This is an appeal against an award of the learned Chairman of the First West Pakistan Industrial Court, Karachi, dated 15th June 1968. The facts briefly put are these.
2. The Five Elected Representatives of the Workers of the appellant-Company, (hereinafter called the respondents), served a notice of strike on the Management in respect of only one demand, namely, "The Workers should be paid bonus at the rate of two months consolidated wages for the ytar ending 31st December 1966, prorata basis". The conciliation pro--ceedings having failed, the Conciliation Officer granted the failure Certificate on 3rd May 1967. The respondents made an applica--tion under section 5(5) of the Industrial Disputes Ordinance, 1959 (hereinafter called the repealed Ordinance), on Hill May 1967.
3. The appellants contested the application on the ground that the Company had earned a nominal profit of Rs. 20,761.00, in the year 1966-67. It was, therefore, not in a position to give any bonus. The Company was, however, willing to give bonus at the rate of one month's basic wages to all its permanent employees, i.e. 11 workmen. It was further stated that out of these 11 workmen, four had already accepted bonus at the rate of one month's basic wages on 31st March 1967. The dispute, therefore, was confirmed to seven workmen.
4. The learned Industrial Court on the evidence led by the parties came to the conclusion that the balance-sheet for the year 1966, showed a net profit of Rs: 20,761.00. He came to the conclusion, considering a nominal amount involved (Rs. 1,470) as bonus, that the Company could afford to pay Bonus to its seven permanent workmen.
5. The learned Advocate, Mr. Salman Rahim, for the appellants relying on the case of the Associated Cement Companies Limited and another v. The Workmen (I ), that the learned Industrial Court had not taken into account certain items, which should have been deducted from the gross profits before coming to the conclusion as to what was the net profit. A perusal of the decision v, could disclose
(1) AIR 1959 SC 1967 that the following items can be deducted from the gross profit in order to arrive at a fret profit :-
(1) The first item of deduction relates to depreciation.
(2) The Income-tax payable for the bonus year.
(3) The deduction of an appropriate amount as return on paid--up capital as well as on working capital.
(4) The amount to be deducted towards rehabilitation. This is in addition to the admissible depreciation.
6. Mr Rahim, the learned Advocate, contended that it is not necessary, in the circumstances of the present ca e. to make a reference to all the deductions that the appellant would be entitled. He confined his submission to the deductions permissible under the Bead `allowable as return on paid-up capital'. He submitted that generally the payment of interest on it is 6%, per annum oil the paid-up capital is permissible. Mr. S. P. Lodhi, for the respondents, contended that no hard and fast rule can be laid down as to what should be the return on the paid-up capital. It will depend from industry to industry. He submitted that the return of 4 to 5 j would be sufficient interest on the paid- up capital. It is true as to what return should be allowed on paid-tip capital in a case must depend upon the circumstances relevant to each case. The quantum of return on the paid-up capital might vary, but the fact remains that some return has to be allowed on tie paid-up capital. In the present case, even if I were to accept the contention of Mr. Lodhi, the return on the paid-tip capital which comes to Rs. 5,00,000.00, would be Its. 24,000.00. This amount exceeds the net profit shown in the bald balance-sheet, In these circumstances, the; workmen will not be entitled to any bonus for the year in question. The appeal is allowed.
7. Mr. Rahim, Advocate, for the appellants, however, stated that lie was willing to pay the bonus, as ordered by the Industrial Court, fur the better understanding and harmonious relations between the employer and the workmen. He stated that his clients were anxious to have that principle decided and not to save the money, which the Industrial Court had awarded,