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II. WHETHER THE EMPLOYEES ARE ELIGIBLE FOR A HIGHER BONUS?

1. It is most humbly submitted upon this Hon'ble court that, in accordance with The Payment of
Bonus Act 1965, the employees are not eligible for a higher bonus. The basic criterion of
“minimum bonus” has been given by the company, and any additional bonus is the discretion
of the Board of Directors. In the current scenario, bonuses are not increased as all profits are
being rotated in order to cater to the fierce competition in market.

2. Bonus is considered as “reward” or any additional payment made to their monthly

remuneration, given by the employer to the employee in any establishment. The basic
objective to give the bonus is to share the profit earned by the organization amongst the
employees.

3. Section 10 of the payment of bonus act states as follows:

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 shall be 8.33 per cent. of the salary or 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 employee as if for the words “one hundred
rupees”, the words “sixty rupees” were substituted.

4. The object of the Payment of Bonus Act was very clearly described in Jalan Trading v Mill
Mazdoor Sabha1 , the Supreme Court observed that the purpose of the Bonus Act was to
maintain peace and harmony between labour and capital by allowing workers to share the
prosperity of the establishment and prescribing the maximum and minimum rates of bonus,
as well as the scheme of "set-off" and set - on to not only secure the labour's right in the share
of profits but also to ensure a reasonable degree of uniformity.

1
Jalan Trading v Mill Mazdoor Sabha 1967 AIR 691, 1967 SCR (1) 15
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5. The word "bonus" is not specified anywhere in the bonus payment act. A bonus is a monetary
reward that is above and beyond the standard payment. According to the Cambridge
dictionary, a bonus is an additional sum of money offered to you as a gift or incentive for
good performance. The primary goal of providing bonuses is to distribute the company's
profits to its workers and employees.

6. The bonus commission in its report suggested "It is difficult to define in rigid terms the
concept of bonus,( it is different for different organizations )but it is possible to urge that
once the profits exceed a certain base, labor should legitimately have a share in them. In other
words, we think it to construe the concept of bonus as sharing by the workers in the
prosperity of the concern in which they are employed.

7. Section 10 of the Act states that, regardless of whether the employer has some allocable
surplus in the accounting year, each employer must pay each employee a minimum bonus
equivalent to 8.33 percent of the employee's salary or wage earned during the accounting
year, or one hundred rupees, whichever is greater. However, if an employee is under the age
of fifteen at the start of the accounting year, the terms of this Section refer to that employee
as if the words "one hundred rupees" were replaced with "sixty rupees." Section 10 of the Act
does not contradict Articles 19 and 301 of the Constitution. Even if the employer loses
money during the fiscal year, he must pay the minimum bonus as according to section 10 of
the act.

8. Furthermore in the case of Commissioner Of Income Tax vs Mettur Chemicals &

Industrial 2... on 19 March, 1998, The revenue challenged the order of the Tribunal and the
learned counsel for the revenue submitted that the payment made is not in accordance with
the Payment of Bonus Act as the allocable surplus was Rs. 99,278 and in the circumstances,
the payment of minimum bonus would be sufficient and therefore, the Tribunal was not
justified in allowing the entire amount of Rs. 18,98,199.

9. In J.K. Chemicals Ltd. vs. Govt. of Maharashtra3 the court held that the company would
not be relieved from its liability to pay minimum bonus, if the bonus liability is negligible in

2
Income Tax vs Mettur Chemicals & Industrial (1998) 148 CTR Mad 32
3
J.K. Chemicals Ltd. vs. Govt. of Maharashtra 1996 (1) BomCR 197, (1997) IIILLJ 578 Bom, 1996 (1) MhLj 126
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comparison to the loss incurred. If the employer's damages were not caused by employee
wrongdoing, the employer must pay the statutory minimum bonus.

10. In the present scenario, the Union Leader Mr. Sharat has already admitted to the fact that the
Company has been paying the minimum bonus as required by the law. The question of
additional bonus absolutely depends on the Board of Directors, and in our scenario, the BOD
has decided to rotate the additional profits for further investments in the company. The
present Company is one that is profit oriented and therefore has all the rights to use profits for
future investments.

11. It is also to be brought to the courts attention that, until now, no issue of bonus has been
raised to the management’s attention and that currently it is the percentage to be spent on
CSR activities that is giving rise to this issue.

PRAYER

Wherefore in light of issues raised, arguments advanced and authorities cited, it is most
humbly requested that this Hon’ble Court pass an order
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1. To Declare, that Section 135 of The Companies Act, 2013 is valid and should not be
quashed.

2. To Hold, that the employees are given sufficient Bonus and no additional bonus is
required to be given by the Company

AND/OR
Pass any other order or relief that this hon’ble court believes to be in the best interest of Justice,
Fairness, Equity and Good Conscience.
All of which is most humbly and respectfully submitted.

Sd/-
Counsels for the Respondent

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