# [1960] 3 S.C.R. 378

- **Citation:** [1960] 3 S.C.R. 378
- **Court:** Supreme Court of India
- **Decided:** 1957-05-13
- **Case number:** Civil Appeal No. 93 of 1959
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, K. o. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1960-3-s-c-r-378-1620
- **Pages:** 5

## Headnote

Industrial Dispute-Full Bench formula-lncomc:tax payablehd.
•
The workmen of the appellant company claimed four months,
\vages including dearness allo\vancc as bonus for the year 1952,
and retrospective operation of the increased wage scale to be fixed
by the Industrial Tribunal from March l, 1952.
The appellant
agreed to the increased wage scale suggested by the Tribunal but
wanted that it should be linked to some guaranteed production,
and opposed its operation retrospectively on the ground that there
had been eliberate slowing down of production by the workmen
in the previous years. The Tribunal found that there was some
justiffoation in the appellant's contention that there was considerable go-slow which had affected production and ordered that
retrospective effect should be given to its order relating to increase
in wages which was passed on May 13; 1957, from June r, 1956,
and not March l, r952, as claimed by the workmen. The increased
\Vages \Vere not linked to any guaranteed production but it \vas
made clear that the workers would give certain reasonable production to which the workmen agreed. The Tribunal granted five
months' basic wages by way of bonus on the basis of the Full Bench
.formula which is generally applied to these matters.
On appeal
by the Appellant-company by special leave :
Held, that there was no reason for interfei·ence with the order
of the Tribunal fixing the date as June l, 1956, from which the
increased wages should come into force and that the Tribunal had
jurisdiction to award five months' basic wag_es by way of bonus.
For the purpose of the Full Bench formula, the incometax payable has to be deducted on the figures worked out
according to the formula and it is immaterial what the actual
income-tax paid is-whether more or less.
OrvrL APPELLATE JURISDICTION:
Civil Appeal
No. 93 of 1959.
Appeal by special leave from the Award dated
May 13, 1957, of the Industrial Tribunal, Bombay, in
H,eference (I.T.) No. 166 of 1955.
R. J. Kolah, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vuhra, for the appellants.
K. R. Ohaudhury and Janardan Shanna, for the
respondents Nos. l and 2.
•
• -
•
•
...
..
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3 S.C.R. SUPREME COURT REPORTS
379
1960. March 24.
The ,Judgment of the Court waf\
delivered by
WANOHOO, J.-This appeal by special leave raises
two questions, namely, (i) bonus for the year 1952 and
(ii) retrospective operation of the order of the Industrial Tribunal relating to increase in wages. The
appellant is a company manufacturing barrels and
drums at Bombay. There was a dispute between the
appella1'lt and its workmen about a number of matters,
which was referred to the tribunal by the Government
of Bombay on November l 'l, 1955. In respect of the
two matters which are now raised in appeal the workmen claimed (i) four months' wages including dearness
allowance as bonus for the year 1952 and (ii) retrospective operation of the wage-scale to be fixed by the
tribunal from March 1, 1952.
So far as the increase in wages is concerned, the
appellant agreed to the scale suggested by the tribunal
but it opposed the grant of the increased scale retrospectively and also wanted that the increased wages
should he linked to some guaranteed production. The
reason for this was that the appellant felt that there
had been deliberate slowing down of production by
the workmen in the previous years. The tribunal was
qf opinion that there was some justification in the
appellant's contention that there had beell consider~
able go-slow which had affected production. Taking
that into account it ordered that retrospective effect
should be given to its order which was passed on
May 13, 1957 from June 1, 1956. As to the linking of
the increased wages to a certain guaranteed production it found it difficult to lay down any norm itself;
but it made it clear that the increase in wages was
made by it on the basis that the workers would give a
·certain reasonable production and noted that the
workers were agreeable to do th

