Case: Burn & Company Limited & Another Vs. Their Employees

1. The principal point which this appeal by special leave raises for our decision is in regard to the distribution of the available surplus between the appellants, Burn & Co., Ltd., and another, and the respondents, their employees. The award under appeal was passed by the industrial tribunal in an industrial dispute which was referred to it in respect of the respondents claim for bonus for the year 1954 payable in 1956. The other dispute referred for adjudication was whether any interim bonus should be paid before the Pujas but with it we are not concerned in the present appeal. The industrial tribunal has applied the Full Bench formula in deciding this dispute. It appears that the respondents claimed four months basic wages by way of bonus whereas by the award they have been given 2 1/2 months basic wages as bonus for the relevant year. Mr. Sanyal, for the appellants, contends that having regard to the surplus available for distribution the award of 2 1/2 months basic wages as bonus is unduly generous to the respondents; and in support of this argument he has invited our attention to the decision of this Court in the Management of the Jawahar Mills, Ltd., and others v. Their workmen [Civil Appeals Nos. 294-296 of 1958, decided on 11 February, 1960]. In that case this Court has observed that while no inflexible rule can possibly be laid down as regards the distribution of the available surplus, a workable rule, where the surplus is not considerable, very often is that, when no other evidence as regards relevant factors is available, the distribution should be half and half between the employees on the one hand and the industry and shareholders on the other. It would be noticed that the judgment does not purport to lay down any rule and the working rule to which it refers is also intended to be confined to cases where the surplus is not considerable.In the present case the gross income derived from the profit and loss account by the appellants is Rs. 55.85 lakhs; and after the calculations are made according to the formula the available surplus is found to be Rs. 13.72 lakhs. Under the award Rs. 10.20 lakhs or so would be available to the respondents by way of bonus, because it appears that the total bill of the average salaries payable to the appellant is Rs. 4.08 lakhs, but this amount would earn a rebate of income-tax which would be in the neighbourhood of Rs. 4.45 lakhs. If the appellants are given credit for this amount, the result would be that it would get nearly Rs. 8 lakhs and the respondents would get nearly Rs. 10 lakhs. Though this result has worked slightly in excess of 50 per cent in favour of the respondents, we do not see how we would be justified in interfering with the award solely on that ground. We have repeatedly held that inflexible rule can be laid down in regard to the distribution of available surplus under the working of the Full Bench formula. It is a matter which must always be left to the discretion of the tribunal. It is only when this Court is satisfied that in exercise of its discretion the tribunal had acted improperly that a case may be made out for our consideration of the matter. Having regard to the circumstances of this case, we do not think that such a case has been made out in the present appeal.2. Mr. Sanyal then contended that the tribunal was in error in not allowing interest at 4 per cent on the reserves used as working capital; the tribunal has allowed 2 per cent interest on the said reserve. This again is not a matter of law. In several instances interest at 2 per cent has been allowed by tribunals on reserves used as working capital. As in the case of the distribution of available surplus, so in the case of awarding interest on working capital the decision must normally be left to the discretion of the tribunal. We are, therefore, not inclined to accede to the argument that the said interest should be raised to 4 per cent.3.

Decision reasoning: 0[ds]It would be noticed that the judgment does not purport to lay down any rule and the working rule to which it refers is also intended to be confined to cases where the surplus is not considerable.In the present case the gross income derived from the profit and loss account by the appellants is Rs. 55.85 lakhs; and after the calculations are made according to the formula the available surplus is found to be Rs. 13.72 lakhs. Under the award Rs. 10.20 lakhs or so would be available to the respondents by way of bonus, because it appears that the total bill of the average salaries payable to the appellant is Rs. 4.08 lakhs, but this amount would earn a rebate ofwhich would be in the neighbourhood of Rs. 4.45 lakhs. If the appellants are given credit for this amount, the result would be that it would get nearly Rs. 8 lakhs and the respondents would get nearly Rs. 10 lakhs. Though this result has worked slightly in excess of 50 per cent in favour of the respondents, we do not see how we would be justified in interfering with the award solely on that ground. We have repeatedly held that inflexible rule can be laid down in regard to the distribution of available surplus under the working of the Full Bench formula. It is a matter which must always be left to the discretion of the tribunal. It is only when this Court is satisfied that in exercise of its discretion the tribunal had acted improperly that a case may be made out for our consideration of the matter. Having regard to the circumstances of this case, we do not think that such a case has been made out in the present appeal.l then contended that the tribunal was in error in not allowing interest at 4 per cent on the reserves used as working capital; the tribunal has allowed 2 per cent interest on the said reserve.This again is not a matter of law. In several instances interest at 2 per cent has been allowed by tribunals on reserves used as working capital. As in the case of the distribution of available surplus, so in the case of awarding interest on working capital the decision must normally be left to the discretion of the tribunal. We are, therefore, not inclined to accede to the argument that the said interest should be raised to 4 per cent.