Decided on September 08,1952

N.M. Shanmughasundaram Mudaliar Appellant
Chidambaram Pillai And Anr. Respondents


Krishnaswami Nayudu, J. - (1.) THE appellants are the defendants in O. S. Nos. 165 of 1947 and 164 of 1947 and in S. C. S. Nos. 133, 187, 119 and 186 of 1947 filed in the District Munsif's Court, Erode. The plaintiffs in those suits were employed under the defendants as accountants, clerks, and cloth -holders in their cloth business. The common case of the plaintiffs in all the suits is that they were employed under the defendants, that their salary was fixed inclusive of bonus and that while the salary was being paid, the bonus has not been paid, in some cases fully and in some cases partially. The suits, therefore, were instituted for the recovery of the amount of the bonus, which remained unpaid. The defendants contended that there was no agreement to pay the plain -tiff's any bonus and as bonus depends upon one's sweet will and pleasure and it is a mere gift, no suit could be filed in respect of the same. They also pleaded bar of limitation to the suits. The lower Court passed decree in all the suits. The defendants filed appeals against O. S. No. 165 of 1047 and against O. S. No. 164 of 1947 in the Subordinate Judge's Court, Coimbatore, but the appeals were transferred to the High Court to be heard along with C. R. P. Nos. 1903 to 1906 of 1947, which were revision petitions filed by the defendants against the decree in S. C. S. Nos. 133, 187, 119 and 186 of 1947.
(2.) TWO contentions were urged before me: (1) That no suit is maintainable for recovery of bonus which is an 'ex gratia' payment and that, in any event, there was no agreement for payment of such a bonus, and (2) The claims are barred by limitation. These payments of salary and bonus are stated to have been agreed to be paid annually and the amounts claimed in the several suits are based on the agreement to pay the bonus every year at differing rates in several suits. The plaintiffs have examined themselves and also relied on the account books maintained in the business which were, stated to have been written by Chidambaram, the plaintiff in O. S. No. 165 of 1947. These account books are not forthcoming but it is stated that there are in the accounts of every year credit entries in the ledger pages of each of these plaintiffs of not only the amount of salary but also the amount of bonus stipulated for. Chidambaram filed Ex. A. 1, which is a copy of the balance sheet for the year 1943 -44 and the balance sheet shows the amounts credited to four of the six plaintiffs, which they claim in these suits and which amounts are stated to be the balance due in respect of bonus. Ex. A. 1 - does not give particulars as to the nature of the amounts to which credit has been given - but there is the evidence of the plaintiffs that these amounts represent the balance due for bonus agreed upon. The explanation for the non -production of the account books, of which the defendants must be in possession, is that they have been filed with the Income Tax authorities to whom Income Tax returns for the years 1942 -43, 1943 -44 and 1944 -45 have been submitted and pending scrutiny, it is stated the books have not been returned. The 2nd defendant examined himself as D. W. 1. He is unable to say whether Ex. A. 1 is a true copy of the accounts and states that the account books were filed by the defendants about five months prior to the date of his examination, with the Excess Profits Tax authorities and that they did not attempt to get the account books after the suit. He does not know whether defendant 1 made any attempt to get them. The 1st defendant is apparently not taking any interest in the suit as he has not examined himself, leaving defendant 2 to face the trial. The 2nd defendant 'further says that he did not verify the balance -sheet and that he does not know if they deducted the bonus amounts from the gross -profits earned by them and showed the balance as net profits to the Income Tax authorities.
(3.) IN view of the specific allegation in the plaint that credit has been given from time to time for the respective amounts of salary and bonus due to the respective plaintiffs, it is incumbent on the defendants to produce the account books and prove that the state of the accounts does not support the plaintiffs' contention. Except taking a subpoena for their ' - production, the defendants did not apparently take any serious steps to have them produced as evidence and their failure to do so would justify an adverse inference to be drawn, viz., that by their production the case of the defendants would not receive any support. There is no reason to disregard the genuineness and the truth of the entries in the balance sheet, Ex. A. 1 and that would be sufficient to show that the course of business and the nature of the accounts must have been what is stated by the plaintiffs, viz., that there was an arrangement to pay not only salary but bonus every year. This would be amply proved by the fact of credit entries being made from time to time in the books of account maintained on behalf of the defendants. Bonus as such would mean 'ex gratia' payment and there cannot be an action to enforce the payment of such an 'ex gratia' payment but if it is established that in feet there was an arrangement to pay a certain sum as bonus and that it would be part of the contract of service between the parties, there is no reason why such a contract should not be enforceable. This aspect was dealt with by :? Bench of this Court in the decision reported in - - 'Kana -kasabapathi v. Hajee Oosman',, 47 Mad LJ 791, and as observed by one of the learned Judges, the claim of the plaintiff should be deemed to be based on a contract, apart from any question whatever of a contemplated gift or a completed gift and apart from any relationship between the parties of depositor and depositee or creditor and debtor and the plaintiff had a case on the footing of a contract which was clearly sustainable. It cannot, therefore, amount to a promise without consideration, the consideration being the plaintiff's services to the defendant on an express agreement that they were to be paid two sums, one described as salary and the other as bonus. In this case, such an agreement has been proved both by the evidence of the plaintiffs and by Ex. A, 1. The lower Court rightly held that the defendants are liable to pay the bonus. There is no dispute as to the amount due and, therefore, the decree of the lower Court would be sustainable.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.