Workmen of Joint Steamer Companies Vs.
Joint Steamer Companies  INSC 123 (29 April 1963)
29/04/1963 GUPTA, K.C. DAS GUPTA, K.C. DAS
CITATION: 1963 AIR 1710 1964 SCR (3) 456
Industrial dispute-Bonus-Industry operating
in India and Pakistan, if, form one integrated industrial activityTests-Full
Bench Formula-Applicability to a part only of the total operations-Inspection
of documents by workmen if and when accessible-Industrial Disputes Act, 1947
(14 of 1947), s.21.
The respondent complies were carrying on
transport business in the eastern part of the country in co-operation with each
other, which continued even after the partition of India. The main traffic of
the company in the years 1949 to 1952 was as before, namely, (a) traffic within
India; (b) traffic with' 457 Pakistan and (c) traffic between India and
Pakistan. The major portion of the large fleet of vessels in which the
companies carried on their business remained in common use for traffic originating
in Pakistan and for traffic originating in West Bengal and Assam, so that no
appreciable part of the fleet could be classed as being in use specifically in
one country or the other. The workmen claimed bonus for all the four years and
the dispute was referred to the Industrial Tribunal. The workmen's claim was
rejected by the Tribunal and the order was confirmed by the Labour Appellate
Tribunal. On appeal by special leave, the main controversy between the parties
in this Court was whether, the Full Bench Formula has to be applied on the
basis of the overall results of the company’s operations in India and Pakistan
or on the results of the operations India only. The appellants main contention
was that assuming that the operation in India and Pakistan formed parts of one
integrated industrial activity, a way should still he found for separating the
two sets of operations for the purpose of the application of the Full Bench
Held that in the present case, on applying
the tests laid down by this Court, the operations of a company carrying on
transport business between two different places cannot be said to be carried on
as different and distinct industrial activities at these two places.
Associated Cement Companies v. Their workmen,
 S. C. R. 925; A. C. C. Ltd., v. Their Workmen, 1960 (1) L.L.J. 1; Pratap
Press v. Their Workmen, 1960 (1) L. L.J.
497; The Management of Pakshiraja Studio v.
Their' Workmen, 1961 (3) F. L. R. 369; Fine Knitting Co. Ltd. v. I. C. &
Ors., 1962 (1) L. L. J. 275 and D. O. M. Chemical Works v.
Its Work -men, 1962 (1) L. L. J. 388,
Held further, that in the present case on the
materials on record, this court was not in a position to apply the Full Bench
Formula to a part only of the total operations of the companies in India and
Pakistan and the Labour Appellate Tribunal was right in rejecting the workmen's
claim for bonus for the years 1949 to 1952.
Subject to the protection of s. 21 of the
Industrial Disputes Act and in the absence of any special circumstances, the
Tribunal, in its judicial discretion would ordinarily be justified in asking
the employees to give to the workmen reasonable access to all relevant papers.
458 In the present case however, even if the
account books were made available to the workmen, it would be impossible on the
materials on record to arrive at proper figures for the different items
involved in the Full Bench Formula. The appeals therefore, must be dismissed.
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 811 and 812 of 1962.
Appeals by special leave from the judgment
and order dated May 31, 1956 of the Lahour Appellate Tribunal of India at
Calcutta in Appeals Nos. Cal. 225 and 224 of 1955.
N. C. Chatterjee and P. K. Mukherjee, for the
A. V. Viswanatha Sastri, S. C. Mazumdar and
B. N. Ghosh, for respondents Nos. I and 2.
1963. April 29. The jugment of the Court was
delivered by DAS GUPTA J.-These two appeals raise a somewhat difficult problem
as regards the grant of bonus to workmen of an industry operating not only in
India but also outside this country. The appellants are the workmen of two
Steamer Companies, the Indian General Navigation and Railway Co., Ltd., and the
Rivers Steam Navigation Co., Ltd., which have for many years been operating
jointly and are conveniently referred to as 'Joint Steamer Companies".
