Case: Workmen of Assam Co. Ltd Vs. Assam Co. Ltd

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 as prosperous one and on a sound footing and as such it is expected to have built up a substantial reserve."7. 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.8. 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 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 respondents 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.9. 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 leading 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 Clerk3. 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;9. Gunti Mohori;10. 3rd Tea House Mohori; 11. Mondal;12. Apprentices.10. Units would thus be awarded to workmen in the 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 be 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.11. Taking the figures on the basis of the award made by the Industrial Tribunal we find that Rs. 7,64,608 would be the surplus for the year 1950, Rs. 77,823 for 1951 and a deficit of Rs. 10 lacs for the years 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 Rupees 4,63,095 and for the year 1951, one sixth of Rs. 4,83,893 and for 1952 one sixth of Rupees 5,31,202 which works out to Rs. 77,182 for 1950. Rs. 80,647 for 1951 and Rs. 88,533 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 the claim for the years1951 and 1952 because of the available surplus which is only Rs. 77,823 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 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.

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

Explanation:
1[ds]5. 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 inSree Meenakshi Mills v. Their Workmen,A I R 1958 S C 153 at p. 156 (A). The formula there laid down issurplus 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 incomethis 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 tothe figures on the basis of the award made by the Industrial Tribunal we find that Rs. 7,64,608 would be the surplus for the year 1950, Rs. 77,823 for 1951 and a deficit of Rs. 10 lacs for the years 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 Rupees 4,63,095 and for the year 1951, one sixth of Rs. 4,83,893 and for 1952 one sixth of Rupees 5,31,202 which works out to Rs. 77,182 for 1950. Rs. 80,647 for 1951 and Rs. 88,533 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 the claim for the years1951 and 1952 because of the available surplus which is only Rs. 77,823 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 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.