# THE SUPREl\IE COURT REPORTS THE MANAGEMENT OF MARINA HOTEL v. THE WORKMEN

- **Citation:** [1962] 3 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** K. N. Wanchoo, K. C. Das Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-suprel-ie-court-reports-the-management-of-marina-hotel-v-the-workmen-2441
- **Pages:** 10

## Headnote

Industrial Dispute-Bonus-Hotel workmen getting service
charges and tips-If disentitled to get bonus-Casual-cum-sickness
leave-Amount of leave-Delhi Shops and Establishments Act,
1.954 (Delhi 7 of 19-54 ), s. 22.
The award made by
the
Industrial
Tribunal, to
which the dispute between the appellant, a hotel in new Delhi,
and its workmen was referred, was challenged by the appellant
on the grounds inter alia (1) that the workmen got a share
in the service charges and aha some amount by way of tips
from the customers and so no bonus could be awarped to them,
and (2) that the Tribunal was not justified in awarding 15
days casual-cum-sickness leave in view of the fact that s. 22 of
the Delhi Shops and Establishments Act, 1954, provided only
for a maximum of 12 days for such leave.
It was not disputed
that the workmen in the present case had contributed to the
earning of profits for the years in question, that on a consideration of the wages paid to the workmen by the appellant there
was a wide gap between their existing v.·ages; and the living
wages, and that the amounts received through the distribution
of service charges and tips were quite inadequate to bring the
wages to the level of a living wage.
Held, that it is well-settled that bonus is paid to workmen
out of the available surplus of profits in order to fill in the gap
between the existing wage and the living wage, provided that
~
the workmen have contributed to the earning of profits, and
that, in the present ca~e, if there was an available surplus of
profits in accordance with the Full Bench formula, the workmen
would be entitled to bonus.
Voltas Limited v. Its Workmen, (1961) 3 S. C.R. 167,
distinguished.
Held, further, that the Tribunal was in error in awarding
15 days' casual-cum-sickness leave contrary to the provisions of
•
s. 22 of the Delhi Shops and Establishments Act
1954 and
that the amount of leave must be reduced to 12 d~ys as piovi-
<;led in the Ac(.
·
1961
4•11"•1 4.
1981
Tht Mana,,ment of
.Varina Hotll
v.
Th. ll'orkmm
"'""",,.. J.
2
SUPREME OOURT REPORTS
[1962]
MeMTs Dalmia Cement (Bharat) LimitR,d, New Delhi v.
Their Workmen, A. I. R. 1960 S. C. 413, followed.
CIYIL APPELLATE ,JURISDICTION : Civil Appeal
~o. 393 of 1960.
Appeal by special leave from the Award dated
July 1, 1958, of the Industrial Tribunal, Delhi, in
I.D. No. 9!l of 1958.
S. I'. Varma, for the appellant.
Jcm<1rdrm Shar111<1, for the respondent.
1961. August 4.
Tlw .J1Hlgment of the Court
was delivered by
WA:xcnoo, J.-This is an appeal by special
leave in an industrial matter. There was a clisputc
between the appellant, namely, the l\Iarina Hotel,
New Delhi, and its workmen, which was referred
for adjudication to the Industrial Tribunal, Delhi.
The matters in dispute comprised a number of
items ; but in the present appeal we arc concerned
only with the following :-
1.
Bonus for the years 1953-54 and
1954-55.
2.
Leave.
3.
Provident Fund.
4. Scales of Pay.
5.
Dearness Allowance.
We shall <lea I with these pointB one by one.
Bonus.
The first contention of the appellant in this
regard is that as the workmen get a share in the
service-c·harges and also some amount by way of
tips from the customers, no bonus can be awarded
to them. Reliance in this connection jg placrnl on
the obsen·11tio11s of thi:i Court in l'olta .. ~ Limil/!d v.
11.8 Workme11 ('),where in dealing with salesmen it
(lJ [1961] 3 S. C.R. IGi.
