Judgment

P. JAGANMOHAN REDDY, J. :- This Appeal is by Special Leave against the Award of the Industrial Tribunal. Rajasthan directing the payment of a bonus of Rs. 1,21,000/- apart from an amount of Rs. 90,000/- already disbursed to the workmen of the Appellant for the year 1962-63. The dispute for the bonus year beginning 1st July 1962 and ending 30th June 1963 was raised by the workmen because the Company which had admittedly made profits, did not pay them a bonus though a gratuity of one month was given to them. The following dispute was therefore referred to the Tribunal.

"Whether workmen of M/s. J. K. Synthetics Ltd. Kota are entitled to any bonus for the year 1962-63 and whether payment of one month s wages as gratuity by the management can be regarded as payment towards bonus for the year in question?"

2. The Mazdoor Union (hereinafter called the Union ) on behalf of the Workmen contended that on the basis of the calculations of available surplus they were entitled to a bonus of 60 per cent, in accordance with the bonus formula which will entitle them to a 5 months wages apart from the one month s wages already paid to them. The first statement of computation filed on behalf of the workers was obviously incorrect because it did not take into account the various prior charges such as Income-tax, return on reserves, rehabilitation reserve etc. which are deductible under the Full Bench formula as approved and accepted by this Court from time to time. It therefore filed another revised return showing an available surplus of Rs. 5.34 lakhs. The management on the other hand challenged the validity of the claim as according to it there was no available surplus for distribution even though they had already paid one month s bonus wrongly styled as gratuity. The calculations given by it were also found to be equally wanting. As such it filed a revised calculation showing a net deficit of Rs. 72.35 lakhs. It may however, be mentioned that as pointed out by the Tribunal, there was no dispute with regard to any of the eight items which comprised the computation of gross profits amounting to Rs. 62.16 lakhs. The Union also did not dispute the deduction of interest on debentures of Rs. 0.06 lakhs; share transfer fee of Rs. 0.05 lakhs; the notional normal depreciation of Rs. 30.57 lakhs; and the return on share capital of Rs. 7.50 lakhs. It had however challenged the deduction of Rs. 4.1 lakhs received as dividend on shares as extraneous income which was being claimed as a deduction by the management. It also disputed an amount of Rs. 1.11,000/- shown as return on reserves employed in the business and Rs. 75.89 lakhs shown as the annual share required for rehabilitation. The method of calculation of income-tax amounting to Rs. 15.23 lakhs was also objected to. The four items upon which the Tribunal was called on to adjudicate therefore were ; (1) Deduction of Rs. 4.10 lakhs received as dividend on shares from the gross profits as extraneous income; (2) Rs. 1,11,000/- as return on reserves employed in business; (3) Rs. 75.89 lakhs as annual share required for rehabilitation, and (4) Rupees 15.23 lakhs towards Income-tax.

3. With respect to the first issue the Tribunal felt that even though there was share capital available to the Appellant, instead of utilising it as working capital it had borrowed amounts to work the Nylon Factory for which they had to pay an interest of over Rs. 5 lakhs. In these circumstances it disallowed the claim for deduction on the ground that it would be unfair to allow the management to treat the income from Investments as extraneous income and still reduce the profits by raising loans and pay interest resulting in demunition of the surplus. On the second issue the objection of the Union for a deduction of Rs. 1.11. lakhs as return on reserves employed as working capital was disallowed on the ground that the statement M. W. 2/1 produced by Talwar, established that the excess of liability over the assets was util