# THE SUPREME COURT REPORTS THE TATA OIL MILLS CO. LTD v. ITS WORKMEN AND OTHERS

- **Citation:** [1960] 1 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1957-09-27
- **Bench:** S. R. Das, N. H. Bhagwati, s. K. DAS, P. B. Gajendragadkar, K. N. WANCHoo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-supreme-court-reports-the-tata-oil-mills-co-ltd-v-its-workmen-and-others-1746
- **Pages:** 13

## Headnote

Industrial Disp11.te--l3onus-Gross Profits-Extraneom income
-Profit unrelated to effort of labour-Available surplus-Prior
charges-Retitrn on depredation reserve used as working capital.
In resisting the workmen's claim for bonus for the year
1955-56 the appellant contended that in calculating gross profits
for the purpose of the Full Bench formula the following items of
income should be excluded :-
(i) Income earned by way of rent, light and power ;
(ii) estate revenue derived from sale of excess coconuts used
in preparing oil grown in the appellant's groves;
(iii) profit from sale of empty barrels ; and
(iv) sale proceeds of tin cans, scraps, Jogs, planks, gunnies
etc.
as they were extraneous income unrelated to the efforts of the
workmen.
The appellant also claimed that a profit of Rs. 3 lacs appearing in the accounts due to a change in the method of valuation
was no real profit due to the efforts of Jabour and should not be
taken into account. In calculating the available surplus the
appellant claimed that it was entitled to 4% interest on the
depreciation reserve used as working capital.
Held, that the four items were earned by the appellant in
the normal cour1>e of its business and could not be excluded from
the gross profits on the ground that it had not been proved that
thev were the result of the direct efforts of labour in the bonus
y~a·r. Though there must be contribution of the workmen in
earning profits before they could be entitled to profit bonus, it
was not necessary to establish direct connection between the
efforts of the workmen and each item of profit earned. Profits
earned in the normal course of business were generally the result
of the joint effort of capital and labour. Income or profit may
be extraneous if it either did not really arise in that year or it
arose out of fortuitous circumstances altogether unconnected with
the efforts of labour or arose out of sale of fixed or capital assets.
z959
May5.
SUPREME COURT REPORTS
[1960(1)]
r959
Mill Owners
Association, Bombay v. The Rashtriya Mill
-
Mazdoor Sangh, Bombay, (r950) L.L.J. r247, Shalimar Roj>e Works
The Tata Oil Mills Mazdoor U11ion, Howrah v. Shalimar Rope Works Ltd., Howrah,
\
Co., Ltd.
(r956) 2 L.L.J. 371, referred to.
v.
Its TVorkmen and
Others
The profit of Rs. 3 lacs due to change in the method of
accounting was extraneous income and had to be excluded. It
was not income in the normal course of business as it ¥1as not
likely to arise again. It had arisen out of fortuitous circumstances and had nothing whatsoever to do with the efforts of
labour.
The appellant was entitled to a 4 % return on the depreciation reserves used as working capital. lf reserves were not used
for this purpose the concern would have to borrow money and
pay interest thereon.
CIVIL
APPELLATE
Ju&rSDIOTION:
Civil Appeal
No. 321 of 1958.
Appeal by special leave from the Award dated the
September 27, 1957, of the Industrial Tribunal,
Bombay, in Reference (I.T.) No. 119 of 1957.
G. K. Daphmry, Solicitor-General of India, J. B.
Da.dachanji and S. N. Andley, for the appellant.
Rajani Patel and Janardan Sharma for respondent
No. l.
1959. May 5.
The Judgment of the Court was
delivered by
Wanehoo/.
WANCHOO J.-This is an appeal by special leave
against the award of the Industrial Tribunal, Bombay,
in a dispute between the Tata Oil Mills Co. Ltd.,
Bombay (hereinafter !"eferred to as the company)
and its workmen, in the matter of profit bonus (or the
year 1955-56. The dispute arose over a demand made
by the workmen for payment unconditionally as bonus
for the year 1955-56 of a sum equivalent to four
months' wages/salary for all employees drawing
wages/salary of less than Rs. 500 per mensem. This
dispute was referred to the Industrial Tribunal by the
Government of Bombay by its order dated June 18,
1957. The company had already paid 2! months'
basic wages as bonus to its workmen and the real
dispute was thus only about the remaining bonus for
a month and half.
