# PODAR PLASTICS(P) LTD v. ITS WORKMEN

- **Citation:** [1964] 6 S.C.R. 15
- **Court:** Supreme Court of India
- **Decided:** 1961-08-26
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/podar-plastics-p-ltd-v-its-workmen-3062
- **Pages:** 8

## Headnote

6 S.C.R. . SUPREME COURT REPORTS
15
action was in two parts and that what the father gifted was
1963
the money and not the property. It would be indeed an
Kanakaral>J-
..i; artificial way of looking at the transaction as was done by
nammal
the trial court as being constituted of two parts. The trans- v. s. L. ~i..tudaliar·
i
action in my judgment is one indivisible whole, and that is,
-
h f th
'd d th
f
· ·
th
· Mudholkar
J ••
t e a er prov1 e
e money or acqumng
e property m ·
the mother's name.
Therefore, in effect it was the father
who purchased the property with the intention of conferring
the benefidal interest solely upon the mother. Such a transaction must therefore amount to a gift.
In that view the
property would not fall under cl. ( d) of s. 10 of the Act
but under cl. (b) of that section. Therefore, the appellant
would be the sole heir of her mother and the non-joinder of
her brothe.Ts would not defeat the >uit so far as she is concerned. In the result I would set aside the decree of the
courts below in so far as the property in question, Beverley
Estates, is concerned and decree the appellant's suit with
respect to it in addition to the property with respect to which
she has already obtained a decree in the courts below. ·I
would further direct that the respondents will pay to the
appellant proportionate costs in all the courts.
ORDER BY COURT
In accordance with the
opinion of the majority the
appeal is dismissed. No order as to costs.
Appellant need
not pay court fees
PODAR PLASTICS(P) LTD
v.
ITS WORKMEN
(P. B. GAJENDRAGADKAR AND K. c. DAS GUPTA Jl)
Industrial
Dispute-Bonus-Deduction according
to Full
Bench
Formula-Wliat priflciple to be followed-Industrial Disputes Act, 1941
(14 of 1947).
An ·industrial Dispute arose between the appellant and its workmen
in respect of the claim made by the workmen (respondents) for bonus
for the year 1959. The respondents claimed that they were entitled IC>
get honus equivalent to three months' salary inclu'ding dearness allowance. The appellant claimed deductions on the basis of the Full Bench
196!
,fodar Plastics (P)
Ltd.
v.
lts Workmen
16
SUPREME COURT REPORTS
Formula. The appellant claimed deduction of Rs. 60.000 by way of
notional remuneration for Mr. K. R. Podar, one of the Directors of the
company. According to the appellant K. R. Podar devoted the whole )"'
of his time to the supervision and management of the appellant concern.
and so, he was entitled to charge remuneration at the rate of Rs. 5,000
a month.
The appellant also made a claim for rehabilitation. On these
facts the Tribunal directed the appellant to pay to the respondents bonus
at the rate of half month's basic wages excluding allowances and overtime for the said year. It is against this award that the appellant has
come to this Court.
Held: (i) that in a _concern like the appellant's if one of the Directors spends his time in supervising
and
managing the affairs of the
concern, he would be entitled to charge a reasonable rerriuneration. But
in the present case Mr. Podar did not actually charge any remuneration.
The working of the Full Bench Formula is no doubt notional in some
respects, but it \Vould not be permissible for the employer to make it
still more notional by introducing claims for prior charges on purely
hypothetical
and
almost fictional basis.
The Tribunal did
not feel
justified in allowing the claim for deduction made by the appellant in
regard to the notional remuneration of Mr. POOar on the ground that
Mr. Podar had not been paid remuneration regularly and it had not
been duly shown in the books of account.
Gujarat Engineering Co. v. Ahmedabad Misc.
Industrial
Workers'
Union, (1961) II L.L.J. 660 and Kodaneri Estate v. Its Workmen, (1960)
I L.L.J. 273, relied on.
(ii) It is not the correct legal position that a second hand machinery
should be rehabilitated only by second hand machinery. But in the
present case the finding of the Tribunal in respect of the
claim for
rehabilitation is based on its

## Text

6 S.C.R. . SUPREME COURT REPORTS
15
action was in two parts and that what the father gifted was
1963
the money and not the property. It would be indeed an
Kanakaral>J-
..i; artificial way of looking at the transaction as was done by
nammal
the trial court as being constituted of two parts. The trans- v. s. L. ~i..tudaliar·
i
action in my judgment is one indivisible whole, and that is,
-
h f th
'd d th
f
· ·
th
· Mudholkar
J ••
t e a er prov1 e
e money or acqumng
e property m ·
the mother's name.
