The Supreme Court of India has ruled that workers in factories run by charitable trusts cannot be denied a bonus under the Payment of Bonus Act, 1965. The Court emphasized that the right to receive a bonus is a statutory entitlement and rejected claims that a factory's association with a charitable organization exempts it from its legal obligations.
Background of the Case
The case involved a charitable trust engaged in the rehabilitation of leprosy patients. Over time, the trust expanded into commercial activities, such as manufacturing and selling automobile parts. Rehabilitated patients were employed as factory workers, and they later formed a union to demand bonuses under the Bonus Act.
However, the trust management denied their claims, arguing that the organization was exempt under Section 32 of the Bonus Act. They reasoned that their institution was similar to the Indian Red Cross Society, which is specifically exempted from paying bonuses under the Act.
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A bench comprising Justices Sudhanshu Dhulia and K. Vinod Chandran heard the case. The Court rejected the appellant’s argument, stating that no evidence was provided to prove that the organization was part of the Indian Red Cross Society or another exempted institution.
"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. Some objects and activities of the appellant might match with those of the Indian Red Cross Society, but that would not be enough to hold that the appellant is an institution like the Indian Red Cross Society," the Supreme Court observed.
The Court further noted that once the trust started running factories and engaging in profit-driven activities, it was bound by the provisions of the Bonus Act.
"When it is established that the appellant is running factories, there can be no doubt regarding the applicability of the Bonus Act. 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."
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Key Takeaways from the Judgment
- Charitable trusts running commercial factories are not exempt from the Bonus Act.
- Workers in such factories are entitled to bonuses under the law.
- The court dismissed claims that the organization was similar to the Indian Red Cross Society.
- The ruling reinforces that labor welfare laws must be interpreted liberally to benefit workers.
The Supreme Court dismissed the appeal and ruled in favor of the workers’ union.
"We hold 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 the law."
The Court directed the appellant to pay the workers their rightful bonus from the applicable period till date, within a month.
Case Title: THE MANAGEMENT OF WORTH TRUST Versus THE SECRETARY, WORTH TRUST WORKERS UNION
Appearance:
For Petitioner(s) Mr. R.Anand Padmanabhan, Sr.Adv. Arimardhan Sharma, Adv. Ms. Ruchi Arya, Adv. Mr. Shashi Bhushan Kumar, AOR
For Respondent(s) Mr. Gautam Narayan, Sr. Adv. Ms. Asmita Singh, AOR Mr. Abheet Mangleek, Adv. Mr. Tushar Nair, Adv. Mr. Anirudh Anand, Adv. Mr. Punishk Handa, Adv.
