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PETITIONER: BINNY LTD.

       Vs.

RESPONDENT: THEIR WORKMEN

DATE OF JUDGMENT15/02/1972

BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. DUA, I.D. MITTER, G.K.

CITATION:  1973 AIR  353            1972 SCR  (3) 462

ACT: The Payment of Bonus Act, 1965. ss. 17 and 19--Direction  to pay  half yearly bonus--If justified--Payment of  additional bonus--Method of calculation.

HEADNOTE: The appellant company was making two payments of bonus every year  one for the half year ending 30th June and  the  other for the half year ending 31st December.  The payment was  on the basis of profits earned by it and the payment was not  a condition  of service and had nothing to do with any  custom or festival.  When the Payment of Bonus Act, 1965 came  into force,  the  appellant issued a circular that as  bonus  was payable under law only within a period of 8 months from  the end of the, accounting year (the appellant’s accounting year was  the  calendar  year),  no bonus  was  payable  for  the accounting  year  1965 until the accounts for the  year  are closed, and the announced payment of one month’s basic wages as advance against wages for the half year ending 30th  June 1965. The  questions, (1) whether the appellant was  justified  in announcing the payment  as advance against wages instead  of as advance bonus, and (2)     whether  the respondents  were justified in claiming bonus for the years 1962 and 1963,  in addition to what had already been paid by the appellant were referred to the Industrial Tribunal. On the first question the Tribunal held. that the  appellant was not justified in announcing the payment towards  advance wages and directed the appellant to pay profit bonus in  two installments one as advance against the final declaration of bonus,  and the balance, if any, as the  second  instalment. On  the second question the Tribunal held that the  question of bonus payable was to be calculated in accordance with the Labour  Appellate  Tribunal Full Bench Formula  approved  in Associated  Cement  Companies  Ltd.  v.  Workmen,  r   19591 S.C.R.25;  that  in calculating the return on  Reserves  the claim of the appellant to include in the  working  capital the amounts sunk in (a) fixed assets and (b) capital work in progress  should  be disallowed; and that the claim  of  the appellant  for  a  provision for  rehabilitation  should  be rejected. In appeal to this Court.

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HELD  :  (1)  (a)  Under the Act,  bonus  for  a  particular accounting year will have to be computed in accordance  with the provisions of the Act on the basis of the gross  profits determined  at  the close of the accounting year.   The  Act makes  provision as to how the gross profits, available  and allocable surplus are to be calculated, and s. 19 prescribes 8 months from the close of the accounting year as the period within which the bonus was to be normally paid.  The  scheme of  the  Act shows that a claim for bonus can be  made  only after  the  close of-the accounting  year,  because.,  gross profits  and  the  available and allocable  surplus  can  be worked  out only at the end of the accounting year  and  not earlier,  whereas  the  direction  given  by  the   Tribunal requires the employer to make two computations at the end of each half year. [469 E-H; 470 A-B] 463 (b)  The   direction  given  by  the  Tribunal   making   it obligatory on the management to make half yearly payments of bonus  apart  from being opposed to the scheme of  the  Act, runs counter to s. 19.  Under the section, whether it is the minimum bonus of 4% under s. 10 or the maximum bonus of 20% under s. 11, they have to be paid only within a period of  8 months from the closing of the accounting year. [470 C-E] (c)  Section  17(b) is an enabling section in favour of  the employer in that it visualizes a situation when he may  have paid during the accounting year a part of the bonus  payable under  the Act, before the date on which such bonus  becomes payable.   If the payment was by way of profit bonus, he  is entitled  to  deduct it from the final amount  that  may  be payable  under the Act.  But that provision does not give  a right  to  an employee to claim payment of bonus by  way  of part  payment  during the currency of the  accounting  year. Therefore, the mere fact that the appellant has been  making payments on previous occasions half yearly, does not  confer a  right  on the employee to have such payments  by  way  of bonus in the same manner after the Act has come into  force. Hence, the Tribunal had no jurisdiction to give a  direction to the appellant to, pay bonus at the end of each half year. [471 A-C] (2)  (a)  In  considering the claim for  return  on  working capital two questions have to be kept in view : (i)  whether Reserves were available, and (ii) whether they were used  as working capital, and if so, what was, the amount used.  1477 GI In the present case, the Tribunal has correctly kept the two principles  in  view in arriving at the amount  of  Reserves used  as  working capital and on which a return  is  to,  be allowed.   The balance sheets of the appellant do  not  have any figures from which the Tribunal would be able to, draw a conclusion.   The Tribunal, therefore, while  accepting  the statements.  of account filed by the appellant for  the  two years,  for  showing  how it had calculated  the  amount  of Reserves  utilized  as working capital, held, that  the  two items   should   be  deducted;  because,   working   capital represents  the funds required for day-to-day Work  of  the company  and cannot include,, fixed assets, and the  capital works in progress. [477 G-H; 478 A-C] Workmen of M/s.  Hindustan Motors Ltd. v.  M/s.   Hindustan Motors  Ltd. & Anr. [1968] 2 S.C.R. 311 and M/s.   Aluminium Corpn.  of India v. Workmen, [1969] 3 S.C.R.  832,  referred to. Therefore, the contention that the Tribunal had committed  a mistake  in  calculating  the amount  of  Reserves  used  as working capital cannot be accepted. [478 D-E] (b)  A company should build up rehabilitation reserve taking

