PETITIONER: BHARAT BARREL AND DRUM MFG. CO.PRIVATE LTD. Vs. RESPONDENT: GOVIND GOPAL WAGHMARE AND ANOTHER DATE OF JUDGMENT: 24/03/1960 BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. GUPTA, K.C. DAS CITATION: 1960 AIR 873 1960 SCR (3) 378 CITATOR INFO : R 1961 SC1191 (3) R 1963 SC1007 (13) ACT: Industrial Dispute--Full Bench formula--Income-tax Payable--Test. HEADNOTE: The workmen of the appellant company claimed four months, wages including dearness allowance as bonus for the year 1952, and retrospective operation of the increased wage scale to be fixed by the Industrial Tribunal from March 1, 1952. The appellant agreed to the increased wage scale suggested by the Tribunal but wanted that it should be linked to some guaranteed production, and opposed its operation retrospectively on the ground that there had been eliberate slowing down of production by the workmen in the previous years. The Tribunal found that there was some justification in the appellant's contention that there was considerable go-slow which had affected production and ordered that retrospective effect should be given to its order relating to increase in wages which was passed on May 13, 1957, from June 1, 1956, and not March 1, 1952, as claimed by the workmen, The increased wages were not linked to any guaranteed production but it was made clear that the workers would give certain reasonable production to which the workmen agreed. The Tribunal granted five months basic wages by way of bonus on the basis of the Full Bench formula which is generally applied to these matters. On appeal by the Appellant-company by special leave : Held, that there was no reason for interference with the order of the Tribunal fixing the date as June 1, 1956, from which the increased wages should come into force and that the Tribunal had jurisdiction to award five months' basic wages by way of bonus. For the purpose of the Full Bench formula, the incometax 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. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 93 of 1959.
Appeal by special leave from the Award dated May 13, 1957,
of the Industrial Tribunal, Bombay, in Reference (I.T.) No.
166 of 1955.
R. J. Kolah, S. N. Andley, J. B. Dadachanji, Rameshwar Nath
and P. L. Vohra, for the appellants.
K. B. Chaudhury and Janardan Sharma, for the respondents
Nos. 1 and 2.
379
1960. March 24. The Judgment of the Court was delivered by
WANCHOO, 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 Industrial
Tribunal relating to increase in wages. The appellant is a
company manufacturing barrels and drums at Bombay. There
was a dispute between the appellant and its workmen about a
number of matters, which was referred to the tribunal by the
Government of Bombay on November 17, 1955. In respect of
the two matters which are now raised in appeal the workmen
claimed (i) four months wages including dearness allowance
as bonus for the year 1952 and (ii) retrospective 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 retrospectively and also
wanted that the increased wages should be 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 of opinion that there was some justification in
the appellant’s contention that there had been considerable
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 production 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, recommended that
immediately after the. award had been given, an expert
should be appointed by agreement, 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 open
to the appellant to appoint one.
380
The appellant’s contention before us is that the tribunal
having found some justification in its contention that there
had been considerable go-slow should not have given
retrospective effect at all to the order relating to the
increase in wages. This matter has been considered fully by
the tribunal and it came to the conclusion that increase in
wages should be granted from June 1, 1956. This could
hardly be called 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 1956 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 increased 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 dearness
allowance). In the circumstances the tribunal certainly had
jurisdiction to award what it has awarded to the workmen.
The next question is whether the tribunal was justified 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 lacs. The tribunal has then
allowed Rs. 1.36 lacs as depreciation, leaving a balance of
Rs. 3.69, lacs. Deducting income-tax from this at seven
annas in a rupee (i.e. Rs. 1.61 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 working capital comes to Rs. 16,000, leaving an
available
381
surplus of Rs. 1.92 lacs. Out of this, the tribunal has
allowed five months’ basic wages as bonus which according to
its calculations comes to Rs. 91,000, leaving Rs. 1.01 lacs.
There will be a rebate of Rs. 40,000 on this sum, leaving a
total of Rs. 1.41 lacs with the appellant. On these
figures, the bonus awarded by the tribunal cannot be
interfered with.
The appellant, however, draws our attention to two
circumstances 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
concession by the workmen and deducting it from the figures
given by us above, the appellant would still be left with
Rs. 1.01 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 calculated by us, namely,
Rs. 1.61 lacs as income-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 apparently not been allowed as
proper expense by the income-tax department. The industrial
tribunal, however, is not concerned directly with what the
income
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tax authorities assess as actual income-tax in a particular
year; it is concerned with working out the Full Bench
formula in accordance with its notional calculations 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 circumstances
pass no order as to costs.
Appeal dismissed.