Appeal No 34 of 1957
Appeal from the judgment and order dated August 31 1955 of the Labour Appellate Tribunal of India Calcutta in Appeal Nos
Cal 187  Cal 188 of 1954 arising out of the Award dated May 15 1954 of the 328 Industrial Tribunal Assam in Reference No 20 of 1953 published in the Assam Gazette dated June 16 1954
CB Aggarwala and K P Gupta for the appelants
PK Goswami section N Mukherjee and B N Ghosh for the respondent
March 31
The Judgment of the Court was delivered by KAPUR J
In this appeal brought by special leave against the order of the labour Appellate Tribunal Calcutta dated August 31 1955 the controversy between the parties is confined to the question of bonus
The appellants are the workmen including members of the Indian staff and artisans employed by the respondent the Assam Co Ltd a company incorporated in the United Kingdom and engaged in tea industry in the State of Assam
The appellants claimed bonus for the years 1950 1951 and 1952 at the rate of 6 months  wages per year
The respondent offered to the Indian staff excluding the artisans Rs 51061 as bonus for 1950 Rs 48140 for 1951 and Rs 15493 for 1952 which works out at 23 of the net profit for the year 1950 31  for the year 1951 and 39  for the year 1952
This dispute was referred to the Industrial Tribunal by a notification of the Assam Government dated August 27 1953
The Industrial Tribunal allowed depreciation as given in the company s balance sheets for the three years and allowed as return on the paid up capital and on the reserve 7 and 5 respectively and held the artisans also to be entitled to bonus
For the purpose of mode of payment the Industrial Tribunal accepted the  unit scheme under which the company had been paying bonus since the year 1926
It was of the opinion that the scheme was fair and rational and gave incentive to industrial efficiency and to production
Both the appellants and the respondent appealed against this order the former as to the correctness of 329 the accounts the amount of the return on capital and reserves and the  unit scheme  and again claimed six months  wages per year as bonus
The latter appealed against the percentages allowed on the capital and the reserves and claimed 10 and 8 respectively as a fair return
It objected to the inclusion of the artisans amongst the workmen eligible for bonus and also to the application of what is known as the Bombay formula to Tea industry
The Labour Appellate Tribunal varied the Tribunal s award and allowed depreciation at the rate allowable under the Indian Income Tax Act confirmed 7 on the paid up capital but raised the return on the reserves from 5 to 6 in order to meet the claim of the company for rehabilitation which though not claimed before the Industrial Tribunal was put forward before it as a basis for increase in return on reserves
In this Court the appellants again repeated their objection to the amount of depreciation the return on capital and on reserves and to the  unit scheme  but were prepared to confine their claim to two months  was as bonus
Counsel for the respondent objected to the applicability of the formula to an industry like the tea industry his contention being that circumstances and considerations applicable to the textile industry cannot apply to Tea industry which being connected with agriculture is affected by various factors which must be taken into consideration in the matter of depreciation return oil capital and return on reserves
The principles on which the ascertainment of the surplus on the basis of which bonus becomes determinable and distributable have been laid down by this Court in Sree Meenakshi Mills vs Their Workmen The formula there laid down is  Distributable surplus has to be ascertained after providing from the gross profits for 1 depreciation 2 rehabilitation 3 return at 6 per cent
on the paid up capital 4 return on the working capital at a lesser but reasonable rate and 5 for an estimated amount in respect of the payment of income tax 1  42 330 Under this formula the depreciation allowable in cases arising under the Industrial Disputes Act is the normal depreciation including shift depreciation
We did not understand counsel for the respondent to contend that there was anything in the formula which was wrong in principle but that it had to be adjusted to suit the circumstances of the Tea industry
No circumstances were however given by him which would make it unfair to apply the formula nor were any figures or particulars furnished for varying it in regard to depreciation
The Industrial Tribunal allowed 7 return on capital as against 6 held allowable under the formula
Its reasons for this increase were  That the tea industry here may have often to face various adverse circumstances more adverse than those that may come upon other industries and may have more risks than other industries
It may however be noted that the company in the instant case is more than a Century old one faring well all through and has thus been so far a prosperous one and on a sound footing and as such it is expected to have built up a substantial reserve
 The Labour Appellate Tribunal maintained this higher rate of return on capital on the ground  of its being exposed to greater risks than any other industry namely weather pests in the plants and gradual deterioration of the soil over which no man has any control These additional risk factors are no doubt present in an industry connected with agriculture like the tea industry and in our opinion they justify the giving of a higher rate of return on capital