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into  consideration  the  increase in  price  in  plant  and machinery  which has to be replaced at a future  date.   But since  it  is a substantial item which goes  to  reduce  the available surplus and as a result, affects the right of  the employees  to  bonus, the employer will have  to  place  all relevant  material,  before the Tribunal for  its  scrutiny. The burden of proof is on the employer to prove the price of the plant and machinery, its age, the period during which it requires  replacements, the cost of replacement, the  amount standing  in  the Debenture and Reserve Funds  and  to  what extent  the  funds at its disposal would meet  the  cost  of replacement.   If  the employer fails to  lead  satisfactory evidence  on these points his claim for rehabilitation  will be  rejected.   Also,  if  a  company  has  no  scheme   for rehabilitation then its claim on that bead must be rejected. [479 A-E; 481 B-C] 464 Azam  Jahi  Mills Ltd. v. Workmen, [1967] 2  L.L.J.  18  and National  Engineering Industries Ltd. v. Workmen,  [1968]  1 S.C.R. 779, referred to. in  the present case, the averment in the written  statement of the respondents, that the appellant’s machinery was among the  most  modern and no provision  for  rehabilitation  was necessary,  was  not  controverted by  the  appellant.   The balance  sheets for the two years showed that  some  amounts were  spent  on machinery.  But when  the  respondents  were contesting the claim of the appellant on the ground that  it had  no scheme of rehabilitation and that it had  not  spent any  amount  by way of replacement, it was the duty  of  the appellant to have made a proper claim and to adduce evidence regarding  that aspect.  Mere production of  balance  sheets and  profit  and  loss accounts and adding  a  note  in  the statements, of account filed that the figure is ’subject  to claim for rehabilitation’ will not entitle the appellant  to sustain   its  claim  for  rehabilitation.   Moreover,   the appellant   had  large  Reserves  to   meet   rehabilitation expenses.   It had also ’Boated a debenture for  buying  new machinery. [481 G-H; 482AC, D] Further,  in  determining  the  claim  of  an  employer  far rehabilitation,   two,   factors   are   essential   to   be ascertained,  namely,  (i) the multiplier, which has  to  be done by reference to the purchase price of the machinery and the price which has to be paid for replacement; and (ii) the divisor, which has to be done by deciding the probable  life of the machinery. [479 E-F] Honorary   Secretary,  South  India  Millowners’  Assn.   v. Secretary Coimbatore District Textile Workers’ Union, [1962] Supp. 2 S.C.R. 926 and M/s.  Gannon Dunkerley & Co. v. Their Workmen, A.I.R. 1971 S.C. 2567, referred to. In  the  present  case no material  was  placed  before  the Tribunal  by  the appellant from which  the  multiplier  and divisor can be properly worked out. [481 E-F] Therefore,  the Tribunal was justified in holding  that  the appellant  had not made out its claim for  making  provision for rehabilitation. [482 C-D] (c)  The  equitable  method  of  allocating  the   available surplus between the company and its workmen is to distribute 60% as bonus to the workmen leaving the remaining 40% to the company.   In  the present case, the method  of  calculation adopted for 1962, by the Tribunal, shows that the amount  of bonus  awarded  by  the Tribunal together  with  the  amount already paid by the appellant exceeded 60% and the award  of the excess was not justified. [484 A-C] M/s.   Gannon Dunkerley & Co. v. Their Workmen, A.I.R.  1971 S.C. 2567. referred to.

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JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  1291  and 1292 of 1967. Appeals  by special leave from the award dated June 30  1967 of  the Additional Industrial Tribunal, Bangalore in  A.I.D. Nos.6 ’,and 8 of 1966. O.   P. Malhotra and D. N. Gupta, for the appellant. I.   N. Keshava and K. Rajendra Chowdhary, for respondents Nos.2 and 3. Vineet Kumar, for respondents Nos. 4 to 10. 465 The Judgment of the Court was delivered by Vaidyalingam  These  two  appeals,  by  special  leave,  are directed  against the common Award,, dated June 30, 1970  of the  Additional  Industrial  Tribunal,  Bangalore,  in   two References, A.I.Ds. 6 and 8 of 1966. On  December 8, 1965, the Government of Mysore  referred  to the  Industrial  Tribunal  for  adjudication  the  following question               "Is  the Management of the Bangalore  Woollen,               Cotton   and  Silk  Mills   Company   Limited,               Bangalore, justified in announcing payment  of               one  month’s  basic wages as  advance  against               wages  for  the  half-year  ending  June  1965               instead  of declaring this payment as  an  ad-               vance  against payment of bonus as was  being,               done all these years ?               If  not,  what other relief  the  workers  are               entitled  to. This was numbered  as  Reference               No. A.I.D.  6 of 1966.  Civil Appeal No.  1291               of  1967 is directed against that part of  the               order   of   the   Tribunal   regarding   this               Reference.               On  March  5, 1966, the Government  of  MysorE               referred to the same Tribunal for adjudication               the following question               "Whether   the  demand  of  the   workers   of               Bangalore Woollen, Cotton and Silk Mills  Co.,               Ltd., Bangalore, for additional bonus for  the               year 1962 and 1963 at     the rate of 2 months               additional bonus and4 months  additional               bonus   on   total   wages   respectively   is               justified.               If  not, to what other relief or  reliefs  are               the workmen entitled ?" This  Reference  was numbered as A.I.D. 8  of  1966.   Civil Appeal No. 1292 of 1967 is directed against that part of the order  of the Tribunal regarding this Reference.   Both  the appeals are by the Company. We  will  first  take  up Civil Appeal  No.  1291  of  1967. appellant  was making two payments of bonus every year,  one for the half-year ending 30th June and half-year ending 30th December.   The accounting year is the Calendar  year.   The half  yearly  payments  were unilaterally  declared  by  the appellant and not on the basis of any agreement between  the parties.  The quantum of bonus that was paid for each  half- year was also not constant.  Half-yearly payments were  made at the end of the half-year when 466 the  working result of the said year was known and if  there was  sufficient profit to pay bonus.  The payment  of  bonus for  the  half  years also  depended  upon  the  approximate

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estimate  that  the  Directors  used  to  make  about  their prospective  future earnings for next half-year.   According to the appellant the bonus amounts were paid out of profits. As  the  Payment  of  Bonus Act,  1965  (hereinafter  to  be referred as the Act) had come into force on August 28, 1965, the  appellant issued a circular to the effect that for  the half-year  ending  June 30, 1965, payments will be  made  as advance  of wages equivalent to 1/6th of the basic  earnings of the employees.  In this circular there is a reference  to the Payment of Bonus Ordinance 1965, promulgated on May  29, 1965  and  that under the terms of the Ordinance,  bonus  is payable  only  within a period of 8 months from the  end  of the-accounting  year.  The circular further states  that  no bonus  is  payable for the accounting year  1965  until  the accounts for the year are closed.  It was further  mentioned that  the amounts are paid as advance wages in view  of  the representations made by the employees.  The circular further mentioned that the amounts paid as advance wages will be set off against the bonus that may be found payable for the  ac- counting  year  1965 and that if no bonus  is  payable,  the amount  paid will be adjusted against the wages due for  any month after March, 1966. The issue of the above circular led to the Unions  concerned raising  a dispute with the Management that the  payment  of bonus at the end of each half-year has become a condition of service  of  the  workmen as the same  was  being  paid  for several  decades  without  any  relation  to  profits.   The appellant  was charged by the Unions of having  changed  the conditions  of  service  by offering  to  make  payments  as advance  against wages instead of payment by way  of  bonus. As conciliation proceedings failed, the workmen resorted  to a strike in December 1965, which led to the Reference  being made by the State Government on December 8, 1965, No. A.I.D. 6 of 1966. The short stand taken by, the appellant before the  Tribunal was that the payments were being made as bonus at the end of each  half-year  on the basis of the profits earned  by  the Company.  Such payment was a voluntary act of the  appellant and  related to profit and it had not become a condition  of service of the employees.  The further case of the appellant is that as the Act had come into force, bonus is governed by the provisions of the Act and that bonus is to be paid  only within eight months after the close of the year of  account, i.e., December 31, 1965.  The Unions pleaded that the payment of bonus at the end  of each  half-year, which was being done for a long  number  of years, 467 has become a condition of service and the amounts paid  were not  related  to  the profits earned by  the  Company.   The Unions further contended that the Act has not in any  manner affected  the  right of the employees getting bonus  in  the manner  paid by the appellant namely , at the end  of  every half-year. The Tribunal has recorded the following findings : The  pay- ment of bonus was not a settled condition of service, but is dependent  upon  the profits earned  during  the  half-year. Payments made by the appellant at the close of the half-year cannot be considered as customary or festival bonus and that the  appellant  has  made no change  in  the  conditions  of service  of  the workmen by altering the quantum  of  bonus. Though  bonus was paid at the close, of each half-year,  the quantum  of  such bonus varied depending  upon  the  profits earned by the Company.  The Company has no doubt been paying for a long time profit bonus in two instalments, namely,  in

