Case: The State Of Mysore Vs. The Workers Of Gold Mines

the appellate tribunal has observed that for determining the total amount required for rehabilitation it is the original cost that has to be multiplied by an appropriate multiple, for instance 2.7, for the purpose of ascertaing in the replacement value of the machinery, buildings and plant. From the amount thus obtained 5 per cent. of the original value is to be deducted as breakdown value. The balance is treated as sufficient to complete replacement of machinery and buildings. Then the amount in hand under the head of depreciation, general reserve and rehabilitation have to be totalled and this total has to be deduted from the aforesaid balance which is required to complete replacement of machinery and buildings. It is the balance thus drawn that has to be spread over a number of years, as for in instance 15, for the purpose of rehabilitation; in other words, the balance has to be divided by 15 and the amount thus determined has to be treated as prior charge under the heading of rehabilitation for the relevant year.Vide Meenakshi Mills Ltd., Madurai and Manapparai v. Their Workmen, 1954 Lab AC 131 (LATI-Luck) (E); The Rohtas Sugar Ltd. v. Their Workmen, 1954 Lab AC 168 at p. 184 (LATI-Cal) (F) and Mettur Industries Ltd., Mettur Dam v. The Workers, 1957 Lab AC 288 (LATI-Bom)(G). Thus the appellants claim for rehabilitation would have to be tried by the tribunal in the light of these decisions.In the application of the principles discussed in these decisions, industrial adjudication cannot adopt an inflexible or rigid approach; these principles will have to be applied with such modifications and adjustments as may be found necessary, just and expedient having regard to the evidence led by the parties before the tribunal and having regard to the special needs and requirements of the industry. This position appears to be fully recognised by the Labour Appellate Tribunal in these decisions themselves.21. There is another point on which Mr. Sanyal has requested us to call for a finding from the tribunal. His case is that the award of the tribunal in one material particular suffers from an error apparent on the face of the record. In the award, the initial contribution to the pension fund and the annual contribution to the pension fund have been added back for both the years in respect of all the companies. Mr. Sanyal contends that the amount added back under the heading "annual contribution to the pension fund" really includes the initial contribution to the said fund also, and so it was erroneous to have added back a separate amount under the heading "the initial contribution to the pension fund". In other words, the grievance is that the amount of the initial contribution has been added back twice. Mr. Jha, for the respondents, does not accept Mr. Sanyals contention that this is an error apparent on the face of the record. He disputes the assumption made by Mr. Sanyal that the annual contribution to the pension fund in each case includes the initial contribution as well. We do not propose to express any opinion on the merits of this dispute. We think it is desirable that the tribunal should be requested to make its finding on the question as to whether the amount of initial contribution has been added back twice over as suggested by the appellant. This is the second point which we want to remit for the consideration of the tribunal.22. The third point which we propose to remit for the consideration of the tribunal has been raised by Mr. Jha for the respondents. He argues that the tribunal has committed an obvious error in allowing a deduction of statutory depreciation to each one of the companies for both the years in question and in support of his argument he relies on the statements contained in the report of the directors in each case. As an illustration we should refer to the report and accounts of the Nundydroog Mines (KGF) Ltd., for the year ended December 31, 1953. In this report, under the item "capital expenditure", it is stated that the sum of Rs. 13,50,000 being depreciation for the period April 1, 1951 to December 31, 1953 has now been written off. Mr. Jha contends that, since this amount has been written off as depreciation, in calculating the available surplus for the year no amount should be allowed by way of statutory depreciation. This argument has been considered by the tribunal in para 20 of its award but Mr. Jha wants to challenge the correctness of the conclusion reached by the tribunal. We would normally not have allowed Mr. Jhas request for a reconsideration of this matter; but since on two points raised by the appellant we are remanding the case to the tribunal and calling for its findings on the said points we think it right to allow the respondents an opportunity to re-agitate this point. In fairness to Mr. Sanyal we may add that he did not object to this matter being remitted to the tribunal for reconsideration. We would, however, like to make it clear that in dealing with this point it would not be open to the respondents to contend that the appellant was not entitled to claim additional depreciation under the head of statutory depreciation. This Court has held in Sree Meenakshi Mills Ltd. v. Their Workmen, AIR 1958 SC 153 (H) that additional depreciation which is admissible under S. 10(vi) of the Income-tax. Act need not necessarily be allowed by industrial courts in determining the available surplus under the Full Bench formula. We wish to make it clear that it would not be open to the respondents to raise any contention on the strength of this decision under the issue which is being remitted to the tribunal at their request.23. It is somewhat unfortunate that, though we have held against the appellant on the main points urged by Mr. Sanyal before us, we cannot finally dispose of the appeal today.