C.A. Vaidialingam, J.
1. These three appeals, by special leave, are directed against the award dated July 22, 1966 of the Fifth Industrial Tribunal, West Bengal, directing the appellant-company to pay two months' wages or l/3rd of the available surplus, whichever is higher, as additional bonus for the years 1956-57, 1957-58 and 1958-59.
2. The reference in respect of the year 1956-57 was made on November 17, 1958, and numbered as Case No. 226 of 1958. The reference in respect of the year 1957-58 was made on July 23, 1959 and numbered as Case No. 124 of 1959. Similarly, the reference in respect of the year 1958-59 was made on August 25, 1960 and numbered as Case No. 421 of I960. All the references were dealt with together.
3. In consequence the questions that the Tribunal had to consider were:
(1) Whether the workmen are entitled to any additional bonus for the year ended 30th June, 1957.
(2) Whether the workers are entitled to any additional bonus for the year ended 30th June, 1958 in excess of one month's basic wages paid by the company.
(3) Whether the workmen are entitled to any additional bonus for the year ended 30th June, 1959, in excess of one month's basic wages paid by the company.
4. Though there is a common award for all the three years, as there were three references for three separate years, three appeals have been filed in respect of the directions given for each year. After the references were made by the State Government, the Oriental Gas Company Act, 1960 received the assent of the President on October 1, 1960. According to the appellant, under the said Act, its under taking had been acquired by the Government and hence the liability to pay bonus, if any, in respect of the years, for which references had been made, is that of the State Government and not of the appellant. For this purpose the company filed an application before the Tribunal for impleading the State of West Bengal as a party to the proceedings. After issuing of notice to the State Government, and after hearing the counsel for the State, the Tribunal passed order on July 16, 1962 impleading the State Government as a party. The State Government also filed in due course a written statement pleading that it has no liability whatsoever to meet the claim for bonus and that the payment, if any, will have to be made, according to the award, only by the appellant-company. The Tribunal after hearing the contentions of the appellant and the State has held in the award itself that the bonus claim is to be met only by the company and not by the State Government. It is on the basis of this finding in the award that ultimately the appellant has been made liable to pay the additional bonus for the years in question. The appellant in these appeals has not impleaded the State Government as a party and, therefore, it is not necessary for this Court to consider the correctness or otherwise of the findings recorded in the award that the Government has no liability whatsoever in respect of the claim for bonus in these matters.
5. There was no dispute before the Tribunal that the claims in respect of the three years has to be decided on the basis of the Full Bench Formula and not according to the provisions of the Payment of Bonus Act. Both the company and the two unions, representating the workmen, filed calculations of available surplus in terms of the said formula. Parties were also agreed as to the gross-profit on the basis of the profit and loss account of each year.
6. The company's calculations for available surplus for the three years were as follows:
Calculation of available surplus-1956-57 Rs. Profit as per profit & loss account. 13,81,177 Add: Bonus paid for previous year. 1,03,180 Add: Depreciation charged in the accounts. 5,35,663 __________ 20,20,020 Less: Interest on bank deposits 84,890 __________ 19,35,130 Less: Normal depreciation 3,37,557 __________ 15,97,573 Less: Income-tax, Super Tax etc. @ 51.5% 8,22,750 __________ 7,74,823 Less: Wealth Tax. 45,000 __________ 7,29,796 (sic) Less: Dividend on Capital @ 6% (40,00,000) 2,40,000 _________ 4,89,796 Less: 4% on Reserves etc. used in business (Rs. 46,38,788) 1,85,551 _________ 3,04,245 Less: Annual rehabilitation Rs. 21,23,553 Normal depreciation Rs. 3,37,557 17,85,996 _________ Deficit 14,81,751 Bonus paid for this year Rs. 1,09,842 __________________ Calculation of available surplus-1957-58 Rs. Profit as per profit & loss account. 7,50,582 Add: Bonus paid for previous year 1,09,842 Depreciation 4,92,170 _________ 13,52,594 (sic) Less: Interest on bank deposits 83,550 _________ 12,69,004 Less: Normal depreciation 3,21,974 _________ 9,47,030 Less: Income-Tax, Super Tax etc. @ 51.5% 4,87,720 _________ 4,59,310 Less: Wealth Tax: 45,000 _________ 4,14,310 Less: Dividend on Capital Rs. 40,00,000 @ 6% 2,40,000 _________ 1,74,310 Less: 4% on Reserves etc. used in business Rs. 44,15,175 1,76,607 _________ Deficit 2,297 Less: Rehabilitation as in 1956/57 account Rs. 21,23,553 Normal depreciation Rs. 3,21,974 18,01,579 _________ Deficit 18,03,876 Bonus paid for this year Rs. 1,17,923 ________________ Calculation of available surplus-1958-59 accounts. Rs. Profit as per profit & loss account. 1,64,158 Add: Bonus paid for previous year 1,17,923 Add: Depreciation 4,39,549 _________ 7,21,630 Less: Interest on bank deposits 64,873 _________ 6,56,757 Less: Normal depreciation 3,41,161 _________ 3,15,596 Less: Income-tax, Super Tax etc. @ 45% 1,41,975 _________ 1,73,621 Less: 6% Dividend on Capital 40,00,000 2,40,000 _________ Deficit 66,379 Less:, 4% on Reserves etc. used in business Rs. 41,82,605 1,67,304 _________ Deficit 2,33,683 Less:Rehabilitation as in previous year's account Rs. 21,23,553 Normal depreciation Rs. 3,41,161 17,82,392 _________ Deficit 20,16,075 Bonus paid in this year Rs. 1,20,996. _______________
7. The two unions also filed similar charts showing various other items to be added back in the calculations made by the management. According to the unions' claims for deduction, bad debts, fees and commissions paid to the directors, managers' remuneration, office allowances and commissions and the amount charged as 10% expenses for repairs should not be allowed and must be added back to ascertain the available surplus.