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the  month of August for the half year ending 30th June  and in  the month of March or April of the succeeding  year  for the  half-year ending 31st December.  The coming into  force of  the Act has, not created any right in the  appellant  to withhold  the payment for each half-year as it used  to  do. The appellant will be entitled to deduct the amount of bonus paid  for  the  first half year from  the  amount  of  bonus payable  to its, employees under the Act in respect  of  the accounting  year  and  the employees  will  be  entitled  to receive only the balance for the second half-year.  On these findings  the  Tribunal  held that  the  appellant  was  not justified  in announcing the payment of the  amount  towards advance wages under the circular dated August 28, 1965.   In the end the Tribunal gave a direction to the effect that the appellant is liable to pay profit bonus in two instalment as advance  against the final declaration of bonus to  be  paid during  the last week of August or first week  of  September and  the  balance, if any, was to be paid in  the  month  of March  or  first week of April of the succeeding  year.   It further  gave a direction that the first payment that is  to be paid is to be as advance against payment of bonus and not as against wages. Mr.  Malhotra, learned counsel for the appellant, has  chal- lenged  the  above directions given by  the  Tribunal.   The counsel pointed out that after the coming into force of  the Act,  the rights and liabilities of the  parties,  regarding bonus,  are governed by its provisions.  Under the Act,  the computations of the available and allocable surplus have  to be made on the basis of the gross-profits ascertained at the end of the relevant accounting year and the payment of bonus has  to  be made within eight months of the  close   of  the accounting  year.  As the Act envisages payment of only  one bonus, at the end of the accounting year, after  computation of  the  amount as per the Act, the direction given  by  the Tribunal 468 regarding  payment  of  half-yearly  bonus  is  illegal  and contrary to the provisions of the Act.  This direction,  the counsel  pointed-out, given by the Tribunal, will apply  not only to the year 1965, but also to all succeeding years. On  the other hand, Mr. H. K. Puri, learned counsel for  the respondents  Nos.  2  and 3,  whose  contentions  have  been accepted  by the, counsel for the other  respondents,  urged that the Act does not prohibit an employer from paying bonus at the end of each half-year.  The appellant has been paying bonus in two installments, namely, at the end of each  half- year.   It is always open to the appellant, both by  virtue: of the provisions of the Act and the direction given by  the Tribunal to deduct when paying final bonus at the end of the accounting year, any amounts that may have been paid for the first  half-year.   Therefore, according to  Mr.  Puri,  the directions  given  by the Tribunal are neither  illegal  nor contrary to the provisions of the Act. We  are not inclined to accept the contention of  Mr.  Puri. We have already referred to the findings of the Tribunal  to the effect that the amount that was paid by the appellant as bonus  at the end of each half-year was on the basis of  the profits earned by it The Tribunal has rejected the claim  of the Unions that the payment of bonus, in the manner  claimed by them, was not a condition of service and that the payment had  nothing  to  do with any  custom  or  festival.   These findings  have not been and in fact could not be  challenged by  the  respondents.   There is also  no  controversy  that payment of bonus for the accounting year 1965 is governed by the  provisions of the Act.  If so, the question is  whether

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the directions given by the Tribunal and referred to  above, can be supported by the provisions of the Act. The  Act has come into force with effect from  August  ’-IS, 1965.   As provided under sub-section (4) of section  1,  it applies to all accounting years commencing on any day in the year  1964  and in respect of  every  subsequent  accounting year.   Section  2 defines amongst others  the  expressions, "accounting year", "allocable surplus", "available  surplus" and "gross profits" Section 4 deals with the computation  of gross-profits.  So far as the appellant is concerned;  under s. 4, cl. (b) the gross-profits are to be calculated in  the manner specified in the Second Schedule.  Section 5 provides for   computation  of  available  surplus.   It  is  to   be ascertained  after  deducting  from  the  gross-profits  the various items, referred to in S. 6. Section 6 deals with the items  to  be  deducted as prior  charges  from  the  gross- profits.   Section 10 makes it obligatory on an employer  to pay minimum bonus to the employees in an accounting year  of 4%  of his salary or wages or Rs. 40/- whichever is  higher. This payment is irrespective of the 469 fact  whether a Company has or has not earned profits in  an accounting  year.   But  this provision is  subject  to  the provisions of ss. 8 and 13.  Section 11 provides for payment of bonus subject to a maximum of 20% of the salary or wages, if the conditions mentioned therein are satisfied.   Section 17  enables an employer, who has paid during any  accounting year  Puja Bonus, or other customary bonus or a part of  the bonus  payable under the Act before the due date, to  deduct the  amount so paid from the amount of bonus payable by  him to  an employee under the Act in respect of that  accounting year.  It further provides that under such circumstances the employee  will  be  entitled to receive  only  the  balance. Section  19 fixed the time limit for payment of  bonus.   If there is a dispute regarding payment of bonus pending before any authority, the bonus will have to be paid within a month from the date, on which the Award becomes enforceable or the settlement  comes  into operation.  In any  other  case  the bonus  will have to be paid within a period of eight  months from the close of the accounting year.  Under the proviso to s.  19,  power  is given to the  appropriate  Government  to extend  the  period of eight months in accordance  with  the provisions contained therein.  Section 34 provides that  the Act except as otherwise provided in the section, shall  have effect   notwithstanding  anything  inconsistent   therewith contained in any other law for the time being in force or in the terms of any Award, agreement, settlement or contract of service made before May 29, 1965. We  have referred to some of the relevant provisions of  the Act.   From a perusal of the scheme of the Act, it is  clear that the bonus for a particular accounting year will have to be computed in accordance with the provisions of the Act  on the  basis of the gross-profits which are determined at  the close of the accounting year.  The Act itself provides as to how the gross-profits are to be calculated and the available and  allocable surplus arrived at The Act also provides  the outer  limit, the period within which bonus has to be  paid. It  further gives the employer a right to deduct any  amount that  any have been paid during the accounting year as  part of the bonus payable under the Act. It  will be seen from the scheme of the Act that  the  claim for bonus can be made only after the close of the accounting year and in accordance with the provisions of the Act.   The gross-profits  can  be  calculated only at the  end  of  the accounting year and the available and allocable surplus  can

