WORKMEN OF ASSAM CO. versus ASSAM CO. LTD.

Citation: [1959] 1 S.C.R. 327 · Decided: 31-03-1958 · Supreme Court of India · Bench: NATWARLAL HARILAL BHAGWATI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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S.C.R. 
SUPREME COURT .REPORTS 
327 
WORKMEN OF ASSAM CO. 
v. 
ASSAM CO. LTD. 
(BHAGWATI, J. L. KAPUR and A. K. SARKAR JJ.) 
Industrial Dispute-Bonus-Formula applicable to tea industry 
• -Deductions allowable for ret·urn on capital and on reserves-" Unit 
Scheme" of payment of bonus, if siiitable . 
The appellants claimed bonus for the years 1950, 1951 and 
1952 at the rate of six months' wages per year. The Industrial 
Tribunal to which the dispute was referred allowed, in calculating 
the surplus available for payment of bonus, inter alia return on 
paid up capital and on the reserves at 7% and 5% respectively and 
accepted the "unit ~cheme" of payment of bonus which the 
company had been following since 1926. Under this scheme units 
were credited to each workman taking into consideration the 
importance of the job he held, the wages he got and the 
number of years he had been employed in that particular job, 
and each workman was paid bonus in proportion to the units to 
his credit. On appeal the Labour Appellate Tribunal modified the 
award and raised the return on the reserves from 5% to 6%.: 
Held, that the formula laid down in Sree Meenakshi Mills v. 
Their workmen, ([1958] S.C.R. 878 at 884) for ascertaining the 
surplus on the basis of which bonus becomes determinable and 
distributable could be applied to the tea industry with suitable 
adjustments. 
The allowing of 7% return on capital as against 6% held 
allowable under that formula was justified by the additional risk 
factors in the tea industry. The allowing of 5% return on 
reserves by the Industrial Tribunal as against 4% allowed by the 
formula was not unreasonable, it being sufficient to safeguard the 
interests of the company. But the increasing of this to 6% by 
the Appellate Tribunal was insupportable in the absence of any 
claim in the respondent's written statement for rehabilitation or 
of any figures for determining this amount. 
The "unit scheme" was suitable for the payment of bonus 
and would result not only in the fair distribution of bonus but 
would also lead to improvement in the quality and quantity of 
work. 
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 
34of1957. 
Appeal from the judgment and order dated August 
31, 1955, of the Labour Appellate 'fribunal of India, 
Calcutta in Appeal Nos. Cal-187 & Cal-188 of 1954, 
arising out of the Award dated May 15, 1954, of the 
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March JI. 
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Workmen of 
Assam Co. 
328 
SUPREME COURT REPORTS 
[1959] 
Industrial Tribunal, Assam in Reference No. 20 of 
1953 published in the Assam Gazette dated June 16, 
1954. 
v. 
C. B. Aggarwala and K. P. Gupta, for the appel-
Assam Co. Ltd. 
alltS. 
Kapur J. 
P. K. Goswami, S. N. Mukher.iee and B. N. Ghosh, 
for the respondent. 
1958. March 31. 
The Judgn:ent of the Court was 
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delivered by 
KAPUR J.-In this appeal brought by special leave 
against the order of the Labour Appellate Tribunal, 
Calcutta dated August 31, 1955, the controversy 
between the parties is confined to the question of 
bonus. The appellants are the workmen including 
members of the Indian staff and artisans employed by 
the respondent, the Assam Co. Ltd., a company in-
· corporated in the United Kingdom and engaged in tea 
industry in the State of Assam. The appellants claim-
ed bonus for the years 1950, 1951 and 1952 at the rate 
of 6 months' wages per year. The respondent offered 
to the Indian staff excluding the artisans Rs. 51,061 
as bonus for 1950, Rs. 48,140 for 1951 and Rs. 15,493 
for 1952 which works out at 2·3% of the net profit for 
the year 1950, 3·1 % for the year 1951 and 3·9% for the 
year 1952. 
This dispute was referred to the Ind us trial 
Tribunal by a notification of the Assam Government 
dated August 27, 1953. 
The Industrial Tribunal allowed depreciation as 
given in the company's balance sheets for the three 
yea.rs and allowed as return on the paid up capital and 
on the reserve 7% and 5% respectively and held the 
artisans also to be entitled to bonus. 
:E'or the purpose 
of mode of payment the Industrial Tribunal accepted 
the "unit schl\me" under which the company had 
been paying bonus since the year 1926. It was of the 
opinion that the scheme was fair and rational and 
gave incentive to industrial efficiency and to produc-
tion. 
Both the appellants and the respondent appealed 
against this order, the former as to the correctness of 
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S.C.R. 
SUPH.EME COURT REPOH.TS 
329 
the accounts, the amount of the return on capita

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