' '
S.C.R.
SUPREME COURT

## Text

THE SUPREME COURT REPORTS
THE TATA OIL MILLS CO. LTD.
v.
ITS WORKMEN AND OTHERS
(S. R. DAS, C.J., N. H. BHAGWATI, s. K. DAS,
P. B. GAJENDRAGADKAR and K. N. WANCHoo, JJ.)
Industrial Disp11.te--l3onus-Gross Profits-Extraneom income
-Profit unrelated to effort of labour-Available surplus-Prior
charges-Retitrn on depredation reserve used as working capital.
In resisting the workmen's claim for bonus for the year
1955-56 the appellant contended that in calculating gross profits
for the purpose of the Full Bench formula the following items of
income should be excluded :-
(i) Income earned by way of rent, light and power ;
(ii) estate revenue derived from sale of excess coconuts used
in preparing oil grown in the appellant's groves;
(iii) profit from sale of empty barrels ; and
(iv) sale proceeds of tin cans, scraps, Jogs, planks, gunnies
etc.
as they were extraneous income unrelated to the efforts of the
workmen.
The appellant also claimed that a profit of Rs. 3 lacs appearing in the accounts due to a change in the method of valuation
was no real profit due to the efforts of Jabour and should not be
taken into account. In calculating the available surplus the
appellant claimed that it was entitled to 4% interest on the
depreciation reserve used as working capital.
Held, that the four items were earned by the appellant in
the normal cour1>e of its business and could not be excluded from
the gross profits on the ground that it had not been proved that
thev were the result of the direct efforts of labour in the bonus
y~a·r. Though there must be contribution of the workmen in
earning profits before they could be entitled to profit bonus, it
was not necessary to establish direct connection between the
efforts of the workmen and each item of profit earned. Profits
earned in the normal course of business were generally the result
of the joint effort of capital and labour. Income or profit may
be extraneous if it either did not really arise in that year or it
arose out of fortuitous circumstances altogether unconnected with
the efforts of labour or arose out of sale of fixed or capital assets.
z959
May5.
SUPREME COURT REPORTS
[1960(1)]
r959
Mill Owners
Association, Bombay v. The Rashtriya Mill
-
Mazdoor Sangh, Bombay, (r950) L.L.J. r247, Shalimar Roj>e Works
The Tata Oil Mills Mazdoor U11ion, Howrah v. Shalimar Rope Works Ltd., Howrah,
\
Co., Ltd.
(r956) 2 L.L.J. 371, referred to.
v.
Its TVorkmen and
Others
The profit of Rs. 3 lacs due to change in the method of
accounting was extraneous income and had to be excluded. It
was not income in the normal course of business as it ¥1as not
likely to arise again. It had arisen out of fortuitous circumstances and had nothing whatsoever to do with the efforts of
labour.
The appellant was entitled to a 4 % return on the depreciation reserves used as working capital. lf reserves were not used
for this purpose the concern would have to borrow money and
pay interest thereon.
CIVIL
APPELLATE
Ju&rSDIOTION:
Civil Appeal
No. 321 of 1958.
Appeal by special leave from the Award dated the
September 27, 1957, of the Industrial Tribunal,
Bombay, in Reference (I.T.) No. 119 of 1957.
G. K. Daphmry, Solicitor-General of India, J. B.
Da.dachanji and S. N. Andley, for the appellant.
Rajani Patel and Janardan Sharma for respondent
No. l.
1959. May 5.
The Judgment of the Court was
delivered by
Wanehoo/.
WANCHOO J.-This is an appeal by special leave
against the award of the Industrial Tribunal, Bombay,
in a dispute between the Tata Oil Mills Co. Ltd.,
Bombay (hereinafter !"eferred to as the company)
and its workmen, in the matter of profit bonus (or the
year 1955-56. The dispute arose over a demand made
by the workmen for payment unconditionally as bonus
for the year 1955-56 of a sum equivalent to four
months' wages/salary for all employees drawing
wages/salary of less than Rs. 500 per mensem. This
dispute was referred to the Industrial Tribunal by the
Government of Bombay by its order dated June 18,
1957. The company had already paid 2! months'
basic wages as bonus to its workmen and the real
dispute was thus only about the remaining bonus for
a month and half.
