Ganesh Flour Mills Co. Ltd. vs Employees Of Ganesh Flour Mills Co. Ltd. on 16 July, 1957

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: Not extracted

Coram: N.H. Bhagwati, Syed Jafer Imam, P.B. Gajendragadkar

In this case the appellant was M/s Ganesh Flour Mills Co. Ltd., a joint‑stock company that had been incorporated and registered under the Indian Companies Act, 1913, with its registered office in Delhi. The company owned three manufacturing units in Delhi—namely a vegetable ghee factory, a flour mill and a breakfast foods factory—as well as a vegetable ghee factory at Kanpur. In addition, it operated a vegetable ghee factory and a flour mill at Lyallpur in West Pakistan. During the accounting year 1952‑53 the employees of the appellant asserted that they were entitled to a bonus equal to six months’ basic wages together with an annual increment in basic wages on the same scale that had been applied for the year 1948‑49. The dispute that arose from this claim was referred by the Chief Commissioner of Delhi to the Additional Industrial Tribunal, Delhi, on 20 September 1954. By referring the matter, the Chief Commissioner presented the tribunal with two distinct issues for determination, although the present appeal concerns only the issue relating to the employees’ claim for a bonus for the year 1952‑53. Before the tribunal the appellant contended that, for the year in question, the company possessed no surplus that could be distributed as a bonus. The tribunal rejected this contention and consequently awarded the respondents a bonus equal to twenty‑five per cent of their basic wages, subject to certain directions specified in the award. The award was formally pronounced on 31 January 1955. Both the appellant and the respondents filed appeals against this portion of the award before the Labour Appellate Tribunal, which, by its decision dated 16 July 1955, upheld the industrial tribunal’s award and dismissed the appeals lodged by both parties. The appellant thereafter filed the present appeal before this Court, seeking relief by way of special leave.

The legal position governing the employees’ claim for a bonus was no longer in doubt because both parties accepted the Full Bench formula that had been formulated by the Labour Appellate Tribunal in the case of Mill Owners Association, Bombay v. Rashtriya Mill Mazdoor Sangh, Bombay (1952) 2 Lab AC 433 (A). Applying that Full Bench formula, the appellate tribunal concluded that the surplus available for distribution amounted to Rs 9,61,371 after accounting for prior charges that the formula required to be provided for. The appellant’s grievance centred on the allegation that the tribunal had failed to make an adequate provision for those prior charges, had made no provision at all for rehabilitation charges, and had wrongly rejected the appellant’s claim for irrecoverable debts. Moreover, the appellant argued that the tribunal erred in treating the business carried on by the appellant in India together with the business carried on in Pakistan as a single, consolidated enterprise for the purpose of computing the surplus, asserting that the Indian operations had incurred a loss during the relevant year and that this loss should preclude any entitlement of the respondents to a bonus for that period.

The appellant argued that the tribunals had wrongly rejected the claim relating to irrecoverable debts. The appellant further maintained that the tribunals had erred in their method of calculating the available surplus. Specifically, the tribunals had treated the business operations of the appellant in India together with the business operations of the appellant in Pakistan as a single, combined enterprise and had required that the consolidated profit‑and‑loss account of this entire enterprise be used to determine the surplus. The appellant contended that during the year in question the Indian part of its business had incurred a loss, and that this loss, in the appellant’s view, should defeat the respondents’ claim to any bonus for that same period. In other words, the appellant submitted that because the Indian operations were unprofitable, the respondents could not rely on the surplus of the combined Indian‑Pakistani business to justify the award of a bonus.

