Case: Management of Pakshiraja Studios Vs. Hie Workers In Pakshiraja Studios Represented by the Secretary,Commercial &amp; Allied Employees' Union

1. This appeal by special leave is by the Management of Pakshiraja Studios against the Award in an industrial dispute regarding bonus. The employees based their claim on the total profits of the working of the Studios, taking into account both the strictly studio line and the line of picture production. This was resisted by the Management, whose contention is that the "studio" business is totally distinct from the business of production and distribution of pictures, and that the employees who have claimed bonus having no connection with the business of production and distribution of pictures their claim must be considered on the results of the working of the strictly studio business alone. It was the common case of the parties that if the results of the working of the studio lien alone are considered, the employees were not entitled to any bonus; but if the total results of the entire working of the Pakshiraja Studios, including both the Studio working and the production and distribution of pictures be taken into consideration, the profits left a sufficient surplus to justify the payment of bonus.2. The Tribunal therefore rightly addressed itself to the question whether the Pakshiraja Studios when engaged in the production and distribution of pictures was a distinct industrial unit for the purpose of bonus payment from the Pakshiraja Studio engaged in proper studio work. Applying the principles laid down by this Court in several cases the Tribunal answered this question in the negative and came to the conclusion that the total results of the working of all the activities of the Pakshiraja Studios as disclosed in the documents12 had to be considered in adjudicating on the claim of bonus. On that basis, it awarded bonus "equivalent to six months basic wages."

Court's reasoning:
4. The question whether two or more units of business under the same ownership form one industrial unit or more has often arisen before the industrial courts. In Pratap Press etc. v. Their Workmen, (1960) 1 Lab LJ 497   at p. 499; (AIR 1960 SC 1213   at p. 1216) the Court pointed out that the most important of the tests which are helpful in deciding the questions are :"that of functional integrality and the question of unity of finance and employment and of labour" and that in all such cases the Court has to consider with care "how far there is functional integrality meaning thereby such functional interdependence that one unit cannot exist conveniently and reasonably without the other and the further question whether in matters of finance and employment the employer has actually kept the two units distinct or integrated."5. Applying these principles, we find that while the several lines of activities carried on by the Pakshiraja Studios should exist independently of each other, it is quite clear that the owner decided to mix them up. There is, in the first place, one capital fund for the two lines of business, there being one bank account; one cash book is maintained. Separate staff is not maintained. There is one accountant for both the production side and the studio side; the administrative staff is also the same.On behalf of the appellant, great emphasis has been laid on this fact of the trading account of the studios, and the trading account of the pictures having been separately prepared, and the further fact that this separatef the picture business was filed before the. We are not however concerned with what happened before theOfficer. If there had been any loss on either the Studio line or on the production line, and the owner had still kept the two separate in hisstatements, that might have been of some assistance to show that he himself treated the two lines as separate and distinct. The however is not the position here. Consequently, the fact that a separateof profit and loss account for the "picture" side was produced before theOfficer cannot furnish any reason for thinking that the owner was keeping the picture side separate from the studio side. Whatever tendency this fact that separate balance sheets were prepared for these different lines of business might have had by itself to show that these were distinct units, is totally nullified by the numerous circumstances set out by the Tribunal, some of which have been mentioned above, viz., the fact that one single Bank Account was maintained; no separate staff was maintained for the production side; there is one accountant for the two sides of the business; the administrative staff was also the same.7. We have therefore come to the conclusion that the Tribunal has applied the correct principles for the decision of the question before itwhether the studio line of Pakshiraja Studios was distinct from the production and distribution side of the same, and has come to the correct conclusion in holding that they were not distinct, but together form one single industrial unit.