MANAGING DIRECTOR, CHALTHAN VIBHAG SAHAKAR KHAND UDYOG, CHALTHAN, DIST. SURAT versus GOVERNMENT LABOUR OFFICER & ORS.

Citation: [1981] 2 S.C.R. 738 · Decided: 04-02-1981 · Supreme Court of India · Bench: A.P. SEN · Disposal: Dismissed

Judgment (excerpt)

738 
A 
MANAGING DIRECTOR, CHALTHAN VIBHAG SAHAKARl 
KHAND UDYOG, CHALTHAN, DIST. SURAT 
v. 
GOVERNMENT LABOUR OFFICER & ORS. 
B 
February 4, 1981 
[A P. SEN AND E. S. VENKATARAMIAH, JJ.] 
Paynient of Bonus Act, 1965-Section 2(21)-}Vhether the 
exprcs~ion 
'salary or wage• in s.2(21) of the Act covers retaining allowance during tfte 
off season granted to the 1vorkn1en in the seasonal estahlislunent of the sugar 
C 
factory of the Udyog. 
The appellant whkh runs a sugar factory, treated the retaining allowance 
paid to the workmen during the off-season as part of their 
wages 
for 
the 
purpose of the Employe_es' Provident Fund Act, 1972, but not for the purpose 
of the Payment of Bonus Act, 1965. 
On a reference of an industrial dispute, 
the Industrial Court, Gujarat made an award holding that the allowance cannot 
D 
be included in wages or remuneration for the purpose of calculation of bonu">. 
E 
]<' 
G 
H 
The Gujarat High Court set aside the a\vard in writ petition and held that 
the allo\vance fell within the definition of the expression 'salary or wage' in 
s. 2(21) of the Act. The appellant sought special leave to appeal under Art. 136 
of the Constitution. 
Dis1nissing the special leave petition, the Court. 
lJELD : The retaining allowance paid to the employees during the off-season 
1n the sugar industry partakes 
the 
nature of deferred wages 
on a lo\Yer 
scale and falls within the definition of the expression 'salary or wage' within 
the meaning of s.2(21) of the Payn1ent of Bonus Act, 1965 and, therefore, 
must be taken into account for the purpose of calculation of bonus payable 
under s.-10 of the Act. 
The definition of the expression 'salary or wage' 
as 
given in s.2(21) of the Act is wide enough to cover the retaining allowance 
granted to the workmen during the off-season. 
The retaining allowance 
is 
nothing l:a.lt remuneration correlated to service and it would be a misnomer 
to call it an allowance. It does not fall within the purview of clause (i) of 
the exclt¥ionary clause of s.2(21) but comes within the substantive part of 
the definlion uE 'salary or wage' ins. 2(21) of the Act. 
[741A-D] 
CIVIL APPELLATE JURISDICTION : Special Leave Petition (Civil) 
No. 1122 of 1981. 
From the Judgment and Order dated 28-11-1980 of the Gujarat 
High Court in Special Application No. 2003 /80. 
F. S. Nariman, TI. K. Puri and Arnn B. Desai for the Petitioner. 
Charan/al Salm for Respondent No. 3. 
• 
SAHAKARI KHANO UDYOG v. LABOUR OFFICER (Sen, !.) 
7 39 
The Order of the Court was delivered by 
SEN, J.-The controversy in this case is whether for the purpose of 
bonus to the workmen employed in the Chalthan Vibhag Sahakari 
Khand Udyog, Chalthan, which is a seasonal establishment, retaining 
allowance paid to such workmen should be regarded as remuneration 
or wages under the Payment of Bonus Act, 1965. The question arises 
under the following circumstances : 
The Industrial Court, Gujarat, by its Award dated July 11, 1980 
held that the retaining allowance pairt to the. workmen could not be 
included for the purpose of calculation of bonus and, therefore. the 
demand of the workmen was not justified. Thereupon, the workmen 
challenged the Award by a Writ Petition in the Gujarat High Court. 
The High Court by its judgment dated December 15, 1980 set aside 
the Award of the Industrial Court and held that the. retaining allowance 
falls within the definition of the expression 'salary or wage' given in 
s. 2(21) of the Payment of Barrus Act, 1965 so as to attract the pay-
ment of bonus in the context thereof under s. 10 of the Act. 
For a proper understanding of the question involved, it is neces-
sary •to state a few facts. Chalthan Vibhag Sahakari Khand Udyog 
runs a seasonal factory which crushes sugarcane and produces sugar. 
It does not work for all the 12 months in year. 
There is an off-
season during the year during which the factory remains closed. Fnr 
this off-season during which the workmen suffer forced idleness, full 
wages are not paid. There are several categories of workmen emplo-
yed by the management. There are unskilled workm~n who are paid 
10% of the basic wages and dearness allowance as retaining allowance 
during the off-season. There are also semi-skilled workmen who get 
25 % of the basic wages and dearness allowance as retaining 
allowance. The rest, 
i.e., 
skilled 'C' to 
supervisory class 
of 
workmen, are paid at the rate of 50% of basic wages 
and 
dearness allowance as reta

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