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Though there is an element of bounty in it the bounty, if granted, is given for good reasons of national policy PRE |
I do not see why this does not fall within the definition of trade dispute just as much as a dispute as to the rate of wages or salary PRE |
To a similar effect are the observations in Kenicott v. Supervisors of Wayne County, (1873) 83 U.S. 452 21 L., Ed PRE |
But second, the meaning of the word 'bonus' is not given to it by the objection PRE |
It is thus defined by Webster PRE |
A premium given for a loan or a charter or other privilege granted to a company; as, the bank paid a bonus for its charter; a sum paid in addition to a stated compensation PRE |
It is not a gift or gratuity, but a sum paid for services, or upon a consideration in addition to or in excess of that which would ordinarily be given" , 12 PRE |
And also in Great Western Garment Co. Ltd. v. Minister of National Revenue , (1948 PRE |
D.L.R. 25, 233 PRE |
A bonus may be a mere gift or gratuity as a gesture of goodwill and not enforceable, or it may be something which an employee is entitled to on the happening of a condition precedent and is enforceable when the condition is fulfilled PRE |
But in both cases it is something in addition to or in excess of that which is ordinarily received PRE |
The Textile Labour Inquiry Committee defined 'bonus' as follows :- "The term bonus is applied to a cash payment made in addition to wages PRE |
It generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained PRE |
There are however two conditions which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production Ratio |
The demand for bonus becomes an industrial claim when either or both these conditions are satisfied Ratio |
The principles for the grant of bonus were discussed and a formula was evolved by the Full Bench of the Labour Appellate Tribunal in Millowners' Association, Bombay v. Rashtreeya Mill Mazdoor Sangh, Bombay, (1950 Ratio |
2 L.L.J. 247;"As Ratio |
both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges" and the following were prescribed as the first charges on gross profits, viz Ratio |
1) Provision for depreciation, (2) Reserves for rehabilitation, (3) A return at 6 per cent Ratio |
on the paid up capital Ratio |
A return on the working capital at a lesser rate than the return on paid up capital Ratio |
The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus Ratio |
It is therefore clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits Ratio |
If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus Ratio |
Bonus is not a deferred wage Ratio |
Because if it were so it would necessarily rank for precedence before dividends' The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees Ratio |
If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year Ratio |
This has been clearly recognised even in the various decisions of the Labour Appellate Tribunal, e.g., Nizam Sugar Factory Ltd., Hyderabad v. Their Workmen, (1952 Ratio |
I L.L.J. 386; Textile Mills, Madhya Pradesh v. Their Workmen, (1952) 2 L.L.J. 625;and Famous Cine Laboratory v. Their Workmen, (1953 Ratio |
I Ratio |
L.L.J. 466;This was also the basis of the demand of the respondent in the case before us, its case being that the appellant had reaped substantial profits during the year 1949 Ratio |
This case was negatived by the Industrial Court as well as the Labour Appellate Tribunal, both of whom held that the working of the appellant during the year 1949 had resulted in a loss FAC |
Whereas the Industrial Court declined to grant the respondent any relief because the working of the appellant during the year had resulted in a loss, the Labour Appellate Tribunal made a special case for the respondent in spite of its concurrence with that finding of the Industrial Court FAC |
It is significant to observe that this principle was accepted by the Labour Appellate Tribunal itself FAC |
As at present advised a claim for bonus which had been rested on profits earned should ordinarily be determined on the basis of the profits earned in the year under claim and that the scale of bonus should be determined on the quantum of profits earned in the year RLC |
So, it would follow that if there is trading loss in the year under claim, bonus should not ordinarily be awarded RLC |
It however observed: " But, in our opinion, that should not be the universal rule RLC |
Considerations of social justice cannot be disregarded altogether, in relations between capital and labour RLC |
There may be special cases, and we consider the case before us to be one, where social justice would demand that labour should have bonus for the year where for that very year capital had not only a.. reasonable return but much in excess of that RLC |
The Labour Appellate Tribunal did not accept the contention of the respondent that bonus should be linked to dividends nor did it rest its decision on the respondent having a right, title and interest in the reserves and the undistributed profits of the appellant FAC |
Linking of bonus to dividend would obviously create difficulties FAC |