•
•
-
-
3 S.C.R.
SUPREME COURT REPORTS
3
"' was said that salesmen being paid commission on
sales had already taken a share in the profits of
the appellant on a fair basis and therefore there
was
no justification for granting them further
bonus out of the available surplus of profits. The
contention is that the workmen of the appellant
also get a share in the profits on the distribution of
~ service charges among them and therefore they are
not entitled to any further bonus. Now it is wellsettled that bonus is paid to workmen out of the
available surplus of profits in order to fill in the
ga

## Text

THE SUPREl\IE COURT REPORTS
THE MANAGEMENT OF MARINA HOTEL
v.
THE WORKMEN
( K. N. WANCHOO and K. C. DAS GUPTA, JJ.)
Industrial Dispute-Bonus-Hotel workmen getting service
charges and tips-If disentitled to get bonus-Casual-cum-sickness
leave-Amount of leave-Delhi Shops and Establishments Act,
1.954 (Delhi 7 of 19-54 ), s. 22.
The award made by
the
Industrial
Tribunal, to
which the dispute between the appellant, a hotel in new Delhi,
and its workmen was referred, was challenged by the appellant
on the grounds inter alia (1) that the workmen got a share
in the service charges and aha some amount by way of tips
from the customers and so no bonus could be awarped to them,
and (2) that the Tribunal was not justified in awarding 15
days casual-cum-sickness leave in view of the fact that s. 22 of
the Delhi Shops and Establishments Act, 1954, provided only
for a maximum of 12 days for such leave.
It was not disputed
that the workmen in the present case had contributed to the
earning of profits for the years in question, that on a consideration of the wages paid to the workmen by the appellant there
was a wide gap between their existing v.·ages; and the living
wages, and that the amounts received through the distribution
of service charges and tips were quite inadequate to bring the
wages to the level of a living wage.
Held, that it is well-settled that bonus is paid to workmen
out of the available surplus of profits in order to fill in the gap
between the existing wage and the living wage, provided that
~
the workmen have contributed to the earning of profits, and
that, in the present ca~e, if there was an available surplus of
profits in accordance with the Full Bench formula, the workmen
would be entitled to bonus.
Voltas Limited v. Its Workmen, (1961) 3 S. C.R. 167,
distinguished.
Held, further, that the Tribunal was in error in awarding
15 days' casual-cum-sickness leave contrary to the provisions of
•
s. 22 of the Delhi Shops and Establishments Act
1954 and
that the amount of leave must be reduced to 12 d~ys as piovi-
<;led in the Ac(.
·
1961
4•11"•1 4.
1981
Tht Mana,,ment of
.Varina Hotll
v.
Th. ll'orkmm
"'""",,.. J.
2
SUPREME OOURT REPORTS
[1962]
MeMTs Dalmia Cement (Bharat) LimitR,d, New Delhi v.
Their Workmen, A. I. R. 1960 S. C. 413, followed.
CIYIL APPELLATE ,JURISDICTION : Civil Appeal
~o. 393 of 1960.
Appeal by special leave from the Award dated
July 1, 1958, of the Industrial Tribunal, Delhi, in
I.D. No. 9!l of 1958.
S. I'. Varma, for the appellant.
Jcm<1rdrm Shar111<1, for the respondent.
1961. August 4.
Tlw .J1Hlgment of the Court
was delivered by
WA:xcnoo, J.-This is an appeal by special
leave in an industrial matter. There was a clisputc
between the appellant, namely, the l\Iarina Hotel,
New Delhi, and its workmen, which was referred
for adjudication to the Industrial Tribunal, Delhi.
The matters in dispute comprised a number of
items ; but in the present appeal we arc concerned
only with the following :-
1.
Bonus for the years 1953-54 and
1954-55.
2.
Leave.
3.
Provident Fund.
4. Scales of Pay.
5.
Dearness Allowance.
We shall <lea I with these pointB one by one.
Bonus.
The first contention of the appellant in this
regard is that as the workmen get a share in the
service-c·harges and also some amount by way of
tips from the customers, no bonus can be awarded
to them. Reliance in this connection jg placrnl on
the obsen·11tio11s of thi:i Court in l'olta .. ~ Limil/!d v.