Therefore, in effect it was the father
who purchased the property with the intention of conferring
the benefidal interest solely upon the mother. Such a transaction must therefore amount to a gift.
In that view the
property would not fall under cl. ( d) of s. 10 of the Act
but under cl. (b) of that section. Therefore, the appellant
would be the sole heir of her mother and the non-joinder of
her brothe.Ts would not defeat the >uit so far as she is concerned. In the result I would set aside the decree of the
courts below in so far as the property in question, Beverley
Estates, is concerned and decree the appellant's suit with
respect to it in addition to the property with respect to which
she has already obtained a decree in the courts below. ·I
would further direct that the respondents will pay to the
appellant proportionate costs in all the courts.
ORDER BY COURT
In accordance with the
opinion of the majority the
appeal is dismissed. No order as to costs.
Appellant need
not pay court fees
PODAR PLASTICS(P) LTD
v.
ITS WORKMEN
(P. B. GAJENDRAGADKAR AND K. c. DAS GUPTA Jl)
Industrial
Dispute-Bonus-Deduction according
to Full
Bench
Formula-Wliat priflciple to be followed-Industrial Disputes Act, 1941
(14 of 1947).
An ·industrial Dispute arose between the appellant and its workmen
in respect of the claim made by the workmen (respondents) for bonus
for the year 1959. The respondents claimed that they were entitled IC>
get honus equivalent to three months' salary inclu'ding dearness allowance. The appellant claimed deductions on the basis of the Full Bench
196!
,fodar Plastics (P)
Ltd.
v.
lts Workmen
16
SUPREME COURT REPORTS
Formula. The appellant claimed deduction of Rs. 60.000 by way of
notional remuneration for Mr. K. R. Podar, one of the Directors of the
company. According to the appellant K. R. Podar devoted the whole )"'
of his time to the supervision and management of the appellant concern.
and so, he was entitled to charge remuneration at the rate of Rs. 5,000
a month.
The appellant also made a claim for rehabilitation. On these
facts the Tribunal directed the appellant to pay to the respondents bonus
at the rate of half month's basic wages excluding allowances and overtime for the said year. It is against this award that the appellant has
come to this Court.
Held: (i) that in a _concern like the appellant's if one of the Directors spends his time in supervising
and
managing the affairs of the
concern, he would be entitled to charge a reasonable rerriuneration. But
in the present case Mr. Podar did not actually charge any remuneration.
The working of the Full Bench Formula is no doubt notional in some
respects, but it \Vould not be permissible for the employer to make it
still more notional by introducing claims for prior charges on purely
hypothetical
and
almost fictional basis.
The Tribunal did
not feel
justified in allowing the claim for deduction made by the appellant in
regard to the notional remuneration of Mr. POOar on the ground that
Mr. Podar had not been paid remuneration regularly and it had not
been duly shown in the books of account.
Gujarat Engineering Co. v. Ahmedabad Misc.
Industrial
Workers'
Union, (1961) II L.L.J. 660 and Kodaneri Estate v. Its Workmen, (1960)
I L.L.J. 273, relied on.
(ii) It is not the correct legal position that a second hand machinery
should be rehabilitated only by second hand machinery. But in the
present case the finding of the Tribunal in respect of the
claim for
rehabilitation is based on its appreciation of the evidence letl by the
appellant and that cannot be disturbed having regard to the material
which· is available on the record.
South India Millowners' Association v. Coimbatore District Textile
Workers' Union, (1962) I L.LJ. 223, relied on.
_.
(iii) It would be erroneous to assume
1 that this Court approved of or
affirmed the ad hoc basis adopted by the Tribunal in the case of South
lndia Millowners' Association.
(iv) It 'voufd be unreasonable to suggest that if the employer does
not adduce sufficient evidence to justify his claim for rehabilitation and
the Tribunal is inclined to reject the; evidence which has been adduced~
the Tribunal must nevertheless award some rehabilitation on a purely
hypothetical and im<lginary ad hoc basis. In the present case the employer
ti
.adduced evidence for rehabiJitation anli that was rejected by the Tribunal.