The learned Attorney‑General, representing the employees, argued that the nature of a bonus claim required the employees to demonstrate that the surplus from which they sought the bonus was generated, at least in part, by their own labour. To support this position, the Attorney‑General relied on a precedent of this Court in Muir Mills Co. Ltd. v. Suti Mill Mazdoor Union, Kanpur. In that decision the Court set out two essential conditions for a bonus claim to succeed: first, the wages paid to the workmen must be insufficient to meet reasonable living standards; second, the industry must have earned profits that are attributable, at least in part, to the workmen’s contribution to increased production. The present argument focused on the second condition. It was acknowledged that the theoretical basis of a bonus claim rests on the assumption that the profit which forms the source of the bonus is partially the result of the employees’ labour. However, counsel for the respondents, Mr. Chatterjee, countered this by asserting that the Court’s reference to “contribution of labour” should be understood as the contribution of labour in its entirety, not the contribution of each individual section of labour. According to Mr. Chatterjee, it is sufficient to show that the employer’s profit is partly due to the collective effort of all labour, without needing to demonstrate that every specific group of workers contributed to that profit. He pointed to several passages in the earlier judgment that described the labour contribution as that of the whole workforce. Mr. Chatterjee also relied on the decision in Burn and Co., Calcutta v. Their Employees, where Justice Venkatarama Aiyar observed that “the entire profits of the company are the result of labour in all its units.” The discussion noted that, in that case, the labour side had argued that if a bonus could not be granted to all workers, at least those workers who had demonstrably contributed to greater production should receive it, an argument that was ultimately rejected.

In the earlier case, the argument was advanced that only the workmen who had undeniably increased production should receive a bonus, but the Court rejected that claim. It held that a bonus claim based on labour’s contribution to greater production must be considered on behalf of the entire work‑force, not merely a particular segment of employees. In the decision of Baroda Borough Municipality v. Its Workmen, the Court similarly ruled that employees of the municipality’s electricity department were not entitled to a separate bonus because all municipal activities formed one integrated whole. The Court explained that the various departmental activities were not sufficiently distinct or unrelated to permit isolating an earning department from a spending department for the purpose of bonus entitlement. Moreover, the Court observed that drawing a distinction between workers of earning and spending departments would be unfair, as it would likely generate unrest and discontent rather than promote harmony among municipal employees. These principles are the basis on which Mr. Chatterjee attempts to counter the learned Attorney‑General’s contention that Indian mill employees should be denied a bonus because they did not contribute to the profits earned by the appellant in Pakistan. The Attorney‑General, however, raised additional considerations in support of his position. He argued that the labour statutes applicable in Pakistan differ fundamentally from those in India, and that the conditions of work, wages, and other employment factors in Pakistan are entirely distinct from Indian circumstances. He further asserted that treating the businesses operating in Pakistan and India as a single unit for bonus determination would create numerous complications and practical difficulties in implementing the bonus decision. While recognizing that differing factories within the Union of India may be treated together, the Attorney‑General emphasized that a clear line must be drawn when the same employer operates units of the same industry in two separate countries. He warned against relying solely on abstract theoretical reasoning in industrial disputes of this nature, contending that serious practical obstacles must be accounted for. Consequently, he maintained that the units operating in different countries should be regarded as separate, unconnected entities for the purpose of adjudicating the Indian workmen’s claim for a bonus. To substantiate this view, he referred to the Labour Appellate Tribunal judgment in The British Insulated Calender’s Cables, Ltd. v. Their Workmen, (1952) 1 Lab AC 87 (E), where the employer conducted business in India, Pakistan and Ceylon, and the Tribunal held that the Indian employees’ bonus entitlement should be based solely on the Indian financial figures, excluding the consolidated accounts of the other countries.

In the earlier cited case, the tribunal held that the bonus payable to the Indian employees must be calculated solely on the basis of the financial figures that pertain to India, and must not be derived from the consolidated accounts of the three countries in which the employer was operating.