11.8 Workme11 ('),where in dealing with salesmen it
(lJ [1961] 3 S. C.R. IGi.
•
•
-
-
3 S.C.R.
SUPREME COURT REPORTS
3
"' was said that salesmen being paid commission on
sales had already taken a share in the profits of
the appellant on a fair basis and therefore there
was
no justification for granting them further
bonus out of the available surplus of profits. The
contention is that the workmen of the appellant
also get a share in the profits on the distribution of
~ service charges among them and therefore they are
not entitled to any further bonus. Now it is wellsettled that bonus is paid to workmen out of the
available surplus of profits in order to fill in the
gap between the existing wage and the living wage
provided the workmen have contributed to the
earning of profits. It is not disputed that the
workmen in the present case have contributed to
the earning of the profits ; nor can it be disputed
on a consideration of the wages paid to the workmen by the appellant that there is a wide gap between their existing wage and the living wage. In
the circumstances, if there is an available surplus
of profits in accordance with the Full Bench formula, the workmen would be normally entitled to
bonus.
The appellant, as we have already mentioned,
relies on the obsen·ations of this Comt in the case
of Valtas Limited (1).
However, we are of opinion
that those observations cannot help the appellant.
It cannot be disputed that even taking into account
the amount received by the workmen through distri-
, bution of service charges and tips, there is still a gap
between their existing income and the living wage.
The observations on which reliance is being placed
on behalf of the appellant were made in a different
context altogether. When dealing with salesmen
of Valtas Limited (1) this Court pointed out that
the commission of salesmen on
an
a,·erage
worked out to about Rs. 1,000 per month and
-therefore their total emoluments wore quite adequate. It was in that context that the observ:Je·
( lJ
[l 961] 3 S. C.R. 191,
1il/;1
The .Management of
Marina Hotel
v.
The Workmen
TVanchOo J.
1981
Th•M-mlof
M orina Hot.I
v.
Tho Work...,.
Wan<lmJ.
4
SUPREME COURT REPORTS
[1962]
tions in question on which reliance has been placc<l ~
were made. Besicks, salesmen in that case were
a small part of the total number of workmen of
Voltas Limit.eel and that was the ren.son why this
Court o bscrvcrl that as the salesmen had al~en,dy
taken a slrnre in the profits of the n,ppcllant on a
fair basis as contrasted with the majority of the
other workmen there was no justification for -
granting them further bonus out of the ava.ilablo
surplus.
The observations therefore on which
reliance has Leen placed were conditioned by two
circumstances, namely, (i) that salesmen in that
case were getting adequate wn,ges after taking into
account the commission rpccived bv them, and
(ii) that salesmen were only a small part of the work·
men in that case ancl as they liacl already partaken
of a share in the profits they were not entitlecl to
any further share from the available surplus to
tho detriment of the other workmen who formed the
large majority.
Neither of these two conditions
apply
in tho
present case.
The
e1•idcnce
shows that the amounts received through the <listri·
bution of s.,n·ice chargcg and tips arl' quite inade· ,
quate to bring the wages to the Jc,·el of a living
wage. Besides, all the workmen of the appellant
share in the distribution of service charges un<l
thus stand on tho same footing so far as the distri·
bution of bonus from the available surplus, if any,
is concorncd. The app<'llant cannot th.crefore take
advantage of the observations made in the case •
of J'oltas Limited (1) torn out of their context.
Coming now to the available surplus for the
year I 953-f>4, the Tribunal found that the net profits
were Rs.
98,'.~43 and was of opinion that t.aking
into account the prior charges three months' bonus
would he justified a8 the month))· wage-bill was
about Hs. !i,500 per month. The Tribunal, however, did not mako a chart in accordance with the -
Full Bench formula to work out the available
surplus. It said that QVCTI making allowance for
--
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'.
