THE GRAHAM TRADING CO. (INDIA) LTD. versus ITS WORKMEN

Citation: [1960] 1 S.C.R. 107 · Decided: 07-05-1959 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Dismissed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
107 
THE GRAHAM TRADING CO. (INDIA) LTD. 
v. 
ITS WORKMEN 
(B. P. SINHA, P. B. GAJENDRAGADKAR and 
K. N. WANCHOO, JJ.) 
Industrial, Dispute-Puja Bonus-Customary and traditional 
payment of-Test. 
The appellant had been paying puja bonus to its workmen 
continuously from 1940 to 1952 at the rate of one month's wages. 
From 1948 to 1952, the appellant whenever it paid this bonus, 
made it clear that it was ex gratia payment and would not consti-
tute any precedent in future years. The dispute arose regarding 
the payment of bonus in 1953· The workmen claimed that the 
sole object of bonus which had been grantecf to them upto that year 
was to meet puja expenses and that the payment of this bonus 
had become customary and a term of employment. The appel-
lant contended that payments in the past years had been entirely 
ex gratia and as there was loss in 1953 no ex gratia payment could 
be made in that year. 
Held, that the workmen were not entitled to puja bonus as 
an implied term of employment for an implied agreement could 
not be inferred when the appellant had made it clear that the 
payments from 1948 to 1952 were ex gratia ; but they were 
entitled to puja bonus on the basis that it was a customary and 
traditional payment. In determining whether the payment was 
customary and traditional the following circumstances have to be 
established : 
(i) that the payment has been made over an unbroken series 
of years; 
, 
(ii) that it has been for a sufficiently long period, the 
period has to be longer than in the case of an implied term of 
employment; 
(iii) that it has been paid even in years of loss and did not 
depend on the earning of profits ; and 
(iv) that the payment has been made at a uniform rate 
throughout. 
The fact that the employer made the payment ex gratia 
made no difference ; nor did unilateral declarations of one party 
inconsistent with the course of conduct adopted by it matter. 
CIVIL APPELLATE JURISDICTION: 
Civil Appeal No. 
161of1959. 
Appeal by special leave from the judgment and 
order. dated the 31st January 1956 of the Labour 
Appellate Tribunal at Calcutta in Appeal No. Cal. 301 
I959 
May7 
I9S9 
Th~ Graham 
Tf'ading Co. 
(India) Lid. 
v. 
JU Workmen 
Wanehoo ]. 
108 
SUPREME COURT REPORTS [1960(1)} 
of 1954, a.rising out of the Awa.rd dated the 20th October 
1954, of the Second Industrial Tribunal, West Bengal. 
B. Sen and 8. N. Mukherjee, for the appellants. 
D. N. Mukherjee, for the respondents. 
1959. May 7. 
The Judgment of the Court was 
delivered by 
WANCHoO J.-This is an appeal by special leave in 
an industrial matter. The appellant is the Graham 
Trading Co. (India) Ltd. (hereinafter called the 
company). There was a dispute between the company 
and its workmen about bonus, which was referred by 
the Government of West Bengal by its order of 
December 17, 195:J: to the Second lndust.rial Tribunal. 
Though the order of reference did not specify the year 
for which the bonus was in dispute, it is common 
ground between the •parties that the dispute was for 
bonus for the ·year 1953. The case of the workmen, 
who a.re respondents before us, was that the company 
ha:d been paying one month's bonus invariably from 
1940 to 1950. In 1951, one month's bonus was paid 
in October and half a month's further bonus was paid 
in December. In 1952 one month's bonus was paid. 
The demand that the workmen made in their letter of 
August 27, 1953, was for three month's bonus. The 
· company replied that payments in past years had been 
entirely ex gratia and as there was loss in 1953 it was 
not possible to make any ex gratia payment that year. 
The workmen then contended in their letter of Septem-
ber 21, 1953 that the sole object of bonus which had, been 
granted upto that year was to meet puja expenses and 
that the payment of this bonus had become customary 
and a term of employment. The matter could not be 
settled between the parties and that is how the dispute 
was referred for adjudication. 
The company's case was that payment of bonus had 
all along been ex gratia depending upon profits except 
in a few years. But in those years it was also made 
clear that the payment was ex gratia and without 
creating any precedent for future. 
Therefore, there 
was neither a term of employment nor any custom, 
S.C.R. 
SUPREME COURT REPORTS 
109 
which put any. obligation on the company to pay any 
bonus.in a year of loss. 
The quest.ion was considered by, the Indust

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