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Judgment
V. Pattabhi Ramaiya, J.—This is an Industrial dispute between the workers and the management of the Hindi Prachar Press, Madras, and it
was referred for adjudication to this Labour Court, by G.O. Ms. No. 14, I.L. & C., dated 3 January 1958. The points referred for adjudication as
stated in the said Government order are-
(1) fixation of quantum of bonus for 1955, and
(2) introduction of gratuity scheme.
* * *
On these contentions the following issues were framed for enquiry:
(1) To what bonus, if any, are the workers entitled for the year 1955 ?
(2)(a) Whether the workers of this concern (?) are entitled to have a gratuity scheme as a second retirement benefit,
(b) If so, what should be its terms ?
Issue (I).-I shall first deal with the contention that the demand for additional bonus is highly belated. Admittedly this concern''s year of account is
according to the calendar year and the account year 1955 came to an end on 31 December 1955. Admittedly the demand for additional bonus
was put forward in writing on 30 November 1956 as mentioned in Ex. M. 1. It is, therefore, contended by the management that this claim is highly
belated as It was put forward eleven months after the year of account came to a close. With a view to meet this objection the union has put
forward two points. One is that even in the , month of February 1956, the workers had asked for additional bonus and that therefore the claim was
not belated. Admittedly it is the practice of this concern to give two months'' wages as bonus in three instalments. One such instalment, namely, half
a month''s wages, is paid some time after the Republic Day, namely, in February of each year. Another instalment of half a month''s wages is given
after the Independence Day and one month''s wages are paid after Gandhiji''s birth-day in October of every year, it is the evidence of W. W. 2
that in February 1956 when the first instalment was paid, the workers requested the management to give them two payments of one month''s salary
instead of the usual two instalments of half month''s salary. It is also stated that the management promised to consider and that they did not comply
with their request and that consequently the demand for three months'' wages was sent by the union. The management denies that any such request
was ever made by the workers in February 1956. Unfortunately, the management has not let in any evidence to rebut the testimony of W. W. 2.
But they contend that if the case of the workers was true they would have sent a written request, as they were accustomed to do so when they
wanted to make any representation just as when they wanted a holiday on a particular day. Though there is some force in what the management
says, still as there is no rebuttal evidence, I cannot but find the case of the workers to be true. I am, therefore, inclined to find that the workers
must have demanded additional bonus even in February 1956. The second ground urged by the union in support of their case that the claim is not
belated is, that as the balance sheet for the year 1955 was prepared only on 7 September 1956, this demand which was put forward in writing at
the end of November of that year cannot be said to be belated. It is argued that normally a belated claim for bonus is rejected by the tribunals on
the ground that the management would have utilized or divided the profits and that if a claim for bonus is put forward after such utilization or
distribution it would work a great hardship on the management as they would not have the profits in their possession to pay it. It is also urged that
this reason cannot apply to the facts of this case as the profits must be deemed to have been ascertained only in the beginning of September 1956
when the accounts were finalized and the balance sheet was prepared. I think there is much force in this argument also and I am inclined to hold
that the claim is not belated. Though the demand was made nearly three months after the ascertainment of the profits. the management has not put
forward a contention to the effect that on the date of the receipt of the demand they were not in possession of the profits of the previous year to
enable them to meet the claim. Nor has any evidence been led in support of such a cage. A belated claim for bonus cannot be rejected solely on
the ground of the belated-ness. The management should prove that by the time when the demand was made the profit had been utilized for other
purposes or that they have been distributed either among the shareholders or partners. No such case is put forward in the present case and I
would go even further and say that a contention of that kind cannot be urged by this management, as its profits are never distributed, since there
are no shareholders or partners. No doubt, they can say that the profits have been utilized for some purposes before the claim was put forward.
But such a contention has not been advanced. I am, therefore, inclined to hold that even if the demand is said to be belated, as not having been put
forward immediately after the close of the year, it cannot be rejected in this case on the ground of belatedness alone.
