Case Note & Summary
The State of Mysore appealed by special leave against an award dated November 24, 1956 by the Central Government Industrial Tribunal, Madras in Industrial Dispute No.1 of 1956 concerning bonus claims by workers of gold mines in Kolar Gold Fields. The employers were three gold mining companies and allied establishments; workmen unions demanded bonus for calendar years 1953 and 1954, claiming sufficient available surplus. The tribunal awarded varying months of bonus to workers of different mines and allied establishments, after rejecting management's contentions regarding applicability of Full Bench Formula, lease covenant reserve fund, pension fund contributions, deduction of 1950 bonus, and higher interest. The Supreme Court considered whether the Full Bench Formula evolved by Labour Appellate Tribunal in Mill Owners Association v. Rashtriya Mill Mazdoor Sangh applied to gold mining industry, which management argued was a wasting industry requiring large investment for ore search and machinery replacement. The Court held the formula and categories of prior charges were comprehensive and applied to gold mining; the concept of social and economic justice rooted in Articles 38 and 43 of the Constitution applied equally. The Court rejected the argument that a covenant in the lease deed permitting creation of a reserve fund of 15% of revenue expenditure could be treated as a prior charge binding on workmen; no evidence showed amounts were actually spent for the stated purposes. The Court upheld the tribunal's disallowance of pension fund contributions as inequitable because they were for covenanted staff only. The claim for deduction of bonus paid for 1950 was also disallowed. However, because the employers had been misled by previous awards and had not specifically claimed rehabilitation apart from the general covenant claim, the Court held they should be given an opportunity to prove their rehabilitation claim. The appeal was thus allowed only to that limited extent, and the tribunal's award was otherwise confirmed.
Headnote
A) Labour Law - Bonus - Applicability of Full Bench Formula to Gold Mining Industry - Constitution of India, 1950, Articles 38 and 43 - The Full Bench Formula for determining available surplus for bonus, evolved in Mill Owners Association v. Rashtriya Mill Mazdoor Sangh, is comprehensive and applies to gold mining industry despite its wasting nature; the Directive Principles require social and economic justice equally. Held that the tribunal was right to apply the formula and consider special requirements flexibly. (Paras not mentioned) B) Industrial Dispute - Prior Charges - Lease Covenant for Reserve Fund - Constitution of India, 1950, Articles 38 and 43 - A covenant in mining lease permitting creation of reserve fund of 15% of revenue expenditure does not bind workmen and cannot automatically be prior charge; tribunal must examine actual expenditure. Held that the tribunal rightly disallowed claim based solely on covenant, but employers should be allowed to prove rehabilitation expenditure separately. (Paras not mentioned) C) Labour Law - Bonus - Pension Fund Contributions as Prior Charge - No specific statute cited - Contributions to pension fund for covenanted staff only cannot take precedence over workmen's bonus claim; tribunal correctly disallowed both initial and annual contributions. Held. (Paras not mentioned) D) Labour Law - Bonus - Deduction of Prior Year's Bonus - No specific statute cited - The claim that bonus paid for 1950 debited in 1958 should be deducted was disallowed because inadmissible. Held. (Paras not mentioned) E) Labour Law - Bonus - Rehabilitation Expenditure - Opportunity to Prove - No specific statute cited - Because employers were misled by previous awards, they should be given opportunity to prove rehabilitation claim apart from general covenant claim. Held. (Paras not mentioned)
Issue of Consideration
Whether Full Bench Formula evolved by Labour Appellate Tribunal applies to gold mining industry; whether lease covenant permitting reserve fund of 15% revenue expenditure constitutes prior charge; whether pension fund contributions, prior year bonus, and higher interest should be deducted; whether employers should be allowed to prove rehabilitation claim
Final Decision
Supreme Court held that Full Bench Formula applies to gold mining industry; lease covenant cannot be treated as prior charge; tribunal's disallowance of pension fund contributions and other deductions upheld; employers to be given opportunity to prove rehabilitation claim; appeal allowed to that extent
Law Points
- Legal points not extracted
- Full Bench Formula for computing available surplus applies to gold mining industry
- categories of prior charges are comprehensive
- lease covenant cannot bind workmen or preclude tribunal's inquiry
- social and economic justice under Articles 38 and 43 applies equally
- tribunal must examine each expenditure claim on merits
- employers misled by prior awards should be allowed to prove rehabilitation