Because if that theory was accepted a company would not declare any dividends but accumulate the profits, build up reserves and distribute those profits in the shape of bonus shares or reduce the capital in which event the workers would not be entitled to claim anything as and by way of bonus Ratio |
The workers not being members of the company would also not have any right, title and interest in the reserves or the undistributed profits which would form part of the assets of the company Ratio |
Even on a winding up of a company the property of the company would be applied in satisfaction of its liabilities pari passu and, unless the articles of association of the company otherwise provided, in distribution amongst the members according to their rights and interest in the company Ratio |
The employees would in no event be entitled to any share or interest in the assets and the capital of the company Ratio |
A transfer of moneys from these reserves or the undistributed profits would therefore not enure for the benefit of the workers Ratio |
The shareholders only would be entitled to such benefit and the mere fact that dividends were declared and paid to the shareholders out of such reserves and undistributed profits would not entitle the workers to demand bonus when in fact the working of the industrial concern during the particular year had showed a loss... |
It has also got to be remembered that the labour force employed in an industrial concern is a fluctuating body and it cannot be predicated of the labour force in a particular year that it represents the past and the present workers, so that it can claim to demand bonus out of the reserves or undistributed profits of th... |
On the accounts of each year being made up and the profits of the industrial concern being ascertained the workers during the particular year have their demand for bonus fully satisfied out of the surplus profits and the balance of profits is allocated and carried over in the accounts Ratio |
No further claimed payment of bonus out of those reserves or undistributed profits can therefore survive Ratio |
To admit the claim for bonus out of the reserves transferred to the profit and loss account would tantamount to allowing a second bonus on the same profits in respect of which the workers had already received their full bonus in the previous year Ratio |
The labour force which earns the profits of a particular year by collaborating with the employers is distinct from the one which contributed to the profits of the previous years and there is no continuity between the labour forces which are employed in the industrial concern during the several years Ratio |
The ratio which applies in the case of the shareholders who acquire the right, title and interest of their predecessorsin-interest does not apply to the labour force and the fact that the shareholders get a dividend by transfer of funds from the reserves and undistributed profits of the previous years would not entitle... |
The considerations of social justice imported by the Labour Appellate Tribunal in arriving at the decision in favour of the respondent were not only irrelevant but untenable Ratio |
Social justice is a very vague and indeterminate expression and no clear-cut definition can be laid down which will cover all the situations Ratio |
Mr. Isaacs, the learned counsel for the respondent ARG |
attempted to give a definition in the following terms : "social justice connotes the balance of adjustments of the various interests concerned in the social and economic structure of the State, in order to promote harmony upon an ethical and economic basis" and he stated that there were three parties concerned here, vi... |
the employers, the labour and the State itself, and the conception of social justice had to be worked out in this context ARG |
Without embarking upon a discussion as to the exact connotation of the expression "social justice" we may only observe that the concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation ARG |
Indeed the Full Bench of the Labour Appellate Tribunal evolved the abovequoted formula with a view to dispensing social justice between the various parties concerned FAC |
It adopted the following method of approach at page 1258 of that judgment :- "Our approach to this problem is motivated by the requirement that we should ensure and achieve industrial peace which is essential for the development and expansion of industry RLC |
This can be achieved by having a contented labour force on the one hand, and on the other hand an investing public who would be attracted to the industry by a steady and progressive return on capital which the, industry may be able to offer RLC |
This formula was reiterated in Textile Mills, M. P PRE |
Their Workmen, (1952) 2 L.L.J. 625; and Famous Cine Laboratory v. Their Workmen, (1953) 1 L.L.J. 466; and in the latter case it deprecated the idea of adjudicators importing considerations of social justice which were not comprised in that formula :- "And what is social justice PRE |
Social justice is not the fancy of any individual adjudicator; if it were so then ideas of social justice might vary from adjudicator to adjudicator over all parts of India PRE |
In our Full Bench decision (See 1950, 2 L.L.J. 1247), we carefully considered the question of social justice in relation to bonus, and there we equated the rights and liabilities of employers and workmen with a view to achieving a just formula for the computation of bonus PRE |
