The Management Of Worth Trust vs. The Secretary Worth Trust Workers Union

REPORTABLE
IN THE SUPREME COURT OF INDIA
2025 INSC 432

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO._______________ OF 2025
[@ SPECIAL LEAVE PETITION (CIVIL) NO. 20474 OF 2019]


THE MANAGEMENT OF WORTH TRUST …APPELLANT(S)


Versus


THE SECRETARY, WORTH
TRUST WORKERS UNION …RESPONDENT(S)


J U D G M E N T
SUDHANSHU DHULIA, J.
1. Leave granted.
2. The appellant before this Court is a trust presently known as
‘Workshop for Rehabilitation and Training of the Handicapped
Trust’, or ‘WORTH’. Prior to the year 1985, the name of this
trust was ‘Swedish Red Cross Rehabilitation Trust’ as it was
initially established by the Swedish Red Cross Society. This
trust has been doing charitable activities, including the
Signature Not Verified
Digitally signed by
Nirmala Negi
Date: 2025.04.02
18:42:10 IST
Reason:
rehabilitation of leprosy-cured patients and other specially
abled persons.
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3. For our purpose, it is an admitted fact that since 1985, the
trust is also engaged in many industrial activities which are in
the nature of commercial activities, such as the manufacture
of automobile parts and parts for industrial machineries. This
is purely a commercial venture, and it is again an admitted
fact that from the manufacturing and sale of these parts,
which is done in its factories, profits are being generated.
These profits, for our purposes and for the purpose of the
Payment of Bonus Act, 1965 (hereinafter ‘Bonus Act’), are
known as ‘surplus’. Thus, though the factory may be under
the control of a trust, but it is also governed under the
Factories Act, 1948.
4. It is again an admitted fact that the workmen who are
employed in the factories in various capacities largely
comprise of such workers who have been cured of Leprosy or
are otherwise differently abled. These workmen have a union
known as “WORTH Trust Workers Union” (hereinafter referred
to as ‘Union’). In the year 1998, this Union raised an industrial
dispute demanding bonus and ex-gratia for the year 1996-97
and ultimately, the dispute was referred to the Industrial
Disputes Tribunal, Chennai as per Section 10(2) of the
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Industrial Disputes Act, 1947 read with Section 22 of the
Bonus Act. The claim of the workmen union was based on the
fact that its members are workmen who are working in the
factories governed by the provisions of the Factories Act, 1948
and Industrial Disputes Act, 1947 and thus, the Payment of
1
Bonus Act is applicable to them.
5. Before the Tribunal, the Respondent-Union claimed a bonus
at the rate of 20% and ex-gratia at the rate of 5% on the annual
earning of a worker. The Tribunal partly allowed the claim of
workmen and held that workmen’s demand for bonus and ex-
gratia is justified. Tribunal ordered that workmen are entitled
to a bonus of 8.33 % on their annual earnings and further, the
Tribunal also held that workmen are entitled to an ex-gratia
amount, which they have already been receiving from the
appellant. This award was challenged before the High Court
by the appellant. The learned Single Judge bench upheld the
award of the Tribunal but modified the relief to the extent that
the bonus shall be awarded after deducting the amount

1
Section 1(3)(a) of the Payment of Bonus Act makes the Act applicable to every factory. It
reads as follows:
Section 1: Short title, extent and application-
(1) …..
(2) …..
(3) …..it shall apply to-
(a) every factory;…
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already paid as ex-gratia. Thereafter, the Writ Appeal, filed by
appellant challenging the findings of the Single Judge, was
also dismissed vide the impugned order dated 20.03.2019.

Aggrieved, the appellant is before us.
6. We have heard both sides and perused the material on record.
7. Let us first understand the scheme and applicability of the
Bonus Act. The practice of paying bonus in India originated
during the First World War when some textile mills started
giving bonus to their workers under the Defence of India Rules.
Later in 1960, at the meetings of the Eighteenth Session of the
standing Labour Committee of the Government of India, it was
agreed that a Commission be appointed to evolve norms for
payment of bonus. Consequently, a Bonus Commission was
appointed and thereafter, the Government of India
promulgated an Ordinance accepting recommendations of the
Bonus Commission with some modification. This ordinance
was later replaced by the Payment of Bonus Act, 1965. In this
regard, the Statement of Object and Reasons of the Bonus Act
states as follows:
“Statement of Objects and Reasons
.—A
Tripartite Commission was set up by the
Government of India by their Resolution No.
WB-20(9)/61, dated 6th December, 1961, to
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makes the Bonus Act applicable to all the factories. The term
‘factory’ is defined under Section 2(17) of the Bonus Act as
follows:
“(17) “factory” shall have the same meaning
as in clause (m) of section 2 of the Factories
Act, 1948;”

Clause (m) of Section 2 of the Factories Act, 1948 reads as
follows:
“(m) “factory” means any premises including the
precincts thereof—
(i) whereon ten or more workers are working,
or were working on any day of the
preceding twelve months, and in any part of
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which a manufacturing process is being
carried on with the aid of power, or is
ordinarily so carried on, or
(ii) whereon twenty or more workers are
working, or were working on any day of the
preceding twelve months, and in any part of
which a manufacturing process is being
carried on without the aid of power, or is
ordinarily so carried on,—
but does not include a mine subject to the
operation of the Mines Act, 1952 (35 of 1952),
or a mobile unit belonging to the armed forces
of the Union, a railway running shed or a
hotel, restaurant or eating place;
Explanation [I]—For computing the number of
workers for the purposes of this clause all the
workers in different groups and relays] in a
day shall be taken into account;]
Explanation II.—For the purposes of this
clause, the mere fact that an Electronic Data
Processing Unit or a Computer Unit is installed
in any premises or part thereof, shall not be
construed to make it a factory if no
manufacturing process is being carried on in
such premises or part thereof;

