DECISION This.is an appeal against an Award of the learned Labour Court No. II, dated the November 13, 1973 whereby the learned Court granted bonus for 3 months and 10 days. Mr. F. M.
Azad, the learned Representative for the respondent raised preliminary objection that no appeal is maintainable against the Award as the same was passed under section 16(1)(a) as amended in 1970. There is no force in this contention. The Court rightly corrected the heading in the application.
In fact the application was intended to be under section 32(1)(A) of the Ordinance as it is obvious from the following terms of Settlement arrived at between the parties on 17th of December 1971:-- "That the parties hereby agree to make within one week from today a joint application to the Labour Court for adjudication on the question of the dispute under section 16(1)(A) of the Industrial Relations Ordinance as amended in 1970." The fact of the matter is that section 32(1)(A) was introduced by Ordinance No. XIX of 1970 (Industrial Relations (Amendment) Ordinance, 1970).
Section 32(1)(A) was introduced by section I6 of the said Ordinance, that is of 1970 and that is how the confusion arose that the application was under section 16(1)(A) although the intention of the parties was to make it under, section 32(1)(A). The Court, therefore, rightly suo moto corrected the heading of the application and proceeded with the matter. I would hold that A appeal lies. | 2. I would make only certain observations in respect of the comments made by the learned Court about the bona fides of the appellant-company about their Balance-Sheet. I think that these remarks are not well-founded and too harsh. The learned Court, for instance, observed that:-- "The analysis of the Establishment expenses as shown by the Company further makes confusion worse confounded when we look to the exhorbitant amount of Rs. 1,25,000 spent on the welfare and well- being of the Officers as is evident from the deposition of Union's witness Mr. Karim Khan in para. 10 of his affidavit which fact has not been rebutted or shattered by way of cross-examination."
3. The observation on the face of if is not justified. In this connection a reference may be made to the cross-examination of Mr. Karim Khan. He admitted that the figures which he had given in the affidavit are taken from the Balance-Sheet. This figure does not find any place in the Balance- Sheet 1975 Pakistan Oxygen Ltd. v. Employees' Union (Inamullah Khan, Appellate Tribunal) and, therefore, the question of challenging the same did not arise. Moreover in para. 8 of the affidavit of Mr. Waheed Ahmed Qidvvai, Chief Accountant, it is denied that any such amount was spent on the welfare of the Officers of the Company. There is no cross-examination of the witness on this point. I would, therefore, observe that this observation is not called for.
4. The observation of the learned Court that depreciation amount of Rs. 15,92,537 is exhorbitant is not justified, ln this connection reference may be made to para. 9 of the affidavit of Mr. Qidwai at page 135 of the lower Court record. It would show that the Balance-Sheet in respect of depreciation amount for the year 1969 was higher being Rs. 16,92,175. In thisl connection a reference may be made to the Supreme Court of Pakistau'sjfl decision in the case of Zeal Pak. Cement Factory Ltd. (1), Cornelius, J.,' as he then was, observed as under:-- "In our view, the decision of the Tribunal on this point is completely devoid of sound reason. A depreciation fund is not maintained as a kind of secret cache for profits, but is an absolute necessity in relation to any modern industry, which is based upon expensive and valuable machinery."
5. The learned Court observed as under:-- "It appears on page 17 of Annexure 'B* that the Company has shown as exhorbitant amount of Rs. 29,70,574 towards the Establishment expenses and Rs. 15,92,537 towards depreciation." It appears to me that the remark of the learned Court that the above amounts are exhorbitant is based on mere surmise and conjecture. I have already observed that the amount of Rs. 1,25,000 said to have been spent on the welfare and well being of the Officers is based on the deposition of Mr. Karim who has stated that all the figures he has taken from the Balance- Sheet. No exception can be taken to have reserve funds. If the Company has a Reserve Fund of Rs. 60,45,759, it has every right to have it as it may be needed for an eventuality that may arise in future.
6. The following observation of the Labour Court is not supported by law. It runs as under:-- / C "There are more factors, the visual examination of which would raiher clearly show that the company was bent upon harming the interest of the workers by showing unnecessary and exhorbitant items of expenditures. It appears that the Company has shown Reserve amount of Rs. 60,45,759 which is meant for the shareholders as admitted by Mr. Qidwai the witness of the Company who stated in cross- examination as under:-- It is correct that no amount was spent out of the General Reserve for the welfare of the employees. Voluntarily says because it is the shareholders' share left for the Bonus. The Directors can recommend the issuance of the Share Certificates out of General Reserve for the Shareholders." In this connection a reference may be made to the observation of the Supreme- Court of India in the case of Muir Mills Ltd. (2) .It was observed that:-- "Reserve fund built up from the undistributed profits of the past years- the workmen of the company have no right or interest as they are not members of the company. Such reserve form part of assets of' the company. A transfer of moneys from these reserves or the undistributed profits could not enure for the benefit of the workmen." (2) (1955) 1 L L J J(1) 1960 PLC 50 "In the absence of cogent and compelling evidence leading to the definite conclusion and finding that a purported expenditure was sham or had been made with the express object of minimizing the profits with a view to deprive the workmen of their bonus, it is no part of the duty of an industrial tribunal to substitute its own judgment as to what was or not commercially justified in the place of the judgment exercised by the company and its directors in whom in law the Management of the company is confided.'* Similarly the observation of the learned Labour Court that "the Company was making a fake huge amount of taxation so as to render the amount of profits with a view to deprive the workers from their lawful right of share of profit by means of bonus were totally uncalled for and unjustified in the facts and circumstances of the case.
7. The only question now that requires consideration is if Union is entitled for extra ten days wages. The admitted position is that the Company has made more profit in the year in question i.e. 1969-70 than the previous year 1968-69. Previous year they have paid 3 jnonths wages as bonus and declared a dividend of 12|% to shareholders and for year 1969-70 they declared a dividend of 15%. In the circumstances of the case if the workers are paid additional bonus of 10 days' wages it will not place an unbearable burden on the company but it may make a great difference so far as the workers are concerned.
8. I would, therefore, maintain the Award in respect of the bonus with the observation that I have made about the remark of the learned Court about the Balance-Sheet. I (1)
(1959) 2 L L J 382