A) ABSTRACT / HEADNOTE
This landmark case, B.N. Elias & Co. Ltd. Employees’ Union & Ors. v. B.N. Elias & Co. Ltd. & Ors., decided by the Hon’ble Supreme Court of India in 1960, addressed the crucial question of whether a repeated ex gratia payment of bonus over the years could evolve into a legal obligation under industrial jurisprudence. The workmen of B.N. Elias & Co. demanded bonus for the years 1954, 1955, and 1956 on the ground that it had become either an implied condition of service or a customary practice. The Supreme Court, however, ruled that bonus payments made expressly as ex gratia, even when regular, could not constitute an implied contractual obligation. Nonetheless, in a significant development, the Court upheld the claim for Puja bonus for subordinate staff as a customary bonus, citing long-standing practice connected with an important religious festival. The judgment reiterated that customary bonus could only be recognized if it was intrinsically linked to a specific festival and consistently paid over time. The Court emphasized the importance of employer declarations and employee acknowledgements in determining the legal nature of such payments.

Keywords: Customary bonus, Ex gratia, Industrial Dispute, Puja Bonus, Condition of Service, Supreme Court.

B) CASE DETAILS
i) Judgement Cause Title: B.N. Elias & Co. Ltd. Employees’ Union & Ors. v. B.N. Elias & Co. Ltd. & Ors.
ii) Case Number: Civil Appeal No. 121 of 1959
iii) Judgement Date: March 24, 1960
iv) Court: Supreme Court of India
v) Quorum: Hon’ble Justices P.B. Gajendragadkar, K.N. Wanchoo, and K.C. Das Gupta
vi) Author: Justice K.N. Wanchoo
vii) Citation: (1960) 3 SCR 382
viii) Legal Provisions Involved: Industrial Disputes Act, 1947 – Section 2(k) and Section 10
ix) Judgments Overruled by the Case (if any): None explicitly overruled
x) Case is Related to: Labour Law / Industrial Law / Employment Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT
This case arises from a long-standing industrial dispute between the employees’ union of B.N. Elias & Co. Ltd. and their employer. The core issue pertained to the non-payment of bonuses for the years 1954, 1955, and 1956. The union claimed a legal entitlement to these bonuses based on their historical continuity and regularity, asserting they had become part of the employees’ implied terms of service or, alternatively, were due as a customary benefit. The employer refuted these claims, stating that all payments were clearly communicated and accepted as ex gratia, without legal obligation. The matter came to be referred to the Industrial Tribunal of West Bengal and eventually reached the Supreme Court through special leave.

D) FACTS OF THE CASE
Between 1942 and 1952, B.N. Elias & Co. Ltd. paid bonuses to both clerical and subordinate staff at regular intervals, sometimes four times a year. The union asserted that these payments became an inherent part of service conditions. However, beginning in 1953, the number of such payments declined, and by 1956, the employer ceased all bonus payments. The union’s claim was twofold: that the bonuses had either evolved into an implied term of employment or had become customary due to their regular occurrence. The employer countered that all bonuses were ex gratia and voluntary. Evidence such as receipts from employees stating the bonuses were ex gratia was also presented to the Tribunal. The Tribunal rejected the claim for bonuses beyond what was already paid for 1954 and 1955 and denied any bonus for 1956. The Supreme Court later heard the appeal filed by the union.

E) LEGAL ISSUES RAISED
i) Whether consistent ex gratia payments of bonuses over a long period can create an implied term of service.
ii) Whether the regular payment of bonuses constitutes a customary bonus under industrial law, particularly when linked to a festival like Puja.
iii) Whether any distinction exists between clerical and subordinate staff regarding entitlement to such bonuses.

F) PETITIONER/ APPELLANT’S ARGUMENTS
i) The counsels for the Petitioners argued that the bonuses paid from 1942 to 1952 were not isolated events but formed a continuing practice that should now be treated as an implied term of employment.
ii) They emphasized the uniformity and regularity of the bonuses—particularly three times a year for clerical staff and four times for subordinate staff—as indicative of an accepted contractual norm.
iii) They cited The Graham Trading Co. (India) Ltd. v. Its Workmen (1960) 1 SCR 107, asserting that a customary bonus, particularly for festivals, could be enforceable if paid regularly and unconditionally.
iv) The petitioners contended that the practice of paying a Puja bonus to subordinate staff had assumed traditional and customary character, continuing even during unprofitable years.

G) RESPONDENT’S ARGUMENTS
i) The counsels for the Respondents argued that the payments were explicitly marked ex gratia and were always made on the understanding that they were voluntary and not contractual.
ii) They presented receipts signed by employees which stated the bonus was accepted as ex gratia, thereby negating any implied legal obligation.
iii) They cited financial constraints and declining profitability post-1952, asserting that they were under no obligation to continue these payments.
iv) They distinguished between general payments and those connected to specific festivals, maintaining that no obligation arose in the absence of a contractual clause or consistent linkage to cultural or religious events.

H) RELATED LEGAL PROVISIONS
i) Section 2(k) of the Industrial Disputes Act, 1947: Defines “industrial dispute” and encompasses disputes relating to bonuses.
ii) Section 10: Empowers the Government to refer industrial disputes for adjudication.
iii) The doctrine of customary bonus as interpreted in Indian industrial law, with special relevance to festival-based traditions.
iv) Reference to The Graham Trading Co. case which recognized Puja bonus as enforceable under customary obligations.

I) JUDGEMENT

a. RATIO DECIDENDI
i) The Supreme Court held that where bonus payments were consistently labeled and accepted as ex gratia, no implied contractual obligation could arise from them.
ii) The Court further held that a customary bonus could be inferred only when the payment was tied to a specific festival, regularly paid over a period of time, and not dependent on the company’s financial results.
iii) The Court accepted that the Puja bonus paid to subordinate staff from 1942 onwards, even during loss-making years, had acquired customary status and thus ordered its payment for the year 1956.

b. OBITER DICTA 
i) The Court opined that one-off or voluntarily labeled payments cannot metamorphose into binding obligations merely by the passage of time or repetition.
ii) Express or implied contractual terms must be established either by agreement or conduct clearly deviating from ex gratia declarations.

c. GUIDELINES 

• Customary bonus claims must be substantiated by:

  • Long-term consistency of payments

  • Regularity and uniformity in amounts

  • Payment during both profit and loss years

  • Connection with a recognized festival or tradition

• Mere repetition of voluntary payments does not establish a legal obligation

• Receipts and employer declarations labeling payments as ex gratia hold evidentiary value against claims of implied obligations

J) CONCLUSION & COMMENTS
The Supreme Court’s ruling in this case carefully balanced the rights of employees and employers. It upheld the sanctity of voluntarily given ex gratia payments unless sufficient evidence shows customary or contractual obligation. The acceptance of Puja bonus as a valid customary bonus underlined the Court’s sensitivity to regional cultural practices while maintaining strict legal scrutiny on employment terms. This judgment reinforces that for a practice to attain enforceable status under industrial law, it must transcend voluntariness and attain characteristics of uniformity, linkage to cultural tradition, and consistency, even in adversity. This ruling has since served as a leading precedent in numerous industrial adjudications involving festival bonuses.

K) REFERENCES

a. Important Cases Referred
i) The Graham Trading Co. (India) Ltd. v. Its Workmen, (1960) 1 SCR 107

b. Important Statutes Referred
i) Industrial Disputes Act, 1947 – Section 2(k)
ii) Industrial Disputes Act, 1947 – Section 10