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SUPREME COURT OF INDIA
1st February, 1962
P.B. GAJENDRAGADKAR AND K.N. WANCHOO, JJ.
1. Honorary Secretary, South India, Millowners Association and Ors, (In C.A. No. 419 of 60) 2. The Management of Express Newspapers (Private) Ltd. (In C. A. No. 302 of 59) and 3. The Lakshmi Mills Ltd. and Ors. (In C.A. No. 159 of 1961), Appellants
Versus
1. The Secretary, Coimbatore District Textile Workers Union (I C. As. Nos. 419 of 60 and 159 of 1961) and 2. The Secretary, Express Newspapers Employees Union (In C.A. No. 302 of 1959), Respondents.
Civil Appeals Nos. 419 of 1960, 302 of 1959 and 159 of 1961.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate (Mr. G. Gopalakrishnan, Advocate of M/s. Gagrat and Co. with him), for Appellants; (In all the appeals); Mr. B. R. Dolia, Advocate and Mr. Rameshwar Nath, Advocate of M/s. Rajinder Narain and Co., for Respondent No. 1 (In A. Nos. 419 of 60 and 159 of 61); M/s. M. K. Ramamurthy and T. S. Venkataraman, Advocates, for Respondent No. 2 (In C. A. No. 419 of 60) and Respondents Nos. 2 and 4 (In C. A. No. 159 of 61); Mr. M. K. Ramamurthy, Advocate and Mr. Rameshwar Nath, Advocate of M/s. Rajinder Narain and Co., for Respondent (In C. A. No. 302 of 59).
BONUS - Industrial dispute - Claim for bonus - Formula for determining bonus - Rehabilitation - Life of machinery - Addition to normal life - Ad hoc addition not justified - Development rebate - Not a prior charge - Interest on depreciation - Entitled to reasonable return.
Fact of the Case:
Three industrial disputes between industrial employers and their respective workmen regarding bonus claims were referred for adjudication to the Industrial Tribunal, Madras. The Tribunal made its awards in each case, and the employers appealed to the Supreme Court by special leave.
Finding of the Court:
1. The Tribunal was justified in holding that the estimated life of the textile machinery in question should be taken to be 25 years and not 15 years as alleged by the appellants. 2. The ad hoc addition made by the Tribunal to the estimated life of the machinery on hypothetical or practical considerations is not justified. 3. In determining the amount of rehabilitation and deciding the question of multiplier, the cost price of the machinery must be ascertained and this can be done only by enquiring for how much the machinery was originally purchased when new. Depreciation amount accruing due after the first purchase must also be ascertained. 4. It is not correct to insist that an employer who purchases second hand machinery must rehabilitate it by purchasing second hand machinery in turn. 5. The two mills run by the Saroja Mills Ltd. constitute one unit. 6. The development rebate allowed to the appellant is not a prior charge and must be taken into consideration in ascertaining the available surplus. 7. The appellant is entitled to claim a reasonable return on the amount of depreciation used by it as working capital. 8. The ad hoc addition made by the Tribunal to the normal life of the printing machinery is not justified.
Issues: 1. Whether the Tribunal was justified in holding that the estimated life of the textile machinery in question should be taken to be 25 years and not 15 years as alleged by the appellants? 2. Whether the ad hoc addition made by the Tribunal to the estimated life of the machinery on hypothetical or practical considerations is justified? 3. How should the amount of rehabilitation and the question of multiplier be determined? 4. Whether it is correct to insist that an employer who purchases second hand machinery must rehabilitate it by purchasing second hand machinery in turn? 5. Whether the two mills run by the Saroja Mills Ltd. constitute one unit? 6. Whether the development rebate allowed to the appellant is a prior charge and must be taken into consideration in ascertaining the available surplus? 7. Whether the appellant is entitled to claim a reasonable return on the amount of depreciation used by it as working capital? 8. Whether the ad hoc addition made by the Tribunal to the normal life of the printing machinery is justified?
