- (1.) This appeal by special leave has been filed by the workmen of Messrs. Hindustan Motors Ltd. against the decision of the First Industrial Tribunal, West Bengal, in a dispute relating to payment oh bonus for the year 1960-61. The respondent, M/s. Hindustan Motors Ltd., (hereinafter referred to as "the Company") was established in the year 1942 and, initially the work taken up by the Company was that of assembling or motor cars from components imported from foreign countries. Later on, manufacture of components of motor cars was started and gradually the Company developed this work of manufacture of components by increasing the number of components manufactured by it until at the present time, the Company is manufacturing more than 70 per cent of the components utilised in the cars put in the market by the Company. The work of manufacturing components was taken in hand for the first time in the year 1949, according to the reply of the Company filed on 10th January 1962, to the statement filed on behalf of the workmen before the Tribunal A, the initial stages of its existence, the Company was running at a loss and even, as late as the year 1956 the Tarrif Commission's Report on the Automobile Industry mentioned that this Company was making a loss of Rs. 833 per car on the Hindustan Landmaster which was the car put in the market by the Company at that time Even subsequently for several years, no profit was shown in the profit and loss account and, consequently no bonus was paid to the workmen until the dispute about it was raised for the first time in respect of the year 1959-60. We were informed that the dispute relating to the payment of bonus for the year 1959-60 is still pending before the Industrial Tribunal, while the dispute with respect to bonus for the next year 1960-61 has been decided and is now before us in this appeal. In this year 1960-61, the profit and loss account of the Company showed a net profit of Rs. 249.71 lacs. Out of this a sum of Rs. 59.59 lacs was allocated for payment of dividend on ordinary shares at 12 per cent and a sum of Rs. 27.55 lacs for dividend on preference shares at 8.57 per cent. The total amount allocated for payment of dividends was thus Rs. 87.08 lacs. In view of the fact that, in this year, the Company had earned a net profit of over Rs. 249 lacs, the workmen demanded bonus equivalent to six months' wages. The monthly wage bill of the workmen is about Rs. 4 lacs, so that the total amount claimed towards bonus by the workmen came to Rs. 24 lacs. It was also stated on behalf of the workmen that, if this bonus to the extent of Rs. 24 lacs is awarded, the actual amount which the Company would have to pay will only be 55 per cent of this amount, because 45 per cent representing income-tax on this amount would be refundable to the Company from the Government.
(2.) Before the Tribunal, there was no dispute between the parties that, in order to find out whether any surplus was available for distribution of bonus, calculations must he made on the basis of the Full Bench Formula approved by this Court in Associated Cement Companies Ltd., Dwarka v. Its Workmen, 1959 SCR 925 = (AIR 1959 SC 967). The Tribunal, after making all other deductions from the surplus which have to be made in accordance with the Full Bench Formula and without taking into account provision for rehabilitation, arrived at a figure of Rs. 87.80 lacs as the amount of surplus available. Thereafter the Tribunal held that a sum of Rs. 373.62 lacs every year was needed for rehabilitation purposes and, since this amount very much exceeded the surplus otherwise available, there was no scope for granting any bonus at all. Consequently, the Tribunal decided the reference against the workmen and held that no bonus was payable for this year. The workmen have come up to this Court against this decision of the Tribunal
(3.) In this appeal also, there is no dispute that the principles to be applied for working out the surplus available for distribution of bonus must be those approved by this Court in the case of Associated Cement Companies Ltd., 1959 SCR 925 = (AIR 1959 SC 96'1) (supra). On behalf of the workmen. however, it was urged that the Tribunal committed an error in applying the Formula in respect of five different items involved in the calculation. These are: (1) Rehabilitation. (2) Return on reserve used as working capital. (3) Return on paid-up capital. (4) Interest on fixed deposit, and (5) Home delivery commission. Of these items, the most controversial is the first item of rehabilitation and that is also the most material one, because, if the figure of annual rehabilitation arrived at by the Tribunal is accepted, it is clear that no surplus can possibly remain out of the profits earned during the year for distribution of bonus. In the calculation of rehabilitation, various factors are involved which have been indicated by this Court in the case of Associated Cement Companies, 1959 SCR 925 = (AIR 1959 SC 967) (supra). The factors in calculation of rehabilitation accepted by the Tribunal which have been challenged by the workmen are: (i) the divisor, which depends upon the life of the plant, machinery and buildings, the year of their installation or erection, and the residuary life which must be taken into account when working out the divisor. (ii) the calculation of the multiplier for arriving at the replacement cost of the old machinery which requires rehabilitation, and (iii) the deductions which should be made when working out the annual rehabilitation. We shall now proceed to deal with these points.;