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TMI Blog1972 (12) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... 13th August, 1969 and Part II dated 28th August, 1969, respectively of the Industrial Court, Gujarat in Reference IC No. 110 of 1968. Civil appeals Nos. 1259 and 1260 of 1970 are by the Textile Labour Association,. Ahmedabad, representing the workmen against the same award. Shri Ambica Mills Ltd., Ahmedabad, is a public limited company owning three textile units, viz., Shri Ambica Mills Ltd. No. 1 and No. 2 at Ahmedabad, Shri Ambica Mills Ltd. No. 3 at Baroda and two engineering units, viz., Shri Ambica Tubes at Vata, and Shri Ambica Machinery Manufacturers in the premises of Shri Ambica Mills Ltd. No. 1 at Ahmedabad. The last unit, i.e., Ambica Machinery Manufacturers came into existence in the beginning of the year 1967. Shri Ambica Mills Ltd. 2 and 3 have entered into an agreement to pay bonus on the lines of Shri Ambica Mills Ltd. No. 1, Ahmedabad. All the aforesaid undertakings have been treated as parts of the same establishment, namely, Shri Ambica Mills Ltd., for the purpose of computation of bonus. The dispute relates to the payment of bonus for the year 1967. The demand for the payment of bonus for the year 1967 was raised as a result of notice of change given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the Mills Company that cannot, in any event, be treated as income for the accounting year 1967 to which the dispute relates. The Industrial Court held that the Mills Company was en- titled to deduct the first two items i.e., cash assistance from Jt. Chief Controller of Imports Exports, Bombay, being ₹ 8,63.194 and cash payment by way of steel entitlement being ₹ 4,25,233 but not items Nos. 3, 4 and 5. It further directed the parties to' file fresh calculation on the basis of its directions in Award Part 1. On the basis of the above directions the Association filed the ,calculations reserving its right to appeal. The Mills Company also submitted fresh calculations. Based on these calculations the Industrial Court made an award directing the Mills Company to pay 4.53% of wages as bonus to all its employees in the 3 textile units and 2 engineering units. The dispute 'thus centres round the meaning of the word 'Subsidy' found in item 6(g) of the Second Schedule to the Payment of Bonus Act. Another incidental question is whether the Joint Plant Committee or the Indian Cotton Mills Federation is a Body Corporate established by any law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following under the heading of Subsidy : Something, usually money, donated or given or appropriated by the government through its proper agencies; a grant of funds or property from a government, as of the state or, a municipal corporation, to a private person or company to assist in the establishment or support of an enterprise deemed advantageous to the public; a subvention. Pecuniary premiums offered by the government to persons enlisting in the public service, or engaging in particular industries, or performing specified services for the public benefit are treated in Bounties. The emphasis in every one of these definitions is on something given or donated; indirect assistance is not mentioned. Before we proceed further, it may be necessary to refer to the history regarding the place of subsidy in the payment of bonus. Under what is known as the Full Bench formula, subsidy will not be a proper deduction in calculating the surplus available for payment of bonus. 'Mere is no reason on principle why subsidies should be kept out of account in calculating the available sum for payment of bonus. The Bonus Commission in its report did not recommend subsidy as a ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the export of some commodity or other, as in the present case, is related to the commodity itself, towards the production of which both labour and capital have contributed and, therefore, any part of the income received in respect of that activity should not be deducted in calculating the available surplus, and that it would be unfair to labour to do so. The force of this argument was appreciated and acceded to even by Shri Gupta appearing on behalf of the Management. His sole point was that but for the introduction of item 6(g) in the Second Schedule to the Bonus Act it would not be open to him to contend that subsidy should be deducted from the allocable surplus for the purpose of payment of bonus. But he contended, the Act itself having made the provision for subsidy being deducted 10-63ISuPCI/73 it is not open to this Court to consider whether it was proper to deduct the subsidy from the allocable surplus. He argued that if subsidy should not be so deductible the remedy lay elsewhere and that it was with the Legislature and while it would be perfectly legitimate for this Court to recommend that the deduction of subsidy should not be permitted, the subsidy must be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In Sone Valley Portland Cement Co.v The Workmen([1972] L.L.J. 612 ) this Court held that apart from legislation an incentive bonus for increase of production, irrespective of the question as to whether the industry was making profit or not is one that must be introduced by the particular unit of industry, and it would be for the management to fix what incentives should be given to different departments to step up production. It was further held that an Industrial Tribunal would not be justified in holding that merely because there has been augmentation in the production labour would be entitled to make a claim to bonus because of such increase, and that labour would undoubtedly be entitled to revision of wage scales, dearness allowance and other terms and conditions of service as also profit bonus. This deci- sion is not, therefore. an authority for the proposition that a subsidy intended to encourage export could not be taken into account for the purpose of calculating the allocable surplus. This decision itself proceeds on the basis that in calculating the profit bonus such amounts would have to be taken into account. All that was held was that the amount paid as subsidy by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come would be unfair to labour in the matter of payment of bonus. As we have already pointed out the remedy lies with the Legislature. What prompted the Government to include item 6(g) in the Second Schedule to the Bonus Act we have no way of knowing. We thus come to the conclusion that only direct cash pay- ments should be deemed to be subsidies and not indirect receipts in the form of drawn up of part of the Excise Duty and rebate on railway freight, which are in reality not subsidies but concessional rate of Excise Duty and railway freight. This means that item 1, i.e., the subsidy paid decree by the Government should be deemed to be a permissible deduction but not items 3 and 4. This leaves the question regarding items 2 and 5 for consideration. Both these items are, of course, cases of cash payment, but only if they are payments by the Government or a Body Corporate established by any law for the time being in force they would be permissible deductions. As regards the Joint Plant Committee the Industrial Court merely said that it appears to be a Government Body, and at another place that it appears to be a Body constituted by the Government. A body constituted by the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration cannot be said to be a Body Corporate established by any law for the time being in force. It may be a Body Corporate established under the Companies Act because it is registered under the Companies Act. The Payment of Bonus Act, Section 2(9) defines a company as follows : (9) 'company' means any company as defined in section 3 of the Companies Act, 1956, and includes a foreign company within the meaning of sec. 591 of that Act; A corporation is defined in section 2 (11 ) as any body corporate established by or under any Central, Provisional or State Act but does not include a company or a co- operative society . Now it will be noticed that the definition of the term 'corporation' takes in bodies corporate established by law as well as bodies corporate established under any law. It cannot, therefore, be said that 'when item 6(g) in the Second Schedule uses the words 'body corporate established by any law' it was not conscious of the distinction between a body corporate established by law and a body corporate established under any law. This distinction has also been noticed in the decision of the High Court of Bombay in Majoor Sahkari Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n into account. We are of the opinion. therefore. that item 5 also is not a deductible item. This leaves for decision the question whether the sum of ₹ 9,72,986 which relates to amounts received in the year 1967 but relate to earlier years, can also be deducted or not. In the view that we have taken that only item 1 is a deductible item, the amount involved is a small one of ₹ 6,873 due for the year 1966 but received in the year 1967. We are not able to agree with the contention on behalf of labour that as the whole of the sum of ₹ 32.43 lacs has been shown as item of income in the profit and loss account of the mills the management cannot now contend that any part of it cannot be deducted and that the whole of the amount should be held to be profit available for calculating the bonus. All that section 23 of the Act Provides is for pre- sumption of the accuracies of the balance sheet and profits and loss account of corporations and COmpanies. The correctness has been accepted by both the parties. But whether any part of that amount should be held to fall under item 6 (g) of the Second Schedule to the Act cannot be decided on the basis that it is shown as an inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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