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•
3 S.C.R.
SUPREME COURT REPORTS
5
the prior charges there was a substantial surplus to
allow payment of three months' bonus. The main
attack of the appellant is directed to this infirmity
in the Tribunal's judgment. It appears, however,
that the appellant also did not submit a chart
showing the available surplus, according to its
' calculations as is usually done in all such cases
by an employer.
The reason for this apparently
was that the balance.sheet and the profit and loss
account of the appellant are maintained in a
rather peculiar way from which it was not easy
to work out the figures according to the Full
, Bench formula.
There is no doubt, however, that
the net profits were above Rs. 98,000 in 1953-54.
Depreciation was already provided for in the profit
and loss account and as the Tribunal had taken
into account net profits it was not necessary to
aUow any further depreciation, for the net profits
had been arrived at after charging depreciation.
As for rehabilitation it seems to us that there is
hardly any scope for rehabilitation in the present
, case, for we find from the profit and loss account
that repairs and replacements which would include
what is understood as rehabilitation are charged
as expenses. As for income-tax, it appears that
the rate was 45 per centum in the relevant year.
The
income-tax
would
thus
work out to
about
Rs. 44,000 leaving a balance
of about
• Rs. 54,000. Then comes 6 per centum return on
paid-up
capital.
The
balance-sheet
shows
Rs. 6,000 as paid-up capital on which the appellant
would be entitled to Rs. 360. But, it has been urged
before us that the business was purchased for
Rs. 60,000 and that should also be treated as capital.
It is enough to say that even if this is a fact there was
no evidence of it before the Tribunal and the balance-
~ sheet did not show this figure as eapital. In the circumstances the appellant cannot in the absence of
proof claim that the capital on which 6 per centum
interest should be allowed is Rs. 60,000. It will,
1951
The Management oj
Marina Hotel
v.
The 1¥ orkmtn
Wanchoo J.
1961
The .l\lana1tnu:nt •f
,\/<rri11ri Hotrl
\',
Tht Jrorkmtt~
lfanchoo .!.
StJPHEMl<~ COURT REPORTS
[1962)
howC\·er, be opeu tu the appellant. to pron' this in
s11hse<j11cnt years if it can. The last of the prior
d1argcs is return on working capital. On that also
there was llo "'·i<lcncc worth the name as to what
amount was used as working capital. fn the circumstances the award of three mouths' bonus cannot
posRibly be challenged before us.
'\\'" asked the appellant to furnish a chart
before us showing what was the surplus according
to tlH~ appellant's l'ase. That chart has becu furnished and shows an a\'ail:tbl" surplus of Rs. :.?8,550.
The rcspondl'nt5 (lispulc a nnrn her of items in that
"1iart-and Jl<'rhaps rightly. But e\·cn if we were to
:wcept the figure of available surplus for this year
at Rs. :.?8,550 the award of three months' bonus
which would come to Rs. 16,500 would not be unjtrntified, particularly as Hs. 8, JOO won Id come back
to the appc.llant out of that as rebate on incomo-tax.
In the circumst<mccs we arc of opinion that tho
orde< of the Tribunal in respect of bonus for the
year i95a · fi4 is correct.
•
Then we come to the year 1954-55. For that
yoar the appellant did not cv<'ll produce the balancesheet antl the profit and loss account. It was, however, conceded before the Tribunal that there were
profit;; in Hlli-l-55. The Tribunal therefore held that
there was enough profit to warrant the payment of
throe months' wages as bonus. This Yiew of the Tri-
>
l.mnal is being attacked and it is mged that in the
absence of figures it was not correct for the Tribunal
to award anv bonus for this \"car. We consider that
the figures ai·e not available because of the fault of
tho appellant. "'e find that the balance-sheet and
the profit and loss account for the year 1951l-57 were
produce<! in anol her cunnec:tion. It is obvious that
the account;; for the ,-car 1954-55 were available. -
The fault for their n01i-production obviously therefore lies on the appellant. We find, however, from
