Appeal No 93 of 1959
Appeal by special leave from the Award dated May 13 1957 of the Industrial Tribunal Bombay in Reference IT No 166 of 1955
R J Kolah section N Andley J B Dadachanji Rameshwar Nath and P L Vohra for the appellants
K B Chaudhury and Janardan Sharma for the respondents Nos 1 and 2 379 1960
March 24
The Judgment of the Court was delivered by WANCHOO J
This appeal by special leave raises two questions namely i bonus for the year 1952 and ii retrospective operation of the order of the Industrial Tribunal relating to increase in wages
The appellant is a company manufacturing barrels and drums at Bombay
There was a dispute between the appellant and its workmen about a number of matters which was referred to the tribunal by the Government of Bombay on November 17 1955
In respect of the two matters which are now raised in appeal the workmen claimed i four months wages including dearness allowance as bonus for the year 1952 and ii retrospective operation of the wage scale to be fixed by the tribunal from March 1 1952
So far as the increase in wages is concerned the appellant agreed to the scale suggested by the tribunal but it opposed the grant of the increased scale retrospectively and also wanted that the increased wages should be linked to some guaranteed production
The reason for this was that the appellant felt that there had been deliberate slowing down of production by the workmen in the previous years
The tribunal was of opinion that there was some justification in the appellant s contention that there had been considerable go slow which had affected production
Taking that into account it ordered that retrospective effect should be given to its order which was passed on May 13 1957 from June 1 1956
As to the linking of the increased wages to a certain guaranteed production it found it difficult to lay down any norm itself but it made it clear that the increase in wages was made by it on the basis that the workers would give a certain reasonable production and noted that the workers were agreeable to do that
It however recommended that immediately after the
award had been given an expert should be appointed by agreement if possible to go into this question
It also said that in case it was not possible to appoint an expert by agreement it would be open to the appellant to appoint one
380 The appellant s contention before us is that the tribunal having found some justification in its contention that there had been considerable go slow should not have given retrospective effect at all to the order relating to the increase in wages
This matter has been considered fully by the tribunal and it came to the conclusion that increase in wages should be granted from June 1 1956
This could hardly be called retrospective considering that the reference was made in November 1955  in any case the tribunal rejected the claim of the workmen for retrospective operation for the period of over four years from March 1952 to May 1956 and a good deal of go slow was practised during this period
In the circumstances we see no reason for interference with the order of the tribunal fixing the date as June 1 1956 from which the increased wages should come into force
This brings us to the next question relating to bonus
The tribunal has awarded five months  basic wages by way of bonus
The first contention in this connection is that the workmen had only claimed four months  basic wages and the tribunal could not have awarded anything more than what the workmen claimed
This in our opinion is incorrect
The workmen had claimed four months  wages including dearness allowance as bonus
Five months  basic wages which the tribunal has allowed are admittedly less than the claim put forward namely four months  wages including dearness allowance
In the circumstances the tribunal certainly had jurisdiction to award what it has awarded to the workmen
The next question is whether the tribunal was justified in awarding as much as five months  basic wages on the basis of the Full Bench formula which is generally applied to these matters
The gross profit found by the tribunal is not challenged namely Rs 505 lacs
The tribunal has then allowed Rs 136 lacs as depreciation leaving a balance of Rs 369 lacs
Deducting income tax from this at seven annas in a rupee ie Rs 161 lacs we are left with a balance of Rs 208 lacs
Six per cent
per annum interest on the paid up capital along with four per cent
interest on the working capital comes to Rs 16000 leaving an available 381 surplus of Rs 192 lacs
Out of this the tribunal has allowed five months  basic wages as bonus which according to its calculations comes to Rs 91000 leaving Rs 101 lacs
There will be a rebate of Rs 40000 on this sum leaving a total of Rs 141 lacs with the appellant
On these figures the bonus awarded by the tribunal cannot be interfered with
The appellant however draws our attention to two circumstances in this connection
In the first place it urges that the tribunal has not taken into account anything for rehabilitation
But it may be mentioned that the appellant had proved no rehabilitation amount as such
What it had done was to appropriate Rs 316 lacs towards depreciation which of course was not the proper amount of notional normal depreciation which is allowable under the formula
Our attention is drawn however to the figures filed by the workmen in exhibit U 4 in which Rs 40000 has been allowed towards rehabilitation
Even accepting this concession by the workmen and deducting it from the figures given by us above the appellant would still be left with Rs 101 lacs after paying five months  basic wages as bonus
There is thus no reason to interfere with the award of bonus on this ground
Lastly it is urged that according to the income tax assessment which was actually made in this case sometime after the order of the tribunal the appellant has been assessed to income tax amounting to Rs 235 lacs
The appellant claims that it should be allowed this entire amount and not the notional figure calculated by us namely Rs 161 lacs as income tax
We are of opinion that for the purpose of the Full Bench formula the income tax payable has to be deducted on the figures worked out according to the formula and it is immaterial what the actual income tax paid is whether more or less
In this particular case the income tax appears to be more because certain items which were challenged by the workmen but were allowed as proper expense by the tribunal have apparently not been allowed as proper expense by the income tax department
The industrial tribunal however is not concerned directly with what the income 49 382 tax authorities assess as actual income tax in a particular year it is concerned with working out the Full Bench formula in accordance with its notional calculations and this is what has been done in this case
There is no ground therefore for interference with the award of bonus for this reason either
We therefore dismiss the appeal but in the circumstances pass no order as to costs
Appeal dismissed


Summary:
The workmen of the appellant company claimed four months wages including dearness allowance as bonus for the year 1952 and retrospective operation of the increased wage scale to be fixed by the Industrial Tribunal from March 1 1952
The appellant agreed to the increased wage scale suggested by the Tribunal but wanted that it should be linked to some guaranteed production and opposed its operation retrospectively on the ground that there had been eliberate slowing down of production by the workmen in the previous years
The Tribunal found that there was some justification in the appellant s contention that there was considerable go slow which had affected production and ordered that retrospective effect should be given to its order relating to increase in wages which was passed on May 13 1957 from June 1 1956 and not March 1 1952 as claimed by the workmen The increased wages were not linked to any guaranteed production but it was made clear that the workers would give certain reasonable production to which the workmen agreed
The Tribunal granted five months basic wages by way of bonus on the basis of the Full Bench formula which is generally applied to these matters
On appeal by the Appellant company by special leave  Held that there was no reason for interference with the order of the Tribunal fixing the date as June 1 1956 from which the increased wages should come into force and that the Tribunal had jurisdiction to award five months  basic wages by way of bonus
For the purpose of the Full Bench formula the incometax payable has to be deducted on the figures worked out according to the formula and it is immaterial what the actual income tax paid is whether more or less