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SUPREME COURT OF INDIA
C.A. VAIDIALINGAM AND K.K. MATHEW, JJ.
Indian Oxygen Ltd. etc., Appellants
Versus
Their Workmen etc., Respondents. All India Trade Union Congress, Intervener.
Civil Appeals Nos. 415, 813 and 1302 of 1967, D/- 9-12-1971.
Advocates appeared
Mr. G. B. Pai, Sr. Advocate (Mr. D. N. Mukherjee, Advocate with him), for Appellant ( In C. A. No. 415 of 1967) and Respondent No. 1 (In C. As Nos. 813 and 1302 of 1967). Mr. Janardan Sharma and Miss Indira Jaisingh, Advocates, for Respondents No. 1 (In C. A. No. 415 of 1967), Appellants. (In C. A. No. 813 of 1967) and Respondent No. 2 (In C. A. No. 1302 of 1967), Mr. K. R. Chaudhuri Advocate, for Respondent No. 3 (In C. A. No. 415 of 1967), M/s. C. L. Dudhia and C. G. Nadkarni, Advocates and M/s. K. L. Hathi and P. C. Kapur, Advocates of M/s. Hathi and Co., for Respondent No. 4 (In C. As. Nos. 415 and 813 of 1967) and Appellants (In C. A. No. 1302 of 1967), Mr. Janardan Sharma, Advocate, for Intervener.
Payment of Bonus Act, 1965 – Section 4 and 6, 6 ( c), 1 (4), 4 (b), 5, 2, 7, 15 - Finance Act, 1966 - Income-tax Act, 1961 - Companies Act, 1956 - Company - Workmen - Bonus - Rate of Total Annual Wages - Whether workmen are entitled to a higher bonus than 17.5 per cent for year as offered by management If so, what should be quantum of bonus for said year - Whether provision for bonus in question in sum of Rupees 30,00,000 and bonus paid to employees in respect of previous accounting year, namely, Rupees 25,21,347, which have been added in Company s statement in computing gross-profits under Act should or should not be deducted from gross-profits before income-tax is computed - Whether concept of notional tax liability adopted for a long time has been altered or given go-bye by Parliament – Held, In chief examination he has stated that under Act amount claimed appellant as doubtful debts has to be added back for ascertaining gross-profits - He has further stated that under Income-tax Act, Provision for doubtful debts cannot be deducted in computing net profits - On this point, so far as Court could see there is no cross-examination on behalf of Company - Tribunal was justified in holding that appellant was not in order in deducting Rs. 55,127 under head "doubtful debts" as an item of expenditure - It was perfectly justified in adding back this amount in computing gross-profits - So far as Plant transfer charges of Rs. 72516/- is concerned, it is seen that though this was claimed as a revenue expenditure, Mr. K. B. Bose, appearing for appellant, had conceded before National Tribunal that this amount is an item of capital expenditure which should be added back - This concession has been recorded in Award and it has not been, challenged before Court on behalf of appellant - So far as calculation of Surtax is concerned, Tribunal has held that method of calculation made by Company in Ex. 4 is correct, but it has to be altered because Income-tax calculated by it after deducting bonus was less - Now, that Court is accepting claim of appellant that bonus should not be deducted for calculating direct taxes, it follows that view of Tribunal in this respect is not correct - But, in Court opinion, Tribunal was justified in holding that in calculating direct taxes, bonus for accounting, though paid during accounting year should not be taken into account, is correct - As bonus paid for previous accounting year from and out of profits of said previous year does not come into picture - Even on basis of rejection of claim of appellant that bonus paid for previous accounting year has also to be taken into account for purposes of calculation of direct taxes, there is no controversy that on a proper calculation, bonus to which workmen will be entitled, will be very much less than 17.58 already given by Company - Hence it is not necessary for Court to recompute figure, as appellant has agreed not to claim a refund or in any other manner adjust or collect excess bonus that has been already paid - This direction has been given on its finding that allocable surplus works out at more than 20 of Annual Wage Bill - If that finding is correct, direction regarding set on will be justified under S. 15 of Act - But Court have already held that parties are agreed that on a proper computation, on basis, indicated by Court in earlier part of judgment, even bonus already paid at 17.58 , will be on the high side, it follows that direction of National Tribunal regarding set on cannot be accepted - In view that Court have taken about appellant s claim regarding direct taxes, it has been represented by counsel appearing for various Unions that they are not pressing their appeals - Appeals dismissed.
