing to the provisions of the Bombay Municipal Boroughs Act, 1925, 
under which the municipality is 
constituted 
and 
functions, the 
earnings of one• department cannot be held to be gross profits in 
the ordinary commercial or trading sense. 
The mere fact that 
separate accounts were kept of the electricity department did not 
alter the position, as there was one budget for the municipality as 
a whole and income from and expenses of all departments consti-
tuted the income and expenses of the municipality. 
The different 
activities 
of the municipality 
constituted one 
integrated 
whole, 
1956 
Karnani Ltd. 
ProfJtrties 
v. 
Augustin 
November 13 
1956 
Baroda Borouth 
Munidpalit.J 
v. 
Its Workmtn 
34 
SUPREME COURT REPORTS 
(1957] 
and the activitias of the different departments were not distinct 
or unconnected activities so . as to permit the isolation of one 
department from another or of an earning department from a· 
si)ending department. 
It would be unfair to draw a distinction 
bct,veen the workers of the earning department and the workers. 
of · the spending department for the payment of bonus. Such a 
distinction would, instead 
of 
promoting 
peace 
and 
harmony 
ainong the 
employees of the 
municipality, create 
unrest and 
discontent. 
D. N. Banerji v. P. R. Mukherjee, [1953] S.C.R. 302 and Muir 
Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur, [1955] 1 S.C.R. 
991, referred to. 
CML 
APPELLATE 
JURISDICTION : 
Civil 
Appeal 
No. 182 of 1956. 
Appeal by special leave from the judgment and order 
dated November 23, 1955, of the Labour Appellate 
Tribunal of India, Bombay, in Appeal No. 224 of 1953 
arising out of an award (Part II) dated June 4, 1953, 
of the Bombay Industrial Tribunal in Reference No. 
(LT.A.) No. 18 of 1951. 
M. 
C. 
Setalvad, 
Attorney-General 
for 
India, 
N. C. Chatterii, f. B. Dadachanii, S. N. Andley and 
Rameshwar Nath of Raiinder Narain & Co., for the 
appellant. 
Purshottam 
Tricumdas, 
H. 
R. 
Gokhale, 
K. R. 
Choudhury and M. R. Rangaswamy, for the respond-
ents. 
1956. November 13. The Judgment of the Court 
was delivered by 
S. K. DAs J .-This is an appeal by special leave from a 
decision of the Labour Appellate Tribunal at Bombay, 
dated 
November 
23, 
1955. 
The 
Baroda 
Borough 
· • 
Municipality is the appellant, and the respondents are 
the workmen employed in the electricity department of 
the said Municipality represented mostly by the Baroda 
State Electric Workers Union 
(hereinafter called 
the 
respondent Union). The substantial question for deter-
mination in this appeal is if the respondents, workers 
in a municipal department engaged in the generation, 
supply and sale of electric energy, are entitled to the 
bonus claimed out of the surplus earnings of the said 
department (called "profits" by the respondents) after 
I 
~. 
' 
,A-
• 
S.C.R. 
SUPREME COURT REPORTS 
35 
allowing for all outgoings including necessary expen-
diture of the de

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