1964 (11) TMI 109 - SC - Indian Laws

Supreme Court decision on Puja and profit bonuses for 1960 and 1959 upheld, with partial appeal success.

Vegetable Products Ltd. Versus Their Workmen

The Supreme Court partly allowed the appeal, setting aside the tribunal's award for the customary Puja bonus payable in 1961 and the profit bonus for the ... - Issues Involved:1. Puja bonus payable in 1961.2. Profit bonus for the years ending December 1959 and December 1960.Issue-Wise Detailed Analysis:1. Puja Bonus Payable in 1961:The primary contention was whether the payment of Puja bonus had become an implied term of employment or had become customary. The workmen argued that the Puja bonus was either an implied term of employment or had become customary. The appellant contended that the Puja bonus had neither become an implied term of service nor customary.The tribunal concluded that payment of one month's wages at the time of Puja as customary bonus had been established, though it did not accept the claim that payment of Puja bonus as an implied condition of service had been proved. The tribunal's decision was based on the precedent set by the Supreme Court in The Grahams Trading Co. (India) Ltd. v. Its Workmen, which laid down four circumstances for proving the payment of customary or traditional bonus on the occasion of a festival like Puja:1. The payment has been made over an unbroken series of years.2. The payment has been for a sufficiently long period.3. The payment has been made even in years of loss.4. The payment has been made at a uniform rate throughout.The tribunal held that these conditions were satisfied in the present case. However, the appellant argued that the payment in 1959 was made ex gratia and accepted as such by the workmen, which was supported by a settlement agreement. Additionally, in 1960 and 1961, payments were made as advances to be adjusted against profit bonuses for the previous year, which contradicted the notion of a customary or traditional bonus. Consequently, the Supreme Court found that there was a break in the payment of such bonuses and set aside the tribunal's conclusion that the payment of customary or traditional bonus on the occasion of the Puja festival had been established.2. Profit Bonus for the Years Ending December 1959 and December 1960:The workmen claimed four months' wages as profit bonus for both years, arguing that they were entitled to it due to the large profits earned by the appellant. The appellant contended that there was no available surplus in either of the two years, and therefore, the workmen were not entitled to any profit bonus.For the year ending December 1960, the tribunal found the available surplus to be Rs. 4,000 but erroneously awarded one month's profit bonus amounting to Rs. 12,000. The Supreme Court noted this mistake and set aside the tribunal's award for the year 1960.For the year ending December 1959, the tribunal found an available surplus of Rs. 1,04,000 and awarded four months' wages at the rate of Rs. 12,000 per month (Rs. 48,000 in total) as profit bonus. The appellant challenged this calculation on two grounds:1. The tribunal's deduction of Rs. 1,23,000 as depreciation from the rehabilitation charge was incorrect, and the correct amount should have been Rs. 1,07,000. This adjustment would reduce the available surplus to Rs. 88,000. However, even with this reduced surplus, the Supreme Court found the award reasonable.2. The appellant argued for a higher multiplier than 1.25 for machinery purchased before 1949, based on a letter from the English company indicating a significant price increase. The tribunal had accepted the figure of 13.1 lakhs for the original cost of the machinery, despite the lack of satisfactory evidence. The tribunal allowed a multiplier of 1.25 due to insufficient evidence to prove the original cost and the increase in price for the rest of the plant. The Supreme Court upheld the tribunal's decision on the multiplier due to the lack of sufficient and proper evidence.Thus, the Supreme Court upheld the tribunal's award of four months' wages as profit bonus for the year 1959.Conclusion:The appeal was partly allowed. The Supreme Court set aside the tribunal's award in respect of customary Puja bonus payable in 1961 and the profit bonus for the year ending December 1960. However, the award of four months' wages as profit bonus for the year ending December 1959 was upheld. No order as to costs was passed.