Full Judgment Text
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PETITIONER:
BENGAL KAGAZKAL MAZDOOR UNION & ANOTHER
Vs.
RESPONDENT:
THE TITAGHUR PAPER MILLS CO. LTD.
DATE OF JUDGMENT:
11/04/1963
BENCH:
ACT:
Industrial Dispute--Bonus--Computation--Gross Profits-
Income-tax--Working capital--Rehabilitation.
HEADNOTE:
An industrial dispute having arisen between the appellants
and the respondents, the Government of West Bengal referred
the dispute to the Second Industrial Tribunal, West Bengal,
for determining the question of bonus for each of the four
years (from 1955 to 1959) and the method of its distribution
amongst different categories of workmen including temporary
hands. The tribunal on examination of the evidence applying
the Full Bench Formula came to the conclusion that there was
no surplus in any of the four years for the grant of bonus
and therefore rejected the claim. The appellants thereupon
appealed to this Court with special leave. The Tribunal’s
Award was impugned by the appellants on four grounds,
namely, tribunal went wrong in calculating (a) gross profits
for the years 1956-57 (b) income-tax for all the four years
(c) working capital for all the four years and (d)
rehabilitation for all the four years.
Held that if there had been any addition to the profit
on account of an increase in the value of the stock that
would be an extraneous profit for which no credit could be
claimed by the workmen and such extraneous profit could not
be taken into account in calculating the available surplus.
But in that case the result of the revaluation was not that
increased value was taken into account in the matter of
consumption of raw materials. The Tribunal overlooked this
fact in applying the ratio of that case to the facts to the
present case.
Tats Oil Mitts Go. Ltd., v. Its Workmen, [1960] 1
S.C.R. 1, explained.
If the stocks are revalued that is no reason for showing
the relevant cost on the debit side as consumption, for in
reality
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the revalued price is not what the mills paid for the raw
materials etc. consumed and therefore to get a correct
picture of the actual profit made it is only the original
cost price which will have to be taken into account for that
purpose. On sale of paper, the profit must be on the
original valuation of paper stock and not on the revalued
figure.
FIeld further, that at p. 962 of the decision of this
Court in The Associated Cement Companies Ltd. v. Its
Workmen, [1959] S.G.R. 925, the word "not" has been printed
by mistake and what the court then decided was that in
calculating the amount of tax payable the Tribunal should
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take into account the concession given by the Income-Tax
Act. The Tribunal was wrong in calculating the income tax
after deducting the notional normal depreciation and not the
statutory depreciation.
Sree Meenakshi Mills Ltd. v. Their Workmen [1958]
S.C.R. 878, referred to.
Held further that it is well settled that a balance
sheet cannot be taken as proof of a claim as to what portion
of reserves has actually been used as working capital and
that the utilization of a portion of reserves as working
capital has to be proved by the employer by evidence on
affidavit or otherwise after giving opportunity to the
workmen to contest the correctness of such evidence by
cross-examination. In the present case no acceptable proof
has been given and the method of proof was not proper.
Petled Turkey Red Dye Works Ltd. v. Dye and Chemical
Workers Union, [1960] 2 S.C.R. 906, refered to.
Held further, that the question whether investments have
been actually used as working capital is a question of fact
and it has to be proved by proper evidence. In the present
case the Tribunal was wrong in assuming that all investments
have been used as working capital without any evidence to
support this assumption.
Where advances have been given for obtaining raw
materials etc. they would certainly be part of the amount
used as working capital. But where advances are purely
loans and where advances have not been made for the purpose
of the business such advances cannot be taken to have been
used as working capital.
Held further that the determination of rehabilitation is
a long term affair and once it has been determined it cannot
go
40
on increasing from year to year except in case of a sudden
appreciable rise in prices or on account of new blocks being
added followed by further rise of price after the purchase
of the new blocks. All rehabilitation amounts which may
have been allowed to the employer for rehabilitation in
previous years but remained unused for rehabilitation in the
meantime have to be taken into account in arriving at the
amount required for rehabilitation.
The Associated Cement Companies Ltd. v. Its Workmen
[1959] S.C.R. 925, referred to.