The counsel also relied on the decision in the matter of the workmen employed by the Ahmedabad Manufacturing and Calico Printing Company Limited (Chemical Division) against their own employer, reported as Ahmedabad Manufacturing and Calico Printing Company Limited (Chemical Division), Ahmedabad, (1952) 2 Lab AC 544. In that case the company was engaged in two distinct lines of business, namely textiles and chemicals. Approximately one‑third of the output of one chemical product and about one‑thirtieth of another chemical product were supplied internally to the textile division, while the balance of the chemical products was sold to external customers. Although the two divisions were managed under a single overall direction and presented a single balance sheet and profit‑and‑loss account, their accounts and administrative control were kept separate. The majority of the Labour Appellate Tribunal concluded that the workers in the chemical division, from which no surplus profit could be identified, were not entitled to the same bonus that had been awarded to the workers in the textile division, which had generated a profit.

The Court’s attention was then drawn to the decision of the Labour Appellate Tribunal in The British India Steam Navigation Company Limited v. Its workmen in Bombay, (1952) 2 Lab AC 826. That judgment emphasized that a bonus based on the worldwide trading results of a multinational enterprise should be justified only in special circumstances. The Tribunal acknowledged that the total trading results for the relevant financial year might be compiled and determined only at the head office in England. Nevertheless, it observed that it should not be impossible, using the figures available at the head office, to allocate earnings and expenditures that arise from the company’s operations in India so that the Full Bench formula could be applied. The Tribunal remarked that it would be “a long call” to connect the claim of two hundred and seventy tally clerks in Bombay with the global profits of a worldwide organization headquartered in England. It suggested that it would be more realistic to calculate the figures on an all‑India basis or at least on a larger regional basis to discover the surplus available in India, and only if such a regional calculation proved impossible should the global trading results be used.

The final authority cited by the appellant was Greaves Cotton Company Limited, Bombay v. Its Workmen, reported as 1954 Lab AC 599. In that dispute the company operated in both India and Pakistan. The company argued that a portion of its investment income could not be remitted to India because of foreign‑exchange restrictions imposed by Pakistan. Consequently, the company contended that this portion of investment income should be deducted from the surplus shown in the consolidated balance sheet, on the ground that the amount located in Pakistan was not available for distribution as a bonus in India. The appellate tribunal did not accept this argument, although it observed that the exchange restrictions might temporarily prevent the company from bringing the investment income into India. The Tribunal noted that the fact that the money was not immediately available in India would nevertheless be a relevant consideration when determining the quantum of bonus after the surplus had been ascertained.

The tribunal observed that difficulties might prevent the company from bringing the investment income into India for some time. It stated that the fact that the money was not available for immediate use in India would be a relevant consideration when determining the amount of bonus after the available surplus had been ascertained. It was argued that, in the present case, the entire surplus computed from the consolidated statement of accounts was locked up in Pakistan and therefore not immediately available in India. The argument further contended that this circumstance should lead to the inference that the employees were not entitled to any bonus for the relevant year. If the non‑availability of any portion of the surplus for immediate use was a relevant consideration, the argument held, it must be relevant not only for fixing the quantum of bonus but also for deciding whether any surplus was truly available for immediate distribution. On this basis, the appellant contended before the Court that the Labour Appellate Tribunal had been in error in holding that Rs 9,61,371 constituted the net surplus immediately available for distribution in the appellant’s hands.

The counsel for the respondents, however, argued forcefully that the liability of the appellant to pay bonus to its workmen should be determined on the basis that the factories operating in both India and Pakistan formed a single business. Accordingly, the counsel maintained that the question of bonus ought to be decided solely by reference to the consolidated profit and loss account. The counsel pointed out that, during the relevant year, a dividend had been paid to shareholders on the basis of this consolidated account and that a commission had likewise been paid to the Managing Director on the same basis. In the counsel’s view, the claim for bonus must be considered as being made by the workmen collectively, without making any material distinction between those labouring in one country and those labouring in the other.

