SARASWATI STEEL ROLLING MILLS Vs. LABOR COURT

JUDGEMENT

(1.) THE question whether the workmen of the petitioner (the Saraswati Steel Rolling Mills) were entitled to the grant of bonus for the year 1958-59 was referred for adjudication to the labour court, Rohtak, by means of a notification dated 19 November 1959, under Section 10 of the Industrial Disputes Act, 1917. An award was made on 19 October 1960, which was published in the Punjab Government Gazette, Part I, dated 18 November 1960, in which the labour court has directed payment of bonus equivalent to fifteen days' consolidated wages to the workmen employed by the petitioner concern. By means of the present petition under Article 226 of the Constitution, the validity and legality of the aforesaid award have been challenged.

(2.) THE point that has been canvassed before me can be stated very shortly. The award proceeded on the basis that there was an available surplus of Rs. 4,500 out of which bonus could be distributed. This item was arrived at after (a) reducing the salary of the partners from Rs. 19,200 to Rs. 15,000, (b) disallowing Rs. 533. 39 np. on account of donations towards charity, (c) disallowing Rs. 740 on account of entertainment expenses, and (d) disallowing Rs. 542. 78 np. on account of bad debts. The total of the items disallowed was Rs. 6,016. 17 np. It is contended that even taking the figures relating to the aforesaid items as determined by the labour court to be final, there would have been a net loss of Rs. 8,457. 96 np. and not a surplus of Rs. 4,500 as found by the labour court. These calculations are shown in annexure C. It is common ground that the labour court has not deducted incometax at the rate of seven annas in a rupee which would have come to Rs. 13,020. If this item was deductable according to law for the purposes of determining the surplus, then admittedly there would be a net loss of Rs. 8,457. 96 np. during the material period and there could be no available surplus so as to justify bonus being granted.

(3.) MR. Bhagirath Dass, who appears for the petitioner concern, submits that as a result of the law laid down by their lordships of the Supreme Court in the matter of calculating surplus for the purposes of awarding bonus the labour court was bound to deduct the amount of Rs. 13,020 on account of incometax at the rate of seven annas in a rupee. As far back in 1950 the Labour Appellate Tribunal was called upon to consider the workmen's claim for bonus. In its decision in Millowners' Association v. Rashtriya Mill Mazdoor Singh 1950 L. L. J. 1247 the tribunal evolved a formula under which the amount of the available surplus in the hands of the employer can be determined. This formula received the general approval of the Supreme Court in Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, Kanpur 1955-I L. L. J. 1. In State of Mysore v. workers of gold mines 1958-II L. L. J. 479, it is mentioned that it was conceded before their lordships that since 1950 the basis supplied by this formula has been adopted by industrial adjudication all over the country in dealing with the workmen's claim for bonus in different kinds of industries. Now, the formula evolved by the Full Bench may be stated in the words of Gajendragadkar, J. , in the aforesaid case (at pp. 483-484): This formula takes the figure of the gross profits made by the industry for the relevant year and makes provisions for depreciation, for reserves, for rehabilitation for return at 6 per cent on the paid-up capital, for a return on the working capital at a lesser rate than the return on the paid-up capital and for the payment of incometax. These items are treated as prior charges and the amount determined after deducting the aggregate total of these items from the gross profits is deemed to be the, available surplus for the relevant year. It is in this available surplus thus deduced that labour is entitled to claim a reasonable share by way of bonus. Any departure from the formula evolved by the Tribunal was deprecated in Associated Cement Companies, Ltd. v. their workmen 1939-I L. L. J. 644 which matter was reiterated in Crompton Parkinson (Works) (Private), Ltd. v. its workmen and Ors. 1959-II L. L. J. 382. It is true that the formula is elastic enough to meet reasonably the claim of the industry and labour for fairplay and Justice, but in its broad features it recognizes the claim of the industry and tabulates them under different items as prior charges, and then provides for the distribution of available surplus. The items specified in the formula have to be worked out notionally on theoretical grounds 1959-I L. L. J. 644 (vide supra ).