' '
S.C.R.
SUPREME COURT REPORTS
3
The ease of the workmen was that the company had
z959
f made record profits during the year and declared a
-
dividend of 12 per centum free of income-tax1 the The Tata Oil Milli
workmen were getting much less than the living wage
Co •• Ltd.
and the dearness allowance was not sufficient to fill the Its wor~;,,en and
gap, and, therefore, profit bonus at the rate of four
Others
months' basic wages should be granted. The company,
on the other hand, contended that it was paying
Wanchoo 1;
graded scale of wages with annual and biennial
~ increments and had already paid profit bonus for 2~
months. It was not possible for the company to pay
more than that as bonus. as the available surplus
according to the Full Bench formula did not justify it.
It was also pointed out that thobgh the company
started as far back as 1917, the shareholders began to
get dividends only from 1940, and, therefore, a dividend
of 12 per centum free of income-tax was in the circumstances not high. The company also claimed that in
<( making calculations for the purposes of the Full Bench.
formula certain items of extraneous income should not
be taken into account. Next it claimed that a profit
of Rs. 3 lacs appearing in the accounts due to the
change in the method of valuation was no real profit
due to the efforts of labour and should not be taken
into account in arriving at the available surplus.
Lastly, it also claimed that it was entitled to 4 per
centum interest on the working capital, including the
a.mount in the depreciation fund.
The Industrial Tribunal disallowed the claim of the
company on all these three points and after making
relevant calculations came to the conclusion that there
was a sufficient surplus available to permit the grant
of bonus for 3l months calculated on basic wages and1
therefore awarded the same. The company thereupon
applied for special leave to appeal, which was granted;
and that is how the matter has now come up before
us for decision.
We shall first take the question of extraneous income. Six items were sought to be excluded by the
company as extraneous income, and they were these :
4
SUPREME COURT REPORTS
[1960(1)]
I959
Tht Tata Oil llfills
Co., Ltd.
v.
Its Worhn1tn and
Others
U1anchoo ].
(i) Income earned by way of rent, \ight
and power
(ii) Estate Revenue
(iii) Profit on sale of empty barrels
(iv) Excess provision for expenses in the
previous year
{v) Refund of income-tax on revision of
Cochin assessment of Excess Profits Tax
(vi) Sale proceeds of tin cans, scraps, logs,
planks, gunnies &c.
Total
In lacs
Rs.
0•24
0·08
0·89
0·31
0·49
2·u
4·12
The Tribunal rejected the claim with respect to all
these items, though in the judgment it mentioned only
items (i), (ii), (iii) and (vi) as those in dispute.
Apparently, items (iv) and (v) were not in dispute
before it; but while making calculations, it seems to
have lost sight of this and disallowed thll claim with
respect to these two items also. Learned counsel for
the rcspondent,s appearing before us has stated that
the claim with respect to items (iv) and (v) was conceded bv the workmen before the Tribunal and it
seems t.Jiat by over-sight these items were not excluded
by it..
He .fairly concedes that these two items may be
excluded from consideration in making calculations
for arriving at the available surplus. We are thus left
with four items, which were disallowed by the Tribunal.
The reason given by the Tribunal for disallowing these
items was that they formed part of the profits earned
in the course of the company's business .and there was
no goocl reason for deducting them from the profits. It
further \milt on to say that <lS regards income earned
by way of rent. light and power it was not disputed
that expenditure in respect of buildings from which the
rent was derived, such as on rep<>irs and maintenance,
is iuclnded in the expenditure 8ide of the account, and
taxes and rates for these buildings were paid by the
company. There was thus no reason for deducting
this amount from the profits. It did not consider the
'
S.C.R.
SUPREME COUR'f REPORTS
5
other three items specifically and was content to
z959
include them on the general ground that they were The T ~a M"ll
profits earned in the course of the company's business.
