Case: Workmen Vs. Management Of Dunlop Rubber Company Of India Limited

2. The respondent, Dunlop Rubber Company of India Limited, which is engaged in the manufacture and sale of types and tubes for light and heavy vehicles, has a factory in Calcutta, besides one at Ambattur in Madras, which was started in or about 1959. At the time of the award, the company was employing about 1200 workmen but, during the years 1962 and 1963, it was employing about 800 workmen. The company paid to its workmen for each of these two years, 1962 and 1963, 12 weeks basic wages as annual bonus. The workmen were not satisfied with the said payment and demanded additional bonus of three months basic wages for each of these years. According to the workmen, the company has made a net profit of about 3.30 crores in each of these years. The company, however, declined to meet the demand with the result that the Government of Madras by its order dated October15, l966, referred the dispute regarding the additional bonus to the Industrial Tribunal, Madras.There was also another dispute referred regarding the alteration of the gratuity scheme. But we are not concerned with this dispute.3. The case of the workmen, as disclosed by their written statement before the Tribunal, was as follows:The company, according to their published profit and loss account has made a net profit of Rs. 3.30 crorers and Rs. 3.27 crores for the years l962 and 1963 respectively. The management have made various deductions from their gross profit, which were not justified according to the Full Bench Formula. The management in their work sheet claimed Rs. 2.49 crores as rehabilitation and this huge amount has been claimed to purposely defeat the just demands of the workmen. Having due regard to the profits earned by the company, the demand of three months basic wages as additional bonus was justified.4. The company resisted the claim of the union. The case of the company was as follows :In each of these two years, 1962 and 1963, it has paid to its workmen in India bonus equivalent to fifteen weeks basic wages. All the workmen, except the workmen at Ambattur, who represent only about 12 per cent of the total number of employees, have accepted the payment and they are fully satisfied with the amount paid voluntarily by the company. The company made proper deductions and additions according to the Full Bench Formula and arrived at the available surplus. Out of the said available surplus, the company has paid nearly 60 or 63 per cent as bonus to the workmen which represents fifteen weeks basic wages.5. Before the Tribunal, the company as well as the workmen filed charts in respect of their pleas. The union objected to the deductions made by the company in respect of the commission received out of the sales made by the Dunlop United Kingdom as well as the royalties receivable out of the sales made by the London firm. There were also objections taken by the union in respect of certain deductions and claims made by the company. As those contentions have been raised before us also, we will refer to those matters later. There was also controversy regarding the rehabilitation claimed by the company. The Tribunal, on a consideration of the materials placed before it by both the parties, ultimately accepted the case of the management and held that the bonus already paid to the workmen was sufficient and that they are not entitled to any additional bonus for these two years.Mr. M. K. Ramamurthi, learned counsel for the appellant workmen attacked the view of the Tribunal accepting the claims made by the company in respect of several items. The company had filed before the Tribunal a statement, Ext.extracted below, showing the available surplus for the years 1962 and 1963:(Ext.The Dunlop Rubber Co. (India), Limited Available Surplus Computations for the years 1962 andon receivable arises out of sales made by Dunlop U.K. of their products to India either through the Indian High Commissioners Purchasing Commission in London or to directes receivable arise out of sales made by Dunlop U. K., of their products to Afghanistan, Burma and Pakistan. xx xx xx xx xx xx" 8.According to the company, it has paid more than 60 per cent of the available surplus as bonus to the workmen and that they are not entitled to any additional bonus. The first item that was challenged by Mr. Ramamurthi was regarding the deductions made by the company in the sum of Rs. 3,94,964 and Rs. 3,94,973 for the years 1962 and 1963 respectively as commission as well as the sums of Rs. 59,191 and 50,582 as royalties for the years 1962 and 1963 respectively received from Dunlop, United Kingdom. According to the counsel, the workmen have also contributed to enable the company to earn these amounts and, therefore, they will be entitled to a share in the said profits. In this connection, Mr. Ramamurthi referred to the decision of this Court in Tata Oil Mills Co., Ltd. v. Its Workmen, (1960) SCR 1= (AIR 1959 SC 1065  ). In that decision certain items were claimed by the company as extraneous income obtained by them without any contribution by labour. While allowing the claim of the company in respect of two items, regarding the rest it was held by this Court that they had been earned by the company in the normal course of its business and that there was no reason why the labour should be excluded from its share in the profit. It was no doubt observed by this court that normally there must be contribution of the workmen in earning profits before they are entitled to profit bonus but it is not necessary that a direct connection between the efforts of the workmen and a particular item of profit earned has to be established before the profit can be taken into account for the purpose of arriving at the available surplus.Mr. B. Sen, learned counsel for the company, on the other hand, referred us to notes 1 and 2 in Ext.which has he been extracted by us earlier Notes. 1 and 2 clearly explain the circumstances under which the said amounts are earned by the company and they show that the labour has made no contribution whatsoever in the companys earning either in the commission or the royalties. Mr. Sen also drew our attention to the evidence ofthe Deputy Chief Accountant of the company, who has explained the circumstances under which the said amounts were received.