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also  be worked out only at the end of the accounting  year. There  is  no question of an employer computing  the  gross- profits,,  available and allocable surplus in the middle  of an  accounting year or at any time before the close  of  the relevant  accounting  year.   The  direction  given  by  the Tribunal really amounts to the employer having to make, two 831 Sup CI/72 470   computations at the end of each half-year.  No  doubt  the Tribunal has given a direction to the effect that any amount paid for the first half-year  can be deducted when the final bonus is paid at the, end     of the accounting year.Even without  any  such  consideration    being  shown   by   the Tribunalallowing an employer to so deduct section 17gives such a right to an employer. We are     not  impressed  with thecontention of Mr. Puri that as there is no   prohibition in theAct against an employer making the payment by  way of bonus at the end of a half year, the direction given  by’ the Tribunal can be sustained. Mr.   Puri  referred  us  particularly  to  the   provisions contained in s. 17 of the Act.  He pointed out that though a time  limit is fixed by s. 19, the Act itself as is  evident from s. 17, clearly envisages payment of bonus at the end-of each  half  year.   We  are  not  inclined  to  accept  this contention of Mr. Puri.  The direction given by the Tribunal making  it obligatory on the Management to make half  yearly payment of bonus apart from being opposed to the scheme-  of the  Act,  also  runs counter to the provisions  of  s.  19. Whether  it is the minimum bonus of, 4% under s. 10 or’  the maximum bonus of 20 % under s. 11, they have to be paid, as, is  made clear by s’ 19, only within the period  mentioned therein.’ It may be that an employer voluntarily pays amount during the accounting year by way of part bonus which he  is entitled  to take into account and adjust when making  final payment  at  the close of the accounting year.  It  is  one, thing  to say that an employer can make  voluntary  payment, but  it  is- a different thing for the Tribunal  to  give  a direction to that effect.               Section  17  on which reliance, is  placed  by               Mr. Puri is as follows:               "Where in any accounting year--               (a)   an  employer has paid any paid bonus  or               other customary bonus to an employee; or               (b)   an employer has paid a part of the bonus               payable  under this Act to an employee  before               the date on which such bonus becomes payable,               then, the employer shall be entitled to deduct               amount  of  bonus so paid from the  amount  of               bonus  payable  by him to the  employee  under               this  Act in respect of that  accounting  year               and the employee shall be entitled to  receive               only the; balance. Clause  (a)has no application as the Tribunal has  categori- cally  held that there is question of any payment by way  of puja bonus, or other customary bonus.  Even then if any such bonus 471 has  been paid the employer is entitled to deduct  the  same from the amount of bonus payable under the Act.  Clause  (b) is an enabling section in favour of the employer in that  it visualizes a situation or contingency where he may have paid during the accounting year a part of bonus payable under the Act  "before date on which such bonus becomes payable".   If an employer has paid any amount during an accounting year by way of part of the bonus, he, is entitled lo deduct the same

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from  the final amounts that may be payable under  the  Act. That provision does not give a right to an employee to claim payment  of  bonus even by way of part  payment  during  the currency  of the accounting year.  If so, the  Tribunal  has also  no jurisdiction to give a direction to an employer  to pay bonus at the end of each half-year. In this case,it  is no doubt, seen that the appellant  has been paying bonus atthe end of each half-year.  But the Tribunal has found that suchpayment   has  not  become   a condition  of service. Therefore by the mere fact  that  the appellant  has  been making payments on  previous  occasions every  half-yearly, does not confer a right on the  employee to  have  such payments by way of bonus in the  same  manner even after the Act came into force,.. From  the  above discussion it follows that  the  directions given,  by the Tribunal in A.I.D. No. 6 of 1966 have  to  be set aside. Now  coming to Civil Appeal No. 1292 of 1967,  as  mentioned earlier,  it  is  against  that part of  the  Award  of  the Tribunal  in  A.I.D. No. 8 of 1966.  The question  that  was referred  to  the Tribunal has also-been  extracted  in  the earlier  part of the judgment.  That relates to a claim  for additional  bonus for the years, 1962 and 1963, There is  no controversy that the appellant has already paid for the year 1962, three months basic wages as bonus.  Similarly for  the year 1963 also four months basic wages as bonus has  already been  paid.   The claim was for, two months total  wages  as additional  bonus for the year 1962 and four months’ total wages  as additional bonus for the year 1963.  The  findings recorded  by the Tribunal in A.I.D. No. 6 of 1966  regarding the nature of bonus paid to the employees have been  adopted for  this  reference also.  The  respondents-Unions  do  not challenge those findings.  Therefore, even in respect of the years  1962 and 1963, what is payable is only profit  bonus. There  is also no controversy that for these two  years  the quantum   of  bonus payable  has  to  be   calculated   in accordance.  with  what  is known as  the  Labour  Appellate Tribunal Full Bench Formula, which has been approved by this Court in The Associated Cement Companies Ltd. Dwarka  Cement Works,  Dwarka  v.  Its Workmen  and  Another(1).  Both  the parties have filed statements of calculations according to (1)  [1959] S.C.R. 925.  472 the  said Formula.  The statements Exs.  M. 1 and M.2  filed by  the  Management represent the computation  of  available surplus  for  the  years ended December 31,  1962  and  1963 respectively.  Ex. M.    1 is as follows-: "THE BANGALORE WOOLLEN, COTTON & SILK MILLS CO.  LTD. Statement  showing the computation of available surplus  for the year ended 31st December, 1962  (Under L.A. T. Formula)      Profit as per profit and loss Account6801756 Add:      Provision for Bonus                      1614000      Depreciation on Fixed Assets             1696481      Donations                                107362      Additional Bonus for    1961        146000 3563843                              ----------                                      10365599      .Less:      Profit on sale of assets    1745426                              8620173      Less      Normal Depreciation and Shift Allowance1465812                                        7154361

