RESEARCH PROJECT ON

MillOwners'Association,Bombayv.RashtriyaMillMazdoorSangh,Bombay1950(II)LLJ124

SUBMITTED TO

InFulfilmentoftheRequirementsforInternalComponentin

LABOURLAW

By

PRAVEEN.C

(Reg.No.BA0140041)
Mill Owners' Association, Bombay v. Rashtriya Mill MazdoorSangh, Bombay 1950 (II)
LLJ 124

FACTS

The sangh is the representative union of cotton textile workers in the city Bombay. From
1941 through 1945 the mills, represented by the mill owner Association for voluntarily
declared bonuses in 1941. And in 1942 to 1945 1/6 th annual earnings. In 1946 to 1947, is
1/5th and 1/6th of the annual earnings for two year it is awarded by Industrial court 1. In 1947
the association paid a bonus equivalent to one month wages in additional as an Independence
Bonus. In 1948 the court awarded 3/8th of the total basic earning. In 1949 a dispute arose over
bonus. The Industrial Court awarded 1/6th of the basic earnings as bonus to all employees,
whether permanent or temporary, in all the 55 mills. So the Association appealed that award
and contended that no bonusesought have been given because there no surplus left after
setting apart from the gross profit for 1949 sum necessary to meet prior charges 2. So this case
is filed in the Tribunal.

RESEARCH OBJECTIVE
The objective is to analyse the dispute between the employer and employee in giving bonus
in the Mill owners association case.
ISSUE
Whether the ex-gratia is compulsory payment?
Whether the employee can raise an industrial dispute for non payment of bonus?
Whether the bonus is temporary satisfaction?
Whether bonus of payment is discrition of employer or it is complsory?
Is there is a minimum amount?
Industrial court said that bonus is 1/6th of wages is a complsory payment . It is upheld in
appeal?
Ratio binding from 1950 till 1965 when payment of bonus Act came.

1 The state of mysore v. the workers of gold mines on 22 may, 1958

2 M/s tulsidas khimji v. their workmen on 11 april 1962

RESEARCH METHODOLOGY
The researcher used case analysis in this project

Decision
In the case of Mill Owners' Association v. Rashtriya Mill Mazdoor Sang a full bench of
the Labour Appellate Tribunal held that it was no longer an ex gratia payment and laid down
a formula konwn as Full Bench Formula) by which the workmen could share in the profits of
the company. The Supreme Court3 in approved this formula elaborated and clarified some of
its basic features. Broadly speaking, the formula, provided that the following prior charges
should be deducted from the gross profits of an enterprise: (i) Return on paid up capital
generally at the rate of six per cent.; (ii) return on working capital varying from two to four
percent.; (iii) depreciation worked out on a notional basis; (iv) rehabilitation; and (v) income
tax. If after the deduction of these prior charges, a surplus was left over, the workmen would
be entitled to a share in the said surplus on an equitable basis. In the absence of any surplus,
however, there would

3 Associated Cement Companies case 1959 I L.L.J. 644