Judgment
VAIDIALINGAM, J.:- All these appeals, by special leave, are directed against the Award dated January 20, 1967 of the National Industrial Tribunal, Calcutta in Reference No. NIT-1 of 1966. Civil Appeal No. 415 of 1967 is by the Company regarding the disallowance of certain items by the Tribunal for arriving at the available and allocable surplus for the accounting year 1964-65.
2. Civil Appeals Nos. 813 and 1302 of 1967 are by the two unions representing the workmen, against that part of the Award rejecting the claim of the Unions for adding back certain items for the purposes of calculating the rate of bonus to be paid by the appellant company.
3. As mentioned earlier, the year of account is 1964-65, which is, October 1, 1964 and ending September 30, 1965. The appellant Company was incorporated under the Indian Companies Act, in 1935 and was made into a public company in 1958. It is a venture of the British Oxygen Company incorporated in England and the English Company still holds a little over 66 of the shares of the Indian Company. The main products of the Company are production of industrial gases like oxygen, dissolved acetylene,. nitrogen and hydrogen and also electrodes and welding equipment and medical equipment. The Company has been paying bonus to its workmen from 1948 and since then it has been paying bonus by agreements with the union. The bonus, so paid, has been more or less at five months basic wages subject to a minimum and maximum as per the agreement. For the year in question, 1964-65, there was no agreement, as the Payment of Bonus Act, 1965 (hereinafter to be referred as the Act) came into force. There is no controversy that this is the first accounting year, in respect of which the bonus is to be paid under the Act.
4. The accounts of the Company were passed at the Annual General Meeting held on February 12, 1966. The Company calculated bonus at the rate of 17.58 of the total annual wages or salary plus Dearness Allowance and declared the said amount payable by notice dated March 23, 1966. The Company originally worked out the allocable surplus under the Act for the said year at Rs. 30,35,958. As the sum of Rs. 1,72,69,770 was the total salary and wages including Dearness Allowance payable for the said year, the allocable surplus worked out at 17.58 of the said total wage bill and hence bonus was declared at that rate.
5. The Unions protested against the rate of bonus declared by the Company and demanded a substantial increase in the quantum of bonus. The claim by the Indian Oxygen and Acetylene Employees Federation was for payment of bonus equal to eight months basic wages subject to a minimum of Rs. 400/-. Another union, National Federation of Indian Oxygen Workmen, Jamshedpur, claimed bonus at the maximum rate of 20 provided under the Act. A third union, also the Bombay Labour Union, claimed bonus at the maximum rate of 20 . A fourth union, Indian Oxygen Employees Union of Rajawadi, Bombay, demanded bonus at 25 of the total earnings or at six months basic wages, whichever was higher.
6. As attempts at settlement failed, a strike notice was given by some of the Unions. Originally, there was a reference of the dispute by the Government of West Bengal to a tribunal. Later on, this order of reference by the State Government was cancelled and the Central Government by order dated July 7, 1966, referred the dispute for adjudication to the National Industrial Tribunal at Calcutta. The question referred was as follows:
"Whether the workmen are entitled to a higher bonus than 17.5 per cent for the year 1964-65 as offered by the management? If so, what should be the quantum of bonus for the said year?"
7. Though the question referred was regarding the claim for higher bonus than 17.5 per cent, all parties were agreed that the appellant Company had actually offered and paid as bonus for the said year at 17.58 per cent. It is on this basis that the dispute also was adjudicated by the National Industrial Tr
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