1971 (8) TMI 221 - SC - Indian Laws

Should the employers be required to pay bonus to their workmen for the year 1960-61 ? If so, at what rate and with what details? Held that - The amount found by the Tribunal in this regard is Rs. 1,29,248/- and if Rs. 55,233/- is to be provided there will be an available surplus of Rs. 74,015/-. The Tribunal as we / said awarded three months bonus amounting to Rs. 73,000/- which works out to Rs. 24,333/per month. We think having regard to the financial capacity of this Undertaking one month s bonus which will leave a surplus for the working of the Undertaking, will meet the ends of justice. We accordingly order the payment of one month s wages as bonus. Each party will bear their own costs in this Appeal.

Issues Involved:
1. Bonus Payable for the Year 1960-61
2. Calculation of Gross Profit
3. Prior Charges and Deductions
4. Depreciation on Double Shift
5. Income Tax Calculation
6. Return on Working Capital
7. Rehabilitation Requirements
8. Contingency and Development Reserves

Detailed Analysis:

1. Bonus Payable for the Year 1960-61:
The dispute centered around whether the employer should pay a bonus to their workmen for the year 1960-61, and if so, at what rate and with what details. The Industrial Tribunal awarded three months' bonus amounting to Rs. 73,000/- out of an available surplus of Rs. 1,29,248/-.

2. Calculation of Gross Profit:
The Appellant claimed a gross profit of Rs. 6,06,684/- for the year ending 31st March 1961. The Tribunal added Rs. 9,949/- as extraneous income, computing the gross profit at Rs. 6,16,633/-.

3. Prior Charges and Deductions:
The Tribunal allowed certain prior charges while disallowing others:
- Expenses as per profit and loss account: Rs. 1,32,156/- allowed.
- Normal depreciation: Rs. 2,02,814/- allowed.
- Double shift depreciation: Nil.
- Income Tax: Rs. 1,04,415/- allowed.
- Contingency Reserve: Nil.
- Development Reserve: Nil.
- Return on share capital: Rs. 48,000/- allowed.
- Return on working capital: Nil.
- Rehabilitation requirement: Nil.

4. Depreciation on Double Shift:
The Tribunal disallowed the double shift depreciation due to lack of evidence. The Company did not produce documents to show the total running hours of each boiler or turbine. The Tribunal noted that the Company had not claimed double shift allowance in previous years nor before the Income-tax authorities for the year in question.

5. Income Tax Calculation:
The Tribunal computed the Income-tax after deducting statutory depreciation, which was Rs. 1,04,415/-. The Appellant argued that only notional normal depreciation should be considered, which would result in a higher Income-tax deduction. The Tribunal's method was upheld as it aligned with the principles established by the Supreme Court.

6. Return on Working Capital:
The Tribunal rejected the claim for return on working capital due to insufficient evidence. The Appellant failed to prove that reserves were utilized as working capital. The Tribunal found that the receipts of the concern were sufficient to meet day-to-day expenses without additional reserves.

7. Rehabilitation Requirements:
The Tribunal disallowed the rehabilitation requirements claim of Rs. 15,66,496/- due to lack of proof. The Appellant did not provide adequate evidence regarding the original cost, age, and replacement needs of the plant and machinery. The Tribunal emphasized the need for detailed and credible evidence to support such substantial claims.

8. Contingency and Development Reserves:
The Tribunal initially disallowed the contingency and development reserves, amounting to Rs. 55,233/-. However, these reserves are required under the Electricity (Supply) Act and should be considered in determining the bonus. The Supreme Court recognized the necessity of these reserves for the financial stability of the undertaking.

Conclusion:
The Supreme Court modified the Tribunal's award, reducing the bonus from three months to one month's wages, amounting to Rs. 24,333/-. The Court emphasized the need for proper evidence and adherence to established legal principles in calculating available surplus and prior charges. Each party was ordered to bear their own costs.

← Previous Next →