This press is a section or a department of an organization or an institution known as Dakshina Bharat Hindi Prachar Sabha, The main object of
this institution is the propaganda of knowledge of Hindi in South India. For this purpose there are several sections like library section, publicity
section, book sales section, training centres for teachers who are paid stipends and are given free tuition and free lodging, etc. The management''s
case is that the bulk of the work done in this press is only printing of books for sale, that for purposes of accounting certain printing charges are
notionally credited to the press account and that the profits of the press alone should not be separately considered for arriving at the available
surplus according to the formula laid down by a Full Bench decision of the Labour Appellate Tribunal in the case reported in 1950 L.L.J. 1247.
Their case is that the entire income of the whole organization or society must be taken into account. The workers on the other hand contend that
the net income of the press alone should be considered, as some of the other sections are only spending departments without having any income. I
think the contention of the management is well founded as the press is only a department or a section of the activities of this organization and it
cannot be treated as a separate establishment. The several departments are interdependent upon one another and are not separate establishments
by themselves without having any connexion with others. As this is not a commercial concern the trading results of a particular year are not
mentioned in terms of profit and loss but are termed as excess or deficit of income over expenditure. But such amounts represent the profits or
losses. According to Ex. M. 4, the trading and profits and loss account for 1955, the excess of income over expenditure for the year 1955 was Rs.
88,891-6-4. The management filed a working sheet marked as Ex. M. 11 and it is said to correspond roughly with the Pull Bench formula. In this
statement they have mentioned the capital of the society as Rs. 14,16,383-1-10. This sabha has no fixed capital in the sense that some money is
invested initially and further sums are added subsequently from time to time. Evidently the organization was started out of donations, subscriptions
and grants by various Governments. Donations were being collected even after the inception. The excess net income derived every year was also
ploughed back and utilized for the various purposes of this institution. It is, therefore, stated by the management that the ordinary commercial
notion of capital cannot be applied and that the capital of this society can be arrived at only by deducting the total of the liabilities out of the total of
the assets. The total of the assets is mentioned in Ex. M. 4 as Rs. 19,26,393-8-8. In Ex. M. 11 the total of various items of liabilities aggregating to
Rs. 5,10,010-6-10 is deducted out of the total assets and the balance of Rs. 14,16,383-1-10 is mentioned as the capital employed. I think this
method of computing the capital of an institution like the present one must be "" accepted having regard to the peculiar nature of its business. The
management states that as provided in the Full Bench formula they are entitled to claim interest at 6 per cent on the capital employed and the
amount comes to Rs. 84,983-2-0. They also claim a sum of Rs. 20,000 as the, rehabilitation charges for purchase of machinery, types, etc. But no
evidence has been adduced in support of this claim, and I am, therefore inclined to reject this item. This organization is admittedly not paying any
Income Tax and no other prior charges are claimed. Therefore, deducting the interest of Rs. 84,983-2-0 out of the net income of Rs. 88,891-6-4,
the available surplus comes to Rs. 3,908-4-4.
The main question which arises for determination is whether the workers of this press are entitled to any additional bonus when the available
surplus is only a sum of Rs. 3,908-4-4. One of the contentions raised by the management is that the workers of the press section alone should not
be treated on a better footing than the employees of the other sections, that if any additional bonus is given to these workers, the other employees
would be similarly entitled to it, and the available surplus is not sufficient to pay similar bonus to all the workers employed in all the other sections of
this organization. I was informed that the wages of the press workers come to Rs. 5,000 per mensem. This was not denied by Mr. Deenadayulu,
who appeared for the union. I was also told that the monthly wage bill of about 150 employees belonging to other sections amounts to Rs. 15,000
per mensem. Therefore, the available surplus of Rs. 3,908 is not sufficient even to pay one week''s additional bonus for all the workers in the
service of the sabha.