Instead of 4 allowed by the formula the industrial Tribunal fixed the return on reserves at 5 on the ground of its being sufficient to guard the interests of the company but the Labour Appellate Tribunal increased it to 6 to meet replacements and rehabilitation charges since the  usual method of calculating these charges is not possible in the present case  and  we are to see that the industry does not
suffer for want of replacement and rehabilitation funds and must 331 provide such funds in some other way namely by allowing a return on the working capital at higher rates 
In the absence of any claim in the respondent s Written Statement for rehabilitation or any figures for determining this amount this extra one per cent
is insupportable
It is not a case where a claim could not be made or figures could not have been given at the proper stage
The additional one per cent
cannot therefore be allowed
In our opinion the reasons given by the Industrial Tribunal sufficiently support the giving of 5 on the reserves as being fair considering the risks of the tea industry which is exposed to various adverse circumstances and elements
The Industrial Tribunal has not acted unreasonably nor in disregard of any accepted principles in calculating the return on reserves at 5 and we see no cogent reason for varying this rate
The respondent has since 1926 been paying bonus to its employees according to a scheme called the  unit scheme  which according to the Industrial Tribunal has the merit of being more rational and gives incentive to industrious habits and efficiency loading to more production
The Labour Appellate Tribunal did not go into the merits of the scheme but ordered payment according to it
Under this scheme units are credited to each workman taking into consideration the importance of the job he holds the wages he gets and the number of years he has been employed in that particular job
The value of units so awarded thus vary commensurate with considerations of efficiency and experience
The establishment is divided into twelve categories and the medical staff into three each based on the relative importance of the nature of work done by a workman
Thus in the descending order of their importance the jobs are classified as 1
Head Mohori 2
Head Clerk 3
Divisional Mohori  4
Land Mohori Hazaria Mohori 5
Kamjari Mohori 6
Godown Mohori 7
2nd Tea House Mohori 2nd Kerani 2nd Hazaria Mohori 8
2nd Godown Mohori 9Gunti Mohori 10
3rd Tea House Mohori 11Mondal 12
Apprentices
Units would thus be awarded to workmen in the 332 particular category they are in and the more qualified the worker the better his work and the higher his wage the higher the number of units he would be entitled to
The amount available for distribution as bonus is divided by the aggregate number of units of all the workmen participating in the scheme and each worker would be entitled to a multiple of the amount payable on one unit and the units to his credit
It appears to us that the estimate of the Industrial Tribunal as to the suitability of the scheme was fully justified and payment of bonus in accordance with this scheme will not only result in fair distribution of bonus but would also lead to improvement in the quality and quantity of work
This scheme is not to be confused with production bonus though it has the merit of combining the fair distribution of the surplus available and the maintenance of efficiency in the establishment
Taking the figures on the basis of the award made by the Industrial Tribunal we find that Rs 764608 would be the surplus for the year 1950 Rs 77823 for 1951 and a deficit of Rs 10 lacs for the year 1952
The total sum available for three years will be nil
On the basis of the claim which counsel for the appellant has made before us i e two months  wages we find that the amount of bonus required for the members of the staff for the year 1950 will be one sixth of Rs 463095 and for the year 1951 one sixth of Rs 483893 and for 1952 one sixth of Rs 531202 which works out to Rs 77182 for 1950 Rs 80647 for 1951 and Rs 88533 for 1952
The amounts required for the artisans further increase these figures
No doubt on the calculations which have now been made the appellant may justify the claim of two months  bonus for the year 1950 but the same cannot be said in regard to It he claim for the years 1951 and 1952 because of the available surplus which is only Rs 77823 for 1951 and there is a deficit of about 10 lacs of rupees for the year 1952
Taking all these figures into consideration we are of the opinion that the amounts awarded by the Industrial Tribunal are fair and proper
As the Labour Appellate Tribunal 333 allowed depreciation and rehabilitation on an erroneous basis we would set aside the order of the Labour Appellate Tribunal and would restore that of the Industrial Tribunal with this modification that the Respondent shall make available the additional amount required for payment of the proportional bonus to the artisans
The appeal is therefore allowed to this extent the order of the Labour Appellate Tribunal set aside and the award of the Industrial Tribunal restored with this modification that the respondent shall also provide an additional amount for these three years for payment to the artisans of proportionate bonus on the basis of the  Unit System 
As neither of the parties have succeeded in their main contentions the fair order in regard to costs should be that the parties do bear their respective costs throughout


Summary:
Section 4 of the abolishes the bonded labour system and states that on commencement of the Act every bonded labourer shall stand freed and discharged from any obligation to render any bonded labour