The counsel further observed that the payment of bonus is essentially a domestic matter between the employer and his employees. If the employer is one entity, it would not be permissible for him to argue that a distinction should be drawn between his employees in different jurisdictions, nor should the question of net surplus be decided by treating his Indian operations as separate from his Pakistani operations. The counsel stressed that, where the employer is a single undertaking and the factories in the two countries carry on the same kind of work, are integrated and governed by a single management, the existence of national barriers does not alter the fundamental position that the employer is one and his workmen form one collective body. In such a situation, workmen in India may contend that they have contributed to the profits, which creates a surplus in the employer’s hands for distribution as bonus, even though the Indian business alone may have incurred a loss.

The Court considered the contention that a bonus could be awarded to the workmen even though the business carried on by the employer in India, taken by itself, had produced a loss. The learned Attorney‑General had strongly relied on the existence of practical difficulties in implementing such a distribution, but the Court observed that those difficulties were exaggerated and, even if they existed, they could not obscure the fundamental principle that the question was one of law and should be decided on theoretical grounds. In support of this view, counsel for the appellant referred to a series of decisions of the Labour Appellate Tribunal. The first authority relied upon was the case of The Indian Oxygen and Acetylene Co. Ltd., Kanpur v. Indian Oxygen Workers’ Union, Kanpur, reported in 1952‑1 Lab AC 254 (I). That decision held that where a company possesses manufacturing centres in different localities but conducts its business as a single undertaking, the profit and loss of the whole concern—not the profit of any individual branch—determines the entitlement to bonus for employees wherever they are situated. The tribunal observed that “the profits of a particular branch are never earmarked for expenditure in that branch and what is of greater importance is that the return on the share capital in the shape of dividends to the shareholders which have been invested in the different factories of the company is declared and paid from the profits of the company, that is to say, from the net amount which is the result of pooling the profits and losses of the entire concern.” A similar principle was endorsed in Ajodhya Distillery, Raja‑Ka‑Sahaspur v. Ajodhya Distillery Mazdoor Union, (1951) 2 Lab LJ 613 (J), where the appellate tribunal held that when a company operates several concerns and pools the profits of all of them while meeting the liabilities of each out of the joint resources, the bonus payable to workmen of any one concern cannot depend solely on the profit of that individual concern. The same reasoning was applied in Herman and Mehatta v. Their Workmen, (1956) 2 Lab LJ 120 (K). In that case the tribunal declared that where the trading results of the various branches are finally aggregated into a consolidated balance‑sheet and where an integrated policy and control emanate from the head office, it would be unrealistic to consider the results of each workshop separately for the purpose of deciding whether a bonus is payable. Finally, in Inland Steam Navigation Workers’ Union v. Inland General Navigation and Railway Company, Ltd., (1956) 2 Lab LJ 378 (L), the tribunal held that “workmen are entitled to share in the prosperity of the industry taken as a whole in one picture. If there are profits in one area of the activities of the industry and loss in another, the prosperity of the industry must be judged from the net result of the profit or loss especially as workmen do not share the loss under any circumstances.” These authorities were presented to demonstrate that the bonus should be assessed on the basis of the overall profit or loss of the entire enterprise, irrespective of the performance of any single component.

The Tribunal further observed that the opposite proposition must also be recognised. It stated that where there exist two distinct industries or two separate units of the same industry, even though both are operated by the same concern and have historically been treated as separate entities for the purpose of determining profits or losses, they cannot be amalgamated solely for the purpose of calculating the bonus payable to workmen. In other words, a whole that has previously been regarded as a single entity may not be arbitrarily divided into compartments, and conversely, units that have been treated as separate cannot be merged into a single whole simply for the convenience of either the employer or the employees in deciding the bonus liability.

Mr Chatterjee acknowledged that he was unable to cite any authority in which factories belonging to the same concern but located in two different countries were treated as a single business for the application of the principle he advocated. Nonetheless, he argued that if the appellant’s contention were followed to its logical end, then the various units operated by the appellant in different parts of the Union of India could not be regarded as constituting a single business.

