BonusPayment of bonus actSupreme Court of India

Jalan Trading Co. (Private) Ltd. v Mill Mazdoor Union

AIR 1967 Supreme Court 691; (1967) 1 SCR 1519662 min read
The case in brief30-second read
Facts
A demand for bonus for 1961 and 1962 was pending before the industrial tribunal in Bombay under S.73-A of the Bombay Industrial Relations Act, 1946. The Payment of Bonus Ordinance, 1965 was promulgated on 29 May 1965 and later replaced by the Payment of Bonus Act, 1965.
Issue
Whether the Payment of Bonus Act, 1965, and in particular S.10 (minimum bonus), S.33, S.34, S.36 and S.37, were constitutionally valid.
Held
The Act was within the legislative competence of Parliament and was not a colourable exercise of power.
Principle
The Payment of Bonus Act, 1965 is within Parliament's competence, and the minimum bonus under S.10 is valid as part of the scheme of set on and set off. S.33, S.34(2) and S.37 were held invalid.
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Facts

  • A demand for bonus for 1961 and 1962 was pending before the industrial tribunal in Bombay under S.73-A of the Bombay Industrial Relations Act, 1946.
  • The Payment of Bonus Ordinance, 1965 was promulgated on 29 May 1965 and later replaced by the Payment of Bonus Act, 1965.
  • The Industrial Court directed bonus for 1962, subject to the Ordinance. The employers appealed and challenged the validity of the Act.

Issue

  1. Whether the Payment of Bonus Act, 1965, and in particular S.10 (minimum bonus), S.33, S.34, S.36 and S.37, were constitutionally valid.

Held

  • The Act was within the legislative competence of Parliament and was not a colourable exercise of power.
  • S.36 (power to exempt) was valid; there was no excessive delegation.
  • By majority, S.10 was valid. Minimum bonus is an integral part of a scheme of set on and set off that keeps bonus from fluctuating widely, and it is not discriminatory or a deprivation of property.
  • By majority, S.33 and S.34(2) were invalid under Art.14, and S.37 (removal of difficulties) was invalid as excessive delegation.

Ratio decidendi

Parliament could enact a law on bonus. The guaranteed minimum bonus under S.10 is valid because it operates within the scheme of set on and set off. S.33, S.34(2) and S.37 of the Act are invalid.

Exam use

How to use it in an answer

  • Authority on the constitutional validity of the Payment of Bonus Act, 1965 and of minimum bonus.
  • Use in Part B on minimum bonus, set on and set off.
  • Do not cite it on wage fixation or the Full Bench Formula for wages.
  • Key line: "In Jalan Trading Co. v. Mill Mazdoor Union (1966), the Supreme Court upheld the Payment of Bonus Act and its minimum bonus provision, while striking down S.33, S.34(2) and S.37."

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Citation

Jalan Trading Co. (Private) Ltd. v. Mill Mazdoor Union AIR 1967 Supreme Court 691; (1967) 1 SCR 15

Reported: https://indiankanoon.org/doc/493792/. This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.