New Delhi: The Supreme Court on Wednesday held that payment of ex gratia to employees could not be claimed as a matter of right.

A Bench consisting of Justices A.R. Lakshmanan and Tarun Chatterjee said just because employees were receiving an ex gratia payment for a number of years, it could not be said they would be entitled to it in future also.

"The meaning of `bonus' is a boon or gift, over and above what is normally due as remuneration to be received. This imports the concept of some ex gratia payment. It was ex gratia payment on account of which it is not possible to employ a term of service on the basis of employed contract." The payment made ex gratia would not constitute any precedent for future years.

Appeal upheld

In the instant case, an Additional Labour Commissioner allowed payment of Rs. 11,10,398 as ex gratia to employees of a cooperative bank in Ghaziabad, Uttar Pradesh. The Allahabad High Court upheld the payment. The Bench allowed the bank's appeal against this ruling. Writing the judgment, Justice Lakshmanan agreed with the bank's contention that if the payment was allowed, 50-odd other co-operative banks would claim relief on the ground of parity and discrimination and it would eat into public money running into several crores.

The Bench said, "The ex gratia payment made in the instant case was neither in the nature of production bonus nor incentive bonus nor customary nor any statutory bonus. It cannot be regarded as part of contract employment. Therefore, the ex gratia payment made by the bank cannot be regarded as remuneration paid or payable to the employees in fulfilment of the terms of the contract of employment within the meaning of the definition under Section 2 (22) of the Industrial Disputes Act."

The emoluments and allowances payable to the employees of the bank were governed by Service Regulations. There was no agreement or settlement between them on payment of an ex gratia amount.

"The impugned judgment suffers from complete non-application of mind on the merits of the case inasmuch as whole pleadings even before the Labour Commissioner or before the High Court were that the payment of ex gratia to the employees are against the objects of the society and it is in contravention of the Service Regulations."

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