It is one of the contentions of the management that the available surplus of a charitable or educational institution of this kind should not be
distributed among the workers just as it is being done in the case of the commercial concerns, as such a course would defeat the very purpose and
object of the institution. It is also stated that the organizations of this kind are started with the object of spreading knowledge and if the entire
available surplus is utilized not for that purpose"" but for the payment of bonus to workers, there would be no amount left to carry on the main work
of the organization and this course would defeat the very object of the institution. It is also stated that if the available surplus is entirely distributed
among the workers, the institution would exist only for the benefit of the workers and . not for fulfilling its ideas and achieving its objects and
purposes. I am inclined to agree with this argument and I am inclined to find that while dealing with a claim for bonus of the workers of an
organization like the present kind, the principles normally applicable to other industries and commercial concerns cannot be strictly followed. It has
also been observed by the Labour Appellate Tribunal that the Full Bench formula is not the last word on the subject and that in appropriate cases
certain modification can be made. In the concerns run with a profit making motive the workers are entitled to share their property (sic). But
organizations of this type are run in a self-sacrificing spirit with laudable and charitable objects and if all the available surplus is given away to the
workers it would defeat the very purpose of the institution. No doubt even in the case of such institutions, if the workers are paid very low wages
they would be entitled normally to some liberal consideration at the hands of the tribunals, as charity must begin at home. It has not been proved
that the wages paid to those workers are so low as to compel sympathetic consideration by this Court. On the other hand, I find they are paying
decent wages though they may not amount to living wages. Admittedly the workers have been paid for the year 1955 two months'' wages as
bonus, and it is not as though nothing was paid at all. Many printing presses and other concerns In Madras are giving only one month''s wages as
bonus and it is, therefore, evident that this management is very considerate towards its workers. On account of these reasons also I am not in
favour of allowing the demand. Anyhow, I am of the definite opinion that the available surplus is not sufficient enough to award any additional
bonus to the workers of this entire organization and no discrimination can be made in favour of these press workers alone.
Mr. Deenadayalu urged that if the trading results of the press alone are taken into account, there was a net profit of Rs. 20,058-1-7 and that this
is more than ample for paying an additional bonus of one month''s wages, as no prior charges have been proved for being deducted out of this
figure. The profit and loss account of the press section found in Ex. M. 4 no doubt mentions this figure of Rs. 20,000 and odd as net profit. But it is
made up of a sum of Rs. 9,551 being the interest on investments and if this sum Is taken away from the net profit, as workers are not entitled to
claim bonus out of income from other sources, the available net profit would be reduced to Rs. 10,500 roughly. It is true that if the press section
alone is considered as separate unit or establishment the workers can be paid the additional bonus claimed by them. But as I am inclined to uphold
the contention of the management that the entire organization should be treated as one establishment I am unable to concede the request of these
workers.
In the result, I find that the entire organization must be taken as one unit, that if so considered the available surplus is not sufficient for paying
any additional bonus be the workers of the organization and that the employees of other sections cannot be discriminated against, I, therefore, find
that the claim for additional bonus is not sustainable and I reject it.
Issues 2(a) and 2(b).-The workers demand a gratuity scheme providing for payment of fifteen days'' wages for each year of service as a
second retirement benefit on the ground that the provident fund scheme now in force does not afford them a sufficient provision as a retirement
benefit for their old age. A provident fund scheme has been in force for the benefit of these workers from 1924 onwards. A sum equivalent to 6i
per cent of the basic wages of the workers was being collected from their wages and the management was contributing an equal amount. After the
Employees'' Provident Fund Scheme was brought into force on or about 1 August 1956, the management has to deduct the contributions of the
employees not only from the basic wages but also from the dearness allowance paid to them and they are also compelled to contribute equal
amounts. Thus at present the management is also contributing towards the provident fund on the deductions from the dearness allowance. Further,
the dearness allowance which was being paid till 1 January 1957, ranged between Rs. 30 to Rs. 45 according to the period of the service of the
workers as no uniform scale was applicable to all the workers. After that date under a settlement between the parties, dearnesa allowance is being
paid to all the workers at the rate of 15 DP or As. 2-6 per point in excess of 100 points in the cost of living index. All the workers are now,
therefore, getting about Rs. 45 per mensem as dearness allowance and the management is constrained to contribute at 6 1/4 per cent on this
amount also. Consequently it is urged by the management that as the workers are now having a far better provision by way of increased provident
fund no gratuity scheme should be framed for their benefit, and that the provident fund scheme now in force cannot be said to be inadequate. It is
their case that the feasibility of providing a second retirement benefit depends upon the inadequacy of the existing provision and the capacity of the
concern to provide for the additional benefit. In support of their contention, the management relies upon an award of Sri K. Ramaswami Gounder,
the Industrial Tribunal, Madras, in the dispute relating to the Workers and the management of Salem-Erode Electricity Distribution Company, Ltd.,
published in the Supplement to Part I of the Fort St. George Gazette, dated 20 November 1957. In that award the learned tribunal observes at p.