## Text

1y60
A1arch 24.
378
SUPREME COURT REPORTS
[HJ60]
BHARAT BARREL AND DRUM J\H'G. 00.
PRIVATE LTD.
'V.
GOVIND GOPAL \VAGHMARE AND ANOTHEH,
(P. B. GAJENDRAGADKAR, K. N. WANCHOO and
K. o. DAS GUPTA, JJ.)
Industrial Dispute-Full Bench formula-lncomc:tax payablehd.
•
The workmen of the appellant company claimed four months,
\vages including dearness allo\vancc as bonus for the year 1952,
and retrospective operation of the increased wage scale to be fixed
by the Industrial Tribunal from March l, 1952.
The appellant
agreed to the increased wage scale suggested by the Tribunal but
wanted that it should be linked to some guaranteed production,
and opposed its operation retrospectively on the ground that there
had been eliberate slowing down of production by the workmen
in the previous years. The Tribunal found that there was some
justiffoation in the appellant's contention that there was considerable go-slow which had affected production and ordered that
retrospective effect should be given to its order relating to increase
in wages which was passed on May 13; 1957, from June r, 1956,
and not March l, r952, as claimed by the workmen. The increased
\Vages \Vere not linked to any guaranteed production but it \vas
made clear that the workers would give certain reasonable production to which the workmen agreed. The Tribunal granted five
months' basic wages by way of bonus on the basis of the Full Bench
.formula which is generally applied to these matters.
On appeal
by the Appellant-company by special leave :
Held, that there was no reason for interfei·ence with the order
of the Tribunal fixing the date as June l, 1956, from which the
increased wages should come into force and that the Tribunal had
jurisdiction to award five months' basic wag_es by way of bonus.
For the purpose of the Full Bench formula, the incometax payable has to be deducted on the figures worked out
according to the formula and it is immaterial what the actual
income-tax paid is-whether more or less.
OrvrL APPELLATE JURISDICTION:
Civil Appeal
No. 93 of 1959.
Appeal by special leave from the Award dated
May 13, 1957, of the Industrial Tribunal, Bombay, in
H,eference (I.T.) No. 166 of 1955.
R. J. Kolah, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vuhra, for the appellants.
K. R. Ohaudhury and Janardan Shanna, for the
respondents Nos. l and 2.
•
• -
•
•
...
..
-
3 S.C.R. SUPREME COURT REPORTS
379
1960. March 24.
The ,Judgment of the Court waf\
delivered by
WANOHOO, J.-This appeal by special leave raises
two questions, namely, (i) bonus for the year 1952 and
(ii) retrospective operation of the order of the Industrial Tribunal relating to increase in wages. The
appellant is a company manufacturing barrels and
drums at Bombay. There was a dispute between the
appella1'lt and its workmen about a number of matters,
which was referred to the tribunal by the Government
of Bombay on November l 'l, 1955. In respect of the
two matters which are now raised in appeal the workmen claimed (i) four months' wages including dearness
allowance as bonus for the year 1952 and (ii) retrospective operation of the wage-scale to be fixed by the
tribunal from March 1, 1952.
So far as the increase in wages is concerned, the
appellant agreed to the scale suggested by the tribunal
but it opposed the grant of the increased scale retrospectively and also wanted that the increased wages
should he linked to some guaranteed production. The
reason for this was that the appellant felt that there
had been deliberate slowing down of production by
the workmen in the previous years. The tribunal was
qf opinion that there was some justification in the
appellant's contention that there had beell consider~
able go-slow which had affected production. Taking
that into account it ordered that retrospective effect
should be given to its order which was passed on
May 13, 1957 from June 1, 1956. As to the linking of
the increased wages to a certain guaranteed production it found it difficult to lay down any norm itself;
but it made it clear that the increase in wages was
made by it on the basis that the workers would give a
·certain reasonable production and noted that the
workers were agreeable to do that. It, however, recommended that immediately after the award had
been given, 'an expert should be appointed by agreement, if possible, to go into this question. It also said
that in case it was not possible to appoint an expert
by agreement it would be op({n to the appellant to
appoint one.
·
Bharat Barrel &
Drum Mfg .. Co.
(P) Lid.
v.
Govind G opal
Waghmare
Wanchoo ] .
380
SUPREME COURT REPORTS
[1960]
, 96o
The appellant's contention before us is that the
-
tribunal having found some justification in its contenBharat Barrel & tion that there had been considerable go-slow should
Dru;~tZ~· co. not have given retrospective effect at all to the order
v.
·
relating to the increase in wages. This matter has
Govind Gopal
been considered fully by the tribunal and it came to
Waghma"
the conclusion that increase in wages should be granted from June 1, 1956.
This could hardly be called
Wanchcn f.
retrospective considering that· the reference was made
in November 1955; in any case the tribunal rejected
the claim of the workmen for retrospective operation
for the period of over four years from March 1952 to
May 1!:156 and a good deal of go-slow was practised
during this period. In the circumstances we see no
reason for interference with the order of the tribunal
fixing the date as June 1, 1956, from which the increased wages should come into force.
This brings us to the next question relating to bonus.
The tribunal has awarded five months' basic wages by
way of bonus. The first contention in this connection