The Secretary of a social organization in Tamil Nadu wrote a letter to the Court alleging prevalence of bonded labour in stone quarries in several districts of Andhra Pradesh
This letter was registered as a writ petition
Three other similar applications were also received and registered as writ petitions
During the pendency of the petitions the court passed certain interlocutory orders
In the first order the Court directed the District Magistrate Hyderabad and a representative of a social organisation AWARE to visit the site and make a report to the court within two weeks
In the next order the court asked the respondent State of Andhra Pradesh to file an affidavit showing how many bonded labourers had been identified and released since 111983 and whether they had been rehabilitated and if so in what manner and if there is a follow up action
If not rehabilitated then what steps were being taken by the State to do so
It was also directed that Vigilance Committees be set up and a member of social organizations may also be included as a member in each committee
After the District Judge submitted his report the Court asked the State Government to take further steps and see that several relevant labour laws applicable to labour PG NO 346 PG NO 347 working in stone quarries are fully implemented
The Court also directed that a Joint Secretary of the Ministry of Labour Government of India should visit the relevant stone quarries to hold an enquiry for the purpose of ascertaining whether there was existence of bonded labour and whether the several relevant mines laws and labour laws were being observed
After the receipt of the report of the Joint Secretary the Court directed the State of Andhra Pradesh to carry out the suggestions and recommendations made in the said report and to file an affidavit setting out what steps and measures have been taken by the State Government on the recommendations made by the Joint Secretary
The Court also issued notice to the Central Government to take steps to ensure that the provisions of the Mines Act and the connected laws are observed in the stone quarries
As a result of the action taken by the Court about 2200 bonded labourers were freed
The State of Andhra Pradesh arranged for their transport to their homes situated in the States of Orissa Karnataka and Tamil Nadu
The State Governments of these three States were directed to take further steps for the rehabilitation of the bonded labourers and submit a report to the Court
Pursuant to this direction the State of Orissa submitted a report showing how these persons were rehabilitated by providing assistance to them
The State of Tamil Nadu also filed a report after repeated directions and stated the measures being taken by them for rehabilitation of these labourers
However in spite of repeated directions the State of Karnataka did not cooperate in filing an affidavit showing how they have rehabilitated the freed bonded labourers
The Court while disposing of the writ petitions and giving some more time to the State of Karnataka to do the needful
HELDOBSERVEDDetailed provisions have been made for extinguishment of liability to repay bonded debt implementing authorities have been set up vigilance committees have been provided resort to bonded labour has been made an offence and steps for rehabilitation have also been indicated
Laws however beneficial they may be are difficult to be implemented unless the requisite social consciousness has grown
The system of Bonded Labour has prevailed in this Country for centuries
The gap in economic conditions has been the main cause for this
358F G The society envisaged under the constitutional set up can no more take bonded labour as a part of it
Every citizen must be prepared to accept every other citizen as a person equal to him for enjoying the social benefits and the guarantees provided under the Constitution
It must PG NO 348 herefore become a conscious obligation of every must therefore become a conscious obligation of every employer not to take advantage of the economic disability of a brother citizen and force him into the system of Bonded Labour
It must equally be the obligation of every citizen to cooperate in bringing about abolition or what is condemned by the laws as Bonded Labour otherwise the beneficial legislation would remain on paper with mere a statutory declaration of abolishing bonded labour as provided in section 4 and yet continue to prevail unabated in the community
359D F Bandhua Mukti Morcha vs Union of lndia   referred to
Twelve years have passed since the law came into the Statute Book and surprisingly it came 26 years after the Constitution came into force
In 38 years under the Constitution we have not been able to generate appropriate attitudes and dispositions to live amicably in the polity
Instead of appropriate consciousness manifesting itself contra indica tions have widely appeared
Even those on whom the Statute casts the responsibility of implementing the provisions of the Act do not appear to be in a situation to respond
It is difficult for the Court to entertain repeated complaints of this type and devote attention by way of monitoring the administration of the Act as has been in this case
We are surprised that about three years were necessary to persuade the State of Andhra Pradesh Where bonded labour was identified and from where repatriation was necessary and the states of Karnataka Orissa and Tamil Nadu where rehabilitation was to be provided to perform their statutory obligations
360A C