The issue raised by the parties was undeniably of some importance, but the Court did not deem it necessary to settle that question in the present appeal. The reason was that, even assuming that the business conducted by the appellant in India and in Pakistan could be treated as one unit, and even assuming that the consolidated profit and loss statement could be taken as the sole indicator of whether the appellant possessed a net surplus available for distribution, it would nonetheless be difficult to uphold the award made by the lower tribunals in favour of the respondents.

For the purpose of illustrating the method employed by the Labour Appellate Tribunal in ascertaining the amount of surplus available during the relevant year, the Court set out the calculation as recorded in the tribunal’s judgment. The total profits shown in the profit‑and‑loss statement amounted to Rs 17,35,630. To this figure the amount provided for bad debts of Rs 1,47,289 was added, and the bonus for 1951‑52 paid in 1952‑53 of Rs 2,06,300 was also added, resulting in total profits of Rs 20,89,219. From this total, the tribunal deducted various prior charges: income‑tax of Rs 8,00,000, return on paid‑up capital of Rs 1,79,937, and return on reserves employed as working capital of Rs 1,47,911, with no rehabilitation charges. The total deductions amounted to Rs 11,27,848, leaving an available surplus of Rs 9,61,371.

The appellant contended that, although the paper calculation indicated an available surplus of Rs 9,61,371, in reality no surplus existed from which a bonus could be paid. The appellant’s balance‑sheet showed cash in hand of Rs 14,576‑2‑4 and a current‑account balance with bankers of Rs 32,50,285‑0‑11. This factual assertion formed the basis of the appellant’s argument that the surplus figure was illusory.

In the evidence, the appellant showed that the balance‑sheet listed cash in hand of Rs 14,576‑2‑4 and a current‑account balance with the bankers of Rs 32,50,285‑0‑11. The appellant further alleged that from the latter amount a sum of Rs 30,98,000 was locked in Pakistan and could not be drawn out or transferred to India. Shri Surajbhan Sharma, who had been the chief accountant of the appellant at Delhi since 1931, gave testimony concerning these facts. He acknowledged that between 1947 and 1952 the appellant had succeeded in withdrawing roughly Rs 9,00,000 from Pakistan, but he asserted that after 30 September 1952 no further monies could be expected because the Government of Pakistan had imposed restrictions on the export of capital. According to his statement, the Pakistani authorities theoretically permitted profits, after deduction of income‑tax, to be remitted to India, yet in practice they prevented such transfers by adopting an obstructive stance. Both tribunals below accepted Shri Sharma’s evidence as credible, but each concluded that the difficulty of repatriating cash from Pakistan could not be assumed to endure indefinitely. Consequently, they declined to give the difficulty substantial weight when deciding whether any surplus existed for distribution as bonus to the employees. The Labour Appellate Tribunal observed that, considering a portion of the company’s capital was temporarily blocked in Pakistan, there was no justification for increasing the bonus rate awarded by the lower tribunal. In effect, the appellate tribunal accepted Shri Sharma’s testimony but applied it only narrowly, refusing to raise the bonus already granted. The learned Attorney‑General argued that if Shri Sharma’s evidence were accepted, there was no record to support the assumption that the impediment to moving cash from Pakistan to India would be short‑lived. Counsel for the appellant, Mr Chatterjee, suggested that despite the difficulties described by Shri Sharma, the appellant might have been able to repatriate cash during the intervening period and perhaps had already done so. The Court could not agree with that contention, given the material before it. The issue had to be examined solely on the evidence presented before the tribunals below. Since Shri Sharma’s statement—that no funds had been transferred from Pakistan to India after 30 September 1952—remained uncontradicted, the Court was required to consider the appellant’s argument on the premise that the entire amount of Rs 30,98,000 remained locked in Pakistan and was not readily available for the purpose of bonus distribution.

