P.JAGANMOHAN REDDY - (1.) THE Government of Maharashtra had referred the dispute between the Appellant and its Workmen to the Industrial Tribunal under the Industrial Disputes Act 1947 (hereinafter called 'the Act') in respect of Wage scales, dearness allowance, bonus, gratuity and permanency. THE Award made by it is the subject matter of this Appeal by Special Leave (Civil Appeal No. 204 of 1967) in which the dispute relating to wage scales and dearness allowance is contested only on the ground that there was a settlement between the workmen and the employers in a conciliation proceeding and as that has not been terminated by either party the Government has no jurisdiction to refer the dispute in relation thereto to the Tribunal. If this plea is not accepted the wage scales and dearness allowance as awarded by the Tribunal is not challenged. THE claim for bonus as awarded is disputed as it often happens, on the manner and method of computation of depreciation and development rebate. It is the case of the employers that it has not the financial capacity to bear the burden of the gratuity scheme framed by the Tribunal for the workmen. Apart from this certain incongruities in this scheme are pointed out to which we shall refer and deal with at the appropriate place. THE fifth issue relating to permanency is not pressed.
(2.) THE workmen have also filed an Appeal (Civil Appeal No. 610 of 1967) against the Award in which the omission by the Tribunal to grant an adjustment in the wage scale by directing a fitment of the wages of workmen in the said scales in accordance with the length of their service is assailed. It is also pointed out that the Tribunal did not link the dearness allowance granted by it with the cost of living index and lastly the award did not compute the return on reserves in accordance with the Schedule 3 of the Payment of Bonus Act (hereinafter called 'the Bonus Act'). A few facts may now be stated for a better appreciation of the matters in controversy. The Appellant was registered as a Public Limited Company in or about 1956 and commenced production in or about 1958. It employs approximately 170 persons of whom 155 are daily rated workers and it is the later category who are the Respondents in this case. In October 62 the General Secretary of the Mumbai Kamgar Union which represents the workers of the Appellant (hereinafter referred to as 'the Union') made certain demands on their behalf relating inter alia to wage-scales and dearness allowance. These disputes formed the subject matter of conciliation proceedings in the course of which the parties arrived at an amicable settlement on 5th April'63, the relevant terms of which pertaining to the wage scale and dearness allowance are as under: "Demand No. I - Wage scales: The workers drawing at present upto Rs. 30.30np. per day will be given an ad hoc increment of 60 np. With effect from 1-1-1963 and another increment of 40 np. With effect from 1-1-1964. (b)Persons drawing more than Rs. 3.30 np. per day will be given an ad hoc increment of 50 np. with effect from 1-1-1963 and another increment of 30 np. with effect from 1-1-1964. (c) The arrears of increment from 1-1-1963 till 31st March will be paid on or before 20/04/1963. Demand No. 2. Dearness allowance: As the wage scale agreed to above are consolidated i. e. including allowance, the Union has withdrawn the demand." The other two demands relating to Casual leave and paid holidays are not before us and need not be noticed. The parties also agreed to discuss the existing production bonus scheme and to finalise the suggestion for revising the same by the end of June '63 in view of the instalment of new machinery. This settlement was reduced to writing and signed by the Chief Executive of the Appellant, the Conciliation Officer and the General Secretary, Mumbai Kamgar Union and was considered a 'settlement' as defined by clause 'P' of Section 2 of the Act. It was averred that as this settlement was binding upon the parties under Section 19 (2) of the Act for a period of six months from 5th April '63 and would continue to bind them after the expiry of the said period until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement and since the settlement was not terminated in accordance with any of the requirements set out above by a notice in writing given by the Respondents, no dispute could be raised again relating to the wage scale and dearness allowance and therefore the reference made on 27th December' 65 under Section 10 (A) (d) of the Act for adjudication was incompetent.
(3.) ON the dispute relating to the payment of bonus, the case of the Appellant was that its profits for the year 1964 before depreciation was Rs. 4.11,176.00, and that under the payment of Bonus Act the available surplus was Rs. 19,921.00 out of which an allocable surplus would amount to Rs. 11,977.00. The Tribunal however, in arriving at its own computation of available surplus and allocable surplus disallowed the claim of the Appellant for a sum of Rs. 1,81,054.00 on account of depreciation and Rs. 5822.00 in respect of the development rebate reserve and instead it allowed depreciation of Rs. 80,190.00 and development rebate of Rs. 3,917.00 as shown in the balance-sheet. In respect of these items the reason given by the Tribunal is that while it is true the Company was entitled to deduct by was of depreciation an amount admissible in accordance with Section 32 (1) of the Income-tax Act by virtue of Sec. 6 (a) of the Bonus Act, there was no material on record to show that the deduction in respect of the aforesaid items was actually made by the Appellant in accordance with the relevant provisions of the Income-tax Act. In these circumstances it did not accept the deduction claimed by the Company, which were admissible under the Bonus Act. On the question of gratuity the case of the Appellant was that it has only been in existence for 8 years from 1958 and that for the years 1958 to 1960 its working showed losses. For 1961 there was carry forward from prior years of loss of Rs. 2,19,948.00 which when set off against the profit of Rs. 93, 062.00 in the year 1961 left a carry forward of loss of Rs. 1,26,886.00. In the year 1962 it earned profits of Rs. 84,837.00 but the losses incurred in the earlier years could not be wholly set off and the balance of the loss of Rs. 42, 049.00 had to be carried forward to the year 1963. After setting off this carry forward of loss against the profit for the year 1963 there was only a profit of Rs. 65,323.00. In these circumstances no dividend was paid to the share-holders for the years 1958 to 1962. Dividends however were paid for the years 1963, 1964 and 1965 but the stand of the Appellant was that notwithstanding the earning of profits and declaration of dividend the depreciation and development rebate could not be provided for fully in accordance with the Income-tax law. Apart from this there were large foreign loans the payment of which was made difficult by the further burden imposed upon it on account of devaluation of the Rupee. To this was also added the increase in the wage bill consequent on the settlement entered into with the Union as well as the increase of Rupees 20,869/- due to Interim wage relief recommended by the Wage Board for Engineering Industry. Taking all these factors into consideration the Company's case before the Tribunal was that it had not the financial ability to sustain a scheme of gratuity. Apart from this ground of attack, the Appellant also contested the scheme as being vague, contradictory and impossible to implement. The Tribunal it is said while it had prescribed a consolidated wage, directed the payment of gratuity by reference to the basic wage excluding the dearness allowance. It is therefore contended that it is not possible to ascertain which portion of the consolidated wage is the basic wage and which portion the dearness allowance and consequently the implementation of the scheme has become impossible. It is also submitted that as the scheme stands it is incongruous because a person who resigns or retires after 10 years gets a larger gratuity then a person whose services are terminated.;