19:
In my view in addition to the provident fund scheme, before a gratuity scheme or any other scheme is introduced as a provision for old age, two
tests must be satisfied:
(1) the employers must be financially stable and sound ; and
(2) the provident fund scheme or any other scheme already in existence is inadequate.
It is urged for the management that both these conditions do not exist in this because according to them the existing provident fund scheme is quite
adequate and this concern is not in a position to provide for an additional retirement benefit by way of gratuity. In support of the plea of adequacy
of the present provision, namely, the provident fund, the management has file a statement showing the names of the workers, the dates of their
entry to the service, the period of service as on 31 December 1956, their wages, the dates of birth and the accumulations to their credit as on 31
December 1956. Two of the workers have got to their credit amounts of more than Rs. 2,000 and they are the oldest employees who are likely to
retire in five or six years. According to the management, the other workers are likely to get a very decent provision as provident fund when they
retire as larger accumulations are being now made for their benefit. Mr. Deenadayalu, the secretary of the union, expressed an opinion in his
evidence saying that each worker should have at least a sum of Rs. 15,000 or Rs. 20,000 as total of all retirement benefits and"" that then alone he
can live above want after retirement. I think the opinion of Mr. Deenadayalu is very idealistic and impractical and in the present present state of
economy of this country it is not possible for most of the concerns to provide such a large amount for each worker when he retired. In my view,
having regard to their needs and the position in life of these workers a sum of Rs. 4,000 would be a decent and sufficient provision for old age. On
a rough estimate the new entrants in service, that is, persons who joined after the Employees'' Provident Fund Scheme came into force, are likely
to get this much amount when they retire as the deductions from their emoluments as well as the contributions by the management are nearly double
the amount which was being saved prior to the scheme. The workers who had put in long service prior to 1 August 1956 and likely to retire shortly
may not be in a position to get this sum of Rs. 4,000. I, therefore, suggested to Mr. Govind Avasthe, the manager of the concern who appeared on
behalf of the management, that the management could agree to provide a gratuity scheme for the benefit of such workers alone for the period of
their service prior to 1 August 1956. Though he stated that my suggestions appeared to be reasonable, he was not in a position to consent to it
straightaway as he had no authority to do so. Further, Mr. Deenadayalu was not willing to accept my suggestion and insisted on a scheme being
framed for the benefit of all workers as demanded by the union.
With a view to prove their case that this concern is not in a position to shoulder this additional liability the management has filed the balance
sheets and the trading profit and loss accounts for the years 1953 to 1956 and they are marked as Exs. M. 2 to M. 5. Exhibit M. 2 .which relates
to the year 1953 shows that this concern had made a net profit of Rs. 1,198-4-3. In 1954 the profits amounted to over Rs. 39,617-10-10. For
1955 the net income was Rs. 88,891-3-4 but in 1956 it was only Rs. 13,984-13-2. It was also mentioned to me that the balance-sheet and the
trading profit and loss account for the year 1957 were being prepared and were not ready. On the strength of these figures it is argued that though
this concern made some decent income in 1955, the same in the year 1956 was considerably less and that as the figures do not establish a
continued state of prosperity for a decent or reasonable period it should not be made to shoulder a gratuity scheme. I was also informed that the
future of this sabha is very gloomy because very shortly decentralization of the activities of this institution has to be effected due to the claims of the
linguistic branches in the various neighbouring States like Andhra, Kerala and Mysore. I was also told that the books sales which is one of the main
and very important sources of income are likely to go down on account of nationalization of the text books by the various State Governments and
that both Kerala and Andhra Governments have already done so. It was further pointed out to me by Mr. Govind Avasthe, the management''s
representative, that in case a gratuity scheme is provided by this Court to these press workers the management would be bound to make a similar
provision for the workers in the other departments and sections both on grounds of equity, decency and morality and also to avoid discontentment
and heart-burning. By way of meeting the argument, that this sabha is receiving large grants from the Central and the State Governments and that it
can provide a gratuity scheme out of these funds, I was informed that grants were being given earmarked for specific purposes and that those