Disputes having arisen between these companies and their workmen on the
question of bonus for the years 1949, 1950, 1951 and 1952, they were referred
by the Government of West Bengal to the Industrial Tribunal, by two separate
orders of reference, one in respect of the dispute for bonus for the years 1949
and 1950 and the other in respect of the years 1951 and 1952.
459 The Tribunal disposed of these two
references by one common judgment and rejected the workmen's claim for bonus
for all the four years. This order of rejection was confirmed by the Labour
Appellate Tribunal, though on different grounds. It is against this decision of
the Labour Appellate Tribunal that these appeals have been filed on special
leave granted by this Court.
The respondent companies were established
more than a century ago and for more than half a century before India was
partitioned, they were carrying on transport business in the eastern part of
the country in co-operation with each other Their business of transporting
goods and passengers is carried on in 600 or 700 vessels plying on the Ganags
and the Brahmaputra rivers and their tributaries. This business continued even
after the partition of India as a result of which a portion of the State of
Pakistan intervened between Assam and the remainder of India. The main traffic
of the company in the years with which we are concerned, viz., 1949 to 1952 has
been as before, namely, (a) traffic within India; (b) traffic within Pakistan,
and (c) traffic between India and Pakistan. The headquarters of the Companies
remained as before at Calcutta. The major portion of the large fleet of vesels
in which the companies carried on their business remained in common use for
traffic originating in Pakistan and for traffic originating in East Bengal and
Assam, so that no appreciable part of the fleet could be classed as being in
use specifically in one country or the other.
The workmen's claim for bonus was
substantially based on the contention that large profits were earned by the
companies on their operations in India. To these, the workmen contented, they
had contributed and so they were entitled to bonus.
460 In resisting this claim the companies
submitted that the transport business which they carried on in India and
Pakistan was one single, integrated, industrial undertaking and the overall
result of the entire business had to be considered in deciding the question of
bonus According to them, if the principles for ascertaining profit bonus that
are embodied in what is known as the Full Bench Formula, finally crystallized
by this Court in Associated Cement Companies' Case (1), be applied, it will be
found that no available surplus for distribution of bonus remains. In support
of this case the companies submitted charts Showing their version of the
calculation of available surplus in accordance with the Full Bench Formula.
The workmen's Counsel conceded before the
Appellate Tribunal that they had no case for bonus if that claim had to be
applied to available surplus on the basis of the profits of the companies
derived from the entire business in India and Pakistan. Their contention was
that the Full Bench Formula had to be applied on the basis of profits derived
in West Bengal or at any rate on the basis of the profits derived in India to
the exclusion of Pakistan which is a foreign country.
The Appellate Tribunal accepted the
Companies' contentions and accordingly rejected the workmen's claim for bonus.
As before the Appellate Tribunal, so before
this Court the main controversy between the parties has centred round the
question whether the Full Bench Formula has to be applied on the basis of the
overall results of the Companies' operations in India and Pakistan or on the
results of the operations in India only. If all these operations are carried on
as parts of one integrated industrial activity there would ordinarily be no
justification for (1)  S. C. R, 925.
461 deciding the question of bonus on the
operations in India only. The question whether different operations carried on
by the same employer form one integrated industrial activity or not has often
been considered by industrial adjudication.
This Court has also had to deal with the
question on several occasions and has in a series of decisions indicated a
number of tests which are of assistance in deciding. it.
Integrality of functions; inter-dependence of
community of control and management;
community of man-power and of recruitment and discipline in respect of them;
whether the employer himself has treated the
different parts as forming part of one unit or not-these are some of the many
tests that have been laid down. It has also been emphasised that the
application of one single test in preference to the other has to be generally
avoided and the weightage to be given to the different tests applied will
depend on the circumstances of each case and the nature of the industrial
activity. A.C.C. Ltd., v. Their Workmen (1);
Pratap Press v. Their Workmen (2 ); The
Management of Pakshiraja Studio v. Their Workmen (8); Fine Knitting Co., Ltd.,
v. I.C. (4); D. C. M. Chemical Works v. Its Workmen (5).
