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SUPREME COURT OF INDIA
22nd May, 1958.
P.B. GAJENDRAGADKAR, A.K. SARKAR, K. SUBBA RAO AND VIVIAN BOSE, JJ.
State of Mysore, Appellant
Versus
The Workers of Gold Mines, Respondents.
Civil Appeal No. 648 of 1957.
Advocates appeared
Mr. H. N. Sanyal, Additional Solicitor-General of India, M/s. R. Ganapathy Iyer, T. Rangaswami Iyengar and T. M. Sen, Advocates, with him, for Appellant; Mr. Janardan Sharma, Advocate, (for Nos. 1, 2 and 6) and Mr. L. K. Jha, Senior Advocate, (M/s. B. R. L., Iyengar and C. V. Ramachar, Advocates, with him) (for Nos. 3 and 5) for Respondents.
BONUS - Gold Mining Industry - Application of Full Bench formula - Special requirements of the industry - Deduction of 15% of revenue expenditure as prior charge - Contribution to Pension Fund - Bonus paid for the year 1950 - Interest on reserve employed as working capital - Rehabilitation - Principles for determining the claim for rehabilitation - Error apparent on the face of the record - Statutory depreciation.
Fact of the Case:
The dispute between the employers and their workmen arose from the claim made by the workmen for bonus for the calendar years 1953 and 1954. The Unions representing the workmen alleged that the employers had sufficient available surplus in their hands from which they could and should be awarded bonus for the two years in question.
Finding of the Court:
The tribunal was not impressed by this argument. It held that a separate fund for finding out new ore and keeping the longevity of the industry was absolutely necessary but it was not satisfied that the covenant in the lease on which reliance was placed by the management could bind the workmen and that the amount in question could be treated as a prior charge.
Issues: 1. Whether the tribunal was justified in applying the principles underlying the Full Bench formula in determining the existence or otherwise of the available surplus in the hands of the appellant during the relevant years. 2. Whether the appellant's industry is a wasting industry and it needs special consideration. 3. Whether the appellant is entitled to deduct 15 percent of the revenue expenditure under a special covenant of the lease. 4. Whether the appellant is entitled to claim credit both for the initial and the annual contribution made by it in the relevant years towards the Pension Fund scheme. 5. Whether the amount representing the bonus paid to the workmen for the year 1950 should be deducted in 1953 since it was actually debited to the workmen in that year. 6. Whether the appellant is entitled to interest at a higher rate than 2 per cent. on reserve employed as working capital during the relevant years. 7. Whether the appellant is entitled to claim any deduction under the head of rehabilitation, and if yes, to what amount? 8. Does the award in substance add back the initial contribution to the pension fund twice over in making calculations for ascertaining the available surplus? 9. In allowing statutory depreciation to the appellant for the relevant years, had the award virtually allowed the said depreciation twice over having regard to the fact that a large amount has been written off by the appellant towards depreciation for the said period?
Ratio Decidendi: 1. The principles of social justice on which a claim for bonus is founded apply as much to this industry as to others. 2. The appellant's argument assumes that the lessee is under an obligation to create a reserve fund and to contribute to it an amount equal to 15 per cent as mentioned in the clasue. This assumption is not justified by the clause itself. 3. The appellant's failure to create a reserve fund or to make a contribution to the said fund from year to year would not necessarily incur forefeiture of his lease. 4. The appellant is entitled to make a claim for prospecting new ore and thereby helping the longevity of its industry. 5. The tribunal was not satisfied that the amount was reasonable and that the payment of this amount was otherwise justified on the merits. 6. The appellant cannot successfully challenge the tribunal's finding on this question. 7. The appellant should be allowed to put forward before the tribunal a specific claim under the heading of rehabilitation and lead evidence in support of the said claim. 8. The tribunal has committed an obvious error in allowing a deduction of statutory depreciation to each one of the companies for both the years in question.
Final Decision: Case remanded.
Judgment
P. B. GAJENDRAGADKAR, J. : This is an appeal with special leave by the State of Mysore against the award passed by the Central Government Industrial Tribunal, Madras, on 24-11-1956, in Industrial Dispute No. 1 of 1956 between the employers in relation to the Gold Mines of the Kolar Gold Fields, Mysore, and their workmen. The employers were the Champion Reef Gold Mines of India (KGF) Ltd., Mysore State, the Mysore Gold Mining Company (K. GF) Ltd., Mysore State & the Nundydroog Mines (KGF)Ltd., & their allied establishments the Central Administration, the Kolar Gold Fields Electricity Department, the Kolar Gold Field Hospital and the Kolar Gold Field Watch and Ward establishment. The dispute between these employers and their workmen arose from the claim made by the workmen for bonus for the calendar years 1953 and 1954. The Unions representing the workmen alleged that the employers had sufficient available surplus in their hands from which they could and should be awarded bonus for the two years in question. The Union representing the workmen in Mysore Gold Mining Co. Ltd., demanded four months wages and five months wages as bonus for the years 1953 and 1954 respectively. The Union on behalf of the Nundydroog Mines demanded four months total wages as bonus for 1953 and 1954 whereas the workmen in Champion Reef Gold Mines demanded four months wages as bonus for the said two years. The management opposed these demands on the ground that there was no available surplus for both the years in all the mines and so no bonus can be awarded. In substance, the tribunal has rejected the case made out by the management and has passed an award in favour of the workmen. Taking into consideration all relevant factors the tribunal has awarded as bonus wages at the rate of one and half months in 1953 and three months in 1954 to the workers of Champion Reef Mines Ltd., 2 1/2 months in 1953 and three and half months in 1954 to the workers of the Nundydroog Mines Ltd., & one month s in 1953 and three months in 1954 to the workers of the Mysore Gold Mines Co. Ltd. In regard to the workmen employed in the allied establishments the tribunal has awarded as bonus one month s wages in the year 1953 and two months basic wages in the year 1954.
2. It was urged before the tribunal by the management that it would be inappropriate to apply the Full Bench formula evolved by the Labour Appellate Tribunal in the Mill Owners Association, Bombay v. Rashtriya Mill Mazdoor Sangh, Bombay, 1950 Lab LJ 1247 (LATI-Bom) (A) without suitable modifications to the case of the mines. The argument was that, unlike the textile industry, gold mining is a wasting industry, and the adjustment of the rival claims of the employer and the employee, even on the basis of social justice, cannot be properly made by the rigid application of the said formula. In the case of gold mines it is of considerable importance that the industry should invest a large amount in search of new ore and higher expenditure has to be incurred even for renewal and replacement of machinery. The tribunal accepted the argument that the special requirements of the gold mining industry would have to be considered in dealing with the workmen s claim for bonus, but neverheless it was inclined to take the view that the principles laid down by the labour appellate tribunal in arriving at the Full Bench formula should be adhered to.
3. The next argument which was raised before the tribunal was based on sub-para (5) in the lease deed executed in favour of the management on 20-2-1949. The case for the management was that the management was entitled to deduct 15 per cent. of the revenue expenditure as a prior charge in calculating the available surplus. It was urged that the relevant clause in the lease deed required the management to create a reserve fund to meet depreciation and development expenditure of a capital nature and to provide for the search of new ore and it was urged that the amount debited by the man
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