amounts cannot be utilized for this 1 claim of the workers. I think there is some force in what the management say about their difficulties with
regard to this matter. Before framing a gratuity scheme which is a long-term benefit this Court is bound to consider the question whether the
concern is having a continued state of prosperity for some time past. On this question the figures shown in the balance sheets do not justify an
affirmative and favourable finding. Though the management''s representative has mentioned several matters regarding the future gloomy position of
the sabha, I am not prepared to give them serious consideration as definite evidence has not been led on those points. On the whole I am inclined
to agree with the management''s case that at present this sabha cannot have a gratuity scheme for its workers. It would not be proper to provide a
scheme only for the press workers as it would amount to discrimination, I was told that there are about 150 workers in the other departments and
about 50 or 60 workers in the press. For these 200 workers if a gratuity scheme is to be provided it would cost the management a sum of about
Rs. 3,00,000 taking the service of each worker as 30 years and taking Rs. 50 as the average wages for fifteen days (200 x 30 x 50 = 3,00,000). I
am, therefore, constrained to hold that no gratuity scheme can be framed at present for the benefit of all these press workers.
In spite of my above finding I wish to state that the present provident fund does not afford a sufficient retirement benefit for the workers who
had put in very long service and who are likely to retire during the course of the next few years as the accumulations in that fund are not substantial.
I would, therefore, suggest to the management to provide a modified or limited gratuity scheme for the benefit of these workers providing 15 days''
wages of each year''s service in respect of their service prior to 1 August 1953 when the State Employees'' Provident Fund Scheme was not in
force. If the management does not act upon this suggestion, the workers may agitate for such a scheme as I find that I am unable to grant them
such a relief in this dispute on account of a legal objection taken by the management.
I shall now deal with the legal objection raised by the management. The workers of this concern represented by another union called
Hindusthani Prachar Press Workers'' Union raised certain demands in 1956. There were conciliation proceedings and in the course of those
proceedings a settlement was arrived at. One of the demands relating to the institution of gratuity scheme was given up under that settlement, Ex.
M. 7. That settlement has not been terminated till to-day and therefore it must be deemed to be in force. The contention of the management is that
while that settlement is still in force it is not open to these workers to raise this demand. I think there is every force in this contention. Section 18 of
the Industrial Disputes Act states that a settlement arrived at in the course of the conciliation proceedings shall be binding on all the parties for the
industrial dispute. It is also stated that all persons who are employed in the establishment to which the dispute relates on the date of the dispute, as
well as persons who subsequently become employed in that establishment, are bound by it. Therefore, the present workers who raised this dispute
are bound by that settlement. According to Section 19 of the said Act a settlement shall be binding for such period as is agreed upon by the parties
and in case no definite period is agreed upon, for a period of six months from the date of the settlement and it shall continue to be binding even
after the period of six months until the expiry of two months from the date on which a notice is given by one party to the other terminating the
settlement. It is not the case of the union that any such notice had been given and that the notice period of two months had expired before this
demand was put forward. It is, therefore, clear beyond doubt that the settlement is still in force and this union cannot agitate this demand for the
institution of a gratuity scheme without validly terminating the settlement. I therefore, find that there is much force in this legal objection of the
management and I have no option but to uphold it. It therefore follows that in this dispute the workers cannot have any relief with regard to this
claim as they are still bound by that agreement and that their proper remedy is to terminate the prior settlement properly and then come forward
with a fresh demand. I am, therefore, constrained hold that this claim for a gratuity scheme cannot be granted now.
On account of my above finding it is unnecessary for me to consider the other contentions of the workers, namely, that gratuity had been paid
in the past to certain workers and that similar concerns are having a gratuity scheme as a second retirement benefit.
In the result an award is passed on the above lines with regard to both the issues and it shall come into force after thirty days of its publication
in the Fort St. George Gazette. Each party is directed to bear its own costs.