TMI Blog1954 (11) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... were therefore higher than those in the previous year. There was moreover indiscipline amongst the workers and production suffered. There was a strike in the month of October and the mills were closed for nearly a month. Further the management were unable to secure cotton which resulted in the curtailment of the working hours. As a result of all these circumstances the appellant suffered a trading loss of ₹ 5,02,563-1-10. A sum of ₹ 2,50,000 being the excess reserve for taxation was written back and a sum of ₹ 10,01,871-13-5 being the amount of reserve transferred from the investment account was also brought in. An aggregate sum of ₹ 12,51,871-13-5 was thus brought into the balance sheet by these two transfers. The trading loss was deducted from this amount leaving a credit balance of ₹ 7,49,308-11-7 and that amount was shown as the profit for the year 1949 in the balance-sheet for that year. The balance which had been brought forward from the previous year was added thereto and a dividend of 24 3/4 per cent. was paid to the ordinary shareholders. The appellant also paid ex gratia to the workmen bonus at the rate of annas 2 per rupee of their basic ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employer having worked at a loss during the year and incidentally whether workers have any right, title or interest in the reserves and the undistributed profits of the previous years. 5. The primary meaning of the word bonus according to the definition given in the New English Dictionary is :- A boon or gift over and above what is nominally due as remuneration to the receiver and which is therefore something wholly to the good . This definition was adopted by Stirling, J. in In re Eddystone Marine Insurance Co. (L.R. (1894) W.N. 30) Webster's International Dictionary defines bonus as something given in addition to what is ordinarily received by or strictly due to the recipient. The Oxford Concise Dictionary defines it as something to the good, into the bargain (and as an example) gratuity to workmen beyond their wages . 6. Corpus Juris Secundum, Vol. XI, at p. 515 ascribes the following meanings to the word bonus :- An allowance in addition to what is usual current or stipulated; a sum given or paid beyond what is legally required to be paid to the recipient; something given in addition to what is ordinarily received by or strictly due to the recipient. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;bonus' may of course be properly used to describe payments made of grace and not as of right. But it nevertheless may also include, as here, payments made because legally due but which the parties contemplate will not continue indefinitely , and in National Association of Local Government Officers v. Bolton Corporation [1943] A.C. 166 :- This payment, if made, cannot properly in my opinion be regarded as a mere gratuity. Though there is an element of bounty in it the bounty, if granted, is given for good reasons of national policy... I do not see why this does not fall within the definition of trade dispute just as much as a dispute as to the rate of wages or salary. 13. To a similar effect are the observations in Kenicott v. Supervisors of Wayne County (1873) 83 U.S. 452 : 21 L.Ed. 319 :- But second, the meaning of the word 'bonus' is not given to it by the objection. It is thus defined by Webster. 'A premium given for a loan or a charter or other privilege granted to a company; as, the bank paid a bonus for its charter; a sum paid in addition to a stated compensation.' It is not a gift or gratuity, but a sum paid for services, or up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for a demand for bonus. Bonus is not a deferred wage. Because, if it were so it would necessarily rank for precedence before dividends. The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees. If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year. This has been clearly recognised even in the various decisions of Labour Appellate Tribunal, e.g., Nizam Sugar Factory, Ltd., Hyderabad v. Their Workmen (1952) 1 L.L.J. 386, Textile Mills, Madhya Pradesh v. Their Workmen (1952) 2 L.L.J. 625 and Famous Cine Laboratory v. Their Workmen (1953) 1 L.L.J. 466. This was also the basis of the demand of the respondent in the case before us, its case being that the appellant has reaped substantial profits during the year 1949. This case was negatived by the industrial Court as well as the Labour Appellate Tribunal, both of whom held that the working of the appellant during the year 1949 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to any share or interest in the assets and the capital of the company. A transfer of moneys from these reserves or the undistributed profits would therefore not enure for the benefit of the workers. The shareholders only would be entitled to such benefit and the mere fact that dividends were declared and paid to the shareholders out of such reserves and undistributed profits would not entitle the workers to demand bonus when in fact the working of the industrial concern during the particular year had showed a loss. 21. It has also got to be remembered that the labour force employed in an industrial concern is fluctuating body and it cannot be predicated of the labour force in a particular year that it represents the past and the present workers, so that it can claim to demand bonus out of the reserve or undistributed profits of the previous years. On the accounts of each year being made up and the profits of the industrial concern being ascertained the workers during the particular year have their demand for bonus fully satisfied out of the surplus profits and the balance of profits is allocated and carried over in the accounts. No further claim for payment of bonus out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 1258 of that judgment :- Our approach to this problem is motivated by the requirement that we should ensure and achieve industrial peace which is essential for the development and expansion of industry. This can be achieved by having a contented labour force on the one hand, and on the other hand an investing public who would be attracted to the industry by a steady and progressive return on capital which the industry may be able to offer. 23. This formula was reiterated in Textile Mills, M.P. v. Their Workmen (1952) II L.L.J. 625, and Famous Cine Laboratory v. Their Workmen (1953) I L.L.J. 466, and in the latter case it deprecated the idea of adjudicators importing considerations of social justice which were not comprised in that formula :- And what is social justice ? Social justice is not the fancy of any individual adjudicator; if it were so then ideas of social justice might vary from adjudicator to adjudicator over all parts of India. In our Full Bench decision 1950, II L.L.J. 1247, we carefully considered the question of social justice in relation to bonus, and there we equated the rights and liabilities of employers and workman with a view to achievi ..... 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