LexJALAN TRADING CO. (PRIVATE LTDJ) versus MILL MAZDOOR UNION
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A B • c D II G • .JALAN TRADING CO. (PRIVATE LTDJ) v. MILL MAZDOOR UNION August 5, 1966 (With Connected Petitions) [K.N. WANCHOO, M. HIDAYATULLAH, J.C. SHAH, S.M. SIKRI AND V. RAMASWAMI, JJ.] Constitution of India, 1950, Arts. 14, 31(1)-Payment of Bo11us Act, 1965, ss. 10, 33, 36, 31-Sections whether discrimi11atory-Section ao whether deprivation of property. During the pendcncy before the Industrial Tribunal, Bombay, of a reference under s. 73-A of the Bombay Industrial Relations Act, 1946, which arose out of a dentancl for the payment of bonus for the years 1961 and 1962 the Payment of Bonus Ordinance 3 of 1965 was promulgated by the President on May 29, 1965 with immediate effect. The represen- tatives of the workmen claimed that even if the plea of the employers that the profit and loo; account of establishment for the years in question disclosed a loss, was correct, the ordinance governed the dispute and that the employees were entitled to receive bonus at the minimum rate of 4% of the salary or wages or Rs. 40 whichever was higher, The Industrial Court upheld the plea of the workmen and directed the employers subject to the provisions of the Bonus . Ordinance, 1965 to pay to each employee bonus for the, year 1962 equivalent to 15 days' of the salary or wages or Rs. 40 whichever was higher. With special leave the employers appeal- ed to this Court and challenged the validity of the payment of Bonus Act, 1965, which repealed Ordinance 3 of 1965 and especially of the pro,isions under which bonus at minimum rate was made payable under the Act. HELD : (i) The impugned legislation was within the legislrutive com- petence of Parliament and therefore not a colourable exercise of power or a fraud on the Constitution. [27 BJ Express Newspapers (Private) Ltd. v. Union of India, [1959] S.C.R. 12 and K. C. Gajapati Narayan De.o & Oi·s. v. State of Orissa, [1954] S.C.R. 1, referred to. (ii) The power to exempt certain establishments from the operation of the Act given to the appropriate Government. ll!'der s. 36 was n~ :in unguided power because the Government was en101ned to take pubhc in· terest, the :financial p6sition of the establishment, and other relevant cir- cumstances into consideration before ex.ercising the said power. There was therefore no excessive delegation of legislative authority by s. 36 and the section was valid, [31 F-GJ (iii) Per Wanclloo·, Shah and Sikri, JJ.-Section 10 is an integral part of a scheme for providing for. a payment of bonus at rates which do not juctuate from year to year. It is not in the interest cf capital or labour that there should be wide fluctuation in the payment of bonus by an establishment from year to year. [33 HJ The object of the Act being to maintain peace and harmony b.etween labour and capital by alloWing the employees to share ,the prospenty of 15 16 SUPREME COURT REPORTS (1967] I S.C.R. the est~blishment reflecled by the profils <>med by the conlribu1ions made A by cap1lal, management and labour, Parliament has provided 1ha1 bonus in a given year s~all not exceed .1(5th and shall not be less 1han I/25th of the total earning of each mdiv1dual employee and bas directed that th~ excess shall be carried forward to the next y.,;.r, and 1hat the amount paid by. way of mlDlmum bonus not absorbed by the available profits shall he c~rncd to the n.ext year and be set. off against the profits of the suc- cccd1ag years. Thts scheme of .rrescnbing maximum and minimum rate~ of bO!JUS together with the scheme of 'set off' and 'set on' not only secures B the right of labour to share in the prospertity of the establishment hut :1150 ensures ~' reasonable degree of uniforn1ity. [34 (~-DJ Equal protection of the laws is denied if in achieving a certain object persons, objects or transattions similarly circumstanced are differently • I rcatet! by l3w and the principle underlying that different trca1ment ha.,; no rational relation to the object sought to be achieved by the law. Exa- C mined in the light of the object of the Act and the scheme of set off •.nil 'set on:. _the provision for payment of minimum bonus cannot be s1ad to be d1scnm1natory between diffcrcru cstahlishmcnts which arc un- able on the profits of the accounting year to pay bonus merely because a uniform standard of minimum rate of bonus is applied to them. [34 FJ Kunna:that Thathunnl Moopil Nair v. State of Kera/a and Another, [1961] 3
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