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    Less:      Tax Liability      Profit as above                         7154361      Less      -Development Rebate                      586415                                             6567946      Income-tax Liability at      50 Y. on Rs.                       65534083276704      Income-Tax at      25 % on Rs.145383635                                     65679463280339      Super Profits Tax on Rs.     6553408409158                                   3689497      Return on Capital employed      Preference Share Capital      78 %. on Rs.                     60000046800      ordinary Share Capital                    729000  6% on   Rs.              12150000      Reserves employed in the business      4% on Rs.  469379 471787 3325545336244030      Available Surplus.Rs. 910331 Subject to claim for rehabilitation. 473 We  have  prepared  the above  statement  from  the  audited accounts of the Company and is in accordance therewith.  The return on Capital and Reserves is as claimed by the Company. Sd/Illegible Chartered Accountants." Similarly Ex.  M2 regarding the year 1963 is as follows : "THE BANGALORE WOOLLEN, COTTON & SILK MILLS CO.  LTD. Statement  showing the computation of available surplus  for the year ended 31st December 1963      (Under L. A. T. Formula)      Profit as per Profit and Loss Account 5239220 ADD :      Provision for Labour Bonus               2245000      Depreciation on Fixed Assets             1733719      Donations                                8804      Provision for Taxation      8110000      12097523                                ----------                                               17336743      LESS:      Profit on Sale of Assets                    83093      Excess Provision of Electricity charges and interest      written back          675184                758277                                                  16578466      LESS:      Normal depreciation and Shift Allowance    1647555                                                 14930911      LESS      Tax Liability      Profit as above                             14930911      Less      Development Rebate                          460548                                         14470363      Income-tax Liability at      50% on Rs.                      14455825    7227912      25 % on Rs.                            145383635      Dividend-tax                      164025      Companies (Profit) Surtax      Liability on Rs.         1445582     51786212                                            9181784      Return on Capital Employed      Preference Share Capital

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    7 .8 % on Rs.                       600000  46800      Ordinary Share Capital      6 Y. on Rs.            12150000            729000      Reserves employed in the business      4 % on Rs. 46937947 .1877518265331811835102                    --------------------------      Available surplus                         3095809      Subject to claim for rehabilitation. 474 We  have  prepared  the above  statement  from  the  audited accounts of the company and certify that it is in accordance therewith.   The  return  on capital  and  reserves  is,  as claimed by the company.    Sd. illegible Chartered Accountants. The  Tribunal has accepted as correct the  gross-profits  as given  by the appellant in these, two exhibits for  the  two years  in  question.  Even though the Unions  contested  the return on Preference Share Capital at 7.8%, the Tribunal has rejected  their  objections.  it has  held  that  under  the Preference  Share Regulations Act, the Company is  bound  to pay  7.8% on Preference Share Capital.  Ile Workmen did  not raise any controversy regarding the return on Ordinary Share Capital  at  6%.   The  Tribunal,  therefore,  accepted  the figures given in both Exs.  M. 1 and M. 2 and to the  return of Ordinary Share Capital.  But the controversy arose  about the claim made by the appellant regarding return on Reserves employed  during  the  two years.  It  will  be  noted  that neither in Ex.  M. 1 nor in Ex.  M. 2 the appellant has made any claim for rehabilitation excepting adding a note to  the statement   that   they   are  subject  to   a   claim   for rehabilitation. The two points in controversy between the parties  regarding these  two years were (1) The claim for Return  on  Reserves and (2) Provision for Rehabilitation. We  will first take up the question regarding the  claim  of the  appellant  for return on Reserves.  In Ex.  M.  1,  the appellant has claimed a sum of Rs. 178733.00 as 4% return on Rs.  44468315.00  being  the amount  employed  in  business. Similarly in Ex.  M.2, for the year 1963, it had claimed Rs. 1877518.00, being 4% return on Reserves on Rs.  46937947.00, employed in the business.  The Unions contested the claim of the  appellant on the ground that they are not  entitled  to any  return  on  Reserves.   The  appellant  had  filed  two statements  Exs.  Ml (a) and M.2(a) for the years  1962  and 1963  respectively,  showing  how  the  amounts  claimed  as Reserves employed in business have been arrived at Ex. M.  1 (a). for the year 1962 is as follows THE BANGALORE WOOLLEN, COTTON & SILK MILLS CO.  LTD. Year ended 31st December 1962. Reconciliation  of Capital employed in the  business  during the year ended 31st December. 1962. 475  "As at 31-12-1961:      Fixed Assets and Capital Works            43139570      in Progress      Investments                                595216      Interest accrued on Investments            17477      Stores and Spare parts                    6179042      Raw Materials                              6886058      Process Stocks                             5053558      Finished Stocks                            1381082      Sundry Debtors                              2473722      Advances                                   2768233      Balance with Railway and      Excise Authorities                         292529

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    Deposits            18993               68806470                            -------------------      LESS      Sundry Creditors             7077709      Due to Directors            63744      Unclaimed Dividends        18257      Provision for Taxation      1057850      Proposed Dividends          1481400      Provision for Gratuity     1860431      Officer’s Retiring Fund     26764      (Fund loss investments)   11588155                -------------                             57218315 LESS: Share                                                Capital 12750000 Rs.     44468315" Exhibit M.2(a) for the year 1963 is as follows  "THE BANGALORE WOOLLEN, COTTON & SUR MILLS CO.  LTD. Year ended 31st December, 1963. Reconciliation of Capital employed during the year ended 31- 12-1963.      As at 31-12-1962              45229453      Investments                    548575      Interest accrued on Investments 8703      Stores and Spare Parts         6553343      Raw Materials                4701434      Process Stocks               7285534      Finished Stocks             1688931      Sundry Debtors               3429299      Advances                     3165324      Balances with Railway and Excise Authorities  346450      .Deposits                    24234              -------------              729811280      476      LESS:      Sundry Creditors                  7686123      Due to Directors                   65278      Unclaimed Dividends                 22837      Provision for Taxation              2305645      Proposed Dividends               1481400      Provision for Gratuity1           706251      Officers Retiring Fund             25799      (Fund less investments)          13293333                     --------------------                                  59687947      Less Share Capital                12750000      Rs.                         46937947" It  will  be seen that the last figures shown  in  both  the statements  have been claimed by the appellant as  Reserves employed in business for each of these two years. The Tribunal after a reference to the evidence of the  Char- tered  Accountant,, M.W.1, has held that the  amounts  which should have been used as Working Capital are those mentioned in  Exs.   M.1(a)  and M.2(a), less  the  fixed  assets  and capital  works in progress.  The Tribunal has  further  held that the working capital cannot include fixed assets nor the capital  works  in  progress, as they  represent  the  funds required  for day to day work of the Company.  According  to the  Tribunal these fixed assets have been accumulated  over years  and  they cannot form part  of-the  working  capital. However,  the Tribunal accepted the claim of  the  appellant that  the  other items in Exs.  M.1(a) and  M.2(a),  namely, investments,  interest  accrued on investments,  stores  and

