LexM:;S. PEIRCE LESLIE & CO., LTD., KOZHIKODE versus THEIR WORKMEN
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
March 9 • 194 SUPREME COURT REPORTS [1960] M:;S. PEIRCE LESLIE & CO., LTD., KOZHIKODE v. THEIR WORKMEN (P. B. GAJENDRAGADKAR, K. SuBBA RAO AND K. c. DAS GUP'l'A, ,J,J.) Industrial Dispu.te-Bonus-Full Bench formula-Variation of- Unusual risk in bu.siness and employment of small capital-If good grounds for variation-Rehabilitation allowance, purpose of-Claim for bonus by small percentage of workmen-Whether entire su.rplus can be taken into accou.nt. During the year 1954-1955, the appellant paid a sum equiva- lent to 3 months basic wages as bonus to its monthly paid clerical staff. These employees raised an industrial dispute claiming an additional bonus equal to 7 months basic wages. The Industrial Tribunal to which the dispute was referred. awarded additional bonus equal to 5 months basic wages. The appellant contended that (i) since the element of risk in the business was great and the capital employed was small the Full Bench formula had to be materially altered and rates higher than 6% on paid up capital and 4 % on reserves employed as working capital should be allow- ed (ii) a higher allowance ought to be made for rehabilitation; and (iii) the entire surplus ought not to be treated as available for distribution as only a small percentage of the workmen had made the claim for bonus. Held, that since the claim for additional bonus was made only by a small prcentage of the workmen the entire available surplus could not be treated as available in distributing bonus to them. Not only the 882 staff members who had raised the claim but rr, 247 other workmen as well had contributed to the emer- gence of the surplus. The sum still in the hands of the company could not be treated as a matter only between the company and these present claimants. Indian Hume Pipe Co., v. Their Workmen, [r959] Supp. 2 S.C.R. 948. L.L.]. 357, applied. Return on invested capital had always to provide for pure interest plus compensation for the risks of business. In a parti- cular industry where the risk vvas appreciably less than usual there would be good cause for providing less than 6%; and in an industry where extraordinary risks were run more than 6°/0 could reasonably be provided for. There was no unusual risk run by the appellants in their business and no case was made out for allowing any higher return on the paid up capital or working capital. There was no justification for compensation of the enter- preneur for the fact that with a small amount of capital consider- able profits were earned. As fixed capital was liable to gradual deterioration reserves had to be created out of profits for replacing any portion of it as soon as it became too deteriorated for efficient use. It was neces- • • - . '- ... • 3 S.C.R. SUPB,EME COURT REPORTS 195 sary that the company's capital fund remained intact. An amount I96o· reasonably sufficient for the notional requirement of rehabilitation during the relevant year was deducted as a prior charge in ascer- M /s. Peirce taining surplus profits from which bonus could be paid. The basis Leslie & Co. Ltd. of the prior charge was the assumption that rehabilitation was a Kozhikode continuing process and needed allotment from year to year. But v. in the present 'case the appellant had failed to make out any Their Workmen case for rehabilitation allowance in addition to the ordinary depreciation. Associated Cement Company's case, [1959] S.C.R. 925, relied on. CrvrL APPELLATE JURISDICTION: Civil Appeal No. 209/58 . Appeal by special leave from the Award dated September 16, 1957 ofthe Industrial Tribunal No. II, Ernakulam, in Industrial Dispute No. 34 of 1957. G. B. Pai and Sardar Bahadur,for the appellants. A. V. Viswanatha Sastri and M. S. K. Sastri, for l the respondents. 1960. March 9. The J udginent of the Court was delivered by DAS GUPTA, J.-The appellant-M/s. Peirce Leslie & Co., Ltd., is a private limited company engaged in various enterprises mainly in South India. It started business in this country over a century ago and though it is registered in England almost ll.ll its activities appear to be carried on in this country . The principal activities that require mention are the business in cashew nuts which the Company sells after roasting raw cashew nuts purchased in this country and in Africa, and business in coir products and several other country produce like ginger, lemon grass oil etc. A large portion of the
Excerpt shown. Read the full judgment & AI analysis in Lexace.