Saturday, October 13, 2007

Bonus Act_Practical Problems_1

The Model Mills, Nagpur refused to pay bonus to its employees on the ground that its management was controlled by an authorised controller appointed by the Government and as such it was entitled to exemption from the liability to pay bonus. Decide.

Section 32 of the Payment of Bonus Act, 1965 provides that the Act shall not apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any Department of the Central Government or a State Government or a local authority.
However, in RMS vs. The Model Mills Hon. supreme court has held held that the exemption as aforesaid will not extend to cases contemplated in the given problem, i.e., where the establishment was not under the direct authority of the Central/State Government or local authority. Appointment of a controller may be a temporary phenomenon. The company was, therefore, held liable to pay bonus to its workmen. The claim of the company shall, therefore, be not tenable.

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