In Kandesh Spinning & Weaving Mills Co. Ltd. v. The
Rashtriya Girni Kamgar Sangh Jalgaon, [1960] 2 S.C.R. 841,
this Court held that before a particular reserve could be
said to be not available for rehabilitation it must be
established that it had 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 part of the reserves
coming under either of the two heads can be said to be not
available for rehabilitation. This means that if any
reserve has been earmarked for a particular purpose which is
binding it cannot be deducted from the gross rehabilitation
amount. For example assessment kept in reserve for paying
debentures when they fail due or working capital which is in
the shape of raw materials cannot be deducted from the gross
rehabilitation amount. The Tribunal misunderstood and
misapplied the ratio of this decision to the facts of the
present case.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 550
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and 551 of 1962.
Appeals by special leave from the Award dated March 20,
1961 of the Second Industrial Tribunal, West Bengal, in Case
No. VIII-27 of 1960.
Ajit Roy Mukherjee, M.K. Ramamurthi, R.K. Garg, D.P.
Singh and S.G. Agarwal, for appellant (in C.A. 550 of 1962).
Ajit Roy Mukherjee and N.H. Hingorani, for the appellant
(in C.A. No. 551 of 1962).
M.C. Setalvad, D.N. Mukherjee and B.N. Ghosh, for the
respondents.
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1963. April 11. The Judgment of the Court was delivered
by
WANCHOO J.--These two appeals by special leave arise out
of the same award of the Second Industrial Tribunal, West
Bengal and will be dealt with together. The two appeals are
by two unions of workmen of the Titaghar Paper Mills Co.,
Titaghar No. 1 and the Titaghar Paper Mills Co. Kankinara
No.2. The two mills have been treated as one. establishment
and are under one management. So the Government of West
Bengal referred the dispute between the mills and the unions
for profit bonus for the years 1955-56, 1956-57, 1957--58
and 1958-59 to the tribunal for determining the quantum of
bonus for each year and the method of its distribution
amongst different categories of workmen including temporary
hands.
The tribunal went into the matter and came to the
conclusion after the application of what is known as the
Full Bench formula evolved by the Labour Appellate Tribunal
in 1950 and approved by this Court in the Associated
Cement Companies Ltd. v. Its Workmen (1), that there was no
surplus in any of the four years for the grant of bonus
and therefore rejected the claim of the workmen. The two
appeals are by the two unions against this award.
The contention of the workmen is that the. tribunal’s
conclusion that there was no available surplus in any of the
years is incorrect and four points have been urged in this
connection to show how the tribunal went wrong. These
points are: (1) The tribunal’s calculation of gross profits
for the years 1956-57 was wrong; (2) The tribunal went
wrong in the matter of calculation of income-tax for all the
four years; (3) The tribunal went wrong, in the matter of
calculating working capital for all
(1) [1959] S.C.R. 925,
42
the four years; and (4) The tribunal went wrong in
calculating rehabilitation for all the four years. We shall
deal with these points one by one.
Re. (1).
The contention in this behalf is that for the year 1956-
57 the mills revalued their stock of raw materials,
chemicals and dyes etc. as well as general stores, machine
furnishings etc. and paper stock as well as coal stock.
This revaluation resulted in an increase of Rs. 38,81,618/-
in the value of these things as on April 1, 1956. This
increase in value was reflected in the consumption of raw
materials, general stores and coal and in the sale of paper
with the result that the profit-and-loss account showed
inflated figures in terms of money on the basis of this
revaluation, though in actual fact this amount was not
spent, the increase being merely due to a paper entry on
account of revaluation. Therefore it is said that as the
tribunal ignored this aspect of the matter it did not
correctly calculate the gross profits for the year 1956-57.
The tribunal in this connection relied on the judgment of
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this Court in the Tata Oil Mills Co. Ltd. v. Its Workmen
(1), and said that if there had been any addition to the
profit on account of an increase in the value of the stock,
that would be an extraneous profit for which no credit
could be claimed by the workmen and such extraneous profit
could not be taken into account in calculating the available
surplus. It is urged on behalf of the appellants that the
tribunal was in error in applying the principle laid down in
the Tata Oil Mills Co.s case (1), to the facts of this case.
There is in our opinion force in this contention. It is
true that in The Tata Oil Mills case (1), the profit of
rupees three lacs which arose merely on account of a
change in the method of accounting was treated as extraneous
income; but the Judgment
[1960] 1 S.C.R. 1.