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spare parts, raw materials, process stocks, finished stocks, sundry  debtors, advances etc. are the amounts available  to be used as working capital.  On this reasoning the  Tribunal held that in calculating the return on working capital,  the amounts  mentioned in Ex.M.1(a) and M.2(a) less  the  amount sunk  in fixed assets and working capital in progress,  have to  be  deducted.   On  this  basis  it  deducted  from  Rs. 44468315,  a  sum of Rs. 43139570, and fixed a  sum  of  Rs. 1328745,  as Reserves employed in business during  the  year ended December 31, 1962.  On this amount it allowed a sum of Rs. 53150/- as return on Reserves at 4% for the year 1962. Similarly, for the year 1963, it deducted from Rs.  46937947 a  sum of Rs. 45229423, and fixed a sum of Rs. 1708524/-  as Reserves  employed  in business during that year.   On  this amount it allowed Rs. 68340/- as return on Reserves at 4%. Mr.  Malhotra,  learned  counsel for  the  appellant,  while accepting that the principle adopted by the Tribunal in this regard is 477 correct, contended that it had made a mistake incalculation. According to the learned counsel, the claim musthave  been allowed  in the manner calculated by the  appellant.In  this connection,  the  learned counsel pointed out that  even  in cases  where  the  evidence  regarding  the  utilization  of Reserves  as Working Capital as claimed by the  Company,  is not  very  satisfactory, this Court,, on the  basis  of  the balance  sheets, which indicated that some amount must  have been  used as working capital has allowed such a claim.   In this  connection,  he  relied on Workmen  of  M/s  Hindustan Motors Ltd. v. M/s Hindustan Motors Ltd., and Another(1) and Messrs.   Aluminium  Corporation of India v.  Their  Workmen (2). We  may straightaway say that these decisions do not  assist the appellant.  In the case before us it is not necessary to do  any  guess work as the appellants wants us to  do.   The appellant has filed statements showing how it has calculated the  amount of Reserves utilized as working capital  and  we have  to  find out whether the calculations made by  it  are correct.   In fact, Mr. Malhotra has not been able to  point out from the balance sheets, as to what amount, according to the appellant, can be considerd to have been used as working capital.   In  the  two decisions,, relied on  by  him,  the company  concerned was able to refer to the figures  in  the balance  sheets  from which this Court was able  to  draw  a conclusion regarding the approximate amount that would  have been utilized as working capital.  The position before us is entirely different. On the other hand, Mr. Puri" learned counsel for the respon- dents,  referred us to the balance sheets for the  years  in question  regarding the share capital of the  company  being shown  as Rs. 12750000/-.  The counsel further  pointed  out that the said share capital must have been sunk in acquiring the  fixed  assets and for capital works  in  progress  and, therefore,  the  Tribunal  was justified  in  deducting  the amount  of fixed assets and capital works in progress  shown in  Exs.  M. 1 (a) and M.2 (a) from the total shown  by  the appellant  in those statements.  The counsel  further  urged that in considering the claim for return on working  capital two  questions  have  to be kept in view:  (1)  Whether  the Reserves  were available, and if they were (2) whether  they were used as working capital and if so what is that  amount. The  Tribunal in our opinion, has correctly kept  these  two principles  in  view in arriving at the amount  of  Reserves used  as  working  capital and on which a return  is  to  be allowed.   We see no error committed by the Tribunal in  the

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calculation  made for arriving at the, Reserves  which  must have  been  used  as  working  capital,  especially  as  the evidence   on   the   side  of  the   appellant   was   very unsatisfactory.  Even the appellant has deducted the  amount of share capital before (1) [1968] 2 S.C. R. 311. (2) [1969] 3 S.C.C. 832. 478 arriving at the final figures mentioned in Exs.  M.1(a)  and M.2  (a).  But the appellant was claiming the whole  of  the final amount shown in these two statements as Reserves  used as  working capital, which it was not certainly entitled  to in law. We have already pointed out that the Tribunal has held  that the  working  capital cannot include fixed  assets  nor  the capital  works  in  progress as  it  represents  ’the  funds required  for  day  to day running  of  the  Company.   The, Tribunal has further held that the appellant is entitled  to deduct  investments, interest accrued on  ,investments  etc. which  have  been shown in Exs.  M 1 (a) and M.2(a)  on  the ground  that  they  must be considered  to  be  the  amounts available  to  be used as working capital.   These  findings have  not  been challenged by the learned  counsel  for  the appellant.  The appellant has also filed details of Reserves employed  in  the  business  during  the  years  ended  31st December,  1962  and  1963 as shown in Exs.  M.  1  (b)  and M.2(b) respectively.  Even ,there the appellant has deducted the share capital before giving final figures. Therefore, the contention of Mr. Malhotra that the  Tribunal ’has  committed  a  mistake in  calculating  the  amount  of Reserves used as working capital for these two years, cannot be accepted.  If so, it follows that the amount fixed by the Tribunal  as  return  ’at 4% on  Reserves  used  as  working capital for these two years, is correct. The  second  question that arises for consideration  is  the claim made by the appellant for provision for rehabilitation for the two years and which claim has been rejected by  the Tribunal.   The claim made by the appellant  for  provision for rehabilitation for the year 1962 was Rs. 18030871.00 and for  the year 1963 Rs. 18062336.00. Thus the  appellant  was claiming  for each year provision being made of more than  a crore of rupees for rehabilitation.  The appellant has filed a chart Ex.  M.8 giving the calculations for the year  1962, its  claim  for rehabilitation for Rs. 18030871.00.  If  the claim  for rehabilitation is accepted, then the result  will be  that  there will be no profits at all from  and  out  of which any bonus can be paid for the years in question. The  claim  of the appellant has been opposed by Mr.  I.  N. Keshava,  learned counsel for the first respondent  and  his contentions  have been adopted by the counsel appearing  for the other respondents-Unions.  The claim of the appellant is opposed  mainly  on  two  grounds,  namely,  (1)  that   the appellant has no scheme for rehabilitation for the  relevant years  and  (2)  in  any  event  there  were  huge  Reserves available  from which the, claim for rehabilitation  can  be easily  met.   The  Tribunal  has  rejected  the  claim  for rehabilitation both on the grounds that the appellant 479 has no scheme for rehabilitation and that the rehabilitation claim  can be adequately met with from the huge Reserves  of nearly four crores of rupees that the appellant had. It   must  be  noted  that  Rehabilitation  Reserve   is   a substantial item which goes to reduce the available  surplus and  as  a  result affects the right  of  the  employees  to receive  the bonus.  Hence the employer will have  to  place