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In determining the quantum of the profit to which workmen as a whole can be held to be entitled, the Labour Appellate Tribunal evolved a formula under which the amount of the available surplus in the hands of the employer can be determined. This formula takes the figure of the gross profits made by the idustry for the relevant year and makes provisions for depreciation, for reserves, for rehabilitation, for return at 6 per cent on thecapital, for a return on the working capital at a lesser rate than the return on thecapital and for the payment ofThese items are treated as prior charges and the amount determined after deducting the aggregate total of these items from the gross profits is deemed to be the available surplus for the relevant year. It is in this available surplus thus deduced that labour is entitled to claim a reasonable share by way of bonus. It would thus be clear that under this formula the existence of an available surplus is a condition precedent for the award of bonus to workmen. The formula also postulates that the claim for bonus is made by workmen who are not paid what may properly be regarded as living wages. The payment of bonus is thus intended to attempt to fill up the gap, to the extent that is reasonably possible, between the wages actually paid to the workmen and the living wages which they legitimately hope in due course to secure. This formula has received the general approval of this Court in Muir Mills Co. Ltd., Kanpur v. Suti Mills Mazdoor Union, Kanpur,SCR 991 : ((S) AIR 1955 SC 170  )has shown that the formula in question is, in its application, elasitic enough to meet the requirements of individual cases, and so we do not think that the appellant has made out case for any addition to the existing categories of prior charges. It is clear that the amounts which can be admitted under the said existing categories would have to be determined in the light of the evidence adduced by the employer and having regard to the special requirements of the employers industry. In the present case the special features of the appellants industry on which Mr. Sanyal relies would have to be taken into account in determining the amounts which could be included either under depreciation or under rehabilitation. That is the approach adopted by the tribunal in the present case and we do not think that any complaint can be validly made againstour opinion it would not be reasonable or fair to allow the appellants specific claim for 15 per cent. by way of rehabilitation solely on the ground that the clause allows it to debit up to 15 per cent. In a special fund without examining the question as to whether a claim for depreciation and rehabilitation is justified, and if yes, what should be the amount which should be treated as a prior charge in the present proceeding. Inclusion of these items in a separate fund allowed under the relevant clause cannot preclude an investigation by the industrial tribunal into the merits of the said items and that is what the appellant seeks to do by placing his claim in that behalf solely on the relevant clause. We are, therefore, satisfied that the tribunal was not in error in disallowing the claim made by the appellant solely on the strength of this particular clause.14.As we have aready pointed out the tribunal has in fact conceded that the appellant would be justified in making a claim for prospecting new ore and thereby helping the longevity of its industry; but since no material was placed before the tribunal on which the tribunal determine the amount which the appellant can legitimately claim in that behalf, the tribunal was enable to give the appellant any relief in this matter. In this connection Mr. Sanyal referred us to the entries in the extracts from the balancesheets which referred to the capital expenditure during the relevant years on buildings, machinery and plant and sundries as well as on shaft sinking etc. In regard to the Mysore Gold Mining Co., for instance, the capital, expenditure in question during the year ending December 31, 1953, was shown as Rs. 3,30,729 (Ex.t the difficulty in accepting this figure as a prior charge either under depreciation or under rehabilitation arises from the fact that Mr. Rajagopal Srinivasan who was examined on behalf of the appellant was unable to explain how this total amount was made up. The witness expressly admitted that the companies had no record to show separately the amounts under different heads. Mr. Sanyal fairly conceded that the companies might have led better evidence in support of theircase. As the evidence stands, however, it is difficult to challenge the correctness of the view taken by the tribunal that the amounts shown in the different extracts from theare a mixture of very many items depending upon the options exercised by the management and that it would be impossible to say which part of the said amounts can be legitimately