In this case the Court observed that the principal flaw in the decision of the Labour Appellate Tribunal was its failure to give full effect to its own finding that Shri Sharma’s testimony concerning the difficulties the appellant faced in bringing cash from Pakistan to India was substantially true. The Court noted that, as it had already pointed out, the inability of the employer to transfer part of its profits from Pakistan into India had been treated as a relevant factor by the Labour Appellate Tribunal in the earlier decision of Greaves Cotton Co. Ltd., Bombay v. Its Workmen, and that even in the present matter the Tribunal had partly taken this circumstance into account when it rejected the employees’ claim for an increased bonus. Consequently, the Court was inclined to hold that, when determining the amount of surplus available for the relevant year, the entire sum of Rs 30,98,000 that was locked up in Pakistan ought to be excluded. The Court found no justification on the record for assuming that any substantial portion of that amount was actually available to the appellant in India at the material time. If the true position was as the appellant asserted, then, out of the total balance of Rs 32,50,285‑0‑11 shown in the balance‑sheet as being with the bankers on current account, the amount of Rs 30,98,000 locked in Pakistan must be deducted, leaving a balance of approximately Rs 1,52,285. The Court emphasized that, for the purpose of calculating a bonus, the employer must be shown to possess surplus that is genuinely available for distribution, and it could not be said that the amount locked in Pakistan satisfied that requirement. The next point raised by the learned Attorney‑General concerned the Labour Appellate Tribunal’s failure to allow for any interest on the preference shares. The Court described this omission as a clear oversight and noted that the validity of the appellant’s contention on this point was not disputed by the respondent’s counsel. Accordingly, the Court allowed the appellant to make an additional deduction of Rs 69,325 as interest on the preference shares. Thereafter, the appellant argued that the tribunals below had erred in law by not taking into account the bad debts shown in the appellant’s accounts. The appellant’s accounts listed Rs 1,47,289 as bad and irrecoverable debts. The Court observed that both tribunals below had not held that the entry for these bad debts had been made with the intention of defeating the employees’ claim for bonus. The Court concluded that the appellant’s argument regarding the bad debts had been misunderstood by the tribunals below, which appeared to assume that the appellant was claiming that the bad debts should be treated as a prior charge in determining the amount of surplus. The Court clarified that the appellant’s position was not that the bad debts constituted a prior charge, but rather that, if the debts were irrecoverable, they would proportionately reduce the gross profits. The Court therefore held that the tribunals below had erred in law by failing to appreciate correctly the contention raised by the appellant in this respect.

In this case, the Court observed that the parties had argued that the amount of bad debts should not be treated as a prior charge when the surplus available for distribution was calculated. Both judgments of the lower tribunals stated that no further items could be added to the list of prior charges for determining the appellant’s surplus. The appellant had not claimed that bad debts constituted a prior charge at all; rather, the appellant’s position was that any debts which proved to be irrecoverable should merely reduce the gross profits to the extent of the loss. The Court found that the tribunals below had failed to appreciate correctly this contention, and that such a failure resulted in a legal error that required correction. The Court noted that if any of the alleged bad debts were later recovered, they would be credited in the year of recovery, and indeed an amount of Rs. 12,028 that had been shown as a bad‑debt item in the preceding year was credited in the year under consideration because it had been recovered. Accordingly, the Court held that the tribunals erred in law by not accepting the appellant’s argument that, for the purpose of computing gross profits, the amount of irrecoverable debts must be deducted.

