MANAGEMENT OF CENTRAL COAL WASHERY vs WORKMEN & ANR.

The Supreme Court interpreted Section 16(1)(a) of the Payment of Bonus Act, 1965, clarifying that newly established organizations are liable to pay bonuses only from the accounting year they start making profits or from the sixth accounting year after they begin selling goods, whichever is earlier. The Court held that the employer is exempt from paying bonuses until profits are derived, but cannot claim perpetual immunity beyond the stipulated period. The appeal was allowed, and the dismissal of the previous appeal was set aside, affirming the entitlement of workmen to bonuses under the Act.