Case: Kirloskar Oil Engines Ltd Vs. Their Workmen

The first two are represented by two unions respectively and the last one who are not represented by any union. These workmen will hereafter be called the respondents. The appeal is in respect of the latters claim for bonus for the year ended 31-3-1955. The appellant is a public limited company and does business of manufacturing oil engines at Kirkee, Poona. The appellant was registered under the Indian Companies Act, 1913 in the year 1946, and it went into production from June 1949. The accounting year of the appellant ends on March 31. The appellant has adopted for its workmen the wage-structure prescribed by the Standardisation Committee (Engineering), Bombay, and it pays to its workmen, in addition to their normal wages and dearness allowance, production incentive bonus and attendance bonus. Besides, the appellant gives other amenities to its workmen. In the result the appellant claims that on the whole the wages paid by it to its workmen amount almost to a living wage2. The respondents disputed this last allegation. They contended that the wages paid to them together with the production bonus and attendance bonus as well as other amenities provided for them fall far short of a living wage and they were entitled to claim bonus from the available surplus of the trading profits of the appellant. They accordingly made a demand for bonus for the year in question equal to 1/3 of their earnings of that year immediately and without attaching any condition3. The industrial dispute to which this demand gave rise was referred to the conciliation officer under S. 12 (4) of the Industrial Disputes Act, 1947 (14 of 1947) by the Government of Bombay. The attempt at conciliation however failed; and on receiving the report of the conciliation officer the Government referred the dispute to the Industrial Tribunal, Bombay, under. S. 12 (5) of the said Act. By its award delivered on 9-1-1957, the tribunal directed the appellant to pay to the respondents bonus equal to 1/8 of their basic earnings (exclusive of allowances and production bonus) within a period of two months from the date the award would become enforceable subject to two conditions specified in the award. It is against this award that the appellant has preferred the present appeal.

Reasoning:
If the income-tax payable by the appellant on the amount of profits ascertained after deducting from the gross profits the admissible depreciation claimed is allowed to the appellant, it would amount to Rs. 2.25 lakhs5. In Associated Cement Companies Ltd., Bombay v. Their Workmen, Civil Appeals Nos. 459 and 460 of 1957, D/-5-5-l959: (AIR 1959 SC 967 ),we have considered this point and we have held that in working out the Full Bench formula the employer is entitled to claim the appropriate amount of income-tax payable on the profits determined under the formula even though under the provisions of the aforesaid section of the Income-tax Act he may not be required to pay the said tax.In view of the said decision we must hold that the tribunal was in error in not allowing the appellants claim for deduction of Rs. 2.25 lakhs as a prior charge under the item of income-tax payable for the relevant yearIt is true that in this case the appellant has not filed any statement on oath showing that the amount from the depreciation fund on which it claims a return at 4 per cent. was available to it and has in fact been used as working capital. On the other hand a claim for .32 lakhs was made by way of return on the said fund and it was not disputed by the respondents on the ground that the fund had not been used as working capital or was in fact not available to the appellant. It appears that it was known to the parties that the tribunal had for some time past been taking the view that depreciation fund cannot earn any return even though it is used as working capital. That explains for the state of the pleadings in the present case. However, it is unnecessary to decide whether the appellant is entitled to any return on the depreciation fund in this case because, as we have just indicated, if only the amount of income-tax claimed by it is allowed that itself would entitle the appellant to succeed in this appealMr. Mandke, the appellants Works Manager, has made an affidavit in the proceedings before the tribunal that he had prepared Ex. C. 15 from his personal knowledge and that the said statement correctly showed the life of the machinery employed by the appellant and the period after which it would require to be replaced. The said witness had also filed other statements in support of the appellants claim including Ex. C. 8 which explain the method adopted by the witness for arriving at the amount of rehabilitation claimed by the appellant. It appears that the appellant offered this witness for examination before the tribunal but the respondents did not desire to cross-examine him and so he did not step into the witness-box.That is why the tribunal held that the estimate given by the appellant for rehabilitation, replacement and modernisation should be accepted and the quota asked for by the appellant should be allowed from out of profits. On these facts it is impossible to accept the argument that the claim for rehabilitation has not been proved by the appellant.