GAJENDRAGADKAR - (1.) THE following Judgment of the court wasdelivered by
(2.) THESE two appeals arise out of a demandfor bonus made against the appellants by their workmen forthe year 1953-54. The Associated Cement Companies Ltd.,Bombay, the Cement Marketing Company of India Ltd., Bombayand the Concrete Association of India, Bombay, were facedwith a demand of their workmen employed in their offices atBombay for bonus equivalent to seven months' basic wageswith dearness allowance. The industrial disputearising outof this demand was referred by the government of Bombay foradjudication before the Industrial tribunal, Bombay, unders. 10 of the Industrial Disputes Act and it was numbered I.T. No. 10 of 1956. The Associated Cement Companies Ltd.,Dwarka Cement Works, Dwarka, was similarly faced with ademand of its workmen for bonus equivalent to 50% of totalearnings or six months' total earnings. This dispute wasreferred to the same tribunal and was numbered 1. T. No. 13of 1956. By consent of parties both the references wereheard together and evidence was recorded and documentstendered in the first reference. By its award delivered on 30/11/1956, the tribunal directed the companies topay their workmen drawing a basic pay or wages up to Rs. 500.00per month bonus equivalent to 1/3 of their basic wages orpay (less bonus already paid for the year 1953-54) subjectto the conditions specified in the award. It is againstthis award that the respective companies have preferred thetwo appeals by special leave. In this judgment the saidcompanies will hereafter be described as the appellant andtheir workmen as respondents. The A. C. C. is the principal company concerned in thedispute. The Cement Marketing Company ofIndia Ltd., (hereafter -called the C. M. I.) has beenseparately registered under the Indian Companies Act as aJoint Stock Company; but it is a hundred per cent.subsidiary of the A. C. C. The C. M. I. are the SalesManagers of the A. C. C. while the Concrete Association ofIndia (hereafter called the C. A. I.) is merely a departmentof the C. M. 1. As a result of the agreement which came intooperation from' 1/08/1953, all financial transactionsof the C. M. 1. in relation to sales now find a place in theaccounts of the A. C. C. Similarly all of its fixed assetshave been taken over and appear in the balance-sheets of theA. C. C. All the three concerns have a common staff inBombay. The A. C. C. had already paid to its employeesbonus equivalent to three months' basic wages for the year1953-54 and so had the C. M. I. to its workmen. It appearsthat the C. M. I., including the C. A. I., undertakes to payto its employees the same amount of bonus as has been paidor awarded to the employees of the A. C. C. There is no dispute that the A. C. C. is the biggest amongstthe companies in India which manufacture cement. It owns 15cement factories at different places in India and 2 inPakistan. Out of the total quantity of cement despatched byall the cement factories in India in 1953-54 the A. C. C.despatched 55.46 %. The A. C. C. came into existence in 1936as a result of the merger of four important groups ofcompanies engaged in the manufacture of cement. These wereF. E. Dinshaw, Tatas, Killick Nixon and Khatau, groups. Itappears that 11 companies in all merged with the A. C. C. Before the tribunal the case for the respondents was thatthe appellant held a position of monopoly in the cementindustry and was easily in a position to pay the bonusclaimed by them. Their allegation was that the appellanthad inflated the capital invested by the merging companieswhile taking them over in 1936; it had set up new factoriesout of the profits earned by it without raising freshcapital and thereby had used profits for the purpose ofexpansion. In the year 195354 the appellant had capitalisedthe full amountstanding to the credit of the premium-on-shares account andhad transferred a part of the reserves for taxation to thecapital account thus increasing the aggregate capital. Theemoluments of the workers were inadequate and so they wereentitled to the bonus claimed by them in order to fill upthe gap between the actual wage paid to them and the livingwage due to them. The respondents also contended that theclaim made by the appellant for rehabilitation andreplacement in the dispute for the year 195152 included notonly the amount required for rehabilitation and replacementbut also expansion; and so, according to them, the appellantwas not entitled to any amount for rehabilitation purposesin the year in dispute. They also alleged that theappellant was not entitled to claim. interest at more than4% on paid-up capital and 2 % on working capital. Thus therespondents urged that if all the relevant facts are takeninto account it would be found that the claim for bonus madeby them in the two respective references was just andproper. In support of their case the respondents filedseveral statements which, they claimed, had been prepared inaccordance with the full bench formula, and they also cross-examined Mr. Tongaonkar who gave evidence on behalf of theappellant. This claim was resisted by the appellant. It was urged onits behalf that the points raised by the respondents in thepresent references bad been heard and finally decided in theprevious adjudication (Ref. I. T. No. 115 of 1953) whichdealt with their claim for bonus for the preceding year; andit was alleged that the respondents were barred from raisingthe same questions over again in the present adjudication.The cement machinery, though heavy, is subject to rigours ofextremely tough and heavy duties and the machinery has torun ceaselessly day and night throughout the year. Theappellant contended that, having regard to the specialfeatures of the cement industry, the machinery had to bekept on the highest standards of maintenance and neededfrequent replacement and rehabilitation. A cement factoryis a very expensive industrial proposition. The appellantdenied thatit was in a monopolistic position and pleaded that itsobject was to deliver cement as cheaply as possible to theconsumers. The respondents' allegation that there was 'puffing up of block capital at the time of the merger in1936 ' was denied by the appellant and it was not admittedthat ever since its inception it had steadily made hugeprofits. The appellant also denied the allegation of therespondents that the profits, coming out of the business hadbeen used in expanding its factories. It had used allavailable resources including premium on issue of shares anddepreciation fund for replacement, rehabilitation andmodernisation. It was not true that the appellant had builthuge reserves and that the wages paid by the appellant toits employees were inadequate; on the contrary they comparedvery favourably with those in other comparable industries.The appellant denied the statement of the respondents thatno plant reinstatement reserve over and above the deprecia-tion allowance was necessary in the current year and iturged that the calculations made by the respondents allegedto be in terms of the Labour Appellate tribunal formula wereinaccurate. In its turn the appellant claimed more than 6%interest on paid-up capital and more than 4% interest onworking capital. The appellant also emphasised that it hadalready paid to the respondents bonus for three monthsthough the strict working out of the formula would show thatthere was no available surplus for the relevant year and sothe respondents would not be entitled to any bonus at all.
