THE WORKMEN OF M/S. BINNY LTD. versus THE MANAGEMENT OF BINNY LTD. & ANOTHER

Citation: [1985] SUPP. 2 S.C.R. 652 · Decided: 22-08-1985 · Supreme Court of India · Bench: O. CHINNAPPA REDDY · Disposal: Appeal(s) allowed

Judgment (excerpt)

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ll 
652 
THE WORKMEN OF M/S. BINNY LTD. 
v. 
THE MANAGEMENT OF BINNY LTD. & ANOTHER 
AUGUST 22, 1985 
[O. CHINNAPPA liliUUY, V. llALAKRISHNA ERADI AND V. KHALID,.JJ.J 
Payment of Bonus Act, Section 3 scope of, - Undertakings of 
five companies get amalgamated with another in accordance with 
the scheme of amalgamation sanctioned by the High Courts provid-
ing for preparation of a separate profit and loss account for the 
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year of amalgamation and also safeguarding the interest of work-
men of a particular company and in particular their rights under 
the payment of Bonus Act and Industrial Disputes Act - Whether 
the new company take refuge under section 3 and refuse to pay 
higher bonus as per the profit and loss account on the specious 
plea that balance sheet has not been prepared - Construction of 
.welfare legislation laws - Whether the adjudicating authority has 
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powers to direct the employers to prepare and submit a regular 
balance sheet, on being satisfied that such balance sheet was not 
prepared to defeat the claims of the employees. 
The first respondent is a company incorporated on 30th June, 
1969, which coanenced its busiuess in the name and style of Binny 
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Limited 0n and from Ist November, 1969. The appellants were 
formerly employed by Binny & Co. Ltd. , and are now employed in 
the Finabce, Trading and Agency Division of the respondent 
Company. Messrs Binny & Co •. Limited in which the appellants were 
formerly employed, was a well established British Company of a 
standing of more than 170 years with branches all over India and 
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had accumulated huge reserves and was able to acquire interest in 
various other companies namely, Messrs Buckingham and Carnatic 
Co. Ltd., The Bangalore Woollen, Cotton and Silk Mills Co. Ltd., 
Binny Engineering Works Ltd .. , Gange Transport and Trading Company 
Ltd., 
and Madura Company· Private Limited. All these five 
companies were amalgamated in accordance with the scheme of 
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amalgamation sanctioned by different High Courts with the respon-
dent Company. The scheme of amalgamation made provisions for 
various matters. Clauae 12 of the scheme provided that "all the 
employees of the amalgamating companies will become employees of 
the new company without interruption in service and on terms no 
less favourable to them.• Clauae 13 provided that "a separate 
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WORKMEN v. MANAGEMENT OF BINNY LTD. 
653 
prof it and loss account would be prepared for each of the amalga-
mating companies for the financial year 1969. • The lligh Court 
while sanctioning the scheme, included in paragraph 11 of the 
order "In t.he result, the scheme of amalgamation is sanctioned 
without prejudice to the rights of the employees of Binny and 
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Company Limited in working but their existing rights under the 
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aforesaid 
Acts (Payment of Bonus Act and Industrial Disputes 
Act) as against the new company, if they are so entitled." ' 
Till the year 1968, the employees of Binny & Co. Limited 
namely, the appellants, had been getting the maximm bonus of 20 
per cent of their gross salary every year in view of the huge 
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profit_s earned by the said company. However,. in the financial 
year 1969, the respondent Company declared and paid the minimum 
bonus of four per cent of the gross salary to the appellants 
alougwith other employees of the respondent company, 
who were 
formerly 
the employees of the remaining five amalgamating 
companies on the basis of a consolidated profit and loss account 
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of the respondent company for the said year. The appellants 
objected to this and raised a claim that they were entitled to 
receive bonus at 20% of their gross salary on the basis of the 
separate profit and loss account for the company formerly known 
as Binny & Company Limited prepared under clause 13 of the .scheme 
of amalgamation and which showed a profit of Rs.26,01,272 during 
the fluanciaJ year 1969 in addition to a further sum of more than 
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Rs. 10 ·lakhs lying i:o the credit of the ·appellants as on 31st 
December, 
1968. This claim was referred to the ,Industrial 
Tribunal, Madras by a reference order dated 19th May, 1971, 
directing the q.iestion of fixation of the quantum of bonus for 
the year 1969 for adjudication. The Tribunal considered the 
evidence before it and also referred to the relevant provisions 
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of the law governing the question and came to the conclusion that 
no separate balance sheet was prepared for this company and the 
quantification of the bo

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