(vl It has been
consistently held by this Court
that
in bonus 11·
calculations the employer is entitled to claim a deduction of the Income·
ta1. as well as wealth tax; but in the present case, there is, no material
t,S.C.R.
SUPREME COURT REPORTS
17
1963
·to determine what the amount of wealth tax charged or paid is, and so,
no relief can be granted to the appellant on that account.
Podar Plastics (P)
CIVIL APPELLATE JURismc1·10N: Civil Appeal No. 496
Ltd. v.
·Of 1963.
Its Workmen
1
Appeal by special leave from the Award dated August
26, 1961, of the Industrial Tribunal, Maharashtra in Reference (IT) No. 43 of 1961.
S. V. Gupte, Additional Solicitor-General of India and
I. N. Shroff, for the appellant.
K. R. Chaudhuri, for the respondents.
December 19, 1963.-The Judgment of the Court was
delivered by:-
GAJENDRAGADKAR J .-This appeal
arises from
an Gajendragadkar /.
Industrial diSQute between the appellant Podar Plastics (P)
Ltd. and the respondents, its workmen, and it has reference
to the claim made by the respondents for bonus for the year
1959. The respondents claim that for the relevant year they.
should get bonus equivalent to three months' salary including dearness allowance. On hearing the parties and on considering the evidence adduced by them, the Tribunal has
directed that the appellant shall pay to the respondents
bonus at the rate of half month's basic wages excluding
allowances and overtime for the said year.
It is against this
award that the appellant has come to this Court by special
leave.
The appellant is a private company and its registered
office is situated at Podar Chambers, Parsee Bazar Street,
i
Fort, Bombay. It owns a factory at Supari Baug Road
where it manufactures plastic products.
The appellant's
case before the Tribunal was that if proper accounts are
made in accordance with the Full Bench Formula, it would
be found that there is no available surplus from which any
bonus can be paid to the respondents. On the other hand,
the respondents urged that the working of the Formula
would show a substantial available surplus from which three
months' wages as bonus can be easily paid. As usual, the
controversy between the parties centered round prior charges
~
which the appellant claimed ought to be deducted from the
gross profits. One of the points of dispute between the
134-159 S.C.-2.
18
SUPREME COURT REPORTS
[1964)
1963
parties was whether depreciation which has to be deducted
P<Hl•r p;;;;;ic• (P) as a prior charge should be statutory depreciation or
Ltd.
notional normal depreciation. The figure of the profit was
11,
.;~rkmen
admitted at Rs. 2 · 70 lacs.
The Tribunal made alternative
calculations, one on the basis that statutory depreciation
G•i•ndra1adk17 1· alone should be deducted, while the other was prepared on ·
the basis that notional normal depreciation as claimed by
the appellant should be deducted.
On the first calculation
the available surplus was found to be Rs. 0 · 44 lac.
On the
alternative calculation, it was found to be Rs. 0 · 33 lac. For
the purpose of this appeal we will accept the latter calculation which is made on the basis that the notional normal
depreciation has to be deducted.
It. has been conceded before us by the learned Addi.
Solicitor-General for the appellant that there are two mistakes in this calculation.
The amount of notional normal
depredation which has been shown as Rs. 0 · 78 lac ought to
be Rs. 0 · 73 lac.
Similarly the amount of income-tax which
is shown as Rs. 0·96 lac ought to be Rs. 0·95 lac.
Thus,
the two mistakes accounting for nearly Rs. 6,000 have
been made in favour of the appellant by the Tribunal in
making this calculation, and that would make the available
surplus as Rs. 0·39 lac; that is .one aspect of the matter
which has to be borne in mind iii dealing with the appeal
before us.
The main point which has been urged before us hy the
learned Addi. Solicitor-General relates to the claim made
by the appellant for the deduction as a prior charge of
Rs. 60,000 by way of notional remuneration for Mr. K. R.
Podar, one of the Directors of the Company.
We
have
already seen that the appellant is a Private Ltd. Co. and
four of the major shareholders are members of the Podar
family; they are: R.A. Podar, G.R. Podar, K.R. Podar and
B.J. Podar; the 5th shareholder is M/s. Podar Trading Co.
Private Ltd., 6th is Jay Agents Private Ltd., 7th is the
National Traders Private Ltd. and the 8th is Ratilal B.
