Case: Shri Ambica Mills Ltd. No. 1 Vs. The Textile Labour Association, Ahmedabad,, And Vice Versa

1. Civil appeals Nos. 2083 and 2084 of 1969 are by the Management, Shri Ambica Mills Ltd. No. 1, against the Award Part I dated 13th August, 1969 and Part II dated 28th August, 1969, respectively of the Industrial Court, Gujarat in Reference IC NO. 110 of 1968. Civil appeals Nos. 1259 and 1260 of 1970 are by the Textile Labour Association, Ahmedabad, representing the workmen against the same Award.      2. Shri Ambica Mills Ltd., Ahmedabad, is a public limited company owning three textile units, viz., Shri Ambica Mills Ltd. No. 1 and No. 2 at Ahmedabad, Shri Ambica Mills Ltd. No. 3 at Baroda and two engineering units, viz., Shri Ambica Tubes at Vata and Shri Ambica Machinery Manufacturers in the premises of Shri Ambica Mills Ltd. No. 1 at Ahmedabad. The last unit, i.e. Shri Ambica Machinery Manufacturers came into existence in the beginning of the year 1967. Shri Ambica Mills Ltd. 2 and 3 have entered into an agreement to pay bonus on the lines of Shri Ambica Mills Ltd. No. 1, Ahmedabad. All the aforesaid undertakings have been treated as parts of the same establishment, namely, Shri Ambica Millts Ltd., for the purpose of computation of bonus.      3. The dispute relates to the payment of bonus for the year 1967. The demand for the payment of bonus for the year 1967 was raised as a result of notice of change given by the Textile Labour Association (hereinafter referred to as the Association) on 15-7-1968. The appellant mills did not agree to the payment of bonus as demand and conciliation proceedings having failed, the dispute was referred under Section 73-A ofthe Bombay Industrial Relations Act, 1946. The Association requested the Mills Company to furnish the information regarding the computation of gross profits as well as allocable surplus to enable the association to calculate the bonus for the year 1967. The Mills Company supplied the said information, but it also claimed certain deductions from the gross profit for calculating the allocable surplus.      4. In the statement of claim filed by the Association it was submitted that -      (a) The Mills Company should be directed to pay bonus at the rate of 6.59 % of the annual earnings.      (b) The said amount should be directed to be paid with interest at the prevailing rate.      (c) The Honble Court may be pleased to grant any other further relief as it may deem fit.      5. The deductions claimed by the mills in calculating the available surplus were of certain items falling under item 6 (g) of the Second Schedule ofthe Payment of Bonus Act, 1965, as subsidies. It was contended that only 4% bonus i.e. the minimum bonus was payable.      6. The Association accepted the facts and figures furnished by the Mills Company and the dispute only related to the matter of deduction in respect of an amount of Rs. 32,42,945/- and whether the whole or any part thereof was subsidy or not.      7. The amounts claimed as subsidies consisted of the following five different items :      (1) Rs. 8,63,194/-      Cash subsidy on export of steel pipes and tubes received from Joint Chief Controller of Imports and Exports, Bombay.      (2) Rs. 4,25,233/-      Cash by way of steel entitlement received from the Joint Plant Committee, Calcutta.      (3) Rs. 9,33,213/-      Cash by way of Customs Drawback realisation on certain types of pipes received from the Collector of Customs, Bombay.      (4) Rs. 71,754/-      Cash by way of Railway Freight Rebate paid by the Chief Commercial Superintendent, Western Railway, Bombay.      (5) Rs. 9,49,551/-      Export incentive on the cotton textile goods exported received from the Indian Cotton Mills Federation, Bombay.      8. Out of this total amount, an amount of Rs. 9,72,986/- relates to past years i.e. the years 1965 and 1966, and, according to the Mills Company that cannot, in any event, be treated as income for the accounting year 1967 to which the dispute relates.      9. The Industrial Court held that the Mills Company was entitled to deduct the first two items i.e. cash assistance from Jt. Chief Controller of Imports and Exports, Bombay, being Rs. 8,63,194 and cash payment by way of steel entitlement being Rs. 4,25,233 but not items Nos. 3, 4 and 5. It further directed the parties to file fresh calculation on the basis of its directions in Award Part I.      10. On the basis of the above directions the Association filed the calculations reserving its right to appeal. The Mills Company also submitted fresh calculations. Based on these calculations the Industrial Court made an award directing the Mills Company to pay 4.53 % of wages as bonus to all its employees in the 3 textile units and 2 engineering units.      11. The dispute thus centres round the meaning of the word Subsidy found in item 6 (g) of the Second Schedule to the Payment of Bonus Act. Another incidental question is whether the Joint Plant Committee or the Indian Cotton Mills Federation is a "Body Corporate established by any law for the time being in force".      12. The word Subsidy is not defined in the Act. The Industrial Court took into consideration the meanings of the word Subsidy given in the (i) Websters New World Dictionary, 1962, (ii) Shorter Oxford English Dictionary, Vol. II, Third Edition, (iii) Chamberss Twentieth Century Dictionary, Revised Edition, and (iv) The Readers Digest Great Encyclopaedic Dictionary, Vol. II (M-Z), and came to the conclusion that the word subsidy cannot be confied only to those cases where cash payment is made by Government in order that an industry may survive, that even if assistance is given by way of an incentive it would not cease to be a subsidy provided it is a cash payment given by way of assistance and that certain types of assistance particularly those which are only indirect like rebates etc. should be excluded.

