Case: Hamilton and Company Private, Limited Vs. Its Workmen

Wanchoo, J. 1. This is an appeal by special leave against the order of the fourth industrial tribunal, West Bengal. There was a dispute between the appellant and its workmen on the question of bonus for the year 1959. The appellant had paid one months wages as bonus for the year 1959, but the respondents demanded two months further wages as bonus on the ground that large profits had been made by the appellant in the year in question. Consequently a reference was made by the Government of West Bengal the tribunal for decision of the question whether any additional bonus, if so, what was payable to the respondents. The tribunal found that there was sufficient available surplus to justify payment of additional bonus amounting to two months basic wages and ordered accordingly. The present appeal is from this decision of the tribunal. 2. The only point that has been urged on behalf of the appellant is that the tribunal was not correct in taking into account the income from a certain house in New Delhi for the purpose of bonus. The case of the appellant is that this was extraneous income within the meaning of the decision of this Court in Tata Oil Mills Company, Ltd., v. Its workmen [1959 - II L.L.J. 250] and should not have been taken into account. It is not disputed that if this income is not taken into account, there will be no case for paying any additional bonus to the respondents. 3. Now the case of the appellant with respect to the house property in New Delhi was that it had been built out of a loan of rupees four lakhs, which the appellant had borrowed for the purpose and as such the workmen had contributed nothing to the building of this house and were thus not entitled to ask that the income from this house should be taken into account in arriving at the available surplus for the purpose of the Full Bench formula. The case of the respondents, on the other hand was that this was an investment by the appellant in the usual course of business. It was not disputed by the workmen that rupees four lakhs had been borrowed by the appellant and that the money had been used for extension of buildings in New Delhi. It was also stated that the loan had been paid back out of the total profits of the appellant-company and that this house was thus merely an investment in the shape of house property just like other investments in other forms.The tribunal found that though the loan had been taken, there was nothing to show that it was borrowed specifically for building the house in New Delhi. It also found that the entire income from the house property in New Delhi was shown in the profit and loss account and the expenditure with respect thereto also was part of the profit and loss account. It therefore held that the building of the house in New Delhi was in the nature of an investment to derive a return which was considered to be more favorable compared to investment made in shares and debentures. It finally held that there was nothing to show that the building was constructed out of the loan and no part of the profits of the appellant went into it. 4. It is urged on behalf of the appellant that one of the witnesses for the respondents admitted that the appellant had borrowed rupees four lakhs and that the money had been utilized for extension of buildings. That is undoubtedly so. But that admission must be taken as a whole; all that the admission shows is that money borrowed was used for the extension of buildings and not that an entirely new building was built only out of the borrowed money. One of the witnesses for the appellant certainly said that the house in New Delhi was constructed in 1954-55 and money was procured by loan for the construction but his statement does not show that the entire house in New Delhi was built only out of the loan. It may be added that the loan was only rupees four lakhs and it seems strange that a house which was constructed only for rupees four lakhs should fetch an annual rental of Rs. 2, 08, 288. On the whole we see no reason to disagree with the conclusion of the tribunal that it has not been proved that this house in New Delhi was built only out of the loan and no part of the profits of the appellant-company went into it. There is also no reason to discharge with the finding of the tribunal that it has not been proved that the loan was only utilized for this purpose and none else.The decision of this Court in Tata Oil Mills case [1959 - II L.L.J. 250] (vide supra) does not help the appellant, for the income in this case was earned in the normal course of business inasmuch as the appellant instead of investing in shares and debentures thought it better to invest in house property. 5. Learned counsel for the appellant, however, relies on a decision of the Labour Appellate Tribunal in pierce, Leslie & Co., Ltd. v. Its workmen [1956 - I L.L.J. 458]. In that case it was apparently held that amounts earned as interest on investments must be treated as unrelated to the employees efforts and as such employees could not claim any shares in such income; and therefore income by was of interest on investments made from reserves must be deducted from gross profits for the purpose of ascertaining available surplus. If this means that even income from investments which have arisen out of the profits earned in the past and are part of the normal manner in which business is carried on, has to be excluded as extraneous income, we must hold it to be incorrect in view of the decision in Tata Oil Mills case [1959 - II L.L.J. 250] (vide supra). 6. It is not disputed on behalf of the appellant that if the income from that house in New Delhi is taken into account for the purpose of bonus, the order of the tribunal awarding further two months basic wages as bonus cannot be assailed.

Decision reasoning: 0[ds]In that case it was apparently held that amounts earned as interest on investments must be treated as unrelated to the employees efforts and as such employees could not claim any shares in such income; and therefore income by was of interest on investments made from reserves must be deducted from gross profits for the purpose of ascertaining available surplus. If this means that even income from investments which have arisen out of the profits earned in the past and are part of the normal manner in which business is carried on, has to be excluded as extraneous income, we must hold it to be incorrect in view of the decision in Tata Oil Mills case [1959II L.L.J. 250] (vide supra)It is not disputed on behalf of the appellant that if the income from that house in New Delhi is taken into account for the purpose of bonus, the order of the tribunal awarding further two months basic wages as bonus cannot be assailed.