Supreme Court: Charitable trust running commercial units not exempt from Payment Bonus Act, 1965

In The Management of Worth Trust v. The Secretary, Worth Trust Workers Union (2025), the Supreme Court held that a charitable trust engaged in commercial manufacturing cannot claim exemption under Section 32 of the Payment of Bonus Act, 1965. Despite its origins in social rehabilitation, the Court noted that Worth Trust had, since 1985, expanded into profit-generating industrial activities, including the manufacture of automobile parts.

As such, its workers engaged in factory operations are entitled to statutory bonus under the Bonus Act. The Court clarified that merely being a charitable institution or paying ex-gratia amounts does not override the mandatory obligation to pay bonus. Commercial activity carried out through factories attracts full application of labour welfare legislation, regardless of the institution’s broader charitable objectives.

The appeal was dismissed, and the Trust was directed to pay bonuses from 1996-97 onwards within one month.