1. Industrial dispute concerning claims for additional bonus and the legality of a workman's dismissal. (Para 1 )
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1962 Supreme(SC) 327
SUPREME COURT OF INDIA
A.K.Sarkar : K.N.Wanchoo : P.B.Gajendragadkar
Hamdard Dawakhana Wakf
Versus
Its Workmen
Case No. : 199 of 1962
Date of Decision : 10/15/62
Advocates Appeared: Daphtary C.K. : Dapthary C.K. : Iyengar B.R.L. : Kishore Brij Bans : Mehta K.B.
Advocates:
B.R.L.Iyengar, Brij Bhusan Kishore, C.K.DAFTARY, K.B.MEHTA
B.R.L.Iyengar, Brij Bhusan Kishore, C.K.DAFTARY, K.B.MEHTA
Bonus calculations under the Full Bench formula must use notional normal depreciation. A domestic enquiry finding is 'perverse' only if unsupported by evidence or contrary to the entire body of evidence, not merely because the tribunal prefers a different conclusion based on the same evidence.
Headnote:(A) Industrial Disputes Act - Bonus - Full Bench Formula - Notional normal depreciation vs. actual depreciation - In making calculations under the Full Bench formula, industrial adjudication must take into account notional normal depreciation and not the actual depreciation shown in the profit and loss account. (Para 7)
(B) Industrial Disputes Act - Dismissal - Perversity of finding - A finding recorded in a domestic enquiry is characterized as perverse only if it is shown that such a finding is not supported by any evidence, or is entirely opposed to the whole body of the evidence adduced before it. An industrial tribunal is not justified in re-weighing the evidence for itself and determining the question of perversity in light of its own finding of fact. (Para 10)
(C) Industrial Disputes Act - Natural Justice - Domestic Enquiry - Where a fair enquiry has been held and a report submitted to the management, the manager is not bound to hear the workman again before passing the final order of dismissal. (Para 12)
(D) Industrial Disputes Act - Victimization - Once it is held that a workman was guilty of misconduct and the conclusion is not perverse, the dismissal must be upheld even if the workman is an active member of a union not favored by the employer. (Para 12)
Facts of the case:
An industrial dispute arose between an employer and its workmen regarding a claim for additional bonus for a specific calendar year and the dismissal of a workman following a quarrel during duty hours. The industrial tribunal ordered the payment of additional bonus based on the Full Bench formula and directed the reinstatement of the dismissed workman, holding that the dismissal was unjustified, perverse, and an act of victimization due to the workman's union activities.
Findings of Court:
The court found that the tribunal erred by allowing actual depreciation instead of notional normal depreciation, which necessitated a reduction in the available surplus for bonus calculation. Regarding the dismissal, the court held that the manager's decision was based on evidence and the workman's blemished past record, and therefore was not perverse. The court further held that the requirements of natural justice were satisfied by the conduct of a fair enquiry.
Issues: Whether the tribunal was correct in using actual depreciation instead of notional normal depreciation for bonus calculation; whether the manager's finding leading to the dismissal of the workman was perverse; and whether the dismissal constituted an act of victimization.
Ratio Decidendi: Notional normal depreciation is the correct measure for calculating available surplus under the Full Bench formula. A finding is not perverse simply because a tribunal would have reached a different conclusion; perversity requires a total lack of evidence or evidence that completely contradicts the finding. Proven misconduct justifies dismissal regardless of the employee's union affiliation, provided the enquiry was fair.
Result: Appeal partly allowed. The award as to bonus is modified and the order of reinstatement of the workman is set aside.
Legal Category Hierarchy
Table of Contents
2. Dispute over bonus surplus calculations regarding income tax and depreciation, and whether a dismissal was perverse or constituted victimization. (Para 6 , 7 , 10 , 12 )
3. Notional normal depreciation applies to bonus calculations; findings are perverse only if unsupported by evidence or contrary to the entire body of evidence. (Para 7 , 10 )
4. Industrial tribunals cannot deem a manager's finding perverse by re-weighing evidence to reach a different conclusion on the merits. (Para 10 )
