Case: Burn and Company Limited Vs. Its Workmen

This dispute between Burn & Company Limited, (Iron Works), Howrah and its workmen is over the profit bonus for the year 1960. Previous disputes between this Company and its workmen on the question of bonus for the years 1951-52, 1953-54 and 1955-56 ended with awards of Industrial Tribunals in West Bengal. The dispute for the bonus payable for the year 1955-56 came up to this Court in appeal and was disposed of by its Judgment dated March 8, 1960. For the Companys financial year from May 1, 1958 to April 30, 1959, the bonus, if any, would be payable in 1960. The Company was prepared to pay bonus equivalent to 3 1/2 months wages but the workmen demanded much more. It appears that the Company has already made an advance of three months wages on the suggestion of the Deputy Labour Commissioner during negotiations for settlement. But the talks for settlement ultimately failed. On applying the principles laid down by this Court in the matter, the Tribunal worked out the net available surplus out of which the claim for bonus had to be made at Rs. 53.31 lacs. After taking into consideration that the Company had contributed Rs. 10.74 lacs towards the employees provident fund and the income-tax rebate which would be available to the Company in respect of the bonus payment, the Tribunal was of opinion that a sum of Rs. 35.20 lacs could be fairly distributed to the workmen as bonus. It has accordingly awarded bonus to the extent of 5 1/2 months wages. It has further directed that the amount of wages already paid in advance towards the bonus shall be set off against the bonus now awarded. Both the Company and the workmen have appealed against the award by special leave.

Court's reasoning:
There can, in our opinion, be no doubt that once the question as to what is necessary for rehabilitation and over how many years it should be spread has been decided by industrial adjudication after proper investigation and careful scrutiny if the evidence adduced in any one year the assessment thus made ought not to be lightly disturbed when the question comes up again in any future year in respect of rehabilitation. The very nature if the problem makes it necessary for industrial adjudication to project itself into the future and decide the total rehabilitation charges over the years and the number of years over which rehabilitation has to be spread.There is bound to be some amount of unreality in its conclusions because of the difficulty of ascertaining in the present what will be necessary in the future. In spite of that however the calculations thus made give on the whole a firm basis for making deductions for calculating the available surplus a reasonable sum for rehabilitation of machinery and buildings and other items of capital as may require rehabilitation. Once however any particular amount has been found necessary as the total rehabilitation charge for a number of years and from that an assessment is made for the particular year in dispute of the amount allowable for that year, it will be unreasonable and indeed meaningless for the matter to be re-investigated year after year. Re- habilitation is rightly regarded as a long term problem and that is why once the matter has been investigated and the proper figure ascertained, that calculation should ordinarily be adhered to for future yearsThere is, in our opinion, considerable force in this contention. We have examined the award in the bonus dispute of 1954-55 and are satisfied that in making the assessment for rehabilitation charges the Tribunal did not get the benefit of proper evidence in the matter We agree that in these circumstances it would not be reasonable to treat the assessment made in that year as binding on the employer in the present dispute also.We are unable to agree however with Mr. Sens contention that the real reason why the Tribunal rejected the evidence adduced on behalf of the employer was that it considered itself bound by the previous assessment. On the contrary, it appears to us clear that the evidence that was adduced was examined fully and carefully by the Tribunal independently of the assessment for the year 1954-55 and it was when that evidence was found unreliable that the Tribunal gave the employer the benefit of the previous assessment. The Tribunal has given clear and cogent reasons for rejecting the evidence that was adduce and we find nothing that would justify us in re-assessing the same for ourselves. One of the main reasons which weighed with the Tribunal was that while q notations were received from Western European countries no quotations were obtained from Eastern European countries like, East Germany, Poland, Czechoslovakia and U.S.S.R. etcWe see no reason also to disturb the Tribunals findings that the rate of 7% on preference shares being a contractual one should not be diminished and that an increase of 30% was also allowable under s. 3(1) of the Preference Shares (Regulation of Dividends) Act of 1960. We are of opinion that the Tribunal was also right in holding that such an increase was not admissible in respect of the ordinary sharesOn behalf of the workmen an objection was raised to the Tribunals findings as to the amount of working capital used. It was said that the evidence did not clearly show the periods during which the amounts were used. In this connection the Tribunal has after consideration of the evidence of Mr. Ghose and Mr. Dutt accepted their evidence and the mere fact that it mentioned some weakness in respect of some minute details does not affect the finality of the Tribunals conclusionThe result of not adding back the sums mentioned above, viz., Rs. 10, 74, 523 and Rs. 2, 83, 156 is that the gross profits became Rs. 168-25 lacs. The Income-Tax on this after making the allowances for statutory depreciation and the development rebate, i.e., a total sum of Rs. 17, 86, 583 is Rs. 67-67 lacs. The calculations for the available surplus therefore stand thus:- (Rupees in lacs) Gross Profits 168.25 Less Normal Notional Depreciation 20.37 Less Income-tax 67.67 Less Return on Paid-up Capital 7.39 Less Return on Working Capital 5.73 Less Rehabilitation Charges 3.29 (23-66 minus 20.37) Available surplus 63.80 The award of bonus at 5 1/2 months wages appears to be reasonable and proper on this figure of the available surplus. The employers plea for reduction of the bonus and the workmens claim for increase of it appear to us equally injustified.