That Full Bench decision stands, and this tribunal and all other tribunals are bound by it PRE |
Without committing ourselves to the acceptance of the above formula in its entirety we may point out that the Labour Appellate Tribunal did not apply its own formula to the facts of the present case Ratio |
It is also significant to note that even while importing considerations of social justice the Labour Appellate Tribunal was oblivious of the fact that it was by their own acts of indiscipline and strike that the workers of the appellant company themselves contributed, to the trading losses incurred by the appellant and... |
The Labour Appellate Tribunal also overlooked the fact that but for the Public Companies (Limitation of Dividend Ratio |
Ordinance of 1948 the whole of the profits of 1948 could have been distributed after paying the workers bonus in that year of four annas in the rupee Ratio |
We may before concluding refer to an argument which was addressed to us by Mr. Isaacs, the learned counsel for the respondent, that this Court under article 136 should not interfere with the decisions of the tribunals set up by the Industrial Disputes Act, 1947 Ratio |
This contention can be shortly answered by referring to our decision in Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank Ltd., Delhi, (1950] S.C.R. 459 1950 Indlaw SC 48; where we held that the Industrial Tribunals were tribunals within the meaning of article 136 and further that article 136 has vested in this, ... |
Vide Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal 1954 Indlaw SC 213 Ratio |
The result therefore is that the decision of the Labour Appellate Tribunal appealed against must be reversed and that of the Industrial Court (Textiles and Hosiery), Kanpur, restored RPC |
The appeal will accordingly be allowed with costs RPC |
Appeal allowed RPC |
Appeal No. 108 of 1964. FAC |
Appeal by special leave from the Award dated May 11, 1962, of the Industrial Tribunal, Bihar, Patna in Reference No. 4 of 1961. FAC |
Ranen Roy, Jai Krishan, G.S. Chatterjee, E. Udayarathnam for A.K. Nag, for the appellants. FAC |
Niren De, Addl.Solicitor General and Naunit Lal, for the respondent. FAC |
The Judgment of the Court was delivered by Wanchoo, J. FAC |
This is an appeal by special leave against the award of the Industrial Tribunal, Bihar. FAC |
It relates to the discharge of 119 workmen of the respondent who were employed as cane carrier mazdoors or as cane carrier supervisors or jamadars. FAC |
All these were seasonal workmen. FAC |
It is necessary to set out in some detail the circumstances leading to the discharge. Ratio |
The respondent is a sugar factory and the crushing season starts usually in the first half of November each year. FAC |
We are concerned in the present appeal with November and December 1960. Ratio |
It appears that from the season 1956 57, the respondent introduced an incentive bonus scheme in the factory. Ratio |
The scheme continued thereafter from season to season with certain changes. FAC |
It also appears that in the beginning of each season, the respondent used to put forward the incentive bonus scheme and consult the workmen. Ratio |
The same thing was done when the season 1960 61 was about to start in November 1960. FAC |
But the scheme for this season proposed by the respondent contained certain changes which were apparently not acceptable to the workmen. FAC |
One of the features in the scheme was that the crushing of sugar cane per day should be 32,000 maunds. FAC |
The general secretary of the union of the workmen suggested certain alterations for the consideration of the respondent on November 7, 1960, and one of the main alterations suggested was that the norm for per day 's crushing should be 125,000 maunds of cane and thereafter incentive bonus should be given at a certain ra... |
No agreement seems to have reached on the incentive bonus scheme, and the complaint of the respondent was that the secretary incited the workmen to go slow in consequence of the change in the scheme. Ratio |
Consequently mild go slow in cane the carrier department which is the basic department in a sugar mill began from the very start of the season on November 10, 1960. FAC |
The L/P(N)4SCI 590 respondent 's case further was that on November 27, 1960, the workmen in the cane carrier department started in combination with one another to go slow deliberately and wilfully and in a planned manner and thus reduced the average daily crushing to 26,000 maunds cane which was much less than the aver... |
This conduct of the workmen was said to be highly prejudicial to the respondent and besides being technically unsafe, had brought into existence an acute shortage in the fuel position which might have resulted in the complete stoppage of the mill and a major breakdown of the machinery. Ratio |
When the position became serious the respondent issued a general notice on December 15, 1960 inviting the attention of the workmen concerned to this state of affairs which had been continuing of any rate since November 27, 1960. FAC |
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