Judgement

BHAGWATI J.: This appeal with special leave is directed against the judgment and order of the Labour Appellate Tribunal of India in a dispute regarding the workers claim for bonus.

2. During the year 1948 the Appellant made a profit of Rs. 11,97,648-11-9. It paid 24 3/4 per cent. dividend on, ordinary shares, being the maximum that could be paid under the Public Companies (Limitation of Dividend) Ordinance of 1948 and also paid to the workers their full share of bonus at As. 4 in a rupee of their basic earnings. During the year 1949 the selling rates for cloth and yarn were controlled by the Government and were approximately 4 per cent below those obtained in 1948. The basic wages were increased from the 1st December, 1948 by order of the Government of Uttar Pradesh and the total wages paid were therefore higher than those in the previous year. There was moreover in discipline amongst the workers and production suffered.

There was a strike in the month of October and the mills were closed for nearly a month. Further the management were unable to recum cotton which resulted in the curtailment of the working hours. As a result of all these circumstances the Appellant suffered a trading loss of Rs. 5,02,363-1-10. A sum of Rs. 2,50,000 being the excess reserve for taxation was written back and a sum of Rupees 10,01,871-13-5 being the amount of reserve transferred from the investment account was also brought in. An aggregate sum of Rs. 12,51,871-13-5 was thus brought into the balance-sheet by these two transfers.

The trading loss was deducted from this amount leaving a credit balance of Rupees 7,49,308-11-7 and that amount was shown as the profit for the year 1949 in the balance-sheet, for that year. The balance which had been brought forward from the previous year was added thereto and a dividend of 24 3/4 per cent, was paid to the ordinary share-holders. The Appellant also paid ex gratia to the workmen bonus at the rate of As. 2 per rupee of their basic earnings making it clear by their notification dated the 7th April 1950 that the directors had sanctioned the payment at that rate in spite at the Appellant having suffered a trading loss for the year, that it was being paid entirely at the direction of

the Appellant and was not related to or connected with any contract of employment of any worker.

3. On the 4th May 1950 the Secretary of the Respondent Union petitioned to the Provincial Conciliation Officer (Textile) that there was more production in 1949 than in 1948, that there was no reason to hold that the profit in 1949 was less than in the previous year and that the rate of bonus was wrongly reduced and asked that bonus for 1949 should also be paid at the rate of As. 4 per rupee. The industrial dispute which thus arose was referred for enquiry and recording of an award to the Regional Conciliation Board (Textile), Kanpur.

The Conciliation Board by a majority decision repelled the contention of the Appellant and awarded the payment of bonus at As. 4 per rupee. On an appeal taken by the Appellant to the Industrial Court (Textiles and Hosiery), Kanpur the Industrial Court accepted the contention of the Appellant, allowed the appeal and set aside the award. The Respondent thereupon appealed to the Labour Appellate Tribunal which substantially agreed with the Industrial Court on questions of fact as well as the general position in law but imported considerations of social justice and treating this as a special case

"where social justice would demand that labour should have bonus for the year where for that very year capital had had not only a reasonable return but much in excess of that",

allowed the appeal and directed the Appellant to pay to the workmen bonus at the rate of As. 4 per rupee within six weeks of their decision. The Appellant filed this appeal against that decision after obtaining special leave from this Court.

4. Both the Industrial Court as well as the Labour Appellate Tribunal found as a fact that there was