Case: Indian Hume Pipe Company Limited Vs. Their Workmen

2. The appellant is a subsidiary of the Premier Construction Co. Ltd., and manufactures Hume Pipes. It has factories in different parts of India, Pakistan and Ceylon. The respondents are the workers employed in the appellants factory at Antop Hill, Wadala, Bombay.      3. In October 1955, respondent I who are workmen represented by the Engineering Mazdoor Sabha made a demand for the payment of six-months wages as bonus for the year 1954-55. The matter was also referred to the Conciliation Officer requesting him to initiate Conciliation Proceedings. The Conciliation Proceedings went on before the Conciliation Officer up to 23-3-1956 on which date both the parties arrived at and executed an Agreement to refer the matter to an Industrial Tribunal for adjudication. Accordingly, on 130-4-1956, both the parties drew up and signed a joint-application for referring the dispute for adjudication to a Tribunal and the Government of Bombay thereupon in exercise of the powers conferred by sub-s. (2) of S. 10 of the Industrial Disputes Act, 1947 by its order dated 11-6-1956 referred the following dispute to the Tribunal:"DEMAND: Every workman (daily rated) should be paid bonus for the year 1954-55 (year ending 30th June 1955) equivalent to six-months wages without attaching any condition thereto"Respondent No. 1 filed their statement of claim before the Tribunal on 20-6-1956. They alleged that the profits of the appellant during the year 1954-55 were higher than those during the year 1953-54 for which year the appellant had paid four months basic wages as bonus. They also alleged that the wages paid to them by the appellant fell short of the living wage and therefore the appellant should pay them six months basic wages as bonus for the relative year.      4. The appellant filed its written statement in answer on 14-8-1956. The appellant submitted that, after providing for "the prior charges" according to the formula laid down by the Labour Appellate Tribunal the profits made during the year under consideration did not leave any surplus and the respondents were not entitled to any bonus. It denied that, it had made huge profits during the year in question and submitted that the profits made were not even sufficient to provide for "the prior charges" etc.      5. The tribunal after hearing the parties came to the conclusion that even if payment of a bonus equal to 4 1/2 months basic wages were made a fair surplus would be left in the hands of the appellant to the tune of Rs. 3.30 lacs and therefore awarded the same subject to the following conditions:      (a) Any employee who has been dismissed for misconduct resulting in financial loss to the company shall not be entitled to bonus to the extent of the loss caused.      (b) Persons who are eligible for bonus but who are no longer in the service of the company on the date of the payment shall be paid the same provided that they make a written application for the same within three months of publication of this award. Such bonus shall be paid within one month of receipt of application provided that no claim can be enforced before six weeks from the date this award becomes enforceable.      6. Being aggrieved by the said award of the Tribunal, the appellant applied for and obtained from this Court special leave to appeal against the same under Art. 136 of the Constitution and hence this appeal.

Court's reasoning:
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