5. Appeal partly allowed; bonus award modified and order of reinstatement set aside. (Para 13 )
6. What type of depreciation is considered when calculating available surplus under the full bench formula for bonus?
The court held that industrial adjudication must take into account notional normal depreciation rather than the actual depreciation shown in the profit and loss account. (Para 7 )
7. When is a finding in a domestic enquiry considered perverse by an industrial tribunal?
A finding is characterized as perverse only if it is shown that such a finding is not supported by any evidence, or is entirely opposed to the whole body of evidence adduced before it. (Para 10 )
8. Can an industrial tribunal set aside a dismissal by re-weighing evidence to reach its own conclusion on the merits?
No. A tribunal is not justified in re-weighing evidence to determine perversity; it cannot label a manager's conclusion perverse simply because the tribunal is inclined to take a contrary view. (Para 10 )
9. Is a manager required to grant a personal hearing to a workman after a fair domestic enquiry report is submitted?
No. Once a fair enquiry has been held, the requirements of natural justice do not make it necessary for the manager to hear the workman again before passing the final order. (Para 12 )
Judgment
P.B.Gajendragadkar, J.
(1) THIS appeal by special leave aries oat of an industiral dispate .between the Appellant Hamdard Dawakhana Wakf and the respondents, its workmen. On 20/04/1961 the Chief Commissioner, Delhi, referred two items of dispute between the parties to the adjundication of the industiral tribunal at New Delhi. These items were in regard to the claim for additional bonna made by the respondents for the year 1969 and in regard to the grievance made by them in respect of the diamissal of Shamsul Zaman. The tribunal haa ordered that the appellant abonid pay to each and every workman of the Hamdard Dawakbana who worked In the calendar year 1959 additional bonaa equivalent to the one-third of his earninga by way of basic wagea for the said year. It haa also held that the order of dismissal passed against Shamaal Zaman was unjustified and so. It has directed the appellant to reinstate him in service without break In the continuity of his service. Back-wages daring the period of hia dlamlaal have, however, not been allowed to the workman. In the present appeal, the appellant ohallenges the correctness and propriety of both the directions given by the award.
(2) HAMDARD Dawakbana, the appellant, was originally established in a modest way in 1906 by Hakim Haflz Abdal Majld. It was then manufacturing and selling Indigenous _taiple and compound medicines. On the death of Hakim Haflz Abdul Majld, his heirs conducted the aald business till 1948. On or about 28 Auguat 1948, the aald heirs and successors settled the said business with all its assets, goodwill, etc., including the trade marks, on an Irrevocable wakf with the object that the income from the said trust should be utilized for the advancement, reform and development of the indegenous system of medicine and for affording medical, educa tion and social relief to deserving people In the country.
(3) UNDER the terms of the wakf, the business is to be managed by at least one and no more than two mutawallis Provision is made for the remuneratlon of the said mutawallis. The said remuneration la in addition to the " khandani " income. These mutawallis have to be appointed from the heira and successors of the settlors. The net profits of the appellant are determined under Cl. 83 of the wakfnama , the terms and conditlons of the wakf require that the appellant should set apart oneeight of the net profits towards the reserve fund; one-fourth of the balance la to be apent for the personal and family benefit of the aettlora-It la called khawbanl income; the balance of three-fourths ie to be apent on objects of charity and general and public utility as well as for the Individual and collective needs of the community and the country.
(4) IT appears that in or about 1968, the appellant framed a scheme for the payment of bonus to Its employees, and in acoordance with the aald acheme, about Ra. 70,000.00 have been paid by the appellant to the respondents for the relevant year. The respondents, however, urged that the appellant was as industry within the meaning of the industrial Disputes Act and that under the full bench formula they were entitled to much larger amount of bonus for the relevant year. That la bow the dispate about the bonaa arose between the parties.
(5) IN deciding this dispute, the tribunal has applied the full bench formula, baa made deductions In respect of four prior charges and baa held that the available surplus for the relevant year Is Ra. 6,12,600. Out of this available surplus. It baa ordered that a lakh of rupees should be paid by the appellant to the reapondenta by way of additional bonus. In other words, the tribanal thought that the total amount of bonue to which the respondents were entitled waa Rs. 1,70,000.00.
(6) ON behalf of the appellant, the leaned Solloltor-General contended that the trbunal waa In error in awarding to the appeliant by way of prior charge Ra. 68,000.00 only under the heading "Incomet