Ratio Decidendi: 1. The Tribunal carefully examined the evidence of the experts and gave satisfactory reasons for holding that the estimate made by them in regard to the life of the machinery is too modest. 2. The Tribunal has not been able to justify the ad hoc additions made to the estimated life of the machinery. 3. The cost price of the machinery must be ascertained and this can be done only by enquiring for how much the machinery was originally purchased when new. Depreciation amount accruing due after the first purchase must also be ascertained. 4. It would be unreasonable and unjust to insist that an employer who purchases second hand machinery must rehabilitate it by purchasing second hand machinery in turn. 5. The two mills are owned and conducted by one Company, the Saroja Mills Ltd.; the profit and loss account for both the Companies is one consolidated account; separate accounts are kept for convenience because the two mills are situated in two different places; the borrowing on which the appellant relies is the borrowing of the Company and as such, the Company is the debtor and not the mills at Madura; the distance between the two mills can hardly be important because the features on which the appellant relies may well be present in the case of two mills owned and run by the same Co, though the mills may be situated side by side in the same locality; what is important in this connection is the fact that the business carried on by the two mills is of the same type and character though the quality of yarn produced may not be the same. 6. The development rebate allowed is in part recognition of the claim for depreciation and the provision in question cannot, therefore, be treated as constituting a bar against taking the said amount into consideration in ascertaining the available surplus in the hands of the employer during the year in question. 7. If an employer shows that the amount of depreciation was actually available and has, in fact, been used as working capital during the relevant year he would be entitle to claim a reasonable return on the said amount. 8. The Tribunal has not been able to justify the ad hoc additions made to the normal life of the printing machinery.
Final Decision: 1. The appeals in Civil Appeals Nos. 419/60 and 159/61 are dismissed. 2. The appeal in Civil Appeal No. 302/59 is allowed.
Judgment
GAJENDRAGADKAR, J. : These three appeals arise out of an industrial dispute between the industrial employers who are the appellants and their respective workmen who are the respondents in respect of the latters claim for bonus. They have been heard together because they raise some common questions of general importance. We would first set out briefly the material facts in the there respective appeals.
2. The Honorary Secretary, The South India Millowners Association and other mills are the appellants in Civil Appeal No. 419/60. A dispute arose between 44 mills and their respective employees in regard to the bonus for the year 1956. The said dispute was referred for industrial adjudication to the Industrial Tribunal, Madras, by the State Government on the 13th March, 1958. To this reference, the different mills and three unions which represented the employees were made parties. It appears that for the four years prior to 1956 the question of bonus had been disposed of by a tripartite Board of Arbitration appointed for each year by the Government. For the year 1956, negotiations were held at governmental level to evolve a satisfactory solution by consent but since the said negotiations failed, the parties agreed on some interim payment leaving the rest of the dispute to be adjudicated upon by the Industrial Tribunal. That is the genesis of the reference.
3. On the 5th of September, 1958, the Tribunal made its award. It considered the several rival contentions raised by the parties in support of their respective claims and awarded bonus ranging from 7 months basic wages to 1 month s basic wages according to its findings as to available surplus in respect of each mill. It is against this award that the appellants have come to this court by special leave.
4. At the time when the award was pronounced, the decision of this Court in the Associated Cement Cos. Ltd., v. Its Workmen Employed, 1959 SCR 925 a not been pronounced. In that decision, this Court has considered all the relevant problems which arise in the working of the Full Bench formula governing the award of bonus to industrial labour and some of the points which the appellants wanted to raise against the award in question are now concluded by that decision. That is how in the present appeal, the appellants have confined themselves to the points on which the Industrial Tribunal has decided contrary to the decision of this Court in the case of Associated Cement Companies Ltd., 1959 SCR 925 or which are not covered by that Judgment.
5. Civil Appeal No. 159/61 arises out of a reference made by the State Government of Madras on the 3rd October, 1959, in respect of an industrial dispute for bonus for the year 1958 between 51 mills and their respective employees. The Industrial Tribunal which heard this dispute pronounced its award on the 11th of January, 1960. In dealing with this dispute, it naturally followed the same line of approach which it had adopted in dealing with a similar dispute for the year 1956 from which Civil Appeal No. 419/60 arises. As a result of its findings, the Tribunal has directed 24 mills to pay bonus to their respective employees, the rate for the same ranging from 6 months to half a month s basic wages according to the available surplus in each case. It is against his award that the 23 mills have come to this Court by special leave in this appeal.
6. Civil Appeal No. 302/59 arises from an industrial dispute for bonus between the appellant, the Management of the Express Newspapers (Private) Ltd. and its employees, the respondents. The claim for bonus which has been referred by the State Government for adjudication to the Industrial Tribunal at Madras on the 19th August, 1957, relates to the years 1954-55 and 1956-57. The appellant in this case carries on the business of publishing certain newspapers and periodicals in English and in the vernacular from four centres in India, viz., Madras, Madurai Bombay and Delhi. After hearing the parties & cons
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