8. After consideration of the claims made by the appellant and the unions, the Tribunal has accepted all the items in the appellant's three statements excepting the claim made by it regarding the return on reserves and annual rehabilitation.
9. It will be seen from the statement of the appellant for the year 1956-57, that it had claimed a sum of Rs. 1,85,551 as return at 4% on reserves used as working capital in the sum of Rs. 46,38,788. The annual rehabilitation in the sum of Rs. 17,85,996 has been claimed. It is on this basis that the appellant has shown that there is no available surplus for payment of bonus, as there is a deficit of Rs. 14,81,751. The Tribunal added back to the sum of Rs. 4,89,796 the two items claimed as return on reserves and rehabilitation and awarded two months' wages as bonus.
10. Similarly, for the years 1957-58 and 1958-59 the claim under the above items were rejected and those amounts were added back and the Tribunal found that there was available surplus and on that basis awarded two months' wages as bonus for each year.
11. The ground on which the Tribunal negatived the claims for return on reserves was that no evidence has been let in by the appellant that the amount mentioned by it has been actually used as working capital during the year. Regarding the claim for rehabilitation the view of the Tribunal is that the appellant has not produced any satisfactory evidence regarding multiplier and divisor.
12. Mr. A.B.N. Sinha, learned Counsellor the appellant, challenged the correctness of the findings and reasons given by the Tribunal for disallowing the claim for return on working capital and rehabilitation.
13. Mr. D.N. Mukherji, learned Counsel for respondent, No. 1, apart from supporting the findings of the Tribunal disallowing these two claims of the management, urged that certain other items asked for by the unions to be added back to the gross profits should have been allowed by the Tribunal. In fact the learned Counsel urged that exhorbitant deductions have been made by way of managing agency commission and salaries paid to the officers. But he, in particular, urged that no deductions should have been allowed in respect of interest on bank deposits.
14. Mr. Naranarayan Guptoo, learned Counsel appearing for respondent No. 4, supported the contentions of Mr. D.N. Mukherji.
15. We will now consider the claim for rehabilitation made by the appellant. Mr. Sinha, learned Counsel for the appellant, found considerable difficulty in satisfying us that the disallowance of the claim for rehabilitation by the Tribunal is in any way erroneous. There is no controversy that if this claim is to be sustained the same will have to be established by the company by proper evidence. In this connection it has to prove the original costs of the machinery as well as the multiplier and divisor.
16. Mr. Sinha, in particular, referred us to the evidence of the company's witness, O.P.W. 2, N.G. Goswami. A perusal of his evidence shows that he was not able to give the actual age or the year of construction of the buildings. He has further admitted that he does not have any quotation for the manufacturing of the machinery for the multipliers. O.P.W. 3, K.N. Sen, Chief Engineer, no doubt referred to many new machineries having been installed between 1950-1951, but he was not able to give any idea as to the value of the newly installed machineries. Similarly, he was also not able to give any evidence regarding the date when the various items of machineries were installed nor the approximate life of those machineries. The evidence of the Chief Engineer about the life of the machinery cannot be accepted as it is quite contrary to the chart prepared by O.P.W. 2 Goswami. Mr. Sinha stated that as all the records and other documents relating to the company are in possession of the Government as the undertaking has been taken over, the management experienced considerable difficulty in producing evidence before the Tribunal. We are not satisfied with this explanation given on behalf of the management. The Government was impleaded as a party at the instance of the management and if it wanted any particular document or record to be produced before the Tribunal, it could have applied to the Tribunal to direct; the Government to produce such records. In the absence of any such attempt having been made by the company, the present explanation must be considered only as an excuse for not placing evidence that is necessary to support such a claim.