~~~.Ltd. ' s
Mr. Daphtary appearing for the company has drawn
v.
our attention to a number of cases decided by indusIts Workmen and
trial tribunals as well as labour appellate tribunals,
Others
where such items of income have been excluded on
wanchoo J.
the ground that they are extraneous income unrelated
to the efforts of the workmen.
\Ve do not think it
{ necessary to refer to all these decisions and it is sufficient to say that these decisions support the contention put forward. The main reason given in these
decisions for excluding what is termed as extraneous
income is that they are unrelated t.o the efforts of
workmen. \Ve may refer only to two of these decisions
of the labour appellate tribunal in this connection. In
The Mill-Owners' Association, Bombay v. The Rashtriya
,j Mill .Mazdoor Sangh, Bombay (1) in which the ]'ull
Bench formula was evolved, the appellate tribunal
rernal'ked at page 1257:
" No scheme of allocation of bonus could be
complete if the amount out of which a bonus is to be
paid is unrelated to employees' efforts."
The Appellate Tribunal reiterated this in Shalimar
RO'pe Works Mazdoor Union, How1·ah v. Messrs. Shalimar Rope Works Ltd., Shalimar, Howrah( 2) by observing at page 372 that " it is however too late in the
day to question tlie view that there are profits un-
~
related to workers' efforts and referred to as 'extraneous
profits' and that such profits must be left out of
account in deciding the question whether there is
available surplus in any particular year." Income
received by way of rent of quarters and by sale of
scrap-materials has generally been treated as extraneous income by the industrial tribunals on the basis
of these decisions of the Labour Appellate Tribunal.
It is the correctness of this view which has been can1 vassed before us in this appeal. Reliance has also
been placed by some tribunals on the decision of this
Court in Muir Mills Co. Ltd. v. Suti Mills Mazdoor
(1) 1950 L,L.J, U47.
(2) 1956 (II) L.L.J. 371.
6
SUPREME COURT REPORTS [1960(1)]
r959
Union, Kanpu1' (1), in this connection.
This Court
T '
T --0 .1 M. observed at page 998 as follows:
nt
ala
i
ills
co., Ltd.
"There arc however two conditions which have
v.
to be satisfied before a demand for bonus can be justifi11' Wo,kmw and ed, and they are, (1) when wages fall short of the
Othm
living standard and (2) the industry makes huge proWanchoo .f.
fits part of which are due to the contribution which
the workmen make in increasing production."
It was fort.lier observed at page 999-
"lt is therefore cle.ar that the claim for bonus
can be made by the employees only if as n result of
the joint contribution of capital and labour the indust.rinl concern has earned profits. If in any particular
year the working of the industrial concern has resulted
in loss t.hnre is no basis nor justification for n demand
for bonus.,.
,
H is clettr from these observations that this Court
was not de>tling with the question of extraneous income •
as such in the 1l!uir 1lfills Case (1). The principles laid
down in that case show that there must be profits in
the particular year for which bonus is claimed, resulting in nn available smplus before profit bonus can be
awarded. It is only when profits are made that
profit bonus can be 11w1trded, subject to two further
conditions, n:i,mely, (1) W>tges fall short of the living
standard and (2) the industry makes large profits part
of which are duo to the contribution which the workmen make in produrtion. It is this last condition
which seems to have been relied upon by industrial
•
tribunals in holding that there must be direct ctmnection hetween the efforts of labour and the profits, and
unless that direct connection is established the profits
must be treated as unrelated to the efforts of labour
and thus become extraneous income. There is no
doubt that there must be contribution of the workmen
in earning profits before they are entitled to profit
bonus; but it wa.s not laid down in the Muir Mills \
Case(') that direct connection between the efforts of the
workmen and the particular item of profit earned must
be established before the profit can be taken into
account for the purposes of arriving at the available
(1) 1955 (1) S.C.R. 991.
, •
S.C.R.
SUPREME UOURT REPORTS
7
surplus. An industrial concern carries on a certain
r959
business.
In carrying on that business it employs Th T
Oil M'll
capita.I as well as labour, and generally speaking the
8
~;~ Ltd.
