In a relatively recent decision of the Madras High Court, rendered in the case of Management Of Worth Trust v. The Presiding Officer [W.A.No.1732 of 2013, decided on March 20, 2019], the Court was asked to examine, if a factory operated by a not-for-profit trust would be exempted from the Payment of Bonus Act, 1965 (“Act”), inter alia, on account of exceptions available to institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit, vide Section 32(v)(c) of the Act?

The Court upheld the applicability of the Act to such factories by noting that the Act is applicable to all factories and whilst the factory may have been established with a laudable object to rehabilitate the leprosy cured and differently abled, nevertheless, the factory which has a full fledged manufacturing facility would be an independent entity. The Court observed that factory has a distinct position, in law it is recognized as a separate unit and though it may fall within the umbrella of the Trust, it would not be sufficient to claim exemption from the provision of the Act basis the same.

This update has been contributed by Arka Majumdar (Partner) and Juhi Roy (Associate).