LexTHE TATA OIL MILLS CO. LTD versus ITS WORKMEN AND OTHERS
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THE SUPREME COURT REPORTS THE TATA OIL MILLS CO. LTD. v. ITS WORKMEN AND OTHERS (S. R. DAS, C.J., N. H. BHAGWATI, s. K. DAS, P. B. GAJENDRAGADKAR and K. N. WANCHoo, JJ.) Industrial Disp11.te--l3onus-Gross Profits-Extraneom income -Profit unrelated to effort of labour-Available surplus-Prior charges-Retitrn on depredation reserve used as working capital. In resisting the workmen's claim for bonus for the year 1955-56 the appellant contended that in calculating gross profits for the purpose of the Full Bench formula the following items of income should be excluded :- (i) Income earned by way of rent, light and power ; (ii) estate revenue derived from sale of excess coconuts used in preparing oil grown in the appellant's groves; (iii) profit from sale of empty barrels ; and (iv) sale proceeds of tin cans, scraps, Jogs, planks, gunnies etc. as they were extraneous income unrelated to the efforts of the workmen. The appellant also claimed that a profit of Rs. 3 lacs appear- ing in the accounts due to a change in the method of valuation was no real profit due to the efforts of Jabour and should not be taken into account. In calculating the available surplus the appellant claimed that it was entitled to 4% interest on the depreciation reserve used as working capital. Held, that the four items were earned by the appellant in the normal cour1>e of its business and could not be excluded from the gross profits on the ground that it had not been proved that thev were the result of the direct efforts of labour in the bonus y~a·r. Though there must be contribution of the workmen in earning profits before they could be entitled to profit bonus, it was not necessary to establish direct connection between the efforts of the workmen and each item of profit earned. Profits earned in the normal course of business were generally the result of the joint effort of capital and labour. Income or profit may be extraneous if it either did not really arise in that year or it arose out of fortuitous circumstances altogether unconnected with the efforts of labour or arose out of sale of fixed or capital assets. z959 May5. SUPREME COURT REPORTS [1960(1)] r959 Mill Owners Association, Bombay v. The Rashtriya Mill - Mazdoor Sangh, Bombay, (r950) L.L.J. r247, Shalimar Roj>e Works The Tata Oil Mills Mazdoor U11ion, Howrah v. Shalimar Rope Works Ltd., Howrah, \ Co., Ltd. (r956) 2 L.L.J. 371, referred to. v. Its TVorkmen and Others The profit of Rs. 3 lacs due to change in the method of accounting was extraneous income and had to be excluded. It was not income in the normal course of business as it ¥1as not likely to arise again. It had arisen out of fortuitous circum- stances and had nothing whatsoever to do with the efforts of labour. The appellant was entitled to a 4 % return on the deprecia- tion reserves used as working capital. lf reserves were not used for this purpose the concern would have to borrow money and pay interest thereon. CIVIL APPELLATE Ju&rSDIOTION: Civil Appeal No. 321 of 1958. Appeal by special leave from the Award dated the September 27, 1957, of the Industrial Tribunal, Bombay, in Reference (I.T.) No. 119 of 1957. G. K. Daphmry, Solicitor-General of India, J. B. Da.dachanji and S. N. Andley, for the appellant. Rajani Patel and Janardan Sharma for respondent No. l. 1959. May 5. The Judgment of the Court was delivered by Wanehoo/. WANCHOO J.-This is an appeal by special leave against the award of the Industrial Tribunal, Bombay, in a dispute between the Tata Oil Mills Co. Ltd., Bombay (hereinafter !"eferred to as the company) and its workmen, in the matter of profit bonus (or the year 1955-56. The dispute arose over a demand made by the workmen for payment unconditionally as bonus for the year 1955-56 of a sum equivalent to four months' wages/salary for all employees drawing wages/salary of less than Rs. 500 per mensem. This dispute was referred to the Industrial Tribunal by the Government of Bombay by its order dated June 18, 1957. The company had already paid 2! months' basic wages as bonus to its workmen and the real dispute was thus only about the remaining bonus for a month and half. ' ' S.C.R. SUPREME COURT REPORTS 3 The ease of the workmen was that the company had z959 f made record profits during the year and declared a - dividend of 12 per centum free of income-tax1 the The Tata Oil Milli workmen were getting much less than
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