Reasoning:
18. We may, perhaps, refer in this connection to certain decisions relied on by the both sides. In Sone Valley Portland Cement Co. v. The Workmen, (1972) 1 Lab LJ 642 = (AIR 1972 SC 2148  ) this Court held that apart from legislation an incentive bonus for increase of production, irrespective of the question as to whether the industry was making profit or not is one that must be introduced by the particular unit of industry, and it would be for the management to fix what incentives should be given to different departments to step up production. It was further held that an Industrial Tribuanal would not be justified in holding that merely because there has been augmentation in the production labour would be entitled to make a claim to bonus because of such increase, and that labour would undoubtedly be entitled to to revision of wage scales, dearness allowance and other terms and conditions of service as also profit bonus. This decision is not, therefore, an authority for the proposition that a subsidy intended to encourage export could not be taken into account for the purpose of calculating the allocable surplus. This decision itself proceeds on the basis that in calculating the profit bonus such amounts would have to be taken into account. All that was held was that the amount paid as subsidy by itself could not be considered to be one in which labour would be entitled to share19. The decision of this Court in Bengal Textiles Association v. I. T. Commr. AIR 1960 Sc 1320   though it had to consider the meaning of the word subsidy occurring in the Business Profits Tax Act 1947, would not be relevant for deciding the question at issue. In that case it was held that the use of the word bonus or subsidy connotes that the payment is in the nature of a gift, and as the payments in that case were made by the Government to an association to assist it in carrying on its business and for the services it was rendering to Government, the payments were not in the nature of a gift. This decision was relied on by Mr. Tarkunde as supporting his argument that a payment made for a service rendered cannot be deemed to be a subsidy. That is no doubt so, but in the present case there is no question of any service rendered by the management to the Government. The mere fact that the Government is interested in encouraging exports and, therefore, offers many incentives for export, of which any manufacturer could take advantage, does not mean that any such manufacturer is rendering any service to Government. These are schemes intended by the Government for the benefit of the country and, therefore, any person would be entitled to take advantage of that scheme and be entitled to subsidy or assistance promised by the Government. Such payments do not become either payments for service rendered or cease to be subsidy merely on the ground that any number of persons coming under that category would be entitled to that benefit of payment20. It was argued by Mr. Tarkunde that if a manufacturer takes it into his head to export all the products that he had manufactured it would mean that all his receipts would be in the form of subsidy, drawback on Central Excise and rebate on railway freight, and if all these items are to be deducted from the profits there will be nothing available for distribution as bonus and that it will be unfair to labour to deprive it of its share of the income from products towards the production of which it has made its own contribution. Notionally that is possible but in actual practice that is hardly likely.But it does not, however, take away the force of the argument that the deduction of subsidies from the total income would be unfair to labour in the matter of payment of bonus. As we have already pointed out the remedy lies with the Legislature. What prompted the Government to include item 6 (g) in the Second Schedule to the Bonus Act we have no way of knowing26. This leaves for decision the question whether the sum of Rupees 9,72,986 which relates to amounts received in the year 1967 but relates to earlier years, can also be deducted ornot.In the view that we have taken that only item 1 is a deductible item, the amount involved is a small one of Rs. 6,873 due for the year 1966 but received in the year 1967.We are not able to agree with the contention on behalf of labour that as the whole of the sum of Rs. 32,43 lacs has been shown as item of income in the profit and loss account of the mills the management cannot now contend that any part of it cannot be deducted and that the whole of the amount should be held to be profit available for calculating the bonus. All that S. 23 of the Act provides is for presumption of the accuracies of the balance sheet and profit and loss account of corporations and companies. The correctness has been accepted by both the parties. But whether any part of that amount should be held to fall under item 6 (g) of the Second Schedule to the Act cannot be dediced on the basis that it is shown as an income in the profit and loss account or the balance sheet. There is no question of estoppel here. All the same we have no doubt that amounts due for earlier years received in 1967 should also be deemed to be income for the year 1967. Otherwise it means that such sums would not have been taken into account in the years for which they were due as also in the years when they were received. Moreover, the accounts in this case have been maintained on a cash basis and, therefore, the amounts received in the year 1967 should be deemed to be the income of that year though due in respect of an earlier year. We may also refer to the decision in Consolidated Coffee Estate Ltd. v. Workmen, (1970) 2 Lab LJ 576 (SC) where it was held that even though the company had been paying bonus in the past by negotiating with its employees, if it insisted that for the year in question it would pay in accordance with the relevant law it could not be prevented from having its liability for bonus determined accordingly.