Civil Appeal No 258 of 1958
Appeal by special leave from the Award dated August 17 1957 of the Industrial Tribunal Bombay in Reference IT No 15 of 1957
IM Nanavati section N Andley JB Dadachanji and Rameshwar Nath for the appellant
907 BKB Naidu and I N Shroff for respondent No 1
I N Shroff for interveners Nos 1 and 2 1960 February 3
The Judgment of the Court was delivered by DAS GUPTA J
The only point raised in this appeal by the employer Petlad Turkey Red Dye Works Ltd Petlad against the award of an industrial Tribunal of a sum of Rs 9839 equivalent to one month s basic wages is as regards the correctness of the disallowance in the process of ascertaining the available surplus of a claim of 4 interest on Rs 227000 standing in the depreciation fund said to have been used as working capital
If this claim was allowed and the amount claimed deducted as a prior charge no surplus would remain so that the employees would not be entitled to any bonus
The Industrial Tribunal was of opinion that even if the depreciation reserve was utilized as working capital no return thereon was allowable for the purposes of deciding on the amount to be deducted as prior charges in applying the Full Bench Formula
In this view it was clearly wrong
Numerous decisions of this Court make it abundantly clear that any portion of the reserve actually utilized as working capital in the year under consideration should be treated as entitled to a reasonable rate of return and the amount thus ascertained deducted as a prior charge in ascertaining the available surplus
There is no reason whatsoever for making an exception in this respect as regards depreciation reserves
The question remains however whether this amount of Rs 227000 in the depreciation fund was actually used as working capital
The Tribunal did not think it necessary to consider this question as in its view even if this entire amount has been utilised as working capital no return was allowable
If on the materials on the record it was possible to reach a conclusion that any reserve or any portion of it was used as working capital during the period under consideration we would have thought fit to calculate the amount allowable as return thereupon and deducted it from the amount ascertained as surplus 908 by the Industrial Tribunal
On an examination of the record however we cannot discover any such material
All that we have is that the employer Company in its written statement claimed interest on reserves as working capital at Rs 32 000 the rate of return being mentioned as 4
It as not mentioned therein in so many words that the depreciation fund was part of the reserves employed as working capital
It is claimed however that such an averment was implicit in the claim of Rs 32000 as the amount allowable as return on reserves employed as working capital
Assuming that this is so it still remained the duty of the Company to prove that any portion of the depreciation fund was actually utilised as working capital
It was suggested before us that this averment by implication that the depreciation fund was also used as working capital was not challenged by the workers
This suggestion is obviously incorrect
We find that in Exhibit UI a statement submitted on behalf of the workers containing calculations for the available surplus Rs 3000 was shown as the amount deductible on working capital at 2
That is a sum of Rs 150000 out of the reserves was stated to have been used as working capital
The employer s statement in Exhibit C3 dated July 12 1957 shows a deduction of Interest at 4 on Reserves employed as working capital Rs
32000
A similar claim is made in exhibit C4 an alternative statement filed on behalf of the employer on July 121957
The workmen also filed a statement showing calculations of bonus made by them on the same date ie July 12 1957
This is marked as exhibit U3
According to this return at the rate of 4 on working capital of Rs 166000 was allowable as deduction
Thus according to workmen the reserves used as working capital was stated to be Rs 166000 while according to the employer this amount was no less than 8 lakhs
It is quite clear therefore that the workmen had at no stage admitted either expressly or by implication the employer s claim that any portion of the depreciation fund was utilized as working reserve
On behalf of the appellant it was strenuously contended however that the balance sheet of the 909 Company which was placed before the Industrial Tribunal will itself show that the entire sum of depreciation fund of Rs 227000 was used as working capital
The balance sheet does show a sum of Rs 227000 as the depreciation fund
Assuming for the purposes of the present case that this was the actual sum standing in the depreciation reserve the further question is whether the balance sheet proves that this sum was utilized as working capital
Assuming further for the purposes of this case that the analysis of the statement made in the balance sheet might indicate that this sum could not but have been utilised as working capital it has to be remembered that no such conclusion is possible unless it is known as a fact that the statements made in the balancesheets under the different heads are correct statements
On that there is absolutely no evidence
All that the balance sheet as submitted shows is that certain statements were made
The mere fact that the statements were made can never be taken as proving that the statements were correct
That is a distinction which the courts of law have always been careful to make
Thus if a person is to prove that he was ill on a particular date the mere filing of a certificate of a medical man that he was ill on that date is not accepted as evidence to show that he was ill
The correctness of the statement made in the certificate has to be proved by an affidavit or oral testimony in court by the Doctor concerned or by some other evidence
There is no reason why an exception should be made in the case of balance sheets prepared by Companies for themselves