an affidaYit filed on behalf of the respondent.a in
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-
•
3 S.C.R.
SD:PR1£M:IJJ CODR'r RR:PORTS
7
this court in connection with the stay application
that the profits for the year 1954-55 were over
Rs. 85,000. W c asked the appellant to produce the
accounts for the year l!l54-G5 and the original
accounts were brought all([ 8hown to us. These
accounts confirm the figure of profit mentioned in
the affidavit filed on behalf of the respondents. We
further find tl:>at in the profit and loss account for
the year 1953-54, there is an item of over
Rs. 13,000 for refund of water charges which has been
claimed as extraneous income unrelated to the
efforts of labour. If this amount is deducted from
the profit of 1953-54 the profit in that year would
also come to Rs. 85,000 or so. Thus the profits in
the year 1954-55 appear to be more or less the same
as in the year 1953-54. In the circumstances there is
no reason to interfere with the award of three
months' wages as bonus for the year 1954-55.
Leave.
The contention of the appellant in this connection is that the Tribunal was not justified in awarding 15 days' casual-cum-sickness leave in view of
the provisions of s.22 of the Delhi Shops and
Establishments
Act, (No. VII of 1954), as that
provides for a maximum of 12 days for sicknesscum-casual leave. This matter was considered by
this Court in Messrs DaJ,mia Cement (Bharat) Limited
New Delhi v. Their Workmen and another (1) and it
was pointed out that the position with regard to
sickness-cum-casual leave was that s.22 fixed a
maximum of 12 days total leave for' sickness or
casual leave with full wages, and it was not open to
the Tribunal to disregard this peremptory direction
of the Legislature. In this case the Tribunal was
aware of the provisions of s. 22 of the Delhi Shops
and Establishments Act; but in spite of that it
decided to grant 15 days' sickness-cum-casual leave
instead of 12 days, which was the maximum
(I) A;I.R. [1960] S.C. 413.
19~1
The .llanagen~ent of
Marina Hotel
v.
The TVorkmen
JVanchoo J.
1961
Th• Ma'l<lge"""' of
!if arina llot(l
v.
Tlrt Worlcrmn
Wonehoo J.
SUPREME COURT REi>OW1'S
(1962]
pro,·icled under the Act. This in our opinion was
illegal and the amount of !'asua].cum·sirkncss leave
must 'be re<l11cccl to 12 days a.5 pro\'ided in the Aet.
It was urged on behalf of the respondents that
the kitchen of th<' hotel wonltl be a factory an<l the
Delhi Shops arnl Establishments Act would not
apply to the kitchen staff at any rate. This point
however was not raised in the written.statement
where the resp<indents' case was that tho Act dirl
not debar the workmen from c\!'manding more leM·c
than what was provided therein.
ft
is not in
rlisputc that the Delhi Shops and Establishments
Act applies to this hotel. Whether the kitchen of
the hotel would be a factorv and thus the staff
working in the kitchen would· be exempt from the
operation of the Delhi Shops and Establishments
Ant is a question which
<~1.nnot be decided in the
present ap.[Wal in the absL•ncc of facts.
In the
cir1,11msta11e<>S the onkr of tho Tribunal with respect
to casual-cnm.sick1wss leave is mo<lific<l as indicated
above.
Pro1:ident Fund.
Learned eounsel for the appellant has stated
that the
Employees'
Provident Funds
Act
(No.XIX of 1952) has been extended to the hotel
industry and in the circumstances he is not pressing
the appeal so far a.s it rclatc's to provident fund, as
the provisions in the a.ward rclatir.g to prov idont
fund arc in accordance with the provisions of
the Employees' Provident l!'unds Act.
Scal,u of Pay.
The workmen had demanded certain scales of
pay; but the Tribunal has fixed Fcales which arc
somewhat lower than those demanded by the
workmen. The Tribunal was of opinion that the
scales fixed by it wore in accordance with the scales
prevailing in some hotels in the Delhi area; in
particular it referred to the scales in the Cecil and
Grand Hotels, which are more or less similar. The
..
