Case: Indian Hume Pipe Company Limited Vs. Their Workmen

made for redemption thereof on due date. This however does not mean that in the calculations of the distributable surplus the provision for such redemption should be given the status of a prior charge, though of course that would be a relevant consideration while distributing the available surplus between the various interests entitled thereto.We are therefore of opinion that the Tribunal was wrong in allowing Rs. 2,50,000 as a prior charge in the bonus calculations. 25. This disposes of all the contentions which have been urged on behalf of both the parties and calculating the figure on that basis we arrive at the following : ?TABLE? 26. This would bring the available surplus for distribution to a sum of Rs. 12 lacs and this would be distributable amongst the shareholders, the company and the workmen concerned. 27. It is not feasible to lay down any rigid formula as to what the proportion of such distribution amongst these various interests should be. The shareholders as well as the company would both be naturally interested inter alia in providing the debenture redemption reserves as also meeting the needs of the industry for further expansion. The workmen would no doubt be interested in trying to bridge the gap between their actual wage and the living wage to the extent feasible. This surplus of Rs. 12 lacs would have to be distributed amongst them having regard to the facts and circumstances of the case, of course bearing in mind the various considerations indicated above 28. Before we arrive at the figure of the actual bonus which it will be appropriate in the circumstances of this case to allow to the workmen, we may advert to one argument which was pressed before us on their behalf and that was that the bonus calculations should not be made on the basis of the All India figures which were adopted by the Tribunal but on the basis of the actual amounts which the appellant had paid and would have to pay to the workmen concerned. It was pointed out that the respondents here were only the workmen in the Wadala Factory of the appellant. The appellant had, however, paid to the various workmen elsewhere as anal by way of bonus sums varying between 4 per cent and 29 per cent of the basic wages for the year in question. The sum of Rs. 1,23,138 only had been paid in full and final settlement to the workmen in some of the factories and the bonus calculations on an All-India basis would thus work to the advantage of the appellant in so far as they would result in saving to the appellant of the difference between the amounts to which those workmen would be entitled on the basis of the All-India figures adopted by the Tribunal and the amounts actually paid to them as a result of agreements, conciliation or adjudication. It was therefore contended that the calculations should be made after taking into account the savings thus effected by the appellant and only a sum Rs. 1,23,138 which was the actual sum paid to those workmen should be taken into account and no more. We are afraid, we cannot accept this contention. If this contention was accepted the respondents before us would have an advantage over those workmen with whom settlements have been made and would get larger amounts by way of bonus merely by reason of the fact that the appellant had managed to settle the claims of those workmen at lesser figures. If this contention of the respondents was pushed to its logical extent it would also mean that in the event of the non-fulfilment of the conditions impose by the Tribunal in the award of bonus herein bringing in savings in the hands of the appellant, the respondents would be entitled to take advantage of those savings also and should be awarded larger amounts by way of bonus, which would really be the result of the claimants entitled to the same not receiving it under certain circumstances - an event which would be purely an extraneous done and unconnected with the contribution of the respondents towards the gross profits earned by the appellant. The Tribunal was, therefore, right in calculating the bonus on an All-India basis. 29. By our order dated 12-4-1957, the appellant was ordered to pay to the respondents within a fortnight from the date thereof bonus for the year 1954-55 equivalent to two months basic wages; that amount has already been paid and works out at Rs. 3.39 lacs on an All-India basis. 30. The only question which therefore survives is what further bonus, if any, would the respondents be entitled to from the distributable surplus of Rs. 12 lacs. The sum of Rs. 3.50 lacs required for building up the debenture redemption reserve is an all engrossing need of the appellant. and that is a factor which must of necessity be taken into consideration while arriving at the ultimate figure, particularly because such redemption of the debentures would enure not only for the benefit of the Company and its shareholders but also of the workmen employed therein. Having regard to all the circumstances of the case, we feel that an award of four months basic wages as the aggregate bonus for the year 1954-55 (which by the way was the bonus awarded for the previous year1953-54 also) would give a fair share to the labour in the distributable surplus, leaving to the shareholders and the company a balance of Rs. 5.22 lacs to be utilised by them not only towards building up of the debenture redemption reserve but also for building up other reserves, which would be utilised for various other purposes indicated above. The appellant would no doubt get also the refund of the income-tax on the bonus payments made by it. This rebate would also go towards the fulfilment of the very same objectives, which would ultimately enure both for the benefit of the capital as well as labour.