Bharat Barrel and Drum Mfg. Co Private Ltd. v. Govind Gopal Waghmare and Another
K. R. Ohaudhury and Janardan Shanna, for the
respondents Nos. l and 2.
-
...
..
-
3 S.C.R. SUPREME COURT REPORTS 379
1960. March 24. The ,Judgment of the Court waf\
delivered by
WANOHOO, J.-This appeal by special leave raises
two questions, namely, (i) bonus for the year 1952 and
(ii) retrospective operation of the order of the Indus
trial Tribunal relating to increase in wages. The
appellant is a company manufacturing barrels and
drums at Bombay. There was a dispute between the
appella1'lt and its workmen about a number of matters,
which was referred to the tribunal by the Government
of Bombay on November l 'l, 1955. In respect of the
two matters which are now raised in appeal the work
men claimed (i) four months' wages including dearness
allowance as bonus for the year 1952 and (ii) retros
pective operation of the wage-scale to be fixed by the
tribunal from March 1, 1952.
So far as the increase in wages is concerned, the
appellant agreed to the scale suggested by the tribunal
but it opposed the grant of the increased scale retros
pectively and also wanted that the increased wages
should he linked to some guaranteed production. The
reason for this was that the appellant felt that there
had been deliberate slowing down of production by
the workmen in the previous years. The tribunal was
qf opinion that there was some justification in the
appellant's contention that there had beell consider~
able go-slow which had affected production. Taking
that into account it ordered that retrospective effect
should be given to its order which was passed on
May 13, 1957 from June 1, 1956. As to the linking of
the increased wages to a certain guaranteed produc
tion it found it difficult to lay down any norm itself;
but it made it clear that the increase in wages was
made by it on the basis that the workers would give a
·certain reasonable production and noted that the
workers were agreeable to do that. It, however, re
commended that immediately after the award had
been given, 'an expert should be appointed by agree
ment, if possible, to go into this question. It also said
that in case it was not possible to appoint an expert
by agreement it would be op({n to the appellant to
appoint one. ·
Bharat Barrel &
Drum Mfg .. Co.
(P) Lid.
v.
Govind G opal
Waghmare
Wanchoo ] .
, 96o The appellant's contention before us is that the
- tribunal having found some justification in its conten-
Bharat Barrel & tion that there had been considerable go-slow should
Dru;~tZ~· co. not have given retrospective effect at all to the order
v. · relating to the increase in wages. This matter has
Govind Gopal been considered fully by the tribunal and it came to
Waghma" the conclusion that increase in wages should be grant
ed from June 1, 1956. This could hardly be called
Wanchcn f. retrospective considering that· the reference was made
in November 1955; in any case the tribunal rejected
the claim of the workmen for retrospective operation
for the period of over four years from March 1952 to
May 1!:156 and a good deal of go-slow was practised
during this period. In the circumstances we see no
reason for interference with the order of the tribunal
fixing the date as June 1, 1956, from which the increas
ed wages should come into force.
This brings us to the next question relating to bonus.
The tribunal has awarded five months' basic wages by
way of bonus. The first contention in this connection
is that the workmen had only claimed four months'
basic wages and the tribunal could not have awarded
anything more than what the workmen claimed. This
in our opinion is incorrect. The workmen had claimed
four months' wages including dearness allowance as
bonus. Five months' basic wages which the tribunal
has allowed are admittedly less than the claim put
forward (namely, four months' wages including dear
ness allowance). In the circumstances the tribunal
certainly had jurisdiction to award what it has award
ed to the workmen.
The next question is whether the tribunal was justifi
ed in awarding as much as five months' basic wages on
the basis of the Full Bench formula, which is generally
applied to these matters. The gross profit found by
the tribunal is not challenged, namely, Rs. 5·05 lacis.
The tribunal bas then allowed Rs. I ·36 lacs as deprecia
tion, leaving a balance of Rs. 3·69 lacs. Deducting
income-tax from this at seven annas in a rupee (i.e.,
Rs. l ·61 lacs), we are left with a balance of Rs. 2·08
lacs. Six per cent. per annum interest on the paid-up
capital along with four per cent. interest on the work
ing capital comes to Rs. 16,000, leaving an avai!a,ble
'
··~
....