Court's reasoning:
We are of the opinion that the Tribunal was justified in accepting the contention of the company that the amounts received as commission and royalties need not he added back.It may be mentioned that the company had deducted from the profits the provision made for retirement gratuities written back. Mr. Sen has quite fairly accepted that the deduction is not justified. Therefore, this item need not be discusseddonations were claimed as deduction in 1963. As a substantial part of the donations was for the National Defence Fund, the Tribunal held that the expenditure was properly incurred and the company was justified in deducting the donations from the profits.Sen accepted that the deduction made by the management under this head is not justified. Even otherwise, the company is not entitled to deduct those amounts, as is clear from the decision of this Court in Voltas Ltd. v. Its Workmen, 1961 (3) SCR 167   = (AIR 1961 SCboth these decisions, the nature of the evidence to sustain a claim for return on working capital has been discussed and laid down. In particular, in the second decision cited above, the various decisions bearing on the point have been exhaustively reviewed. The position emerging from the decisions of this Court is that mere production of aby a company cannot be taken as proof of a claim as to what portion of the reserves has been actually used as working capital. The utilization of any amount from the reserves as working capital has to be proved by an employer by adducing proper evidence by way of affidavit or otherwise, after giving an opportunity to the workmen to contest the correctness of the same inThe company will have to satisfactorily prove that the amount on which return is claimed has been actually used as workingcompany has filed Ext.containing particulars regarding the amount used as working capital for the years 1962 and 1963. It has also filed Ext.the certificate of the Chartered Accountant, that reserves of Rs. 5,83,75,228 and Rs. 6,22,64,083 have been used as working capital in the years 1962 and l963 respectively. MWl has spoken to the contents of Exts.9. The Chartered Accountant of the auditors, who issued the certificate, Ext.has also given evidence asWhen they have spoken about the amounts used as working capital, there is absolutely noby the union regarding these matters. This is not a case where merely the profit and loss account alone has been filed without any further evidence adduced by the management. Mr. Ramamurthi no doubt attempted to satisfy us by a reference to the profit and loss account for the two years that the entire amount claimed by the company could not have been used as working capital. We have gone through the balance sheet and profit and loss account. We are satisfied that the Tribunal has rightly accepted the claim of the management for 4% return on the workingare not inclined to accept this plea of Mr. Ramamurthi. On the other hand, Ext.shows that the company was prepared to take a stand that even without any claim for rehabilitation being allowed in its favour, the available surplus shown in Ext.will establish that the workmen have been paid more than 60 to 62 % of the available surplus as bonus for each of the two years. Ext.does not and cannot be put against the company if it can properly establish a claim for rehabilitation. Before we discuss further the claim for rehabilitation, it is now necessary to work out the figures on the basis of the findings recorded by us earlier. We have accepted the claim for deduction of commission and royalties in favour of the company. We have also accepted its claim for return on the share premium amount of Rupees 70 lakhs. We have disallowed the claim of the company regarding the amount paid by them as donation in 1962. We have allowed the companys claim for return on the working capital on the above basis, two chart have been prepared of the available surplus for the years 1962 and 1963.We do not propose to go into the details of the claim for rehabilitation made by theas well as the objections now made on behalf of the workmen to the said claim. The reason is that when evidence, oral and documentary, was adduced by the company before the Tribunal, the appellant has not objected to the data adduced and the documents produced by the management and they have not put any questions to the witnesses to establish that the calculation made by the company is erroneous. There is also the additional fact that from two charts of available surplus for the years 1962 and 1963, reproduced earlier, even without allowing any claim far rehabilitation, the workmen have been paid bonus for the two years in question at rates higher than 60 %. Allowing for the benefit that the management will get by way of tax rebate on the amount of bonus paid, the payment of bonus already made is in accordance with the proportion accepted by this Court vice M/s. Gannon Dunkerley and Co. Ltd. v. Workmen, AIR 1971 SC 2567  . Even on the basis of the calculation to be made, according to the appellant, in respect of the rehabilitation claim, the company will be entitled to some amount at least in that regard. Even if the amount, as contended by Mr. Ramamurthi, is taken into account, the available surplus, as shown in the charts, will be reduced further. The result will be that even the amount paid as bonus already by the company, will be more than what the workmen will be entitled to according to the decisions of this Court. As pointed out earlier, even without making any provision for rehabilitation, the percentage of bonus paid is amply sufficient. Considering the matter from any point of view, there is no question of the workmen being entitled to any additional bonus over and above what has already been paid.