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]26. This would bring the available surplus for distribution to a sum of Rs. 12 lacs and this would be distributable amongst the shareholders, the company and the workmen concerned27. It is not feasible to lay down any rigid formula as to what the proportion of such distribution amongst these various interests should be. The shareholders as well as the company would both be naturally interested inter alia in providing the debenture redemption reserves as also meeting the needs of the industry for further expansion. The workmen would no doubt be interested in trying to bridge the gap between their actual wage and the living wage to the extent feasible. This surplus of Rs. 12 lacs would have to be distributed amongst them having regard to the facts and circumstances of the case, of course bearing in mind the various considerations indicated above28. Before we arrive at the figure of the actual bonus which it will be appropriate in the circumstances of this case to allow to the workmen, we may advert to one argument which was pressed before us on their behalf and that was that the bonus calculations should not be made on the basis of the All India figures which were adopted by the Tribunal but on the basis of the actual amounts which the appellant had paid and would have to pay to the workmen concerned. It was pointed out that the respondents here were only the workmen in the Wadala Factory of the appellant. The appellant had, however, paid to the various workmen elsewhere as anal by way of bonus sums varying between 4 per cent and 29 per cent of the basic wages for the year in question. The sum of Rs. 1,23,138 only had been paid in full and final settlement to the workmen in some of the factories and the bonus calculations on an All-India basis would thus work to the advantage of the appellant in so far as they would result in saving to the appellant of the difference between the amounts to which those workmen would be entitled on the basis of the All-India figures adopted by the Tribunal and the amounts actually paid to them as a result of agreements, conciliation or adjudication. It was therefore contended that the calculations should be made after taking into account the savings thus effected by the appellant and only a sum Rs. 1,23,138 which was the actual sum paid to those workmen should be taken into account and no more. We are afraid, we cannot accept this contention. If this contention was accepted the respondents before us would have an advantage over those workmen with whom settlements have been made and would get larger amounts by way of bonus merely by reason of the fact that the appellant had managed to settle the claims of those workmen at lesser figures. If this contention of the respondents was pushed to its logical extent it would also mean that in the event of the non-fulfilment of the conditions impose by the Tribunal in the award of bonus herein bringing in savings in the hands of the appellant, the respondents would be entitled to take advantage of those savings also and should be awarded larger amounts by way of bonus, which would really be the result of the claimants entitled to the same not receiving it under certain circumstances - an event which would be purely an extraneous done and unconnected with the contribution of the respondents towards the gross profits earned by the appellant. The Tribunal was, therefore, right in calculating the bonus on an All-India basis29. By our order dated 12-4-1957, the appellant was ordered to pay to the respondents within a fortnight from the date thereof bonus for the year 1954-55 equivalent to two months basic wages; that amount has already been paid and works out at Rs. 3.39 lacs on an All-India basis30. The only question which therefore survives is what further bonus, if any, would the respondents be entitled to from the distributable surplus of Rs. 12 lacs. The sum of Rs. 3.50 lacs required for building up the debenture redemption reserve is an all engrossing need of the appellant. and that is a factor which must of necessity be taken into consideration while arriving at the ultimate figure, particularly because such redemption of the debentures would enure not only for the benefit of the Company and its shareholders but also of the workmen employed therein. Having regard to all the circumstances of the case, we feel that an award of four months basic wages as the aggregate bonus for the year 1954-55 (which by the way was the bonus awarded for the previous year1953-54 also) would give a fair share to the labour in the distributable surplus, leaving to the shareholders and the company a balance of Rs. 5.22 lacs to be utilised by them not only towards building up of the debenture redemption reserve but also for building up other reserves, which would be utilised for various other purposes indicated above. The appellant would no doubt get also the refund of the income-tax on the bonus payments made by it. This rebate would also go towards the fulfilment of the very same objectives, which would ultimately enure both for the benefit of the capital as well as labour