Desai.
According to the appellant, K.R. Podar devoted
the whole of his time to the supervision and management of
the appellant concern, and so, he was entitled to charge
remuneration at th.! rate of Rs. 5,000 a month.
In sup-
•
{
f
6 S.C.R.
SUPREME COURT REPORTS
I9
port of this claim, Mr. Gupta, the Manager of the concern,
- If'3
made an affidavit and offered himself for cross-examination. Podar pT.;ics (P)
He stated that Mr. Podar attends the factory from 9 A.M. to l
Ltd.
P.M. and 2-30 P.M. to 6-30 P.M. In his cross-examination, it
Its ;;,kmen
was brought out that when the previous Director was paid G . d-dk
1
.
.
a Jen raga -ar
•
Rs. 1000 per month as remunerat10n, a resoluhon
had
been passed by the Board of Directors in that behalf; but
no such resolution
has been passed
in regard to
the
remuneration of Mr. K. R. Podar.
Besides, the appellant
itself has urged that Mr. Podar did not actually charge any
remuneration because it was thought that the financial position of the appeUant was n'ot very satisfactory, and so, Mr.
Podar wanted to save expenditure on account of his remuneration.
It may be conceded that in a concern like
the appeUant's if one of the Directors spends his time in
supervising and managing the affairs of 'the concern, he
would be entitled to charge a reasonable remuneration. This
position has not been and cannot be disputed in view of
the decisions of this Court in Gujarat Engineering ClJmpany
v. Ahmedabad Misc. Industrial Workers' Union(').
and
Kodaneri Estate v. Its Workmen and Another('). Relying
on these decisions, it is urged on behalf of the appellant that,
\he Tribunal was in error in not allowing any deduction on
account of remuneration to Mr. Podar.
In our opinion, the appellant cannot seriously quarrel
with the finding of the Tribunal, because it is conceded that
Mr. Podar in fact has not charged any remuneration. The
working of the Formula is no doubt notional in some respects, but we think it would not be permissible for the
employer to make it still more notional by
introducing
claims for prior charges on purely hypothetical and almost
fictional basis. If Mr. Podar had been paid remuneration
regularly and it had been duly shown in the
books
of
account, a claim in that behalf could have been made by
the appellant, and subject to the scrutiny by the Industrial
Tribunal as to reasonableness of the said payment, such a
claim would have been allowed; but if for any reasons Mr.
Podar did not charge any remuneration, it would be unfair
t<i allow a deduction on that account to be made notionally
('J [19611 II L.L.J 660.
(1)
[1960! I L.L.J. 273.
1963
Podar Plastics (P)
Ltd.
v.
Its Workmen
Gajendragadkar J.
20
SUPREME COURT REPORTS
because the working of the Formula is sometimes described
as notional.
The inclusion of such an item solely for the
purpose of depressing the available surplus cannot, in our
opinion, be allowed.
Besides, the Tribunal does not appear to have accepted the evidence for Mr. Gupta and it
has made a significant comment that Mr. K. R. Podar has
himself not stepped into the witness-box to make a claim for
his remuneration.
Mr. Gupta
was asked
whether
Mr.
Podar was going to give evidence, and he answered
the
question in the negative. Therefore, i[ in the circumstances
proved in this case, the Tribunal did not feel justified in
allowing the claim for deduction made by the appellant in
regard
to the notional remuneration
of Mr. Podar,
the
appellant cannot make a serious grievance.
The other point in controversy is in regard to the direction of the Tribunal that the appellant was not entitled to
make any claim for rehabilitation.
It appears that
the
Tribunal was inclined to take the view that since the appellant had begun its business with second-hand machinery,
it was not entitled to make a claim for rehabilitation on the
basis of replacement of the said machinery by brand new
machinery.
In other words, the Tribunal seems to be of
the opinion that in cases where an employer is carrying on
his business with
second-hand
machinery,
rehabilitation
should be calculated on the basis that the said second-hand
machinery would be replaced by second-hand machinery and
not by new machinery. This view has been rejected by this
Court in the case of South India Mil/owners'
Association
and Ors. v. Coimbatore District Textile Workers' Union and
Ors(').
Therefore, the appellant is right in contending that
the approach adopted by the Tribunal in dealing with the
question of rehabilitation is erroneous.
