SECRETARY ENGINEERING METAL AND GENERAL WORKERS Vs. MANAGEMENT OF MYSORE PREMIER METAL FACTORY
LAWS(MAD)-1970-4-13
HIGH COURT OF MADRAS
Decided on April 23,1970

SECRETARY ENGINEERING METAL AND GENERAL WORKERS Appellant
VERSUS
MANAGEMENT OF MYSORE PREMIER METAL FACTORY Respondents

JUDGEMENT

- (1.) THIS petition is filed by the workers' union representing the employees of the second respondent company to quash the award of the Industrial Tribunal, Madras, in I. D. No. 42 of 1967. The dispute referred to the Tribunal was in relation to the demand of the workers for additional bonus for the years 1964 and 1965. The employer has disbursed a 4 per cent bonus for the year 1965. The dispute with regard to the bonus for 1964 his been settled by means of an agreement. The workers claimed that for the year 1965, if the provisions of the Payment of Bonus Act were applied, they would be entitled to a 20 per cent bonus. The main basis of this claim was that the management had earned a profit of Rs. 12,08,304 as a result of the sale of an import entitlement and that this represented a revenue receipt and should have been taken into account in calculating the available surplus. The management contended that the receipts from the transfer of import entitlements were receipts of a capital nature and as such exempt from any charge to income-tax or from being taken into account for computation of the bonus payable. The Industrial Tribunal held that the demand for additional bonus for 1964 was not justifiable, as it was governed by an agreement entered into in I. D. No. 9 of 1965 Discussing the question with regard to the payment of bonus to the year 1965, the Tribunal held that the available su plus and the allocable surplus were correctly calculated by the company and the bonus was paid according to the allocable surplus. This seems to have been mainly on the ground that the consideration received for the transfer of import entitlements was in the nature of a Capital receipt and the company was entitled to appropriate it towards its capital because the expenses and out-goings incidental to the transfer of import entitlements hive not been taken into account by the management for ascertaining the managerial remuneration under the company and for payment of dividend to the shareholders and for provision of taxation for the year under consideration.
(2.) IT appears to me that the fact that the management did not take the consideration received for the transfer of the import entitlements for the purpose of ascertaining the managerial remuneration and for payment of dividend to the share-holders and for provision of taxation for the year under consideration, is wholly irrelevant to the decision of the question under consideration. This amount continues to remain with the company. It will ultimately become available to the shareholders as well as to the management. The fact that it has not been taken into consideration for the purpose of ascertaining the managerial remuneration and for payment of dividend and income-tax merely means that the management want, if they can, to avoid having to pay income-tax on this amount. Incidentally it may help them to avoid having to pay the legitimate bonus also to the labourers. The only question for consideration therefore is, whether this amount represents the profits of the company or not.
(3.) IN this petition, three questions arise for consideration; (1) Whether the receipt of the company for transfer of import entitlements is to be taken into account in calculating the profits of the company for the purpose of bonus? (2) Whether in the bonus paid for 1964, the sum of Rs. (sic) lakhs, as bonus paid to workers, is alone to he taken into account or a sum of Rs. 3,00,000, which, includes the bonus paid to employees of the management other than the workers also has to be taken into account? and (3) Whether the management is justified in providing for the return on the capital as on 1. 4. 1965 or is it to be on the capital as on 3. 12. 1964. I shall deal with the second and third questions later.;


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