•
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l
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3 S.C.R. SUPREM:lll cot:JRT R:ll1PORTS
~
appellant, however, relies on the statement of
Lakshmi Chand Narula, Hony. Secretary of the
Delhi Caterers' Association,
who stated that the
Marina Hotel was in B category. Our attention
was also drawn to the statement of D. D. Singh,
Secretary, Hotel Workers' Union on behalf of the
respondents who stated that the workers placed
the Marina Hotel in category A, which included
almost all the hotels in New Delhi and Civil Lines
Delhi.
The Grand and Cecil Hotels are in Civil
Lines Delhi and Singh's contention was that they
were comparable, though he did not say so in so
many words. The appellant contends that as the
Marina Hotel is in B category, according to
Narula, it cannot be compared with the Grand
and Cecil Hotels. The evidence of Shri Narula,
however, does not show in which category the
Cecil and Grand Hotels are.
But on the whole
Singh's evidence shows that the Marina Hotel is
in the same category as the Cecil and Grand
Hotels. In any case in this state of the evidence,
we see no reason to disregard the view of the
Tribunal that the Marina Hotel was not inferior to
the Cecil and Grand Hotels in any way. If that
is so, scales of pay fixed by the Tribunal which
are more or less similar to the scales in the Cecil
and Grand Hotels cannot be objected to; nor are
the scales intrinsically so high as to call for
reduction. We also see no reason to disregard the
view of the Tribunal that the appellant has the
capacity to pay the scales of pay fixed by it. It is
true that profits have gone down since 1954-55.
Even so there is no reason to hold that the
Tribunal was wrong in the view that the hotel
would be able to bear the increase in the wage-bill
due to the introduction of these scales of pay. We
therefore see no reason to interfere with the scales
fixed by the Tribunal.
Dearness Allowance.
The dearness allowll.llce fixed by the '.l'ribunal
1961
The Managepttmt Qj
Marina Hotel
v.
J:he Workmen
W.panchoo J.
19&1
'I'll.1 .Marni,tment of
!itar/11~ lloltl
v.
The 1Vorkmrn
Wancl100 J.
1961
lo
StPREME COl1RT RRPORTS
[1962]
is i11 accorrlanr(' with the prrseot scale. Tho
workmen \l'l'I'C demanding HB. :J5, but the Tribunal
has fixed Rs. 20 per month anrl has pro\•idcd that
where a workman takes his meals at the hotel the
amount will be reduced by Rs. 15; but where he
lives in accommodation provided by the hotel but
docs not talw his meals there the amount will be
reduced by R~. 5; further whnr he both li,·es and
trtkPs his meals in the hotPI there will be no
dearness allowance paicl to him. We see no reason
to dis.igree with the view taken by the Tribunal
in thiR b(•half, particularly when it is ir. accordance
with what was prcrnlent in the hotel from before
according to tlw aware! of Sh1·i Dulat of .May 17,
1950.
The appeal
therefore fail:;
('Xecpt in the
mntt<'r of the modification in the casual.cum·
siekneHs leave as indicated above and it is hereby
dismissed with (·osts.
Appeal dinni88Cd enept for slight modification.
THE STATE OF BOMBAY
"·
KATHI KALU OGHAD AND OTHERS
(B. P. SINHA, c. J.. s. ,J.
IMAM, s. K. DAS,
P. R. GAJE);DRAGADKAR, A. IC
SAHKAR,
K. Si::HHA RAO, K. K.
WAXCHOO,
K. c.
DAS GUPTA,
RAGHUBAR
DAYAL, N. RAJAGOPALA AYYAXGAR
and ,T. R. MUllHOLKAR, JJ.)
'l'estimonial Compulsion -(Jbtai1iing «q.>ecimen u·riting and
thumb i1npreasion j1·om G('CUAP.d- Statenient of accWied in Pol1·ce
custody U.'Jl!d in et·ideru:t-lf confrca·enf ron.'ttitutional guaranteeConslitulion of India, Art. 20(8).
Section 73 of the Indian Evidence Act empowers the
court
to obtain specimen ,,·riting or signatw·e and finger
imprcs~ions of an accused person for purposes of comparison.
•
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