17. The Tribunal has discussed the evidence of these witnesses and it has held that then-evidence does not support the claim made by the appellant for rehabilitation in respect of these three years. We have been taken through the reasons given by the Tribunal in this regard and we are in full agreement with the findings recorded by the Tribunal rejecting the appellant's claim for deduction of the amount for rehabilitation for each of these three years. It follows that the available surplus for each of these years will have to be calculated adding back the amount claimed by way of rehabilitation.
18. Coming to the claim for return on working capital, here again the appellant is faced with a serious difficulty. In the recent decision of this Court reported in Bareilly Electricity Supply Co. Ltd. v. The Workmen and Ors. 1971 L.LJ. 407, to which one of us (P. Jaganmohan Redely, J.) was a party, the nature of evidence to sustain such a claim has been discussed. The various decisions bearing on the point have also been exhaustively reviewed. It is now well-settled that the production of the balance-sheets alone cannot be taken us proof of a claim as to what portion of the reserves has actually been used as working capital. The utilisation of any amount from the reserves as working capital has to be proved by an employer by the evidence by way of affidavit or otherwise after giving opportunity to the workmen to contest the correctness of such evidence by cross-examination. It is also clear from the authorities reviewed in Bareilly Electricity Supply Co. Ltd. v. The Workmen and Ors. (supra) that when return on reserves is claimed by an employer, the latter should satisfactorily prove that the amount on which the return is claimed has been actually used as working capital.
19. The view of the Tribunal is that the employer has not satisfactorily proved this claim. The attempt of Mr. Sinha was that the unions did not dispute the figures mentioned in the balance-sheets and, on the other hand, they only required certain further information on certain particulars. In this connection he referred us to the Orders Nos. 19, 26 and 33 passed by the Tribunal as well as the application filed by the union asking for particulars. We do not see in those orders any indication that the unions have accepted as correct the statements contained in those balance-sheets. What the orders show is only a recording of the documents filed by the company which include balance-sheets, and the application of the union was only that they should have inspection of the balance-sheets and that they should have further information on certain aspects. Therefore, neither the orders passed by the Tribunal, nor the application filed by the unions gave any indication that the balance-sheets filed by the appellant have been accepted as correct in all particulars without any further proof.
20. Mr. Sinha, no doubt, referred us again to the evidence of Goswami, O.P.W. 2, the Accountant of the company. A perusal of his evidence shows that he was only reading what was contained in the balance-sheets which anybody could have done. The counsel pointed out that there has been no cross-examination of this witness regarding the particulars mentioned in the balance-sheets. In view of the nature of the evidence given by this witness, there was absolutely nothing for the unions to cross-examine him. Mr. Sinha further urged that going by the statements mentioned in the balance-sheets, it is clear that some portion of the reserves at least must have been utilised as working capital. In our view the matter cannot be decided on such a guess work. As the appellant has not placed any satisfactory evidence or material before the Tribunal, the latter was justified in declining to allow return on reserves, as claimed by the appellant. From this it follows that the amounts claimed as return on reserves used as working capital in the statements of the appellant have to be added back for each year.
21. Mr. Sinha further contended that even if the claims for rehabilitation and return on reserves are disallowed, nevertheless, there will not be any available surplus for payment of bonus. In the alternative, the counsel urged that there will not be enough surplus for payment of bonus at a uniform rate for each year. The counsel pointed out that the Tribunal has merely referred to the figures given for the year 1956-57 and has not cared to scrutinise the particulars furnished for the years 1957-58 and 1958-59.
22. Prima facie there is some force in the contention of Mr. Sinha that the Tribunal has not given as much attention that is necessary to consider whether there will be available surplus for payment of bonus at a uniform rate for two months for each of these three years. In this connection we must point out that Mr. Mukherji, learned Counsel for respondent No. 1, urged that the deduction allowed by the Tribunal in respect of interest on bank deposits for each of these years is not justified. Therefore, he urged that, apart from adding back the amount claimed as return on reserves and annual rehabilitation, the Tribunal should have also added the amount accrued to the appellant by way of interest on bank deposits. He further urged that there has been very exhorbitant deductions made by the appellant by way of office expenditure, managing agents' commission and remuneration and salaries of the officials.
23. We are impressed with the contention of Mr. Mukherji that the Tribunal has committed an error in accepting the claim of the appellant with regard to the interest received from bank deposits. Even here Mr. Sinha urged that labour has not contributed in the company earning on account of interest from bank deposits and, therefore, the interest cannot be added back. Mr. Mukherji referred us to the decision of this Court reported in Jabalpur Bijlighar Karamchari Panchayat v. Jabalpur Electric Supply Co. Ltd. and another (C.A. No. 752 of 1967 dated 9-8-71), to which one of us (P. Jaganmohan Reddy, J.) was a party. In the said decision it has been held that while it is true that the claim by the workmen for adding back interest received from bank deposits cannot be rested on any work done by them for the company during the year of account, there can be no doubt that the interest has accrued to the company out of the efforts of the workers in the past. On this principle, we are of the opinion that Mr. Mukherji's contention regarding adding back of interest on bank deposits will have to be sustained.
