N. H. BHAGWATI J. : - (1.) THE following Judgment of the court was delivered by
(2.) THIS appeal with special leave challenges the award made by the Industrial tribunal, Bombay, in Reference (IT) No. 75 of 1956 between the appellant and the respondents whereby the Industrial tribunal awarded to the respondents 4 1/2 months' basic wages as bonus for the year 1954-55 (year ending 30/06/1955). The appellant is a subsidiary of the Premier Construction Co., Ltd., and manufactures Hume Pipes. It has factories in different parts of India, Pakistan and Ceylon. The respondents are the workers employed in the appellant's factory at Antop Hill, Wadala, Bombay. In October 1955, respondent 1 who are workmen represented by the Engineering Mazdoor Sabha made a demand for the payment of six-months' wages as bonus for the year 1954-55. The matter was also referred to the Conciliation Officer requesting him to initiate Conciliation Proceedings. The Conciliation Proceedings went on before the Conciliation Officer upto 23/03/1956, on which date both the parties arrived at and executed an Agreement to refer the matter to an Industrial tribunal for adjudication. Accordingly, on 30/04/1956, both the parties drew up and signed a joint application for referring the dispute for adjudication to a tribunal and the government of Bombay thereupon in exercise of the powers conferred by sub-s. (2) of s. 10 of the Industrial Disputes Act, 1947, by its order dated Ju 11/06/1956, referred the following dispute to the tribunal :' DEMAND: Every Workman (daily rated) should be paid bonus for the year 1954-55 (year ending 30/06/1955) equivalent to six-months' wages without it attaching any condition thereto '. Respondent No. 1 filed their statement of claim before -the tribunal on 29/06/1956. They alleged that the profits of the appellant during the year 195455 were higher than those during the year 1953-54 for which year the appellant had paid four months' basic wages as bonus. They also alleged that the wages paid to them by the appellant fell short of the, living wage and therefore the appellant should pay the in six months' basic wages as bonus for the relative year. The appellant filed its written statement in answer on 14/08/1956. The appellant submitted that, after providing for ' the prior charges ' according to the formula laid down by the Labour Appellate tribunal the profits made during the year under consideration did riot leave any surplus and tile, respondents were not entitled to any bonus. It denied that it bad made huge profits during the year in question and submitted that the profits made were not even sufficient to provide for ' the prior charges ', etc. The tribunal after hearing the parties came to the conclusion that even if payment of a bonus equal to 4 1/2 months' basic wages were made a fair surplus would be left in the hands of the appellant to the tune of Rs. 3.30 lacs and therefore awarded the same subject to the following conditions:(a) Any employee who has been dismissed for misconduct resulting in financial loss to the company shall not be entitled to bonus to the extent of the loss caused. (b) Persons who are eligible for bonus but who are no longer in the service of the company on the date of the payment shall be paid the same provided that they make a written application for the same within three months of publication of this award. Such bonus shall be paid within one month of receipt of application provided that no claim can be enforced before six weeks from the date this award becomes enforceable.
(3.) BEING aggrieved by the said award of the tribunal, the appellant applied for and obtained from this court special leave to appeal against the same under Art. 136 of the Constitution and hence this appeal. The formula evolved by the full bench of the Labour Appellate tribunal in Millowners' Association, Bombay v. Rashtreeya Mill Mazdoor Sangh, Bombay(1) is based on this idea that ' as both labour and capital contribute to the earnings of the industrial concerti, it is fair that labour should derive some benefit, if there is a surplus after meeting ' prior or necessary charges '. The following were prescribed as the first charges on gross profits, viz., (1) Provision for depreciation ;(2) reserves for rehabilitation ; (3) a return at 6%on the paid up capital; (4) a return on the working capital at a lesser rate than the return on paid up capital and (5) an estimated amount in respect of the payment of income-tax. The surplus that remained after making the aforesaid deductions would be available for distribution among the three sharers, viz., the shareholders, the industry and the workmen . This full bench -Formula has been working all throughout the country since its enunciation as aforesaid and has been found to be, in the main, fairly satisfactory. It is conducive to the benefit of both labour and capital and even though certain variations have been attempted to be made therein from time to time the main features thereof have not been substantially departed from. We feel that a formula which has been thus adopted all throughout the country and has so far worked fairly satisfactorily should be adhered,' to, though there is scope for certain flexibility in the working thereof in accordance with the exigencies of the situation. ;