1958 (5) TMI 46 - SC - Indian Laws

Summary

Issues Involved:
1. Application of the Full Bench formula for determining available surplus.
2. Deduction of 15% revenue expenditure under a lease covenant.
3. Deduction of annual contribution to the pension fund.
4. Deduction of bonus paid for the year 1950.
5. Claim for rehabilitation.
6. Alleged double addition of initial contribution to the pension fund.
7. Allowance of statutory depreciation twice over.

Detailed Analysis:

1. Application of the Full Bench Formula:
The tribunal applied the Full Bench formula from the case of Mill Owners Association, Bombay v. The Rashtriya Mill Mazdoor Sangh, Bombay (1950) L.L.J. 1247, to determine the available surplus for awarding bonuses. The management argued that the formula should be modified for the gold mining industry due to its unique nature as a "wasting industry" requiring significant investment in new ore search and machinery renewal. The tribunal acknowledged the industry's special needs but adhered to the Full Bench formula, emphasizing that social justice principles apply to all industries. The tribunal found enough available surplus for the years 1953 and 1954, thus awarding bonuses to the workmen.

2. Deduction of 15% Revenue Expenditure:
The management argued that under a lease covenant, they were entitled to deduct 15% of revenue expenditure for depreciation and development. The tribunal rejected this claim, stating that the covenant did not impose an obligation to create a reserve fund or spend a specific amount. The tribunal also noted that the amounts claimed under this clause could be included under existing categories like depreciation and rehabilitation in the Full Bench formula.

3. Deduction of Annual Contribution to the Pension Fund:
The management sought to deduct both the initial and annual contributions to a pension fund for covenanted staff. The tribunal disallowed these deductions, noting that the fund was primarily for a small group of officers and was not essential for the companies' operations. The tribunal found that allowing these deductions would be inequitable and adversely affect the workmen's bonus claims.

4. Deduction of Bonus Paid for the Year 1950:
The management claimed that the bonus paid for the year 1950, disbursed in 1953, should be deducted from the 1953 gross profits. The tribunal rejected this claim, noting that the amount was provided and debited in 1952, as evidenced by the income-tax assessment order. The tribunal found no error in this finding.

5. Claim for Rehabilitation:
The tribunal acknowledged the management's right to claim deductions for rehabilitation but found no evidence to support the specific amounts claimed. The tribunal noted that the amounts shown in the balance sheets were a mixture of various items, making it impossible to determine legitimate prior charges for rehabilitation. The tribunal allowed the management to present a specific claim for rehabilitation upon remand.

6. Alleged Double Addition of Initial Contribution to the Pension Fund:
The management contended that the initial contribution to the pension fund was added back twice in the calculations. The tribunal was directed to determine whether this was an error upon remand.

7. Allowance of Statutory Depreciation Twice Over:
The respondents argued that the tribunal allowed statutory depreciation twice, considering a large amount had already been written off. The tribunal was directed to reconsider this point upon remand, ensuring no double allowance of statutory depreciation.

Remand Directions:
The tribunal was directed to make findings on three issues:
1. The amount of deduction under rehabilitation, if any.
2. Whether the initial contribution to the pension fund was added back twice.
3. Whether statutory depreciation was allowed twice over.

The tribunal was to consider additional evidence and adjust the final award if the available surplus was materially affected. The case was remanded to the Central Government Industrial Tribunal at Bangalore, with directions to submit findings within three months. The appellant agreed to pay fifteen days' basic wage towards the respondents' bonus claim during the relevant years.

Conclusion:
The Supreme Court remanded the case for further findings on specific issues while upholding the tribunal's application of the Full Bench formula and rejection of most of the management's claims. The tribunal was to re-evaluate the claims for rehabilitation, potential double addition of pension fund contributions, and statutory depreciation allowances.