• s
profits earned in the normal course of business at t4e
v.
end of year are the result of the joint effort of capital Its Workmen and
and labour. Even so, it may be recognized that there
Others
may be instauees of extraneous income for the purpose of the ]'ull Bench formula due (i) either to some
part of the profits not having bee°t earned in that year,
(ii) or to some part of profits arising out of fortuitous
circumstances altogether unconnected with the efforts
of labour.
A third category may be the income
arising out of sale of fixed or capital assets. Such
income or profit may be called extraneous income as
either it did not really arise in that year or though it
has arisen in that year, labour has not contributed
anything towards its accrual ; it may therefore not be
taken into account in calculations according to the
Full Bench formula.
But apart from these cases, we
cannot see how income arising during the year in the
normal course of business of the concern can be called
extraneous income merely on the ground that no direct
connection between the efforts of labour and the
accrual of the income has been established. In this
very case we find an instance of the first category in
two items relating to return of excess provision for
expenses and refund of excess profits tax. These two
amounts have gone to swell the profits of this year;
hut they have not arisen in this year and may, therefore, properly be treated as extraneous income. An
instance of the second kind is to be found in the profit
of Rs. 3 lacs made in this year by a change in the
method of valuation of the company's assets, which is
entirely unconnected with the efforts of labour. But so
far as the other four items are concerned, they are
earned by the company in the normal course of its
business and there is no reason why they should be
excluded on the ground that it has not been proved
that they are the result of direct efforts of labour in
this year.
Let us take these four items one by one. The first
is the item of income earned by way of rent, light and
Wanchoo ].
8
SUPREME COURT REPORTS [1960(1)]
x959
power. It is well known that many industrial concerns
'1 he Tata Oil Mills provide amenities for their workmen by building
co., Ltd.
quarters, which are provided with light and power
v.
from the concern's power house. The quarters and,
Its Workmen and power-house are built out of capital or profits earned
Others
in past years. If they are built out of ca pita!, there is
wanchoo J.
provision for a return which is generally at 6 per
centum on the paid-up capital. Even if they are
built out of past prpfits, the depreciation and rehabilitation charges fall on the gross profits before the
available surplus is arrived at.
Besides, expenditure
with regard to repairs and maintenance, and rates and
taxes is all paid out of the income of the concern
before the gross profits are arrived at. In other words
these expenses are paid out of the profits in the earning
· of which the workmen have contributed their labour.
How can the company claim to exclude the rent etc.,
from the profits while meeting the expenditure relating
to such assets out of the profits, part of which is
att.ributable to the efforts of labour? In short, income
by way of rent, light and power arises in the normal
course of business of the concern and there is no reason
why a direct contribution by labour during the year
in question must be insisted upon in the case of such
income. The company must also be employing some
labour for purposes of maintenance and repairs of the
quarters aud power-house, even though the labour
may not be wholly allocated to this work only. We
are, therefore, of opinion that income from rent, light
and power arises in the normal course of business of a
concern and cannot be treated as extraneous income in
the sense described above.
The next item is estate revenue.
We are told that
the company has coconut groves, which produce
coconuts used in preparing oil which is one of the
main items of the company's business. We are also
told that sometimes the entire produce of these groves
is not used in the manufacture of oil and therefore
some part of the produce is sold. This income is out
of this part sold in the market. Here again the income
arises in the normal course of business and the expenses
for looking after and maintaining the groves are paid
1
•
S.C.R.
SUPREME COURT REPORTS
9
by the company and entered into its account. The
z959
company must also be employing labour to look after The Tata Oil Mills
the groves. In these circumstances we fail to see why
co., Ltd.
this income by sale of surplus coconuts should be
v.
excluded from the profits for the purpose of the Full Its Workmen anrl
Bench formula.
Others
Then we come to the profit on sale of empty barrels
WanchooJ.
and sale proceeds of tin cans, scraps, logs, planks,
gunnies etc. These items may be taken together, for
the nature of the receipt is the same, though on account
of the method of accounting employed, the income in
the case of barrels is shown as profit while in the case
of scrnps etc., it is shown as sale proceeds. It is said
that this is extraneous income because it is unrelated
to the efforts of labour. We cannot accept this contention, for this income again is in the normal course
of business. Further when the company buys chemicals (for example), it pays for the chemicals as well
as the containers, namely, the barrels. When the
chemicals are used up these empty barrels are sold.
