VOLTAS LIMITED Vs. ITS WORKMEN
LAWS(SC)-1960-12-49
SUPREME COURT OF INDIA (FROM: BOMBAY)
Decided on December 09,1960

VOLTAS LIMITED Appellant
VERSUS
ITS WORKMEN Respondents





Cited Judgements :-

MANAGEMENT OF RONEO VICKERS INDIA LIMITED VS. LT GOVERNOR [LAWS(DLH)-1994-2-86] [REFERRED]
GUJARAT KAMDAR PANCHAYAT VS. MAIZE PRODUCTS [LAWS(GJH)-2001-7-18] [REFERRED]
MANAGEMENT OF MARINA HOTEL VS. WORKMEN [LAWS(SC)-1961-8-3] [DISTINGUISHED]
ANGLO FRENCH DRUG CO LTD VS. PRESIDING OFFICER LABOUR COURT [LAWS(ALL)-2003-12-70] [REFERRED TO]
GABERIEL INDIA LIMITED VS. STATE OF H P [LAWS(HPH)-1994-10-4] [REFERRED TO]
MUNICIPAL BOARD RAISINGH NAGAR VS. HARISH CHANDRA JOSHI [LAWS(RAJ)-2002-2-18] [REFERRED TO]
ASSOCIATED INDIAN ENTERPRISES PRIVATE LTD. VS. SECOND INDUSTRIAL TRIBUNAL OF WEST BENGAL AND OTHERS [LAWS(CAL)-1966-9-33] [REFERRED TO]


JUDGEMENT

WANCHOO, - (1.)THE following judgment of the court wasdelivered by:
(2.)THE only question raised in these two appeals byspecial leave is about the quantum of bonus to be paid tothe workmen (hereinafter called the respondents) by VoltasLimited (hereinafter called the appellant) for the financialyear 1956-57. THE dispute between the parties was referredto the adjudication of the industrial tribunal Bombay. THEappellant, it appears, had already paid 4 1/2 months' basicwages as bonus for the relevant year but the respondentsclaimed it at the rate of six months' basic wages subject tothe minimum of Rs. 250.00 per employee.THE tribunal went into the figures and after making therelevant calculations came to the conclusion that theavailable surplus worked out according to the Full-Benchformula justified the grant of bonus equal to five months'basic salary; it therefore ordered payment of this amountexcluding the amount already paid. THE appellant in itsappeal claims that the tribunal should have allowed nothingmore than what the appellant had already paid; therespondents in their appeal on the other hand claim thatthey should have been allowed six months' bonus.
The principles on which bonus has to be calculated havealready been decided by this court in the Associated CementCompanies Ltd. v. Their Workmen (1) and the only questionthat arises for our consideration is whether the tribunal inmaking its calculations has acted in accordance with thoseprinciples. This leads us to the consideration of variouspoints raised on behalf of the parties to show that thetribunal had not acted in all particulars in accordance withthe decision in the Associated Cement Companies' case (1).

We shall first take the points raised on behalf of theappellant. The first point raised is that the tribunal waswrong in not allowing a sum of rupees one lac paid ascontribution to political fund as an item of expense. It isurged that this is a permissible item of expense andtherefore the tribunal should not have added it back inarriving at the gross profits. We are of opinion that thetribunal was right in not allowing this amount asexpenditure. In effect this payment is no different fromany amount given in charity by an employer, and though suchpayment may be justified in the sense that it may not beagainst the Articles of Association of a company it isnonetheless an expense which need not be incurred for thebusiness of the company. Besides, though in this particularcase the donation considering the circumstances of the casewas not much, it is possible that permissible donations maybe out of all proportion and may thus result in reducing theavailablesurplus from which low paid workmen are entitled to bonus.We are therefore of opinion that though the law or the rulesof the company may permit the appellant to pay such amountsas donations to political funds, this is not a properexpense to be deducted when working out the availablesurplus in the light of the Full bench formula. Thetribunal's decision therefore on this point must be upheld.