The Court further explained that, if the gross profits determined by the Labour Appellate Tribunal were reduced by the deduction of Rs. 1,47,289 as bad debts, and if an allowance of Rs. 69,324 were made as a prior charge for interest on preference shares, it would be difficult to assert that any surplus existed that could be called a “surplus” for the purpose of distributing bonuses to employees. The Court then set out the cash position of the appellant. Cash in hand amounted to Rs. 14,576‑2‑4, and the balance with Indian bankers was Rs. 1,52,285, giving a total of Rs. 1,66,861‑2‑4. From this total, the amount of Rs. 1,47,289 had to be deducted as bad and irrecoverable debts, and the sum of Rs. 69,324 had to be deducted as interest on preference shares, which was a prior charge. The tribunals below had not taken into account the testimony of Shri Sharma, which indicated that the appellant faced difficulties in repatriating cash that was locked up in Pakistan. Had the tribunals accepted that evidence, they could not logically have concluded that any surplus was actually available to the appellant for distribution among the employees. Although the accounts showed a considerable amount of surplus on paper, in reality that surplus was not available to the employer for the relevant year and, as the record demonstrated, was not likely to become available in the near future. Consequently, the Court concluded that even if the bonus claim were considered on the basis that the appellant’s business in India and Pakistan constituted a single enterprise, it would be difficult to uphold the Labour Appellate Tribunal’s finding that a surplus existed during the relevant period or was likely to be available shortly thereafter for payment of bonuses to the employees.

The Court observed that the Labour Appellate Tribunal had concluded that there was no surplus available during the relevant period, nor any surplus likely to become available in the near future, from which a bonus could be paid to the employees. The learned Attorney‑General then raised three additional points for brief reference. First, the appellant had claimed a prior charge of Rs 10,29,800 in respect of rehabilitation charges for the year in question. The tribunal below rejected this entire claim on the ground that the appellant had not produced sufficient material to support it. The Attorney‑General conceded that the appellant should have produced more satisfactory evidence, but he maintained that the evidence presented should not be treated as wholly insufficient and that a complete refusal to allow any amount for rehabilitation charges was not justified. The Court noted that the appellant company had previously been penalised by the Labour Appellate Tribunal in the case of Ganesh Flour Mills Co. Ltd., Kanpur v. Ganesh Flour Mills Staff Union, (1952) 1 Lap AC 172, which highlighted the appellant’s failure to lead satisfactory evidence. Nevertheless, the Court recognised that reasonable rehabilitation charges have consistently been allowed as a prior charge when calculating the surplus available for bonus claims. If the point had required determination in the present appeal, the Court might have considered, subject to suitable cost orders, whether the appellant should be given another opportunity to lead more satisfactory evidence in support of the rehabilitation charge. The Labour Appellate Tribunal, in the case of M/s Singh Plate Mills Ltd. v. The Workmen of M/s Singh Plate Mills Limited, 1955 Lab AC 216, had set out the data required for computing rehabilitation charges, namely: (a) dates of purchase of machinery or erection of buildings together with the costs incurred; (b) the number of shifts in which the concern was operating; and (c) the existing depreciation fund and evidence concerning the useful life of the machinery and building, with higher depreciation allowed where a factory operates three shifts. The Court examined the evidence of Shri Kapur, which the Attorney‑General had drawn to its attention, and agreed with the tribunals below that the evidence was not satisfactory. The appellant argued that the penalty imposed for failing to produce satisfactory evidence was unduly severe. However, in view of the conclusion which

Having examined the matters presented in the appeal, the Court observed that it considered it unnecessary to pursue the earlier point any further, having already reached a conclusion on that issue. The Court also noted that the learned Attorney‑General had argued in this appeal that the appellate tribunal had erred by awarding interest at five per cent on the paid‑up capital and at two per cent on the reserves used as working capital; however, the Court decided that it was not required to address those contentions at this stage. Consequently, the Court turned to the central finding of the Labour Appellate Tribunal that a surplus of rupees nine lakh sixty‑one thousand three hundred seventy‑one was either available for distribution during the relevant period or would become available within a reasonable time thereafter. After reviewing the evidence and the tribunal’s own assessment, the Court concluded that this finding could not be sustained because the tribunal’s appreciation of the evidence did not support such a surplus. As a result, the Court set aside the order of the Labour Appellate Tribunal that had directed payment of a bonus and allowed the appeal. In the circumstances of the case, the Court directed that each party should bear its own costs in this Court.