1959 (5) TMI 48 - SC - Indian Laws

Issues Involved:
1. Demand for bonus by workmen.
2. Alleged monopoly position of the appellant.
3. Inflation of capital and use of profits for expansion.
4. Adequacy of wages paid to workers.
5. Claim for rehabilitation and replacement.
6. Calculation of interest on paid-up and working capital.
7. Calculation of depreciation.
8. Inclusion of income from investments for bonus calculation.
9. Inclusion of overtime payments in bonus calculation.
10. Determination of available surplus for bonus distribution.

Detailed Analysis:

1. Demand for Bonus by Workmen:
The workmen demanded a bonus equivalent to seven months' basic wages with dearness allowance for the year 1953-54. The Industrial Tribunal directed the companies to pay a bonus equivalent to 1/3 of their basic wages (less bonus already paid) for employees drawing up to Rs. 500 per month.

2. Alleged Monopoly Position of the Appellant:
The respondents claimed that the appellant held a monopoly in the cement industry and could easily afford the demanded bonus. The appellant denied this, arguing that its objective was to deliver cement as cheaply as possible to consumers.

3. Inflation of Capital and Use of Profits for Expansion:
The respondents alleged that the appellant inflated the capital invested by merging companies in 1936 and used profits for expansion without raising fresh capital. The tribunal found no evidence of inflated capital and noted that the appellant had used available resources for replacement, rehabilitation, and modernization.

4. Adequacy of Wages Paid to Workers:
The respondents contended that the wages paid were inadequate and sought the bonus to bridge the gap between actual wages and the living wage. The tribunal did not find the wages inadequate compared to other industries.

5. Claim for Rehabilitation and Replacement:
The appellant claimed substantial amounts for rehabilitation, replacement, and modernization. The tribunal scrutinized the evidence, particularly Mr. Tongaonkar's testimony and Ex. C-2, and found the appellant's claim exaggerated. The tribunal allowed a reduced amount for rehabilitation, considering past expenditures and reserves.

6. Calculation of Interest on Paid-up and Working Capital:
The tribunal allowed 6% interest on paid-up capital and 4% on working capital. The appellant's claim for higher interest was rejected, and the tribunal's decision was upheld as it was within its discretion.

7. Calculation of Depreciation:
The tribunal allowed normal depreciation calculated by the straight-line method. It rejected the appellant's claim for additional depreciation, aligning with the Full Bench formula which excludes initial and additional depreciation.

8. Inclusion of Income from Investments for Bonus Calculation:
The tribunal included income from investments in shares and securities for bonus calculations, rejecting the appellant's contention to exclude it.

9. Inclusion of Overtime Payments in Bonus Calculation:
The tribunal included overtime payments in the calculation of bonus, which was contested by the appellant. The Supreme Court found that including overtime payments was unfair as it would disproportionately benefit those who worked overtime.

10. Determination of Available Surplus for Bonus Distribution:
The tribunal calculated the available surplus after accounting for prior charges like depreciation, taxes, interest on capital, and rehabilitation costs. It found a surplus allowing for one month's additional bonus. However, the Supreme Court recalculated the figures, excluding exaggerated claims, and found no available surplus for bonus distribution.

Conclusion:
The Supreme Court allowed the appeal, setting aside the tribunal's award, as the strict application of the Full Bench formula revealed no available surplus for the relevant year. The decision emphasized the need for accurate and fair calculations under the formula, balancing the interests of both industry and labor.

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