(3.) IN support of its case the appellant examined Mr. G. R.Tongaonkar, its controller of planning and development, andproduced a statement (Ex. C-2) showing the original cost ofthe blocks to be replaced and the approximate replacementcost. It also produced amongst other documents a statement(Ex. C-10) showing the cost of the assets of the mergingcompanies on 31/07/1936, as taken over by the appellantand the statement (Ex. C-29) showing the capitalexpenditure from 1936-37 to 1953-54 on expansion,modernisation, rehabilitation, replacement, sundry capitaljobs, etc.IN addition a statement was filed by the appellant (Ex. C-23) showing that the calculations made under the Full benchformula would show a substantial deficit and that wouldsupport its case that there was no available surplus for therelevant year from which any bonus could be claimed by therespondents. Ex. C-2 is a statement prepared by Mr. Tongaonkar showingthe original cost of the block to be replaced and theapproximate replacement cost. This statement has beenprepared on the basis that the approximate cost to themerging companies of their assets as on 31/7/1936 was 5.73crores. It is admitted that this statement has lumpedtogether all the properties of the appellant including plantand machinery, as well as buildings, roads, bridges andrailway-sidings and has classified them into fourcategories. The statement contains 9 columns. The firstcolumn gives the year or years of purchase of machinery.This could classifies the four categories of the blocksaccording to their respective years of purchase. The firstcategory consists of blocks purchased up to 1939, the secondpurchased between 1940-44, the third purchased between 1945-47 and the last purchased between 1949-54. Column 2 givesthe original cost of the said categories as on 31/7/1954.Column 3 gives particulars of such portions of the blocks ashave been discarded, scrapped or sold. In this column theyears in which the blocks were discarded, scrapped or soldare indicated and their original cost is mefigures mentioned in col. 5 for 1939 and 1940-44 blocks havebeen arrived at by reducing the corresponding figures givenin col. 4 by 20%. Column 6 gives the approximate presentlife of the machinery and plant mentioned in col. 4; col. 7sets out the breakdown value of the machinery referred to incol. 4, whilst col. 8 gives the approximate cost ofrehabilitation of machinery as shown in col. 5 lessbreakdown value as shown in col. 7. The last column worksout the annual requirements of the appellant in respect ofthe rehabilatation of the four categories of blocks. Thefigures in this column are arrived at by dividing theamounts mentioned in col. 8 by the respective divisorsmentioned in col. 6. The total annual requirement of theappellant in respect of rehabilitation is shown as of theorder of Rs. 3,29,61,752.00. Ex. C-23 is a statement prepared by Mr. Tongaonkar to showthe deficiency in profits in relation to payment ofadditional bonus claimed by the respondents for theaccounting year 1953-54. This statement has been preparedalternatively on the basis of statutory depreciationallowable by income-tax authorities and also on the basis ofstraight computation at ordinary rates. The first methodresults in a deficit of Its. 107.20 lakhs, while the secondin a deficit of 97.86 lakhs. In working out the provisionfor rehabilitation, this statement first takes thereplacement cost of block up to 1939 as per Ex. C-2 to beRs. 1601.19 lakhs. From this amount the available reservesas on 1/8/1953 which are of tile order of Rs. 311 lakhs arededucted, leaving a balance of Rs. 1290.19 lakhs. Then thereplacement costs of the three remaining categories ofblocks are taken into account and all the said amounts aredivided by the appropriate divisors mentioned in col. 6 ofEx. C-2. The result is the sum of Rs. 284.48 lakhs, andthat is claimed by the appellant as the provision forrehabilitation under the formula. ;