Cases often occur where the same employer
carries on the same industrial activity at different places and the question
arises whether the units at the different places are one and the same or
distinct and separate. Thus, where the same company engaged Fain the
manufacture of cement starts two different factories at two places, A and B,
they may well be distinct and separate, so that the claim for bonus of the
workmen of the Factory at A will be decided on the results of the Factory
working at A and not on the combined result of the working of the two factories
at A and B. If of these two places, one is in India, and the other in a foreign
country, that will make no difference; for it will still be (1) 1960 (1) L. L.
1. (2) 1960 ( 1) L. L. J 497, (3) 1916 (3) F. L.R. 369. (4) 1962 (1) L.L.J.
275, (5) 1962 (1)L.L.J.388 462 possible to ascertain the different items for
the application of the Full Bench Formula.
It is difficult to see however how the
operations of a company carrying on transport business between two different
places can be said to be carried on as different and distinct industrial
activities at these two places. It is unnecessary to discuss in detail the
application of the tests mentioned above for deciding whether the companies'
operations in Pakistan and their operations in India form two different units
of industrial activity or they are really one as Mr.Chatterjee, who appeared
before us for the appellants, did not seriously contend that they form two
different units. It was however strenuously contended by Mr. Chatterjee that
assuming that the operations in India and Pakistan form part of one integrated industrial
activity, a way should still be found for separating the two sets of operations
for the purpose of the application of the Full Bench Formula. The bulk of the
companies' operations, Mr. Chatterjee, contends, is carried on in india. As the
companies' own witness admits, 61.4% of the total receipts was in India. It
appears reasonable to think also that the greater part of the traffic was from
one point to another point in India. The workmen contend that a proper scrutiny
of the companies' accounts would show that these operations where the traffic
originated in India and the destination was also in a part of India, resulted
in considerable profits to the companies, and it will be unjust that they
should be denied a share of the profits in the form of bonus merely because
other operations carried on by the companies, whether within Pakistan or
between India and Pakistan resulted in loss. It is suggested that conditions in
Pakistan are so very different from conditions in India that it would be denial
of justice to the workmen in India to tie them to whatever happened in
Pakistan. We find it impossible to say that there is not much force in these
submissions. We might have been 463 prepared therefore to consider whether it
would be possible to evolve some principles for the application of the Full
Bench Formula to these peculiar conditions, if we could derive assistance for
the same on the materials on the record. The evidence that has been given in
the case however affords us little assistance in the matter. This becomes
painfully clear when we try to apply the Full Bench Formula to the facts of the
At the threshold of the task, we are faced
with the difficulty of ascertaining the profits of the companies for what is
called its "'Indian operations". Assuming that wherever the traffic
originates in India the receipts in freights and fares for such traffic should
be held to constitute the receipts for the Indian operations, even such an
approximation cannot possibly be applied to the allocation of the expenditure.
For the same vessel which carries traffic originating say, in Calcutta in India
to a destination in India. say, Dibrugarh in Assam, would often carry traffic
also from Calcutta to some points in Pakistan and from points in Pakistan to
some points in Assam. There is no indication in the evidence we have got on the
record to show how in these circumstances the total expenditure incurred should
be allocated between purely Indian operations of the traffic and the rest.
Mr. Chatterjee drew our attention to a
notification of the Government of India dated December 10, 1947 which gave
effect to an agreement between the Government of the Dominion of India and the
Government of the Dominion of Pakistan for the avoidance of double taxation of
income, and suggested that the principles laid down in this agreement for
calculating what proportion of the total income each of the Dominion would be
entitled to charge in respect of concerns, which do business both in India and
Pakistan, may be conveniently applied for 464 ascertaining the profits, for the
Indian operations, for the purpose of the Full Bench Formula.
It is difficult to see how this agreement
between the two Governments for the specific purpose of action under the
Income-tax Act can furnish a just or proper basis for computation of profits
for the purpose of Full Bench Formula for bonus.