Whatever is the income from the sale of these barrels
is in reality a reduction in the cost price of chemicals
to the company, though by the method of accounting
employed it may appear as profit on the sale of
barrels. We see no reason why the reduction in cost
price of chemicals should not be taken into account for
the purpose of arriving at gross profits in making
calculations for the Full Bench formula. Some scraps
are normally left over in the process of manufacture.
Whatever income is derived from such scraps also
goes to reduce the cost price of materials used in
production and thus to increase the profits. We do not
see why this income arising in the normal course of the
company's business should not be taken into account
on the plea that labour has not directly contributed in
its accrual. We are, therefor<\ of opinion that all these
four items were rightly taken into account by the
Tribunal in arriving at the gross profits.
Then we come to the profit of Rs. 3 lacs made by a
change in the method of accounting. The Tribunal
did not accept this income as extraneous and in so
doing it fell into error.
This income of Rs. 3 lacs has
2
10
SUPREME COURT REPORTS
[1960(1)]
'959
nothing whatsoever to do with the efforts of labour,
Th T -Oil M'll even though it has arisen this year. It has arisen out
e
ala
• s f
.c t "t
,
t
.
h
th'
co .. Ltd.
o a ior m ous circums ance masmuc
as
is year
v.
there was a change in the basis of valuation of stock.
Its Workmen and It is not income in the normal course of business,
Others
because it is not likely to arise ever again. In the
Wanchooj,
circumstances this income of Rs. 3 lacs must be treated
as extraneous income and excluded for the purpose of
calculations based on the Full Bench formula.
The last item with which we are concerned is the
return on the amount of depreciation reserve used as
working capital. An affidavit was made on behalf of
the company that it had used its reserve funds comprising premium on ordinary shares, general reserve,
depreciation reserve, workmen's compensation reserve,
employees' gratuity reserve, bad and doubtful debt
reserves and sales promotion reserve as working
capital. The Tribunal, however, allowed return at 4
per centum on a working capital of Rs. 31·88 lacs.
This excluded the depreciation reserve but included all
other reserves which were claimed by the company
and having been used for working capital. The Tribunal gave no reason why it excluded the amount of the
depreciatiGn reserve in arriving at the figure of working capital. A return is allowed on the reserves used
as working capital on the ground that if these reserves
are not used for this purpose, the concern would have
to borrow money and pay interest on that. This being
the basis on which a return on reserves used as working capital is allowed, there is no reason why, if there
is in fact money available in the depreciation reserve
and if that money is actually used during the year as
working capital, a return should not be allowed on
such money also. Further if the money has been converted into such assets as stock in trade and stores
etc., (i.e., other than capital or fixed assets), it will be
obviously available from year to year to that extent as
. working capital subject to adjustments on account of
loans, secured or otherwise.
Learned counsd for the
respondents wanted to contest that the whole amount
in the depreciation reserve was not available for being
used as working capital. It is enough to say that the
S.C.R.
SUPREME ·coURT REPORTS
11
affidavit of the Chief Accountant filed on behalf of the
z959
co~pany was not challenged before the Industrial The Tata Oil Mills
Tribunal on behalf of the respondents. It would,
co., Ltd.
therefore, be impossible for us now to over-look that
v.
affidavit, particularly when the Tribunal gave no Its Workmen and
reason why it treated the working capital as Rs. 31·88
Others
lacs only. So far therefore as the present year is conWamhoof.
cerned, we must accept the affidavit and hold that the
working capital was Rs. 139·09 lacs. It will, however,
be open to the workmen in future to show by proper
cross-examination of the company's witnesses or by
proper evidence that the amount shown as the depreciation reserve was not available in whole or in part
to be used as working capital and that whatever may
be available was not in fact so used in the sense
explained above. In the present appeal, however, we
must accept the affidavit of the Chief Accountant. The
Tribunal allowed 4 per centum interest on the working
0apital and that must be allowed on the total sum of
Rs. 139·09 lacs.
We now come to the calculations in accordance with
the Full Bench formula, subject to what we have said
above:
Profit for th.-. year ...
Add provision for -
Rs. in lacs
Rs. in lacs
15•53
(i) tax ........................... .