43
of that case does not show that the result of the
revaluation was that increased value was taken into account
in the matter of consumption of raw materials etc. The
tribunal overlooked this fact when it proceeded to apply
the ratio in the Tata Oil Mills case (1), to the facts of
the present case. It has however been urged on behalf of the
respondent that there is a contra-entry in the profit-and-
loss account and that shows that the tribunal was right in
ignoring the effect of revaluation on the debit side, for
the same sum of money i.e. Rs. 38,81,618/- was entered on
the credit side and so there could be no mistake in arriving
at the correct gross profit for that year. We have not been
able to understand what the effect of this entry on the
credit side is in arriving at the gross profit for the
year; nor has the learned counsel for the respondent been
able to explain the position clearly to us. We are of
opinion that the matter requires looking into and evidence
may have to be taken to find out how exactly the real
profits have been affected by showing on the debit side as
consumption the valuation of raw materials etc. at the
revaluation cost. The matter will therefore have to be
investigated further. But it may be added that if the stocks
are revalued that is no reason for showing the revalued cost
on the debit side as consumption, for in reality, the
revalued price is not what the mills paid for the raw
materials etc., consumed and therefore to get a correct
picture of the actual profit made, it is only the original
cost price which will have to be taken into account for that
purpose, for that is what the mills actually paid for
acquiring the raw materials. Further on sale of paper, the
profit made must be on the original valuation of paper stock
and not on the revalued figure which was not the cost to the
mills of making the paper. Finally it will also have to be
considered what is the effect of the so-called contra-entry
on the credit side of the profit and-loss account for that
year. Expert evidence may be necessary to explain
(1) [1960] 1 S.C.R. 1,
the position properly and arrive at the correct profits for
that year and so there will have to be a remand for the
determination of this question by the tribunal, as it is not
possible for us on the materials available on the record to
arrive at a final conclusion ourselves.
Re. (2).
The contention under this head is that the tribunal
while calculating income-tax has only taken into account the
notional normal depreciation and not the statutory
depreciation, as it should have done. This matter was
considered by this Court in Sree Meenakshi Mills Ltd. v.
Their Workmen and again in the Associated Cement Companies
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case (2), and it was pointed out that in calculating income-
tax the tribunal should take into account the concessions
given by the Income-tax Act to the employers, for two more
depreciations are allowed under s. 10 (2) (vi) of the
income-tax Act. At p. 962 of the report in the Supreme
Court Reports,e word "not" has been printed by
mistake and what this Court then decided was that in
calculating the amount of tax payable, the tribunal should
take into account the concessions given by the Income-tax
Act, though in the report it is printed that the tribunal
should not take into account the concessions. This will
however be clear from the calculation of income-tax which is
made at p. 994. Chart V shows that the notional normal
depreciation in that case was Rs. 100.22 lacs. Note A below
that chart further shows that in arriving at the amount to
be deducted as income-tax, the statutory depreciation
amounting to Rs. 165.49 lacs was deducted from the gross
profits and it was on the balance that income-tax payable
was calculated. We may add that a correction slip was
issued later. In the present case the tribunal has
apparently calculated incometax after deducting the notional
normal depreciation and not the statutory depreciation. The
contention
(i) [1958] S, C. R, 878. (2) [1959] S. C.R. 925.
45
of the appellants is that the statutory depreciation is much
higher. The respondent has not been able to controvert this
contention of the appellants, though there does not seem to
be any evidence on the record as to what is the exact amount
of statutory depreciation allowed during these years. It
seems that on behalf of the workmen calculation sheets were
put in for all the four years, according to which the
statutory depreciation was much higher than the depreciation
which was deducted by the tribunal from gross profits in
arriving at the income-tax payable. But as the appellants
were unable to point out any evidence beyond their own
charts to prove the exact statutory depreciation for the
years in controversy, it is not possible for us to calculate
the correct amount of income-tax to be deducted in the
absence of such evidence. The matter will therefore have
to go back to the tribunal for taking further evidence on
this point and then arriving at the amount payable as
income-tax after deducting statutory depreciation from
gross profits.
Re. (3).
Three contentions have been raised in this respect on
behalf of the appellants. It is now well settled that a
balance-sheet cannot be taken as proof of a claim of what
portion of reserves has actually been used as working
capital and that the utilization of a portion of the
reserves as working capital has to be proved by the employer
by evidence on affidavit or otherwise after giving
opportunity to the workmen to contest the correctness of
such evidence b cross-examination :(see Petlad Turkey Red
Dye Works Ltd. v. Dyes & Chemical Workers’ Union (1). What
happened in the present case was that the accountant of the
respondent gave two alternative calculations for arriving at
the reserves used as working capital. Thus there were two
figures given by the respondent to show what reserves were
actually
(1) [1960] 2 S.C.R. 906.