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all  relevant  materials  and  the  Tribunal  will  have  to scrutinize them carefully and to be satisfied that the claim is justified.  It is no doubt true that it is but proper  in the larger interest of the industry as well as the employees that proper rehabilitation Reserve should be built up taking into  consideration  the  increase in  price  in  plant  and machinery  which has to be replaced at a future date and  by determination  of  multiplier and its deviser.  It  is  also clear from the decisions of this Court that if a Company has no  scheme for rehabilitation, then of course, its claim  on that  head must be rejected. [vide Azam Jahi Mills, Ltd.  v. Their  Workmen(1)].  Further, since it is the  employer  who seeks  replacement  costs,  it is for  him  to  satisfy  the Tribunal as to what will be the overall cost of  replacement and in doing so, it is he who has to discharge, this  burden by  adducing  proper  evidence and  giving  other  party  an opportunity  to  test the correctness of  that  evidence  by cross-examination.  [vide  National  Engineering  Industries Ltd. v. Its Workmen(2)]. It is also now well-settled that in determining the claim of the  employer for rehabilitation, two factors are  essential to be ascertained, namely, (1) the, multiplier, and that has to  be  done  by  reference to the  purchase  price  of  the machinery   and  the  price  which  has  to  be   paid   for rehabilitation or replacement; and (2) the determination  of the deviser and that has to be done by deciding the probable life of the machinery. [vide The Honorary Secretary, South India Millowners’ Association and others  v The Secretary Coimbatore District Textile Workers’  Union(3) and  M/s Gannon Dunkerley and Co. Ltd. and another v.  Their Workmen(4)]. Mr.  Malhotra,  learned  counsel  for  the  appellant,  very strongly  relied on the statement Ex.  M.S. as well  as  the evidence  of  M.W.  2,  the Mill Manager  and  M.W.  3,  the Assistant  Officer,  Efficiency  Section  of  the  Mill,  in support  of his contention that the appellant has  a  scheme for rehabilitation and that the claim made by the  appellant for  making  provision for rehabilitation  is  proper.   The counsel  also  pointed out that the evidence  of  these  two witnesses  clearly  establishes that most of  the  items  of machinery have long out lived, their normal age of 25  years and (1)  [1967] 2 L.L.J. 18. (2) [1968]1 S.C.R. 779. (3)  [1962] Supp. 2 S.C.R (4)  A.I.R. 1971 S.C. 2567. 480 therefore they require replacement in order to ensure proper production.   The  counsel  further  pointed  out  that  the rejection  by  the  Tribunal of  the  claim  made  by  the appellant,  on  the  basis  that the  life  of  the  textile machinery is only 25 years, is not correct and that the view of the Tribunal that the normal age is more than 25 years is opposed to the decisions of this Court. So  far as the age of the machinery is concerned, it  is  no doubt  true  that  in The Honorary  Secretary,  South  India Millowners’   Association  and  others  v.   The   Secretary Coimbatore  District Textile Workers’ Union(1), this  Court, after  a  reference to the evidence  adduced  confirmed  the findings  of  the Tribunal that the estimated  life  of  the textile  machinery  in  question should be taken  to  be  25 years,  but in the said decision itself it is  observed  ,is follows               "We are not prepared to accept either argument               because,  in  our  opinion, the  life  of  the

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             machinery  in every case has to be  determined               in  the  light  of  evidence  adduced  by  the               parties." But  it is unnecessary for us to pursue this aspect  further as we are disallowing the entire claim for rehabilitation. Mr. Malhotra, also criticized the view of the Tribunal  that in  this case the evidence of the witnesses on the  side  of the  appellant clearly shows that the machines  are  working very  efficiently though they have been running for over  50 years.   On  the  other hand, the  counsel  urged  that  the principle  to be borne in mind, when considering  the  claim far rehabilitation, is that the life of the machinery is the period during which it is estimated to work with  reasonable efficiency  and not the period during which it has  actually been operated, that is, till it becomes too deteriorated for use.   No  doubt  the last  proposition  enunciated  by  the counsel  in  the abstract is correct; but  the  question  is whether   the  appellant  has  discharged  its   burden   of satisfying   the   Tribunal  that  it  had  a   scheme   for rehabilitation and whether it had placed the necessary mate- rials for the purpose of working out the multiplier and  the deviser. Mr.  Keshava,  learned  counsel for  the  first  respondent, referred  us  to the written statement filed by one  of  the Unions,  Benny  Mills  Labour Association,  wherein  it  has specifically  stated that the plant and machinery  owned  by the  Mills are amongst the most modem, machineries and  that no   provision   for  rehabilitation  is   necessary.    The appellant, it is pointed out, in its reply statement did not controvert  these averments.  EN-en in the  statements  Exs. M.  1  and  M.  2, filed by  the  appellant,  no  claim  for rehabilitation  has  been  made.  He also  referred  to  the evidence or (1)  [1962] Supp. 2. S.C. R. 926. 481 M.Ws.  2 and 3 and pointed out that their evidence does  not show that the Company had any scheme for rehabilitation.  On these  grounds, the counsel pointed out that  the  appellant has  not placed sufficient materials before the Tribunal  to sustain its claim for rehabilitation. It  must be emphasized that in dealing with the claim of  an employer  for  rehabilitation, as pointed out  earlier,  the onus of proof is on the employer.  He has to prove the price of  the plant and the machinery, its age, the period  during which it requires replacement, the cost of replacement,  the amount  standing in the Debentures and Reserve Funds and  to what extent the funds at its disposal would meet the cost of replacement.   If the, employer fails lo  lead  satisfactory evidence on these points, the result will be that the  claim for rehabilitation will have to be totally rejected. It  is no doubt true that a chart Ex.M. 8 has been filed  by the appellant and M.W. 3, the Assistant Officer,  Efficiency Section, has spoken regarding the same.  But he has admitted that  the  original  quotations received  from  the  dealers regarding  the  price of new machinery for  the  purpose  of replacement have not been produced before the Tribunal.   He has further admitted that the appellant has not produced the letters  written by it calling for quotations regarding  the price  of  the machinery.  He has further admitted  that  no charts  have  been  produced  to  show  the  value  of   the machineries  in  1962.  The multipliers, according  to  this witness,  have  been adopted as advised by  the  appellant’s Legal Adviser. It is clear from the above answers of the witness that there is  no material placed before the Tribunal by the  appellant