is that the workmen had only claimed four months'
basic wages and the tribunal could not have awarded
anything more than what the workmen claimed. This
in our opinion is incorrect. The workmen had claimed
four months' wages including dearness allowance as
bonus.
Five months' basic wages which the tribunal
has allowed are admittedly less than the claim put
forward (namely, four months' wages including dearness allowance). In the circumstances the tribunal
certainly had jurisdiction to award what it has awarded to the workmen.
The next question is whether the tribunal was justified in awarding as much as five months' basic wages on
the basis of the Full Bench formula, which is generally
applied to these matters. The gross profit found by
the tribunal is not challenged, namely, Rs. 5·05 lacis.
The tribunal bas then allowed Rs. I ·36 lacs as depreciation, leaving a balance of Rs. 3·69 lacs.
Deducting
income-tax from this at seven annas in a rupee (i.e.,
Rs. l ·61 lacs), we are left with a balance of Rs. 2·08
lacs. Six per cent. per annum interest on the paid-up
capital along with four per cent. interest on the working capital comes to Rs. 16,000, leaving an avai!a,ble
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3 S.C.R. SUPREME COURT REPORTS
381
surplus of Rs. l ·92 lacs. Out of this, the tribunal has
allowed five months' basic wages as bonus which
according to its calculations comes to Rs. 91,000, leaving Rs. l ·Ol lacs. There will be a rebate of Rs. 40,QOO
on this sum, leaving a total of Rs. l ·41 lacs with the
appellant. On these figures, the bonus awarded by
the tribunal cannoli be interfered with.
The appellant, however, draws our attention to two
~ircumstances in this connection. In the first place it
urges that the tribunal has not taken into account
anything for rehabilitation. But it may be mentioned
that the appellant had proved no rehabilitation amount
as such. What it had done was to appropriate Rs. 3·16
lacs towards depreciation, which of course was not the
proper amount of notional normal depreciation, which
is allowable under the formula. Our attention is
drawn, however, to the figures filed by the workmen
in Ex. U-4 in which Rs. 40,000 has been allowed
towards rehabilitation. Even accepting this concession by the workmen and deducting it from the figures
given by us above, the appellant would still be left
with Rs. l ·Ol lacs after paying five months' basic
wages as bonus. There is thus no reason to interfere
with the award of bonus on this ground.
Lastly it is urged that according to the income-tax
assessment which was actually made in this case
sometime after the order of the tribunal, the appellant
has been assessed to income-tax amounting to Rs. 2·35
lacs. The appellant claims that it should be allowed
this entire amount and not the notional figure calculated by us, namely, Rs. l ·61 lacs as incoine-tax. We
are of opinion that for the purpose of the Full Bench
formula, the income-tax payable has .to be deducted
on the figures worked out according to the formula
and it is immaterial what the actual income-tax paid
is-whether more or less. In this particular case, the
income-tax appears to be more because certain items
which were challenged by the workmen but were
allowed as proper expense by the tribunal have apparently not been allowed as proper expense by the
income-tax department. The industrial tribunal, however, is not concerned directly with what the income
49
I960
Bharat Barrel &
Drum Mf:. Co.
(P) Ltd.
v.
Govind Gopal
Waghmare
Wanchoo j .
Bharat Barrel &
Drum Mfg. Co.
(P) Ltd.
..
Govind Gopal
Waghmare
Wanchoo ].
r960
382
SUPREME COURT REPORTS
[1960]
tax authorities assess as actual income-tax in a particular year; it is concerned with working out the Full
Bench formula in accordance with its notional calculations and this is what has been done in this case.
There is no ground therefore for interference with the
award of bonus for this reason either.
We therefore dismiss the appeal, but in the circumstances pass no order as to costs.
Appeal dismissed.
B. N. ELIAS AND CO., LTD., EMPLOYEES'
UNION AND OTHERS
v.
B. N. ELIAS & CO., LTD., AND OTHERS.
(P. B. GAJENDRAGADKAR, K. N. w ANOHOO
and K. C. DAS GUPTA, JJ.)
Industrial Dispute-Bonus-Implied term of agreement or
condition of service-Ex gratia payments-Cttstomary bonus- -Pnja
bonus.
Since 1942 the respondents had been making ex gratia payments to their employees (appellants) in addition to wages and
salaries, bnt these were not regular and in 1956, no ex gratia
payments were made at all. The appellants claimed that their
right to be paid bonus had become an implied term of agreement
or a condition of service and, at any rate, it should be paid as
customary bonus, and relied on the case of The Graham Trading
Co. (India) Ltd. v. Its Workmen, [1960] l S.C.R. 107. The evidence showed that though the payments were made from 1942
to 1952 it was made clear every time that the payments were
made as ex gratia:
Held, (1) Where payments are made to workers ex gratia
and are accepted as such, it is not possible to imply a term of
service on the basis of an implied agreement to pay bonus.
(2) that there cannot be a customary payment of bonus
between employer and employee where terms of service are
governed by contract, express or implied, except where the bonus
may be connected with a festival, whether Puja in Bengal or
some other equally important festival in any other part of the
country.
The Graham Trading Co. (India) Ltd. v. Its Workmen, [1960] l
S.C.R. 107, explained.
(3) that for the year 1956 one month's basic wage should be
paid as Puja bonus to the subordinate staff as it has become
customary and traditional in the respondents' concerns.
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