treated as prior charge under the heading of rehabilitation. That is why we do not think that Mr. Sanyal can succeed in his argument that, on the evidence as it stands, the appellant is entitled to any particular amount under the heading ofour opinion, whether or not this particular amount should be allowed as claimed by the appellant does not raise any general question of law and the reasonableness of the claim has, therefore, to be judged in the light of all relevant facts and circumstances. As the tribunal has found against the appellant on this point we do not think we would be justified in interfering with the decision of theis clear that the respondents were found entitled to bonus for the year 1950, because the companies held in their hands sufficient available surplus from the trading profits of that year.In the absence of satisfactory evidence, normally the bonus paid to the respondents for the year 1950 cannot be brought into accounting for a subsequent year. We are, therefore, satisfied that the appellant cannot successfully challenge the tribunals finding on this question.. Jha, for the respondents, has resisted the appellants request for a remand to enable it to put forward this claim for rehabilitation. He argues that the companies deliberately did not make a specific claim for rehabilitation and chose to rest their case on the relevant terms of the contract because they knew that a claim for rehabilitation would not be sustained. In this connection Mr. Jha referred us to the principles adopted by industrial courts in determining the employers claims forare not impressed by this argument. It seems to us that, if the employer was partly misled by the previous awards and did not in consequences put forward a specific claim for rehabilitation, it would not be fair or just that he should be precluded from making such a claim even after his general claim for the deduction of 15 per cent. is disallowed. After all, the Full Bench formula has recognised the existence of four items as constituting a prior charge on principles of social justice and if, in the present case. the employer failed to make out a claim for deduction of one of the items substantially as a result of the previous awards passed in its favour, he cannot be penalised as suggested by Mr. Jha. We would accordingly allow the appellant to put forward before the tribunal a specific claim under the heading of rehabilitation and lead evidence in support of the said claim.There is another point on which Mr. Sanyal has requested us to call for a finding from the tribunal. His case is that the award of the tribunal in one material particular suffers from an error apparent on the face of the record. In the award, the initial contribution to the pension fund and the annual contribution to the pension fund have been added back for both the years in respect of all the companies. Mr. Sanyal contends that the amount added back under the heading "annual contribution to the pension fund" really includes the initial contribution to the said fund also, and so it was erroneous to have added back a separate amount under the heading "the initial contribution to the pension fund". In other words, the grievance is that the amount of the initial contribution has been added back twice.Mr. Jha, for the respondents,does not accept Mr. Sanyals contention that this is an error apparent on the face of the record. He disputes the assumption made by Mr. Sanyal that the annual contribution to the pension fund in each case includes the initial contribution as well.We do not propose to express any opinion on the merits of this dispute. We think it is desirable that the tribunal should be requested to make its finding on the question as to whether the amount of initial contribution has been added back twice over as suggested by the appellant. This is the second point which we want to remit for the consideration of the tribunal.Jha contends that, since this amount has been written off as depreciation, in calculating the available surplus for the year no amount should be allowed by way of statutory depreciation. This argument has been considered by the tribunal in para 20 of its award but Mr. Jha wants to challenge the correctness of the conclusion reached by the tribunal. We would normally not have allowed Mr. Jhas request for a reconsideration of this matter; but since on two points raised by the appellant we are remanding the case to the tribunal and calling for its findings on the said points we think it right to allow the respondents an opportunity tothis point. In fairness to Mr. Sanyal we may add that he did not object to this matter being remitted to the tribunal for reconsideration. We would, however, like to make it clear that in dealing with this point it would not be open to the respondents to contend that the appellant was not entitled to claim additional depreciation under the head of statutory depreciation. This Court has held in Sree Meenakshi Mills Ltd. v. Their Workmen, AIR 1958 SC 153   (H) that additional depreciation which is admissible under S. 10(vi) of theAct need not necessarily be allowed by industrial courts in determining the available surplus under the Full Bench formula. We wish to make it clear that it would not be open to the respondents to raise any contention on the strength of this decision under the issue which is being remitted to the tribunal at their request.