-
-
3 S.C.R. SUPREME COURT REPORTS 381
surplus of Rs. l ·92 lacs. Out of this, the tribunal has
allowed five months' basic wages as bonus which
according to its calculations comes to Rs. 91,000, leav
ing Rs. l ·Ol lacs. There will be a rebate of Rs. 40,QOO
on this sum, leaving a total of Rs. l ·41 lacs with the
appellant. On these figures, the bonus awarded by
the tribunal cannoli be interfered with.
The appellant, however, draws our attention to two
~ircumstances in this connection. In the first place it
urges that the tribunal has not taken into account
anything for rehabilitation. But it may be mentioned
that the appellant had proved no rehabilitation amount
as such. What it had done was to appropriate Rs. 3·16
lacs towards depreciation, which of course was not the
proper amount of notional normal depreciation, which
is allowable under the formula. Our attention is
drawn, however, to the figures filed by the workmen
in Ex. U-4 in which Rs. 40,000 has been allowed
towards rehabilitation. Even accepting this conces
sion by the workmen and deducting it from the figures
given by us above, the appellant would still be left
with Rs. l ·Ol lacs after paying five months' basic
wages as bonus. There is thus no reason to interfere
with the award of bonus on this ground.
Lastly it is urged that according to the income-tax
assessment which was actually made in this case
sometime after the order of the tribunal, the appellant
has been assessed to income-tax amounting to Rs. 2·35
lacs. The appellant claims that it should be allowed
this entire amount and not the notional figure calcu
lated by us, namely, Rs. l ·61 lacs as incoine-tax. We
are of opinion that for the purpose of the Full Bench
formula, the income-tax payable has .to be deducted
on the figures worked out according to the formula
and it is immaterial what the actual income-tax paid
is-whether more or less. In this particular case, the
income-tax appears to be more because certain items
which were challenged by the workmen but were
allowed as proper expense by the tribunal have appa
rently not been allowed as proper expense by the
income-tax department. The industrial tribunal, how
ever, is not concerned directly with what the income
49
I960
Bharat Barrel &
Drum Mf:. Co.
(P) Ltd.
v.
Govind Gopal
Waghmare
Wanchoo j .
Bharat Barrel &
Drum Mfg. Co.
(P) Ltd.
..
Govind Gopal
Waghmare
Wanchoo ].
r960
tax authorities assess as actual income-tax in a parti
cular year; it is concerned with working out the Full
Bench formula in accordance with its notional calcula
tions and this is what has been done in this case.
There is no ground therefore for interference with the
award of bonus for this reason either.
We therefore dismiss the appeal, but in the circum
stances pass no order as to costs.
Appeal dismissed.
B. N. ELIAS AND CO., LTD., EMPLOYEES'
UNION AND OTHERS
v.
B. N. ELIAS & CO., LTD., AND OTHERS.
(P. B. GAJENDRAGADKAR, K. N. w ANOHOO
and K. C. DAS GUPTA, JJ.)
Industrial Dispute-Bonus-Implied term of agreement or
condition of service-Ex gratia payments-Cttstomary bonus- -Pnja
bonus.
Since 1942 the respondents had been making ex gratia pay
ments to their employees (appellants) in addition to wages and
salaries, bnt these were not regular and in 1956, no ex gratia
payments were made at all. The appellants claimed that their
right to be paid bonus had become an implied term of agreement
or a condition of service and, at any rate, it should be paid as
customary bonus, and relied on the case of The Graham Trading
Co. (India) Ltd. v. Its Workmen, [1960] l S.C.R. 107. The evid
ence showed that though the payments were made from 1942
to 1952 it was made clear every time that the payments were
made as ex gratia:
Held, (1) Where payments are made to workers ex gratia
and are accepted as such, it is not possible to imply a term of
service on the basis of an implied agreement to pay bonus.
(2) that there cannot be a customary payment of bonus
between employer and employee where terms of service are
governed by contract, express or implied, except where the bonus
may be connected with a festival, whether Puja in Bengal or
some other equally important festival in any other part of the
country.
The Graham Trading Co. (India) Ltd. v. Its Workmen, [1960] l
S.C.R. 107, explained.
(3) that for the year 1956 one month's basic wage should be
paid as Puja bonus to the subordinate staff as it has become
customary and traditional in the respondents' concerns.
-
.•
y