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SUPREME COURT OF INDIA
SRI P. B. GAJENORAGADKAR, Chief Justice
JUSTICE SI K, N. WANCHOO
JUSTICE SRI M. HIDAYATULLAH
JUSTICE SRI V. RAMASWAMI
JUSTICE SRI P. SATYANARAYANA RAJU
Civil Appeals Nos. 703 to 706 of 1964, dated 2 November l965
Mathura Prasad Srivastava and others
Versus
Saugor Electric Supply Company, Ltd., and another
While calculating profits for considering the question of bonus, the Tribunal should start with the net profits for each year and not the net revenue balance in the balance-sheet as, if the net revenue balance was net profit. The net profit has to be taken from the profit and loss account and not from the balance-sheet. [Para 9]
(2) Electricity (Supply) Act, 1948 - Ss. 67 and 68 - contingency reserve and development reserve have to be taken into account while calculating the profits for determining amount of bonus.
Contingency reserve and development reserve which are statutary reserves to be maintained by an electric company under the Electricity (Supply) Act, (No. 54 of 1948), have to be taken into account though these may not be considered as prior charges. The Tribunal cannot fix the bonus at such a high figure as to leave insufficient funds in the hands of the company and make it difficult to provide for these two statutory reserves. [Para 9]
(3) Industrial Disputes Act, 1947 – S.10 - if a question is not raised in the reference it cannot be considered by the Tribunal - while determining the question of bonus the question whether the labourers were employees of the Company and not of an independent contractor which was not included in the reference cannot be considered indirectly. [Para 7]
(4) Industrial Dispute - revision of wages - wage increase demanded - Employer Company nut having the financial capacity to bear the increase - demand rejected. [Para 10]
(5) Industrial Dispute - gratuity demanded by employees of Electricity Supply Company -Company not having financial capacity to bear the burden - fact that Electricity Board was likely to take over the Company has to be taken into consideration – demand for gratuity rejected. [Para 11]
(1) Industrial Disputes Act, 1947 - S. 10 - question not referred to the Tribunal - cannot be considered indirectly.
The question whether the coolies were the employees of the company or of an independent contractor was not raised in the reference and hence that question could not be considered by the Tribunal. [Para 6]
(2) Industrial Disputes Act, 1947 –S. 10, Sch. III - bonus-calculation of gross profit-profit should be taken from profit and loss account and not form balance sheet-revenue balance not be considered.
The Tribunal made the mistake of starling not with the net profits for each year but with the net revenue balance in the balance sheet as if the net revenue balance was net profit. The net profit has to be taken from the profit and loss account and not from the balance sheet and thereafter additions have to be made to arrive at the gross profit. [Para 8]
(3) Industrial Disputes Act, 1947 - S.10, Sch. III - electricity (Supply) Act, 1948 - Ss. 67 & 68 – calculation of net profits for purposes of bonus – contingency reserved and development reserve- amounts have to be taken into account in calculating amount of bonus to be paid.
The contingency reserve and development reserve are statutory reserves which an electric company has to maintain under the Electricity (Supply) Act, (No. 54 of 1948). Even though these may not be considered as prior charges, they have to be taken into account when the tribunal comes to at the figure of bonus after ascertaining the available surplus. The tribunal cannot fix the bonus at such a high figures as to leave insufficient funds in the hands of the company and make it difficult to provide for these two statutory reserves. Therefore though these two statutory reserves may not be considered as prior charges, they have certainly to be taken into account when fixing the amount of bonus after ascertaining the available surplus. [Para 8]
(4) Industrial Disputes Act, 1947 - S. 10, Sch. III - wage in crease-financial position of the employer has to he seen-same applies to claim of gratuity.
Where the financial position of the employer company is such that it cannot bear burden of a further increase in wages the claim of the employees for increase in wages has to be rejected. [Para 9]
When the Company is not in a position to bear the burden of graturity, the claim has to be rejected. [Para 10]
JUDGMENT
Per Wanchoo, J.:--These four appeals by special leave arise out of two references which were disposed of by the industrial tribunal, Madhya Pradesh, by the same order. Two of them are by the management and two by the workmen. We shall deal with them together in the same way as the tribunal has done.
The demands raised by the two references which are still outstanding are these:
(i) Revision of pay-scales with effect from July 1959.
(ii) Bonus for the period 1 January 1958 to 31 March 1959.
(iii) Gratuity at the rate of one month s earnings for each completed year of service.
(iv) Bonus for the year 1959-60.
It may be added that the company had paid bonus for the two periods at 10 per cent of the total earnings. The workmen however claimed that bonus should be paid at the rate of 30 per cent of the earnings.
The tribunal worked out the bonus on the basis of the Full Bench formula and came to the conclusion that nothing further was due to the workmen for the period from 1 January 1958 to 31 March 1959. It however awarded a further bonus at the rate of 10 per cent for the period 1959-60. A question was raised in that connexion as to whether certain coal coolies were also entitled to bonus. The case of the company was that these coolies were not its employees but were the employees of an independent contractor, while the workmen claimed that they were the employees of the company. The tribunal held that there was no reference of the question whether these coolies were the employees of the company or were employed by an independent contractor. Therefore, the tribunal accepted the evidence of the contractor to the effect that they were his employees and rejected the claim made on behalf of these coolies for payment of bonus.
The tribunal then considered the question of revision of wages and in that connexion went into the financial capacity of the company to bear the burden of increase in wages. It found that the profit of the company in the year 1959-60 was Rs. 32,986. It also found that the increase in wage-scales demanded by the workmen would add Rs. 30,000 annually to the wage-bill with a recurring increase of Rs. 5,000 annually on account of increments. It, therefore, held, that the company was not in a financial position to bear the burden of increase in wages. It also compared the wage-scales prevalent in the company with the wage- scales of a similar company in Jabalpur under the same management, and found that they were the same. It also took into account the wage-scales paid by the Madhya Pradesh Electricity Board to its employees at Saugor and on a comparison came to the conclusion that there was no case for increasing the wage-scales. It, however, gave an increase of Rs. 5 per month on an ad hoc basis in the cost of living allowance subject to certain adjustments.
On the question of gratuity the tribunal came to the conclusion that the company had not made consistently progressive profit. It took also into consideration the fact that though the lease of the company expired In 1975, there was some prospect of the electricity board taking over the company even before that. It, therefore, felt that the company would not be in a position to bear the burden of a gratuity scheme.
In effect, the tribunal rejected the demands of the workmen except for extra bonus of 10 per cent for the year 1959-60 and an ad hoc increase in the cost of living allowance. The two parties have appealed against the award in so far as it goes against each.
We shall first take the question of bonus. It has again been urged before us that the coal coolies employed by the so called independent contractor are also entitled to bonus. We, however, agree with the tribunal that the question whether these coolies were the employees of the company or of an independent contractor was not raised in the reference and that question cannot be considered indirectly while determining the question of bonus. The tribunal has accepted the evidence of the contractor who st
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