It has to be borne in mind that in many cases the Directors of the Companies may feel inclined to make incorrect statements in these balance sheets for ulterior purposes
While that is no reason to suspect every statement made in these balance sheets the position is clear that we cannot presume the statements made therein to be always correct
The burden is on the party who asserts a statement to be correct to prove the same by relevant and acceptable evidence
The mere statement of the balance sheet is of no assistance 910 to show therefore that any portion of the reserve was actually utilized as working capital
The question whether a balance sheet can be taken as proof of a claim of what portion of reserve has actually been used as working capital was very recently considered by us in Khandesh Spg
 Weaving Mill Co Ltd vs The Rashtriya Girni Kamgar Sangh
Jalgaon Civil Appeal No 257 of 1958
As was pointed out by Subba Rao J in that case the balancesheet of a Company is prepared by the Company s own officers and when so much depends on the ascertainment of what portion of the reserve was utilized as working capital the principles of equity and justice demand that an Industrial Court should insist upon a clear proof of the same and also give a real and adequate opportunity to the labour to canvass the correctness of the particulars furnished by the employer
In that case we also considered an observation in Indian Hume Pipe Company Ltd vs Their Workmen 1 which was relied upon for an argument that the balance sheet was good evidence to prove that amounts were actually used as working capital
As was pointed out in Khandesh Spg  Weaving Mills Case Supra this observation was not intended to lay down the law that a balance sheet by itself was good evidence to prove any fact as regards the actual utilisation of reserves as working capital
The observation relied on was a sentence at page 362  Moreover no objection was urged in this behalf nor was any finding to the contrary recorded by the Tribunal
 If it had been intended to state as a matter of law that the balance sheet itself was good evidence to prove the fact of utilisation of a portion of the reserve as working capital it would have been unnecessary to add such a sentence
This question as regards the sufficiency of the balance sheet itself to prove the fact of utilization of any reserve as working capital was also considered by us in Management of Trichinopoly Mills Ltd vs National Cotton Textile Mills Workers Union Civil Appeal No 309 of 1957 and it was held that the balance sheet does not by itself prove any such fact and that the law requires that such an important 1 1959 II LLJ 357
911 fact as the utilisation of a portion of the reserve as working capital has to be proved by the employer by evidence given on affidavit or otherwise and after giving an opportunity to the workmen to contest the correctness of such evidence by cross examination
We must therefore reject the contention urged on behalf of the employer appellant that the balancesheet that has been filed is sufficient to prove that Rs 227000 of the depreciation fund was actually used as working capital
There is as we have already stated no material on the record from which any conclusion can be reached as regards the utilisation of the whole or any portion of this sum lying in depreciation fund as working capital
The appellant s counsel finally asked that the matter may be sent back to the Industrial Tribunal and an opportunity given to him to adduce proper evidence on this point
We do not see any circumstance that will justify us in making an order of remand in a case of this nature
The appeal is accordingly dismissed with costs
Appeal dismissed


Summary:
The petitioner who entered into contracts with the Government of India for the supply of certain quantities of sugar of foreign origin placed orders with dealers in foreign countries and made arrangements for transporting the goods to Bombay by engaging steamers
When the goods were on the high seas and before the vessels arrived at Bombay harbour the petitioner delivered to the Government the shipping documents including the bill of lading pertaining to the goods and received the price
After the goods reached the port they were taken delivery of by the Government of India after paying the requisite customs duties to the authorities concerned For the assessment year 1954 55 the Assistant Collector of Sales Tax held that sales tax was payable by the petitioner in respect of the transaction relating to the sugar sold to the Government
The petitioner claimed inter alia that the sales had taken place in the course of import and therefore they were not liable to sales tax under article 2861b of the Constitution of India
But it was contended for the Sales Tax Authorities that the sales were not in the course of import and that in any case under the terms of the contracts the intention of the parties was that notwithstanding the delivery of the bills of lading against payment the property in the goods should not pass to the Government till actual delivery was made
Held 1 that under article 2861b of the Constitution of India the course of the import of the goods starts at a point when the goods cross the customs barrier of the foreign country and ends at a point in the importing country after the goods cross the customs barrier 2 that an importer can if he receives the shipping documents transfer the property in the goods when they are on the high seas to a third party by delivering to him shipping documents against payment and such a sale is one made in the course of import 3 that the delivery of a bill of lading while the goods are afloat is equivalent to the delivery of the goods themselves Sanders Brothers vs Maclcan  Co  relied on
4 that on a true construction of the contracts in question the property in the goods passed to the Government of India 853 when the shipping documents were delivered to them against payment and 5 that the sales in question took place in the course of
import into India and were exempted from sales tax under Art2861b of the constitution
State of Travancore Cochi vs The Bombay Co Ltd   followed