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from which the multiplier and deviser can be properly worked out   for   the  purpose  of  considering  the   claim   for rehabilitation.  In fact the Mill Manager, M.W. 2 has stated that the company has floated a debenture for 1 1/2 crore for buying new machinery.  This clearly shows that the appellant had  no  scheme  for rehabilitation and  that  explains  the reason why it had not made any provision for rehabilitation. Mr.  Malhotra,  then  urged that at any  rate  the  Tribunal itself  has  proceeded  on the basis that  some  amount  for rehabilitation  is necessary to be provided for  each  year. Based  on  this  observation of The  Tribunal,  the  counsel pointed  out that the appellant should be allowed  at  least the  amount  that it has actually spent for  replacement  of machineries in the years 1962 and 1963.  According to him  a sum  of Rs. 2619608 and Rs. 2124102 have been spent  in  the years  1962  and 1963 respectively for machinery  and  plant installed in those years.  In this connection he referred us to the balance sheet and profit and loss accounts for  these two  years and stressed that the Tribunal has  committed  an error in not 482 allowing  at  least these amounts by way  of  provision  for rehabilitation. it  is  no doubt true that these amounts are  shown  in  the schedules  to  the balance sheets for the  years  concerned. Admittedly,  there  is, no such claim made  in  the  written statement filed by the appellant before the Tribunal.   When the Unions were contesting the claim of the appellant on the ground that it has no, scheme for rehabilitation and that it has  not  spent  any amount by way  of  replacement  of  old machinery,  it was the duty of the appellant to have made  a proper  claim and it should have adduced evidence  regarding that aspect before the Tribunal.  Mere production of balance sheet  and profit and loss accounts by themselves will  riot entitle   the   appellant   to   sustain   its   claim   for rehabilitation. For  all  the  reasons given above, it  is  clear  that  the Tribunal was justified in holding that the appellant has not been  able  to make out its claim for making  provision  for rehabilitation.  In this view the Tribunal was justified  in rejecting this claim of the appellant. We  may  also state that the Tribunal is also  of  the  view ’that  the  appellant has large Reserves with which  it  can meet  rehabilitation  expenses of the  machinery.   In  this connection the Tribunal has also referred to the evidence on the  side  of  the appellant, that  even  according  to  the appellant  rehabilitation  will have to  be  completed  only within  eight years from 1962 and that only a sum of  rupees eighty  lakhs  will  be required for each  year.   On  ’this reasoning  the tribunal has held that this amount of  rupees eighty lakhs can be easily met with from the large  Reserves available with the appellant.  It is not necessary for us to consider this aspect further because we have already  agreed with the findings of the Tribunal that the appellant has  no scheme  for  rehabilitation and that it has not  placed  any satisfactory evidence before the Tribunal in support of  its claim. The  last point that arises for consideration  is  regarding the  available  surplus  for  the years  1962  and  1963  as calculated  by the Tribunal and the award by it of 1/3rd  of the  amount  as  additional bonus for the  two  years  after deducting  the  bonus already paid by  the  appellant.   The Tribunal,   after  rejecting  the  appellant’s   claim   for rehabilitation and also allowing return on Reserves used  as working  capital  in the manner, already  referred  to,  had

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arrived  at the available, surplus for the year 1962 in  the sum  of  Rs. 2635914 and for the year 1963 at  Rs.  4904987. The appellant filed a statement Ex.  M. 4 showing the Amount of  bonus  already paid for the years 1962 and 1963  to  all employees drawing a total of Rs. 500/- and less per  mensem. From that statement it is seen that for the year 1962 it had paid a sum of Rs. 1441455 and for the year 1963 a sum of Rs. 1960795.   On the basis of the available surplus worked  out for the years 1962 and 1963, the balance  483 available surplus after deducting bonus already paid will be as follows:      1962 Rs.      Available surplus as worked out by the Tribunal2635914      Amount already paid as bonus by the appellant1441455      Balance . .    .   .     .     .     .          1194459      1963      Available surplus as worked out by the Tribunal4904987      Amount already paid as bonus by the appellant1960795      Balance  ..   .    .    .    .    .            2944192 What  the Tribunal has done is to distribute 1/3rd  of  the, amount  shown  as balance above, for each of  the  years  as additional  bonus.  That results in the workmen getting  Rs. 398153 representing 25 days basic wages as additional  bonus for  the  year1962.  Similarly, the workmen get  Rs.  981397 representing two months basic wages as additional bonus  for the year 1963.      Therefore, it will be seen that the total bonus thatthe workmen will get for each of the years will be as follows      1962 Rs.      1. Amount already paid by the appellant   1441455      2. Additional amount awarded by the Tribunal 398153      TOTAL    .   .    .    .    .    .   .   . 1839608 From the available surplus of Rs. 2635914 in 1962, the work- men  will get a total sum of Rs. 1839608 as bonus  for  that year  which  works  out to more than 60%  of  the  available surplus.. Similarly for the year 1963 the figures are as follows      1963 Rs.      1. Amount already paid by the appellant   1960795      2. Additional amount awarded by the Tribunal981397      TOTAL   .    .        .                .    2942192 From the available surplus of Rs. 4904987 in1963,       the workmen  will  get  a  sum of  Rs.  2942192  for  that  year which  works  out more or less about 60%  of  the  available surplus, falling short by a sum of Rs. 800/-. 484 Mr. Malhotra, learned counsel for the appellant attacked the method of calculation adopted by the Tribunal.  According to him the Tribunal should not have fixed more than 60% of  the available surplus as bonus payable for a year.  On the other hand, the amounts of bonus now awarded by the Tribunal  and already  paid by the appellant exceed 60%.  In our  opinion, there is considerable force in the contention of the learned counsel.   The available surplus, as found by  the  Tribunal for  the year 1962 is Rs. 2635914.  Working out roughly  60% of  this surplus to be distributed as bonus to the  workmen, the  amount  of  bonus  will  be  about  Rs.  1581600.   The appellant  has  admittedly paid a sum of Rs.  1441455.   The balance  that  the workmen will be entitled to will  be  Rs. 140145.00,  whereas the Tribunal has directed the  appellant to pay for this year by its Award a sum of Rs. 398153.   The

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award of this amount is not-.justified. So far as 1963 is concerned, the available surplus as  found by  the  Tribunal  is Rs. 4904987.  60%  of  this  available surplus,  to which the workmen will be entitled to  will  be Rs.  2942992.  On the other hand, the total amount that  the workmen  will  get  as per the award  including  the  amount already paid by the appellant as bonus is Rs. 2942192.   The appellant  will  have to pay only an additional sum  of  Rs. 800/- to make up 60%.  There is no appeal by the Unions  and therefore,  the  bonus awarded for the year  1963  does  not require any interference. In allocating the available surplus between the company  and the workmen, it has been held by this Court that it will  be equitable  if roughly 60% of the surplus is  distributed  as bonus  to  the  workmen and the Company  is  left  with  the remaining  40%.   The Company will get in addition  to  this 40%,  the benefit of the Income-tax rebate on the 60%  bonus payable to the workmen. [vide M/s.  Gannon Dunkerley and Co. Ltd. and another v. Their workmen(1)].  We have ’adopted the same principle in the case on hand. To  conclude the Award of the Industrial Tribunal in  A.I.D. No. 6 of 1966 is set aside and Civil Appeal No. 1291 of 1967 is allowed.  There will be no order as to costs. The Award of the Industrial Tribunal in A.I.D. No. 8 of 1966 is  modified to the following extent: For the year 1962  the appellant  will be liable to pay as additional bonus only  a sum of Rs. 140145 instead of a sum of Rs. 398153 as directed by  the Tribunal in the Award.  To this extent Civil  Appeal No. 1292 of 1967 is allowed in part.  In other respects,  it is dismissed.  There will be no order as to costs. V.P.S. (1) A.I.R. 1971, S.C. 2567 485