That, however, does not help the appellant because in
the present case. the Tribunal has considered the evidence
given by Mr. Dinshaw on behalf of the appellant in support of its claim that the rehabilitation requirement of the
appellant would be of the order of Rs. 8,84,629.
It is true
that one of the reasons given by the Tribunal is that the
(1) [I9f'] l!L.L.J. 223,
'•
•
6 S.C.R.
SUPREME COURT REPORTS
21
appellant is not justified in making a claim for rehabilita1961
"
tion on the basis that new machinery would be purchased Podar Plastics (P)
by him for rehabilitating his old one; but there are several
Ltd.
other reasons which the Tribunal has discussed and these
Its w:rkmen
reasons indicate that the Tribunal was not satisfied with
--
the accuracy of the statements made by Mr. Dinshaw and Giiiendragadkar l
their reliability.
Incidentally, it appears that the appellant
made a novel claim for rehabilitating his dead stock as· one
of the items under rehabilitation, and the Tribunal has rejected that claim. In the result, the finding of the Tribunal
i
is based on its appreciation of the evidence led
by
the
appellant and that cannot be disturbed having regard to the
material which is available on the record.
The Tribunal
has taken the precaution of adding that if the appellant leads
better evidence in future, its claim for rehabilitation would
have to be judged on the merits and the present decision
will not create any bar against it.
In our opinion, that is
all that can be done in the present appeal.
The learned Addi. Solicitor-General, however, attempted
to argue that the Tribunal should have made some allowance for rehabilitation on an ad hoc basis and in support
of this contention, he has referred us to some of the observations made in the case of South India Millowners' Association('). It appears that in that case, the appellant Mills
had not adduced relevant evidence about the original price
and subsequent depreciation of the machinery prior to its
purchase by the appellant, and so. acting on the evidence
available on the record, the Tribunal adopted some ad hoc
basis.
No grievance was made about the
ntl hoc basis
adopted by the Tribunal; the only
grievance
made was
against certain observations made by the Tribunal that if
the existing machinery is >ccond hand. it should be rehabilitated only by second hand machinery. and this Court held
that the said observations did not represent the true legal
position in the matter.
It would, we think, be erroneous to
assume that this Court approved of or affirmed the ad hoc
basis adopted by the Tribunal in that particular case.
On
what material the said ad hoc basis was adopted is not
known, and it would, we think, be unreasonable to suggest
that if the employer does not adduce sufficient evidence to
(1) [1962] I L.L.J. 223.
22
SUPREME COURT REPORTS
[rg64J
196J
justify his claim for rehabilitation and the Tribunal is inPodar Pla.<tics (P) clined to reject the evidence which has been adduced, the
Ltd.
Tribunal must nevertheless award some rehabilitation on a
v.
Its Workmen
purely hypothetical and imaginary ad hoc basis.
In such
.Gai•nd-;;;,dkar J. a case all that the Tribunal can do is to safeguard the position of the employer by giving him opportunity to adduce
better evidence in future, and that is what the Tribunal has
done in the present case.
An attempt was then made by the learned Addi. Solicitor-General to make a claim for the deduction of the wealth
tax.
It has been consistently held by this Court that in
bonus calculations the employer is entitled to claim a deduction of the income-tax as well as wealth tax; but, in the
present case, there is no material to determine what the
amount of wealth tax charged or paid is, and so, no relief
can be granted to the appellant on that account.
In the result, the appeal fails and is dismissed wi!h
costs.
Appeal dismissed.
BOMBAY UNION OF JOURNALISTS & ORS.
v.
THE STATE OF BOMBAY & ANR.
(P. B. GAJENDRAGADKAR, K. N. WANCHOO AND K. C. DAS
'
GUPTA JJ.)
Industrial Dispute-Reference by Government-Discretion of Govern·
ment-Industrial Disputes Act (XIV of 1947), s. 25F-Scope of-Duty
of Government to make a reference.
The appellants 2 and 3 were working journalists and they 14-:re
retrenched on payment of three months salary in lieu of notice. The
first appellant took up their case and alleged that the retrenchment was
not bona fi.de and they were in fact victimised. On the failure of conci·
liation procee'din.gs a report was submitted to the
State Government
(respondent No. I). After hearing the parties concerned the Govema111t pup<! aa order rofusi•I to refor Iha dispute. The reasons given
J