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TMI Blog1960 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... nus for the period from January 1, 1955 to December 31, 1955. Negotiations in this regard having failed, the respondent made a reference to the Industrial Court under s. 73A of the said Act for arbitration of the dispute arising out of the said notice. The arbitrator, i.e. the Industrial Court, following the Fall Bench Formula , ascertained the surplus to be ₹ 2.20 lakhs after deducting the prior charges from the gross profits of the Company, but it did not give any credit to the rehabilitation amount apart from the statutory depreciation. The Industrial Court disallowed this item for the following reasons: It estimated the amount required for rehabilitation at ₹ 60 lakhs; out of this amount it deducted ₹ 51 lakhs representing tile reserves and the balance of ₹ 9 lakhs spread over a period of 15 years gave the figure of ₹ 60,000 as the amount that should be set apart for the year in question for rehabilitation. As the statutory depreciation was ₹ 83,639, it came to the conclusion that the Company would not be entitled to any allocation as a prior charge for rehabilitation. After excluding the said item of rehabilitation, it The fixed the surp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital is released, that amount will have to be taken into account in ascertaining the surplus for that year and so on for subsequent years: otherwise it will lead to the anomaly of the reserves being excluded from the amount required for rehabilitation, though as a matter of fact the entire reserves were utilised as working capital, and though in future years they were expected to be released but in fact not so released. This would lead to a result inconsistent with the decisions on the subject which have clearly laid down that the reserves which have been used as working capital shall not be deducted from the amount fixed for rehabilitation. This result does not advance the case of the appellant unless it is able to prove by admissible evidence that it has used the reserves as working capital during the bonus year in question. The principles governing the reserves in this context are well settled. This Court in The Associated Cement Companies Ltd. v. It,3 Workmen ([1959] S.C.R. 925) restated the principle thus at p. 970: Before actually awarding an appropriate amount in respect of rehabilitation for the bonus year certain . deductions have to be made. The first deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s far in excess of the requirements of the particular purpose for which it is so earmarked and whether it is only a device to reduce the claim of the labour for bonus. We do not suggest that it is the duty of the Industrial Court to ascertain the correct or exact figure required for a particular purpose; but it is certainly its duty to is cover whether the so- called earmarking for a particular purpose is a device to circumvent the formula. If it is satisfied that there is such a device, it shall deduct that figure in calculating the rehabilitation amount and if possible arrive at a real figure for that purpose. So too, in the case of general reserves when an employer claims that a specific amount reserved has been used as working capital, it is the duty of the Industrial Court to arrive at a finding whether the said reserves, or any part of them, have been used as working capital and, if so, to what extent during the bonus year. Shortly stated before a particular reserve can be deducted from the rehabilitation amount it must be established that it has been reasonably earmarked for a binding purpose or the whole or a part of it has been used as working capital and that only such pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Industrial Courts and Labour Tribunals are not bestowing so much attention on this aspect of the case as they should. Some of the tribunals act oil affidavits and sometimes even on balance- sheets and extracts of accounts without their being proved in accordance with law. For the purpose of holding an enquiry or a proceeding under the Bombay Industrial Relations Act, 1946, s. 118 of the said Act confers on the Industrial Court the same powers as are vested in Courts in respect of-(a) proof of facts by affidavits; (b) summoning and enforcing the attendance of any person and examining him on oath; (c) compelling the production of documents; and (d) issuing commissions for the examinations of witnesses. In Courts facts have to be established either by oral evidence or by documentary evidence proved in the manner prescribed by law. But Order XTX of the Code of Civil Procedure empowers the Court, to have particular facts proved by affidavits. Under rule `thereof any Court may at any time for sufficient reason order that any particular fact or facts may be proved by affidavit, or that the affidavit of any witness may be read at the hearing, on such conditions as the Court thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Court would not have accepted the items in the balance-sheet as proof of user if it was not satisfied that no objection was taken in that behalf. In Tata Oil Mills Company Ltd. v. Its Workmen ([1959] S.C.R, 924), a similar question was raised. It was contended by the labour in that case that the depreciation reserve was Dot used as working capital and therefore no return should be allowed on the said reserve. The Chief Accountant of the Company made an affidavit on behalf of the Company that the said depreciation reserve, along with others, had been used as working capital. This Court accepted the affidavit for the year in question, but made the following observations for future guidance: It will, however, be open to the workmen in future to show by proper cross-examination of the company's witnesses or by proper evidence that the amount shown as the depreciation reserve was not available in whole or in part to be used as working capital and that whatever may be available was, not in fact so used in the sense explained above. In the present appeal, however,we must accept the affidavit of the chief accountant. These observations also recognized the necessity to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king capital and that the respondent did not canvass this position in the statement filed by it before the Industrial Court. We have already pointed out that the balance-sheet, without its being proved by a person competent to do so, cannot prove that any reserves have been utilised as working capital. In the written- statement filed by the appellant before the Industrial Court, no specific allegation is made that the reserves were utilised as working capital, though in its statement of calculations the said reserves were not excluded from the amount claimed towards rehabilitation. As there is no specific allegation, the respondent also in its statement did not deny the said fact, but in its statement of calculations it did not deduct the reserves from the rehabilitation amount. Therefore, it must be held that the respondent did not accept the position that the reserve funds were utilised as working capital. Strong reliance is placed upon the evidence of the General Superintendent of the appellant-Company, but a perusal of that evidence discloses that the said witness has not deposed that the Company used the reserves as working capital; nor does the said witness seek to prove eith ..... X X X X Extracts X X X X X X X X Extracts X X X X
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