The Supreme Court held that just because a factory comes under the broad umbrella of a trust, which is also involved in some charitable work, the workers cannot be deprived of the benefit of the Bonus Act.
The Court dismissed an Appeal concerning the entitlement of workmen to bonus under the Payment of Bonus Act, 1965 (the Act). The Appellant, a trust known as ‘Workshop for Rehabilitation and Training of the Handicapped Trust’ (WORTH), which was initially established by the Swedish Red Cross Society.
A Bench of Justice Sudhanshu Dhulia and Justice K Vinod Chandran held, “The Appellant has submitted that it has already been paying some amount, which is called ex-gratia, as a measure of charity to the workmen and this fact has also been admitted by the respondent-union. However, by no stretch of argument can this be a ground to avoid paying a bonus, which is a statutory duty and right of the appellant and workmen respectively.”
Senior Advocate R. Anand Padmanabhan represented the Appellant, while Senior Advocate Gautam Narayan appeared for the Respondent.
Brief Facts
The WORTH Trust Workers Union (Union) had claimed for a bonus and ex-gratia for the year 1996-97. The Union argued that its members were workmen employed in factories governed by the Factories Act, 1948, and the Industrial Disputes Act, 1947, and are therefore entitled to bonus under the Act.
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The Trust, however, contended that it is exempt from paying a bonus under Section 32 of the Act, which excludes certain institutions from its purview. The Trust argued that it should be treated as an institution similar to the Indian Red Cross Society or as an institution established not for purposes of profit.
Court’s Reasoning
The Supreme Court upheld the decision of the High Court, affirming the workmen’s entitlement to bonus. The Court explained that since 1985, the Trust had been involved in commercial activities, including the manufacture of automobile parts, and these activities fall under the Factories Act.
“The workmen do not deny the fact that the appellant has been doing charitable work and they also admit that most of the workmen are the persons cured of leprosy who had been rehabilitated by the trust, but again it is a fact that these workmen are working in factories and fall within the definition of ‘workmen’ and ‘employee’ under the Factories Act, 1948 as well as the Bonus Act,” the Bench noted.
The Court remarked, “The Division Bench rightly observed that the appellant had severed all its links with the Swedish Red Cross Society by deleting all references to Swedish Red Cross Society from the trust deed via an amendment in 1989. Further, there is nothing on record to show that the appellant is akin to the Indian Red Cross Society, which was established by an Act of Parliament.”
The Bench clarified, “Just because such factories come under the broad umbrella of the appellant-trust, which is also involved in some charitable work, the workers cannot be deprived of the benefit of the Bonus Act. In our view, workmen of the respondent-Union, who are presently before us, are liable to receive their bonus under the Payment of Bonus Act.”
Consequently, the Court held that “the appellant is not exempted under section 32(v)(a) or (c) of the Bonus Act, and the workmen of the respondent-Union, who are engaged by the appellant in its factories, are entitled to get the bonus in accordance with law. Therefore, the appellant is directed to pay bonus to its workmen, as per provisions of the Bonus Act.”
Accordingly, the Supreme Court dismissed the Appeal.
Cause Title: The Management Of Worth Trust v. The Secretary, Worth Trust Workers Union (Neutral Citation: 2025 INSC 432)
Appearance:
Appellant: Senior Advocate R. Anand Padmanabhan; AOR Shashi Bhushan Kumar; Advocates Arimardhan Sharma and Ruchi Arya
Respondent: Senior Advocate Gautam Narayan; AOR Asmita Singh; Advocates Abheet Mangleek, Tushar Nair, Anirudh Anand and Punishk Handa
Source : verdictum
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