24. Before we consider the calculations to be made for arriving at the available surplus for purpose of payment of bonus, it is necessary to consider the contention of Mr. Sinha that bonus has been paid during the years 1957-58 and 1958-59 as profit-sharing bonus and that amount has to be deducted before arriving at the available surplus. On the other hand, Mr. Mukherji pointed out that the bonus that has been paid was customary pooja bonus and that has been included in the wage expenditure by the company. We must point out that there is no material placed before us by the appellant as to how exactly the payment of one month's bonus has been adjusted in their accounts. Mr. Sinha, however, referred us to the memorandum of settlement dated October 14, 1958. According to Mr. Sinha this settlement will show that for the years 1957-58 and 1958-59, the company has paid one month's basic wage as bonus taking into consideration the trading profits. There is also a clause therein that the company has agreed to give an advance of 1/2 month's basic wages to all employees and that the said advance shall not be recovered until the claim for additional bonus in excess of one month's basic wages already paid by the company is adjudicated upon by the Tribunal. Mr. Mukherji, however, pointed out that there is a further statement in this settlement that one month's bonus referred to therein is to be paid before the pooja holidays.
25. The Tribunal has gone into this aspect and it has found that the appellant has been paying customary pooja bonus from 1942 or 1947 onwards. But as that payment was stopped in 1958 that led to a conciliation proceeding resulting in the settlement on October 14, 1958. It is not necessary for us to consider this aspect any further, as we will presently show from the calculations to be made, that there will be available surplus for payment of bonus for the years 1956-57 and 1957-58, at any rate, though the amount of bonus for the latter year cannot be at the rate of two months' wages.
26. The unions claimed 50% of the available surplus and, therefore, it is clear that they cannot get anything more than this rate. We will now consider the available surplus for each of the years.
27. For 1956-57, from the statement of the appellant, after disallowing the claim of return on reserves and annual rehabilitation, the total will be Rs. 4,89,796. To this amount, a sum of Rs. 84,890 shown as interest on bank deposits and deducted by the appellant will have to be added. Both the amounts put together will be Rs. 5,74,686. Having due regard to the available surplus for this year, the amount awarded as bonus for this year by the Tribunal is justified.
28. Coming to the year 1957-58, here again deleting the claim made for rehabilitation and return on reserves, the net amount to be calculated from the appellant's statement is Rs. 1,74,310. To this amount will have to be added a sum of Rs. 83,550 being the interest on bank deposits. The total will be Rs. 2,57,860. For this year, having due regard to the claim of the workmen, they will be entitled only to a. payment by way of bonus in the fixed sum of Rs. 1,28,930. This figure has been arrived at by us after having due regard to the claim of the workmen as well as the rebate by way of income-tax that the company will get on this amount paid as bonus.
29. Now coming to the year 1958-59, after deleting the claim for rehabilitation and return on reserves, the net amount shown in the appellant's statement is Rs. 66,379. But this amount is shown as deficit. Even if the sum of Rs. 64,873 being interest on bank deposits is adjusted against this amount, the net result will be, there is still a deficit of Rs. 1,506. There is no available surplus for payment of any additional bonus for this year. Therefore, the award of two months' wages as bonus for this year is not justified.
30. We make it clear that the amount paid as advance as half months' basic wages under the settlement dated October 14, 1958 cannot be recovered by the appellant nor adjusted towards the claims allowed in favour of the workmen in these appeals. As per orders of this Court at the time of granting stay, the appellant will have also to pay interest in respect of any amount due under this judgment and which have not been paid to the workmen.
To conclude the workmen will be entitled to:
(i) Bonus as awarded by the Tribunal for the year 1956-57;
(ii) The workmen will be entitled only to a sum of Rs. 1,28,930 as bonus in the year 1957-58 ; and (iii) For the year 1958-59 the workmen will not be entitled to any bonus at all.
31. In the result, the award of the Industrial Tribunal granting bonus for the year 1956-57 is confirmed. The award granting two months' wages or 1/3rd of the available surplus whichever is higher as bonus for the year 1957-58 is modified and the bonus payable for the said year will be only a sum of Rs. 1,28,930. The award directing bonus to be paid for the year 1958-59 is set aside.
32. In the result, the appeal relating to the year 1956-57 is dismissed. The appeal relating the year 1957-58 is allowed only to the extent that the appellant will have to pay bonus in the sum of Rs. 1,28,930 and the award for that year will stand suitably modified. The appeal relating to the year 1958-59 is allowed and the award of the Tribunal for that year is set aside. There will be no order as to costs in these appeals.