Case: Aluminium Corporation Vs. Their Workmen and Others

as in the case of rehabilitation charge so also under this head, different figures have been shown in different statements. Statements Nos. 1, III and V show the reserves employed in business as Rs. 111, 74, 162.00, while in statements 11, TV and VI the amount is shown as Rs. 199, 56, 718.00. The difference is due to the fact that while in statements 1, III and V, the depreciation reserves is shown as Rs. 86 lacs, the corresponding figure in statements 11, IV and VI is more than double of this, being Rs. 173, 82, 556.00. 4. The very fact that such widely different estimates have been given is some justification for refusing to accept any of these as correct. Indeed, the way the Company has approached the calculations of reserves used as working capital makes one think that those responsible for these calculations did not treat the matter seriously at all and felt that by putting arbitrary figures under this head they could play havoc with the Full Bench Formula. This deserves strong condemnation. 5. Mr.Sastri made no attempt to justify these calculations of reserves used as working capital. He tried to persuade us however that the balance-sheet of the Company would by itself show what part of reserves was used as working capital. Learned counsel submitted that are easy and safe way of ascertaining the correct figure under this head is by deducting the current liabilities of the Company in the balance-sheet from the current assets as shown therein. There is undoubtedly support in standard books on account- ancy for the proposition that the excess of the readily realisable, liquid, or current assets of a concern over its current liabilities is the proper measure of the working capital. (See Croppers Higher Book-Keeping and Accounts 7th Edition, p. 301 and Pickles on Accountancy, 2nd Edition p. 1325).There are however two difficulties in the way of accepting Mr. Sastris contention. The first is that the mere state- ments in the balance-sheet as regards current assets and current liabilities cannot be taken as sacrosanct. As has been emphasised in more than one case by this Court, the correctness of the figures as shown in the balance-sheet itself are to be established by proper evidence in Court by those responsible for preparing the balance-sheet or by other competent witnesses. (Petlad Turkey Dye Works v. Dyes and Chemical Workers Union([1960] 2 S.C.R. 906.) and Khandesh Spg. and Weaving Mills Case([1960] 2 S.C.R. 841.)). This was recently emphasised again in Bengal Kagabkal Mazdoor Union v. The Titagarh Paper Mills Co. Ltd.([1964] S.C.R. 38.). 6. The second difficulty is that the task here is not to ascertain the total working capital of the concern, but to find out what portion of the reserves has been used as work- ing capital. It may often happen that the whole of the working capital is provided from what remained of the subscribed capital after the acquisition of the fixed assets. There may be other cases where a portion of the working capital is provided from the subscribed capital and the remainder is met from the reserves. There appears to be a tendency on the part of some employers to show the entire amount of reserves available for use as working capital as the actual amount used for that purpose. This is obviously wrong. 7. It would be improper and indeed impossible in most cases to come to a correct conclusion on these matters by scrutiny of the balance-sheet itself. Whenever a Company claims deductions from the gross profits under the head return on reserves used as working capital, as prior charge, for ascertaining the available surplus under the Full Bench Formula it is necessary and proper that the accountant, or other competent officers of the Company should come into the witness-box and assist the Tribunals in coming to a satisfactory conclusion on the question.No such attempt was made in this case and we find it impossible to say from the evidence on the record as to what portion, if any, of the reserves was actually used as working capital. The tribunal would have been justified in rejecting in toto the Companys claim under this head. The allowance of Rs. 0.43 lacs as prior charge on return on reserves used as working capital was therefore an error in favour of -the appellant. There is no reason therefore for reducing the figure as found by the Tribunal as the available surplus. 8. Lastly it was suggested by Mr. Sastri that in deciding what should be allowed as bonus out of this available surplus the Tribunal should have proceeded on the basis that one months basic wages amount to Rs. 90, 000 and not Rs. 50, 00 as mentioned by the Tribunal. This figure of Rs. 90, 000/- has been given by the Companys Manager as the total wage of the workmen and the employees, including officers. We are told that the officers were also paid bonus and that also has to come out of the available surplus. So Mr. Sastri argued, though rather faintly, that the bonus should have been fixed on the basis of Rs. 90, 000 wage bill. We do not think that to be the correct approach. The Industrial Tribunal is not concerned with what is paid by the Company to its officers. It is concerned only with the workmens claim of bonus. For deciding therefore what part of the available surplus should be paid to the workmen as bonus the wage bill of the workmen only has to be considered. It is -not disputed that the wage bill (basic wage) of the workmen, excluding the officers, was Rs. 50, 000. The Tribunal has therefore committed no error in fixing the bonus figures on this basis. 9. We wish to make it clear that what we have said in this judgment will not stand in the way of the employer substantiating a claim for rehabilitation charge by proper evidence, in any future dispute on that question.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It would be improper and indeed impossible in most cases to come to a correct conclusion on these matters by scrutiny of the balance-sheet itself. Whenever a Company claims deductions from the gross profits under the head return on reserves used as working capital,as prior charge, for ascertaining the available surplus under the Full Bench Formula it is necessary and proper that the accountant, or other competent officers of the Company should come into the witness-box and assist the Tribunals in coming to a satisfactory conclusion on the question.No such attempt was made in this case and we find it impossible to say from the evidence on the record as to what portion, if any, of the reserves was actually used as working capital. The tribunal would have been justified in rejecting in toto the Companys claim under this head. The allowance of Rs. 0.43 lacs as prior charge on return on reserves used as working capital was therefore an error in favour of -the appellant. There is no reason therefore for reducing the figure as found by the Tribunal as the available surplusLastly it was suggested by Mr. Sastri that in deciding what should be allowed as bonus out of this available surplus the Tribunal should have proceeded on the basis that one months basic wages amount to Rs. 90, 000 and not Rs. 50, 00 as mentioned by the Tribunal. This figure of Rs. 90, 000/- has been given by the Companys Manager as the total wage of the workmen and the employees, including officers.We are told that the officers were also paid bonus and that also has to come out of the available surplus. So Mr. Sastri argued, though rather faintly, that the bonus should have been fixed on the basis of Rs. 90, 000 wage bill. We do not think that to be the correct approach. The Industrial Tribunal is not concerned with what is paid by the Company to its officers. It is concerned only with the workmens claim of bonus. For deciding therefore what part of the available surplus should be paid to the workmen as bonus the wage bill of the workmen only has to be considered. It is -not disputed that the wage bill (basic wage) of the workmen, excluding the officers, was Rs. 50, 000. The Tribunal has therefore committed no error in fixing the bonus figures on this basisWe wish to make it clear that what we have said in this judgment will not stand in the way of the employer substantiating a claim for rehabilitation charge by proper evidence, in any future dispute on that question