The second contention of the appellant relates to deductionof what it calls extraneous income. This matter has beenconsidered by this court in The Tata Oil Mills Co. Ltd. v.Its Workmen and Others (1) and what we have to see iswhether in accordance with the decision in that case, theappellant's claim for deducting certain amounts asextraneous income is correct. Learned counsel for theappellant has pressed four items in this connection. Thefirst item relates to a sum of Rs. 3.47 lacs. It is saidthat this was not the income of the year and thereforeshould not have been taken into account in arriving at thegross profits. The exact position with respect to this itemis not clear and in any case learned counsel for theappellant appearing before the tribunal conceded that theamount could not be deducted from the profits. In view ofthat concession we are not prepared to allow the deductionof this amount as extraneous income. The second item is asum of Rs. 1.76 lacs in respect of the rebate earned oninsurance by the appellant with other companies by virtue ofits holding principal agency. Obviously this is part of theinsurance business of the appellant and the work in thisconnection is entirely handled by the insurance departmentof the appellant; as such the tribunal was right in notallowing this amount as extraneous income. The third itemis a sum of Rs. 3-33 lacs being gain on foreign exchangetransactions. These transactions are carried on in thenormal course of business of the appellant. As the tribunalhas rightly pointed out, if there had been loss on thesetransactions it would have certainly gone to reduce thegross profits if there is a profit it has to be taken intoaccount asit has arisen out of the normal business of the appellant.The tribunal was therefore right in not allowing this amountas extraneous income. The last item is a sum of Rs. 9.78lacs being commission on transactions by government agenciesand other organisations with manufacturers abroad direct.It seems that the appellant is the sole agent in India ofcertain foreign manufacturers and even when transactions aremade direct with the manufacturers the appellant gets com-mission on such transactions. The tribunal has held thatthough the transactions were made direct with the foreignmanufacturers, the respondents were entitled to ask that thecommission should be taken into account inasmuch as therespondents serviced the goods and did other work whichbrought such business to the appellant. It seems that thereis no direct evidence whether these particular goods onwhich this commission was earned were also serviced free bythe appellant like other goods sold by it in India. Weasked learned counsel for the parties as to what the exactposition was in the matter of free service to such goods.The learned counsel however could not agree as to what wasthe exact position. It seems to us that if these goods arealso serviced free or for charges but in the same way asother goods sold by the appellant in India, the respondentsare entitled to ask that the income from commission on thesegoods should be taken into account. As however there is nodefinite evidence on the point we cannot lay down that suchcommission must always be taken into account. At the sametime, so far as this particular year is concerned we have totake this amount into account as the appellant whose duty itwas to satisfy the tribunal that this was extraneous incomehas failed to place proper evidence as to servicing of thesegoods. A claim of this character must always be proved tothe satisfaction of the tribunal. In the circumstances wesee no reason to interfere with the order of the tribunal sofar as this part of its order is concerned.

Two other points have been urged on behalf of theappellant with respect to the interest allowed on capitaland on working capital. The tribunal has allowed the usualsix per cent on capital and four per cent on workingcapital. The appellant claimed interest at a higher rate inboth cases. We agree with the tribunal that there is nospecial reason why any higher rate of return should beallowed to the appellant.

(3.)THIS brings us to the objections raised on behalf of therespondents. The main objection is to a sum of Rs. 4.4 lacsallowed by the tribunal as income-tax, which is said to bewith respect to the previous year. It appears that there isa difference between the accounting year of the appellantand the financial year. In the particular year in disputethere was an increase in the rate of tax which resulted inextra payment which had to be paid in this year. In thesespecial circumstances, therefore, the tribunal allowed thisamount and we see no reason to disagree.
Next it is urged that the tribunal had allowed a sum of Rs.4.76 lacs for making provision for gratuity as a priorcharge. This is obviously incorrect, as this court haspointed out in the Associated Cement Companies' case (1)that no fresh items of prior charge can be added to theFull-Bench formula, though at the time of distribution ofavailable surplus such matters, as provision for gratuityand debenture redemption fund, might be taken into account.This disposes of the objections relating to the accounts.

Two other points have been urged on behalf of therespondents. They are with respect to (1) salesmen and (2)apprentices. The tribunal has excluded these two categoriesfrom the award of bonus made by it. The respondents contendthat they should also have been included. We are of opinionthat the decision of the tribunal in this behalf is correct.So far as salesmen are concerned, the tribunal has examinedthe relevant decisions of other tribunals and has come tothe conclusion that salesmen who are given commission onsales are not treated on par with other workmen in thematter of bonus. It has also been found that the clericalwork done by salesmen is small and incidental to their dutyas such; salesmen havetherefore been held not to be workmen within the meaning ofthe Industrial Disputes Act. The tribunal has pointed outthat the commission on an average works out at about Rs.1,000.00 per mensem in the case of salesmen and therefore theirtotal emoluments are quite adequate. Besides, the salesmenbeing paid commission on sales have already taken a share inthe profits of the appellant on a fair basis and thereforethere is no justification for granting them further bonusout of the available surplus of profits. As for theapprentices, the tribunal has held that there is a definiteterm of contract between them and the appellant by whichthey are excluded from getting bonus. Besides, as theappellant has pointed out, the apprentices are merelylearning their jobs and the appellant has to incurexpenditure on their training and they hardly contribute tothe profits of the appellant. The view of the tribunaltherefore with respect to apprentices also is correct.

;


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.