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As mentioned earlier, the year of account is 1964-65, which is October 1, 1964 and ending September 30, 1965. The appellant Company was incorporated under the Indian Companies Act, in 1935 and was made into a public company in 1958. It is a venture of the British Oxygen Company incorporated in England and the English Company still holds a little over 66% of the shares of the Indian Company. The main products of the Company are production of industrial gases like oxygen, dissolved acetylene, nitrogen and hydrogen and also electrodes and welding equipment and medical equipment. The Company has been paying bonus to its workmen from 1948; and since, then it has been paying bonus by agreements with the union. The bonus, so paid, has been more or less at five months basic wages, subject to a minimum and maximum as per the agreement. For the year in question, 1964-65, there was no agreement, as the Payment of Bonus Act, 1965 (hereinafter to be referred as the Act) came into force. There is no controversy that this is the first accounting year, in respect of which the bonus is to be paid under the Act. The accounts of the Company were passed at the Annual General Meeting held on February 12, 1966. The Company calculated bonus at the rate of 17.58% of the total annual wages or salary plus Dearness Allowance and declared the said amount payable by notice dated March 23, 1966. The Company originally worked out the allocable surplus under the Act for the said year at Rs. 30,35,958. As the sum of Rs. 1,72,69,770 was the total salary and wages including Dearness Allowance payable for the said year, the allocable surplus worked out at 17.58% of the said total wage bill and hence bonus was declared at that rate.

Though the question referred was regarding the, claim for higher bonus than 17.5 per cent, all parties were agreed that the appellant Company had actually offered and paid as bonus for the said year at 17.58 per cent. It is on this basis that the dispute also was adjudicated by the National Industrial Tribunal.

Though originally, the appellant, as mentioned earlier, had calculated the allocable surplus in the sum of Rs. 30,35,958, during the proceedings before the Tribunal, they recomputed the amount and filed a revised statement Ex.4, by which the allocable surplus was worked out at only Rs. 23,30,396. This reduced figure was explained by the appellant Company as due to omission in the previous statement, to add back certain items in computing the gross profits and higher figure for income-tax. All the unions very strenuously contested both the calculations of the Company. According to the unions,- in the balance sheet and profit and loss accounts of the Company various items of expenses have been inflated. Details of such inflation were given by them. The unions also contested the amount of direct taxes shown in the statement of the Company. It was the further case of the unions that if there is a proper computation, the allocable surplus would be very much higher than 50 lacs as against the figure of Rs. 30,35,958 shown in the original calculation and miserably reduced in the subsequent calculation Ex.4.

Though the Unions support the Award of the Tribunal, in so far as it is against the Company,, grievance in their appeals Nos. 813 and 1302 of 1967 relates to the Tribunal's declining to add back certain further items in calculating the gross-profits and permitting the Company to deduct from the gross-profits certain items for arriving at the allocable surplus.

There are several items, which, according to the Unions, should have been either added back to the gross-profits or should not have been deducted from the gross-profits to arrive at the allocable surplus. We are not referring in detail to the various items, referred to in the two appeals of the Unions, as their counsel have represented before us that if the claim of the Company regarding the manner in which the computation of direct taxes, is accepted'. by this Court, they are not pressing their appeals. In order to appreciate the points in controversy we are giving below the statement, which will show the calculations of the Company, as well as the computation made in the Award.

1,72,69,770					 34,53,954
10.  Set on to be carried for-
     ward					  4,63,750

In the Award, the Tribunal has given its computationas well as the manner in which direct taxes have been calculatedfor the year 1964-1965.

At this stage we may indicate that while the Company com- puted the direct taxes on the gross-profits, before deducting any amount on account of bonus, the Tribunal has calculated the taxes, after deducting the amount of bonus from the gross-profits. A decision on this really depends upon the construction of certain provisions of the Act, having due regard to the principles laid down by this Court. We have stated earlier that the claim for bonus is for the year 1964-65, i.e., from October 1, 1964 to September 30, 1965. There is no controversy that for this period bonus is to be calculated under the Act, which had become applicable. The Company worked out the allocable surplus under the Act and paid a sum of Rs. 30,35,958 as bonus for the said year. If that calculation is correct, there is no controversy that the amount represents 17.58% of the total wages earned by the eligible employees during the said accounting year. Later on, the appellant Company in view of the provisions of the Finance Act, 1966 recomputed the allocable surplus and fixed it in the sum of Rs. 23,30,396. It is the, claim of the Company that they paid bonus at a higher percentage than is, warranted under the Act. There is also no controversy that the Annual Wage Bill of the employees throughout the country was Rs. 1,72,69,770. Though the claim of the Company was that they paid bonus at a higher percentage, its Chief Exe- cutive, Finance, M.W. 1 has given evidence to the effect that the Company would not seek to recover the excess amount paid. Before us also, Mr. G.B. Pai, learned counsel for the appellant Company represented, that even, if on the basis of the decision of,' this Court, it is found that bonus at a higher percentage has been paid to the employees, the appellant Company will not seek to, recover any excess amount paid. That is, even if after accepting any of the contentions of the appellant. Company, it is found that bonus is payable at a percentage lesser than the rate, at which it has been paid, the excess amount will not be recovered from the employees, nor adjusted in any other manner.