9. The payment of minimum and maximum bonuses is made as
per Sections 10 and 11 of the Bonus Act. These provisions read
as follows:
10. Payment of minimum bonus .—Subject
to the other provisions of this Act, every
employer shall be bound to pay to every
employee in respect of the accounting year
commencing on any day in the year 1979
and in respect of every subsequent
accounting year, a minimum bonus which
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shall be 8.33 per cent. of the salary of wage
earned by the employee during the
accounting year or one hundred rupees,
whichever is higher, whether or not the
employer has any allocable surplus in the
accounting year:
Provided that where an employee has
not completed fifteen years of age at the
beginning of the accounting year, the
provisions of this section shall have effect in
relation to such employees as if for the words
“one hundred rupees”, the words “sixty
rupees” were substituted.

11. Payment of maximum bonus- (1)
Where in respect of any accounting year
referred to in Section 10, the allocable
surplus exceeds the amount of minimum
bonus payable to the employees under that
section, the employer shall, in lieu of such
minimum bonus, be bound to pay to every
employee in respect of that accounting year
bonus which shall be an amount in
proportion to the salary or wage earned by
the employee during the accounting year
subject to a maximum of twenty per cent of
such salary or wage.
(2) In computing the allocable surplus under
this section, the amount set on or the amount
set off under the provisions of Section 15
shall be taken into account in accordance
with the provisions of that section.

10. The workmen of the Respondent-Union argued that they are
engaged in manufacturing activities and are working in
factories run by the appellant, and thus, in terms of the above
provisions of the Bonus Act, they are entitled to the payment
of a bonus. The workmen had demanded a maximum bonus
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of 20% of their annual earnings as per section 11 of the Bonus
Act.
11. Under Section 32, the Bonus Act is not made applicable to a
certain class of employees. The appellant has consistently
taken the defence that it is exempted under Section 32(v)(a)
and (c) of the Bonus Act, and thus, not liable to pay any bonus.
The relevant portion of Section 32 of the Bonus Act reads as
follows:
“ 32. Act not to apply to certain classes of
employees. —Nothing in this Act shall apply to—
…
…
(v) employees employed by—
(a) the Indian Red Cross Society or any other
institution of a like nature (including its
branches);
…
(c) institutions (including hospitals, chambers
of commerce and social welfare institutions)
established not for purposes of profit..

12. The argument of the appellant before the Tribunal and before
all other Courts including this Court therefore is that the
Bonus Act does not apply as its employees are to be treated as
employees of ‘the Indian Red Cross Society’ and if not, then
they have to be treated as the employees of an ‘institution of a
like nature’, which is like Indian Red Cross Society, and thus,
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exempted from payment of bonus in terms of Section 32(v)(a)
of the Bonus Act. In the alternative, the appellant also argued
that it can be treated as an institution which has been
‘established not for the purposes of profit’ and thus, exempted
as per Section 32(v)(c) of the Bonus Act.
13. After taking evidence from both sides, the Tribunal came to
the conclusion that though trust was established in 1969 as
‘Swedish Red Cross Rehabilitation Trust’ with the charitable
object of rehabilitation of former leprosy patients or other
persons with disabilities, but since the year 1985 there has
been a marked shift in the activities of the trust. Not only did
the name of the trust change from ‘Swedish Red Cross
Rehabilitation Trust’ to ‘Workshop for Rehabilitation &
Training of the Handicapped’ (‘WORTH’), but the very object of
the trust also got diluted and its work was expanded since
appellant started commercial activities at a greater scale.
These commercial activities include the manufacturing and
sale of certain automobile parts and other types of equipment.
The factories make a profit, which is called surplus, though
this profit is allegedly again invested in similar rehabilitation
activities which the trust has been doing.
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14. 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. Since, admittedly, they work in
factories, the Bonus Act is applicable in their case, as are all
other beneficial legislations such as the Factories Act,
Employees’ State Insurance Act, Employees Provident Fund
Act etc.
15. The appellant’s contention that it is exempted under Section
32(v) of the Bonus Act is without any merit, and the Tribunal
rightly observed that there is no evidence to show that the
appellant-trust is run by Indian Red Cross Society or that the
appellant is an institution similar to Indian Red Cross Society.
Nor can it be said that appellant is an institution exempted
under section 32(v)(c) of the Bonus Act. The learned Single
Judge of the High Court also noted that since the year 1985,
appellant has been engaged in commercial activities, and it is
not dependent upon the Red Cross Society.
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16. The Division Bench of the High Court, in its well-reasoned
order, has elaborated on this aspect. 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. Some
objects and activities of the appellant might match with that
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. Moreover, when it is established that the
appellant is running factories, then 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. 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.
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17. 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.
18. The Tribunal had awarded the minimum bonus to the
workmen i.e., 8.33 % of the annual earnings and when this
award was challenged by the appellant before the High Court,
the learned Single Judge dismissed the challenge with a slight
modification that bonus shall be paid after deducting the
amount of ex-gratia already paid to workmen. This order of the
Single Judge directing adjustment of the amount of ex gratia
against the bonus was never challenged by the workmen.
19. 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 law.
Therefore, the appellant is directed to pay bonus to its
workmen, as per provisions of the Bonus Act, from the year
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1996-1997 till date. This must be done within a month of this
order.
20. The appeal stands dismissed in the above terms.

21. Pending application(s), if any, stand(s) disposed of.
22. Interim order(s), if any, stand(s) vacated.


…......………………………….J.
[SUDHANSHU DHULIA]





..….....………………………….J.
[K. VINOD CHANDRAN]


NEW DELHI,
APRIL 2, 2025.

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