THE STATE OF MYSORE versus THE WORKERS OF GOLD MINES

Citation: [1959] 1 S.C.R. 895 · Decided: 22-05-1958 · Supreme Court of India · Bench: VIVIAN BOSE · Disposal: Directions issued

Judgment (excerpt)

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S.C.R. 
SUPREME COURT REPORTS 
895 
THE STATE OF MYSORE 
v. 
THE WORKERS OF GOLD MINES 
(GAJENDRAGADKAR, A. K. SARKAR, SUBBA RAO 
and VIVIAN BosE JJ.) 
Industrial Dispute-Gold mining industry--Claim of bonus by 
employees-Available surplus, Calculation of-Applicability of Full 
Bench Formula-Duty of Industrial Tribunal. 
This was an appeal against.an award of bonus to the work-
men of the Mysore gold mining industries, then under company 
management. A covenant in the lease executed in favour of the 
companies permitted them to create a reserve fund to meet 
depreciation and development expenditure by contributing 15% 
of the revenue expenditure to it and deduct the same in calcu-
lating the net surplus. 
The covenant imposed no obligation on 
the lessees to create such a fund and was obviously intended to 
provide a basis for the lessor's claim to royalties. It was con-
tended on behalf of the employer companies that the formula 
for determination of available surplus as evolved by the Full 
Bench of the Labour Appellate Tribunal in Mill Owners Associa-
tion, Bombay v. The Rashtriya Mill Mazdoor Sangh, Bombay, (1950) 
L.L.J. 1247, was inapplicable to gold mining industries which 
had special and distinguishing features of their own and that 
the employers were entitled under the said covenant to deduct 
15% of the revenue expenditure as a prior charge in calculating 
the available surplus. It was their case that, th us calculated, 
there was no available surplus out of which bonus could be 
awarded. The Tribunal was not impressed by this argument, 
disallowed the claim made on the basis of the covenant, applied 
the formula, upheld the claim for depreciation but as there was 
no evidence to show that any sums had actually been spent for 
rehabilitation for the years in question, refused to make any 
allowance on that head. It was further urged in appeal that 
since the cmppanies were misled by previous awards passed 
in their favour in not preferring any specific claim for rehabili-
tation, apart from the general claim under the covenant, they 
should, in case their general claim was disallowed, be permitted 
to do so : 
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Held, that the formula evolved by the Labour Appellate 
Tribunal and generally approved by this Court and the categories 
· of prior charges prescribed by it were comprehensive enough 
to cover each individual case and there was no reason why it 
should not apply to the gold mining industries as well. 
Mill Owners Association, Bombay v. The Rashtriya Mill Maz-' 
door Sangh, Bombay, (1950) L.L.J. 1247, discuss~d. 
II4 
May 22. 
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896 
SUPR:mM:m COURT R:mPORTS 
[1959] 
z958 
Muir Mills Co. Ltd., Kanpur v. Suti Mills Mazdoor Union, 
The State of 
Mysore 
v. 
The Workers of 
Gold Mines 
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Kanpur, [r955] r S.C.R. 99r, referred to. 
The covenant in the lease, apart from the question whether 
it could bind the workmen, imposed no obligation on the 
employees and could not preclude an investigation by the Tribu-
nal as to the merits of each particular claim of expenditure in 
order to ascertain the existence of any available surplus, and the 
Tribunal was right in disallowing the claim made solely on the 
basis of the covenant which could otherwise have been made 
under the formula itself. 
Held, further, that the concept of social and economic 
justice on which the claim of bonus is founded apply equally to 
gold mining industries as to any others and the formula, which 
had for its purpose the ascertainment of the available surplus to 
make an a\vard possible, O\.ved its origin to the san1e principles 
of social and economic justice enshrined in the Directive 
Principles of State Policy enunciated by Arts. 38 and 43 of the 
Constitution. 
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It is for the Industrial Tribunal to determine in each parti-
cular case, on the evidence adduced by the employers and 
having regard to the special requirements of the industry, which 
items of expenditure should be admitted under each of the four 
categories prescribed by the formula and in doing so they 
should apply the principles laid down and discussed in decided 
cases in a flexible manner suited to the requirements of each 
case. 
Ganesh Flour Mills Co. Ltd., Kanpur v. Ganesh Flour Mills 
Staff Union, (r952) L.A.C. r72, Trichinopol)' Mills Ltd., Ramjee-
nagar v. National Cotton Mills Workers Union, Ramjeenagar, 
(1953) L.A.C. 672, The Mee-nakshi Mills Ltd., Madurai and Manap-
parai v. Their Workmen, (r954) L.A.C. r3r, The Rohtas Sugar Ltd. 
v

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