46
used as working capital. Further, according to the
accountant, the lower figure represented the assets which
could be at once converted into liquid cash while the higher
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figure represented both cash invested in the business and
liquid cash that would be available. He then went on to
state that the amount was always available for utilization
as working capital and that it was actually utilised during
the years. There was no effective cross-examination of this
statement. However, before the tribunal it was claimed on
behalf of the respondents that the lower figure should be
taken as the actual working capital and that the tribunal
did. We must say that it looks odd that the respondent
should have produced two figures for working capital.for
each year. We should have expected more positive evidence
on the point which would have shown one figure, for
reserves actually used as working capital could only be
represented by one figure. Though therefore the accountant
did swear that the amount was used as working capital and
his oath was apparently with respect to both figures, the
respondent in the end was content to take the lower figure.
This in our opinion is not the right way of proving what
reserves were actually used as working capital during the
year and we should expect a firm figure to be given by the
employers for this purpose. But as. there was no effective
cross-examination on the point by the appellants, we would
not disallow interest on working capital altogether. As we
are remanding the matter we expect proper evidence to be
given by the respondent in this connection.
The next point urged on behalf of the appellants with
respect to the calculation of working capital is that
investments cannot be taken into account in arriving at the
figure of working capital. Put in -this broad form the
contention of the appellant cannot be accepted, for there
may be circumstances in which investments may have been
used,
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as working capital while equally there may be circumstances
in which investments may not have been so used, and it will
depend upon the evidence available whether investments have
been actually used as working capital or not. For example,
where investments at the beginning of a particular year were
of a particular kind and the same investments appear at the
end of the year without any change, it cannot be said that
the amount invested has been used as working capital. We
may make this clearer by a hypothetical example. Suppose at
the beginning of the year the employer has investments in
government securities of 3 percent conversion loan to the
tune of 20 lacs. At the end of the year also, the same
investment continues in the same form, namely, 3 percent
conversion loan for Rupees twenty lacs. In those
circumstances it cannot be said that this investment has
been used during the year as working capital. On the other
hand where investments have been realised during the year
and actually used as working. capital, evidence can be given
to show that this has happened and then the investments so
realised and,used as working capital can be taken to be part
of working capital for the year. If such a thing has
happened the balance-sheet will show that though, for
example, at the beginning of the year the investment
consisted of 3 percent conversion loan for Rs. 20 lacs but
at the end of the year it consisted of 3 percent conversion
loan for Rs. 5 lacs, which would show that Rs. 15 lacs out
of investments, might have been used as working capital.
Similarly where investments are pledged as security for the
purpose of business, even though there may be no change in
them, that may show that part of the investments so pledged
has been used as working capital. Therefore the question
whether investments have been actually used as working
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capital is a question ’of fact; whether they have been so
Used will have to be shown by evidence, oral and
documentary, in support thereof. In the present case
however it seems to
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have been assumed by the tribunal that all investments have
been used as working capital and this in our opinion was not
correct. The matter will therefore have to go back to find
out exactly what investments were used as working capital.
The last argument under this head is that certain
advances have also been taken into account as working
capital and that this is not permissible. Here again the
contention of the appellants cannot be accepted in this
broad form. There may be some advances which may have been
used as working capital while there may be others which may
not have been so used. Where advances have been given for
obtaining raw materials etc., they would certainly be part
of the amount used as working capital. On the other hand
where advances are purely loans and have not been realised
during the year and the same advances which appear at the
beginning of the ,year continue at the end of the year to
the same person and the advances have not been made for the
purpose of business, such advances cannot be taken to have
been used as working capital. Further, as in the case of
investments, if advances have been realised during the year
and the amount realised has then been used as working
capital, evidence will have to be given to show this. In the
present case however ,it seems that advances have been taken
en bloc as part of working capital and this in our opinion
is not correct.
The result therefore is that there will have to be a
remand on the question of determining working capital and
the interest to be allowed on it in the light of the
observations we have made herein.
Re. (4).
We now come to the question of rehabilitation. It is urged
that the tribunal had occasion to consider
49
the question of rehabilitation in connection with the
respondent-mills for the year 1954-55, i. e., just before
the four years now in dispute. On that occasion, the
tribunal found that the total amount necessary for
rehabilitation was Rs. 43.39 lacs per year; but in the four
years in dispute the tribunal has increased this amount to
Rs.63.56 lacs in 1955-56 and Rs. 67.66 lacs in 1956-57. As
for the years 1957-58 and 1958-59 the tribunal has found the
rehabilitation amount only for the pre-1939 block as Rs.
