Our company is covered under the Bonus Act and bonus is being paid according to the available surplus. Some of the employees have challenged its quantum stating that it is not in accordance with the balance sheet and profit and loss accounts. Can they challenge the accuracy of balance sheet and the profit and loss accounts when these are compulsorily audited under the provisions of company's law?

Ayodhya Prasad, Kanpur

Section 226 (1) of the Companies Act provides that a company or a corporation need not prove the accuracy of balance sheet and profit and loss account by affidavit or any other mode. However, the proviso to the said section enables the authority that in case of any doubt, steps can be taken to find out the accuracy.

Sub-section (2) enables a party challenging the correctness of such statement by applying for clarification by the management and the authority before whom the proceedings are pending and the company will be given an opportunity to give clarification.

In one case the opposite party had not challenged the accuracy of a particular item but simply attached the statement in general terms pertaining to method of accounting. He did not move the authority for direction. And presumption of inaccuracy could not be rebutted by the authority.

The burden to prove accuracy lies upon the party challenging the correctness. In another case, it has been held that in case of dispute about accuracy of the balance sheet and profit and loss account, the industrial tribunal has the powers to enquire into the accuracy of balance sheet and profit and loss account but it cannot make any fishing enquiry. It has been further held that if the company fails to produce the material for purpose of calculating available surplus, the tribunal has to make its own calculations.

1. Workmen of India Cement Ltd. vs. Management of India Cement Ltd. and Another, 11986 lab IC 1682: 1986 II LLN 959.

2. Toshniwal Brothers (P) LKtd. vs. Delhi Administration and others, 1989 Lab. IC 881 (Delhi HC).

In addition to our regular employees, we also engage some employees through a contractor in our factory. Are the employees engaged through contractor liable to be covered under the Factories Act?

Bankey Behari Saxena, Delhi

The words `including contractor' were added by the Factories (Amendment) Act, 94 of 1976, meaning thereby that even a worker engaged through a contractor and working in a factory is a `worker' for the purpose of the Factories Act. All the beneficial provisions of the Act apply with equal force to such workers/labourers employed through contractor. This view has been confirmed by Andhra Pradesh High Court in the following case.

Government of Andhra Pradesh and another vs Bhadrachalam Paper Boards Ltd. and others, 1989 I LLN 338 (A.P.HC).

Section 33 of the Industrial Disputes Act provides that during pendency of an industrial dispute the employer cannot change the service conditions of the workman. Does transfer of a workman from one place to another attract the provisions of Section 33 of the Act. ?

Thomas Cherian, Bombay.

No. Transfer of a workman from one place to another in accordance with terms of employment does not amount to change in conditions of his service.

Reference is made to a case decided by the division bench of Madhya Pradesh High Court. The facts of the case were that a dispute was pending before the Labour Court relating to fixation of wages of an employee.

During pendency, the employee was transferred from one place to another. The question arose as to whether this amounted to a change in service conditions. This has been answered in the negative in holding that the transfer has no concern with the pending dispute which relates to fixation of wages. Transfer does not have the effect of altering service conditions of employee to his prejudice. Thus the proceedings under section 33-A of the Industrial Disputes Act were un-sustainable.

Dainik Naveen Duniya, Jabalpur vs. Labour Court, 11991 I LLN l745 (M.P. D.B.)

Which are the allowances to be considered for computation of wages for the purpose of making payment of bonus?

Dilbagh, Rai, Chandigarh.

Dearness allowance is undoubtedly included in the definition of `salary' or `wages' under section 2(21) of the payment of Bonus Act. In one case, it has been held that the free food allowance would be `wages' within the meaning of payment of Bonus Act, if it is part of the remuneration and was payable on fulfilling the terms of employment or is paid in lieu of the whole or part of the salary or wages payable to an employee. On the facts of a case it has been held that the food allowance is not part of the `wages'.

Similarly the value of uniforms and chappals/slippers could not be said to be remuneration and hence cannot come within the term `wages' or `salary' of the Payment of bonus Act. However, city compensatory allowance will be taken into consideration to calculate bonus payable to the employees in the absence of an agreement under section 34 of the Act between the employer and the employees relating to any formula for the payment of bonus.2.

1. S.P.Janakipatti vs. Presiding Officer, Labour Court, Madras and another, 1979 LLJ 340 (Madras HC).

2. S.Krishnamurthy vs.l P.O.Labour Court, 1986 I LLN 710; (1986) I LLJ 1133, 11986 (53) FLR 535.

Will the dependents of an employee working abroad be entitled to claim compensation in India if such an employee meets with an industrial accident and dies.?

Elvin George, Panaji

The amended Workmen's Compensation Act No.30 of 1995 has removed all the controversies by Clause B of Section 2 inter alia providing that a person recruited for work abroad by a company and who is employed outside India in any such capacity as is specified in Schedule-II and the ship, air-craft or motor vehicle, company, as the case may be, is registered in India and if he meets with an accident he or his dependents, as the case may be can claim compensation in India under Workmen's Compensation Act.

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