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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.

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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.

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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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49 382 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.