64.59 lacks and Rs. 64.71 lacs respectively. The appellants
contend that these calculations are incorrect and that
rehabilitation calculations are a long term matter and
there was no reason for the rehabilitation amount to go up
as compared to that for 1954-55 as there was no appreciable
change in prices during the four years in dispute as
compared to the prices in 1954-55. It is conceded that
rehabilitation may have increased slightly on account of new
blocks which came into existence after 1954-55. Even so it
is urged that the tribunal has fallen into two basic errors
and that is how it came to arrive at such an inflated figure
of rehabilitation for the years in dispute as compared to
the year 1954-55. The first base error is said to be that
the tribunal did not take into account what had already
been allowed for previous years as rehabilitation and
proceeded to calculate rehabilitation as if nothing had been
allowed for rehabilitation for previous years, which would
naturally have the effect of inflating the rehabilitation
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amount year by year. The second basic error is said to be
that the tribunal did not give credit for all the reserves
available for rehabilitation as it should have done with the
result that the amount of rehabilitation found by it became
inflated.
We are of opinion that there is force in this argument
and the tribunal has undoubtedly fallen into error on both
counts. In the first place
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determination of rehabilitation is a long term affair and
once it has been determined it cannot go on increasing from
year to year except in case of a sudden appreciable rise in
prices or on account of new blocks being added followed by
further rise of prices after the purchase of the new blocks.
As was pointed out in the Associated Cement Companies case
(1), the tribunal has before awarding the proper amount in
respect of rehabilitation, to make deduction, (firstly)on
account of break-down value, (secondly) on account of
depreciation and general liquid reserves available to the
employer other than those reasonably earmarked for specific
purposes, and (thirdly) on account of the rehabilitation
amount which may have been allowed to the employer in
previous years and remained unused in the meantime. It
appears that in the year 1954-55 the net figure arrived at
for rehabilitation for that year was Rs. 33.39 lacs after
allowing depreciation for that year and as the available
surplus after deducting other prior charges was only Rs.
24.46 lacs, the tribunal did not grant any bonus to the
workmen. Even so h is remarkable that out of the
rehabilitation amount of Rs. 33.39 lacs for that year a sum
of Rs. 24.46 lacs was left in the hands of the employer
as rehabilitation amount. The tribunal seems to have
ignored this fact altogether in calculating rehabilitation
amount for the years in dispute. As was pointed out in the
Associated Cement Companies case (1), all the
rehabilitation amount which may have been allowed to the
employer for rehabilitation in previous years but remained
unused for rehabilitation in the meantime, has to be taken
into account in arriving at the amount required for
rehabilitation. The same result can be arrived at in other
way, provided there is no appreciable .rise in price, by
taking the rehabilitation amount once arrived at and adding
to it such amounts as may be due for rehabilitation for new
blocks and also such amounts as may not have been left in
the hands of
(1) [1959] S.C. R. 925.
51
the employer in the previous years, because the available
surplus in his hand after allowing all other prior charges
was less than the rehabilitation amount found due. In any
case the tribunal was certainly wrong in not taking into
account the rehabilitation amounts allowed in previous years
in working out the rehabilitation amount for the years in
dispute.
The second error into which the tribunal fell was in the
matter of deducting the amount available from liquid
reserves other than those ear-marked for specific purposes.
What the tribunal did in this case was that it did not
properly take into account the liquid reserves available
and deduct them from the rehabilitation amount found due by
it. The tribunal seems to have held that whatever sum was
working capital could not be deducted from the gross
rehabilitation amount found by it and reliance in this
connection was placed on the judgment of this Court in
Khandesh Spg. & Wvg. Mills Co. Ltd. v. The Rashtriya Girni
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Kamgar Sangh Jalgaon (1). In that case the employer claimed
that the balance-sheet disclosed that the entire reserves
had been used as working capital and consequently such
reserves should not be excluded from the claim towards
rehabilitation. It was however held that the employer had
failed to prove that reserves had in fact been used as
working capital and as such the amount was rightly deducted
by the industrial court from the amount fixed for
rehabilitation. In our opinion the ratio of that case has
been misunderstood. That case does not lay down that all
the amount on which interest is allowed as working capital
cannot be deducted from the gross rehabilitation amount
found by the tribunal to arrive at the net rehabilitation
amount. What that case decided was that before a particular
reserve could be said to be not available for rehabilitation
it must be established that it has been reasonably earmarked
for a binding purpose or the whole or a
(1) [1960] 2 S. C. R. 841.