(ii) depreciation .............. .
14•51
11•75
(iii) bonus ........................ .
7•76
34·02
Gross Profits.
Less extraneous income
Balance ................. .
Less notional normal depreciation
Balance ................. .
Less income-tax payable a.ocording to
Meenakshi Mills case (1) (PCT Note A
Below).
Balance ...• ...,,. .......... .
49·55
3·80
45·75
11·12
34•63
15•90
J.8·73
'959
The Tata Oil Mills
Co., Ltd.
v.
Its Worknien and
Others
ivanchoo j.
12
SUPREME COURT REPORTS [1960(1))
Rs. in lacs
Rs. in lacs
Less dividend on paid-up
5•54
capital
Less return on Reserves used
5•56
as working capital of Rs.
139·09 @ Rs. 4 per cent.
U·lO
Available surplus
7•63
Less bonus actually paid
7·90
Less rebate of income-tax at
3•40
-/7/- in the rupee ..
4•50
Amount remaining with the Company.....
3·13
Note A.
Gross Profits
Less total statutory
depreciation
Rs. in lacs
49•55
13·19
Balance......
36·36
Income-tax at -/7/- in 15·90
a rupee
The available surplus· of profit thus works out at
Rs. 7·63 lacs. The company has already paid 2t
months' bonus amounting to Rs. 7•90 lacs to the
workmen. The company would be entitled to a rebate
of Rs. 3·40 lacs on this sum and therefore the amount
which the company has actually to pay is Rs. 4·50
lacs.
This will leave a sum of Rs. 3·13 lacs out of the
available surplus with the company for its use. It will
be seen that more than half the available surplus has
already gone to labour according to what the company
has paid. There are three sharers in the available
surplus, namely, the industry, share-holders and
labour. In the circumstances no case has been made
out for increasing the profit bonus beyond what the
•
•
company has already paid, particularly when we find
i
that the company has claimed no rehabilitation
charges in this year. We, therefore, itllow the appeal,
set aside the order of the Industrial Tribunal and
dismiss the claim of the workmen for any bonus
S.C.R.
SUPREME COURT REPORTS
13
beyond what has already been granted by the comr959
pany. In the particular circumstances of this case, The Tata Oil Mills
we order the parties to bear their own costs.
Co., Ltd.
v.
Appeal allowed.
GREAT INDIAN MOTOR WORKS LTD.,
AND ANOTHER
v.
THEIR EMPLOYEES AND OTHERS
(B. P. SINHA, P. B. GAJENDRAGADKAR
and K. N. WANCHOO, JJ.)
Industrial Dispute-Award against company in liquidationAppeal by managing director and auction-pu.rchaser not aggrieved by
the award-Summary dismissal by Appellate Tribunal-ValidityRight of appeal-Industrial Disputes (Appellate Tribunal) Act, z950
(48 of z950), s. z20-Companies Act z956 (I of z956), s. 457.
The discharged employees of the Company in liquidation
raised an industrial dispute wherein the auction-purchaser of the
Company was also impleaded as a party. The Tribunal, inter
alia, held that no relationship of employer and employee existed
between the auction-purchaser and the t:ild staff who had been
discharged prior to the purchase of the business, and the reference
so far as the auction-purchaser was concerned was incompetent.
The Tribunal directed the liquidators to pay compensation to the
discharged employees.
The liquidators were refused sanction to appeal from the
said award by the High Court whereupon the auction-purchaser
who was also the managing director of the Company, prior to
its liquidation, preferred an appeal in the name of the Company
represented by himself as the managing director and also in his
capacity as the auction-purchaser of the Company. The Appellate Tribunal dismissed the appeal in limine as incompetent in
view of the provisions of s. 457 of the Companies Act 1956, on
the ground that the appeal was not maintainable as it was not
authorised by the High Court.
JI eld, that where a party to the Reference in an industrial
dispute was exonerated from its terms, and no Award was made
against him, he could not be sairl to be an aggrievc-d party,
thereby attracting the provisions of s. 12 of the Industrial
Disputes (Appellate Tribunal) Act HJSO, and any appeal by him
from the said Award will be incompetent.
Its Workmen and
Others
Wanchooj.
I959
May6.