Assuming, however, that some guidance is
available from what is stated in this agreement as to the calculation of the
profits for the companies' operations in India., other difficulties in the way
of applying the Full Bench Formula still remain. How is one to calculate the
paid-UP capital on which interest is to be allowed? Admittedly, no demarcation
is made between vessels used in the companies' purely Indian operations and
vessels used for the traffic within Pakistan and for traffic between India and
As we have mentioned earlier, the same vessel
may carry and will in many cases actually carry cargo for Indian destinations
as also for Pakistani destinations. As far as we can see from the evidence on
the record there is no easy way of ascertaining what portion of the total paid
up capital of the companies could be said to have been used for the purpose of
the Indian operations. it is equally difficult to ascertain the extent of the
working capital used for their Indian operations. Unless these difficulties can
be removed it is not possible to arrive at any figure for the prior charges to
be deducted on account of interest on paid up capital and interest on working
capital. Equally difficult is the assessment of the amount necessary for rehabilitation.
By far the major part of the capital that will require rehabilitation 'consists
of the vessels in which the goods and passengers are carried. If it was known
that out of the total fleet of 600 or 700 vessels some are car-marked for
purely Indian operations, it might be possible to find out what was required
465 for their rehabilitation Admittedly, however, there is no such earmarking.
Apart from the fact as mentioned above that an identical vessel is often used
for carrying goods of the purely Indian traffic as also goods of the traffic
within Pakistan and the traffic between India and Pakistan in one and the same
trip, it also seems likely that some vessels which are at times confined to
purely Pakistani traffic are from time to time transferred to Indian 'traffic.
In these circumstances, it is not possible with the materials at our disposal
to ascertain the amount for rehabilitation of the capital used for Indian
Learned Counsel for the appellant was
conscious of these difficulties. He appealed to us however to try to find out
some means for applying the Full Bench Formula to the companies' Indian
operations. He himself has not been able to suggest any solution to the problem
except suggesting that a way out may be found by apportioning the income,
expenditure, paid-up capital and working capital for the entire operations in
India and Pakistan between those in India and those in Pakistan Some of the
difficulties in the way of such apportionment have been indicated by us above.
We must hot however be understood to say that
the task is wholly impossible of achievement. It may be that in another case
the workmen may be able to adduce such evidence by examining expert witnesses,
like actuaries, accountants or others that the tribunals may feel justified in
computing, in respect of the Indian business, reasonably accurate figures for
the different items of the Full Bench Formula.
All we wish to say is that on the materials
on the present record we are not in a position to apply the Full Bench Formula
to a part only of the total operations of the companies in India and Pakistan.
We have therefore come to the conclusion that
the Labour Appellate Tribunal has rightly rejected 466 the workmen's claim for
bonus for the years, 1949, 1950,1951 and 1952.
Before we part with these appeals, we have to
refer to a complaint vehemently pressed before us by Mr. Chatterjee that there
has not been a fair hearing of these cases inasmuch as the workmen or their
representatives were not given access to certain account books which they
wanted to consult. We think it necessary to examine how far this complaint is
justified as, in our opinion, even if these account books were made available
to the workmen, it would be impossible on the materials on the record to arrive
at proper figures for the different items involved in the Full Bench Formula.
We think it proper however to emphasise the importance of both employers and
workmen making available to industrial adjudication all relevant papers,
including account books which are likely to assist a proper decision of the
questions at issue. The provisions of s. 21 of the Industrial Disputes. Act
afford ample protection against disclosure of information which a party may
wish to be treated as confidential. Where workmen or their representatives ask
for inspection of such papers and account books, it should ordinarily be
possible for the employers to comply with the request, Subject however to the
protection of s. 21 of the Industrial Disputes Act. When any such prayer is
made, the Tribunal has to use its judicial discretion in the matter and in the
absence of any special circumstances would ordinarily be justified in asking the
employers to give to the workmen reasonable access to all relevant papers.
As has been stated above, we have come to the
conclusion that the Appellate Tribunal has rightly rejected the workmen's claim
for bonus. The appeals are accordingly dismissed. There will be no order as to