52
part of it has been used as working capital and that only
such part of the reserves coming under either of the two
heads can be said to be not available for rehabilitation.
This means that if any reserve has been earmarked for a
particular purpose which is binding and must be carried out,
for example, an amount kept in reserve for paying debentures
when they fall due, it cannot be deducted from the gross
rehabilitation amount. Further when that case lays down
that the whole or apart of the reserves which have been
actually used as working capital cannot be deducted from
the gross rehabilitation amount it does not mean that money
which may be available for use as working capital in the
next year cannot also be deducted from the gross
rehabilitation amount. The position would be clear if we
indicate how generally the amount of working capital is
arrived at. What is usually done is to take into account
the liquid assets of various kinds available at the
beginning of the relevant year and the total of such assets
available at the beginning of the year is considered as
working capital for that year, if there is evidence that it
has been actually used during the year. But when we come to
the end of the year and look at the balance sheet we have to
find out the liquid assets available at the end of the year
from which the amount available as working capital for the
next year may be arrived at. But the liquid assets
available at the end of the year will usually be of two
kinds; firstly there will be cash assets in the various
reserves and secondly there will be assets in the shape of
raw materials etc. and both together become the available
working capital for the next year subject to necessary
adjustments and also subject to the evidence that they
were actually used as working capital. Now, what was laid
down in the Khandesh Spg. & Wvg. Co.s case (1), when it was
said that the amount which had been actually used as working
capital could not be deducted from the gross rehabilitation
amount was that
(1) [1960] 2 S.C.R,841.
53
that part of the working capital Which is in the shape of
raw materials etc. could not be deducted. The distinction
which we have pointed out did not arise for consideration in
that case, for it was held in that case that there was no
evidence to show that any part of such reserves had in fact
been used as working capital and this Court upheld the award
of the industrial court deducting the entire reserves from
the gross rehabilitation amount. The matter will be clearer
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if we take a concrete example. Take the year 1955-56. Now
the working capital is generally arrived at by finding the
liquid reserves available on April 1, 1955. These liquid
reserves may be in the form of reserves of various kinds
i.e. depreciation reserve, general reserve, renewal
reserve, and so on, and also in the form of investments,
advances and raw materials etc. in stock. All these have to
be taken into account in arriving at the working capital
after necessary adjustments. As we have already, pointed
out, the amount of working capital thus arrived at if there
is evidence that it was actually used as working capital for
the year may be allowed interest in accordance with the Full
Bench formula. But then we come to the end of the year i.
e. March 31, 1956. At that time we have again to see what
the position of the reserves is. The reserves may be again
in the form of cash reserves or investments or advances and
also in the form of raw materials etc. From these reserves
working capital for the next year may have to be calculated
and if evidence is given that it has been actually used,
interest may have to be allowed on it; but that is no reason
for not deducting that part of the reserves which is in the
shape of cash reserve, investments or advances on the ground
that it is not available for rehabilitation, as it may be
used as working capital for the year 1956-57. Only that part
of the reserves which is in the shape of raw materials etc.
or which is car-marked as indicated already cannot be
deducted for purposes of rehabilitation, for it will not be
available for that purpose and
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would be consumed or sold during the course of the next year
or used for a specific purpose. But all other reserves are
available for rehabilitation on March 31, 1956 and have to
be deducted from the gross rehabilitation amount for the
year. The tribunal in this case however, has not followed
this principle on a misappreciation of the effect of the
judgment of this Court in Khandesh Spg. & Wvg. Co.’s case
(1). All that that decision lays down is that that part of
the reserves which go to make up the working capital which
is in the shape of raw materials etc. or earmarked reserve
will not be deducted from the gross-rehabilitation amount;
it does not lay down that all cash reserves in the shape of
depreciation reserve, general reserve, renewal reserve
and so on and also in the shape of investments and advances
cannot be deducted from the gross rehabilitation amount as
they may be used as working capital next year. This means
that the tribunal has to recalculate the rehabilitation
amount due in view of what we have said above.
In view of the fact that the adjudication of the claim
for bonus has already been delayed, we direct the tribunal
to recalculate the available surplus in accordance with the
observations made in this judgment after giving opportunity
to the parties to adduce further evidence and submit its
findings to this Court within three months of the receipt of
the record by it. When the findings of the tribunal have
been received, notice will be given to parties to file
objections if any within ten days of the receipt of the
notice and thereafter the appeals will be listed for final
disposal.
Case remanded.
(1) [1960] 2 S. C. R.841.
55