Judgment

VAIDIALINGAM, J.:- This appeal by certificate, is against the judgment and order dated March 7, 1968, of the Calcutta High Court in Appeal No. 24 of 1964,* holding that the Industrial Tribunal has to calculate the claim for bonus made by the workmen according to the Full Bench Formula, as explained by this Court. The proceedings between the parties had a very chequered career, as will be noted from the facts mentioned later. The dispute between the parties relates to a claim for additional bonus for the years 1957-58 and 1958-59 and for payment of bonus for the years 1959-60 and 1960-61.

2. By order dated December 7, 1946, the Government of West Bengal referred a dispute between the appellant and its workmen for adjudication under Rule 81-A of the Defence of India Rules to the Hon ble Mr. Justice William Mccormick Sharpe. One of the questions that were referred and which has relevance to the present proceedings, was whether a profit sharing bonus scheme should be introduced in all any of the factories mentioned in the order of reference and, if so, on what basis such a scheme be framed. The parties were able to reach an agreement during the proceedings before the Adjudicator and accordingly the same was incorporated in the award dated March 3, 1947. As per the agreement, the workmen were declared entitled to a profit sharing bonus at the rate of two days basic wages for every 1% dividend declared after February 1, 1947, and paid to the ordinary share-holders of the company, Bonus at this rate had to be paid to both the labour and uncovenanted staff. The Government of Bengal by its order dated March 4, 1947, directed that the said award should remain in force and bind the parties for a period of four months and should also continue to be in force thereafter as long as Rule 81-A of the Defence of Indian Rules continued to be in force. This award of Mr. Justice Sharpe will be hereinafter referred to as the McSharpe award.

3. The McSharpe award ceased to be in force after the expiry at the Defence of India Rules. But an Industrial Tribunal, consisting of three Adjudicators, to whom the question of annual bonus along with other matters was referred by the order dated October 31, 1947, of the State Government, gave an award on April 1, 1948, to the effect that the McSharpe award on the basis of the agreement between the parties will continue to govern the question of bonus. This Tribunal rejected the claim of the workmen for an annual profit bonus equal to three months basic wages. In the certified Standing Orders of the company, it was provided in clause 17 that the profit sharing bonus is based on dividends paid to ordinary shareholders of the company and payments are made in accordance with the rules which have been separately published.

4. Later on, the appellant issued bonus shares and this resulted in an increase in the ordinary share capital from Rupees 9.74,625/- in 1947-48 to Rs. 38.98.500/- in 1958-59. The workmen in consequence demanded bonus equivalent to eight days wages for each 1% dividend declared by the company on its ordinary shares. As the appellant was not agreeable to this demand, the State Government by its order dated July 6, 1961, referred to the First Industrial Tribunal for adjudication on the issue relating to "additional bonus for 1957-58 and 1958-59 and bonus for 1959-60 and 1960-61". The union in its written statement claimed that it is entitled to claim six months wages as bonus for each of these years on a proper working out of the percentage at the rate given in the McSharpe award or by applying the Full Bench Formula of the Labour Appellate Tribunal. Accordingly it claimed 118 days pay as additional bonus for the years 1957-58 and 1958-59, after giving credit to the 65 days wages already paid by the appellant. It claimed for the years 1959-60 and 1960-61 six months or 180 day s pay as bonus.

5. The appellant contested the claim of the union on the ground that according to the McSharpe award,