Case: The Ahmedabad Miscellaneousindustrial Workers' Union Vs. The Ahmedabad Electricity Co. Ltd

approved. In the circumstances it seems to us that it is not open to the appellant to raise the question that the provisions of the Seventh Schedule to the Electricity (Supply) Act should be applied for purposes of calculating depreciation in preference to the income-tax rates in working out the Full Bench formula.5. But, assuming that the question is still open because it was never directly raised in this Court and specifically decided, we are of opinion that the income-tax rules should be applied in working but depreciation under the Full Bench formula in preference to the provisions of the Seventh Schedule to the Electricity (Supply)Act. It was pointed out in Tinnevelly-Tuticorin Electric Supply Co.s case 1960-3 SCR 68 : (AIR 1960 SC 782 ) that the provisions in the Electricity (Supply) Act contained in S. 57 and the Sixth and Seventh Schedules to the Act were for a special purpose, namely to work out the charges to be recovered from consumers for the supply the electricity. It was also observed at the provisions of the Electricity (Supply) Act and its Schedules were meant for operation in the field covered by the Act and that the principles of industrial adjudication were wholly different and had to be worked out in their own way in the industrial field. It seems to us therefore that in working out available surplus according to the Full Bench formula, the same principle with respect to depreciation should be applied in the case of electricity companies as in the case of all other industrial concerns. As the Appellate Tribunal pointed out, the result in the long run would be the same though there might be differences in some years. Besides, in the formula when it was evolved in 1950 (see Mill-Owners Association v. Rashtriya Mill Mazdoor Sangh Bombay 1950-2 Lab LJ 1247 (LATI-Bom) the depreciation intended to be allowed was as provided in the rules under the Income-tax Act. The Appellate Tribunal pointed this out in U. P. Electric Supply Companys case 1955-2 Lab LJ 431 (LATI-Bom) and said that the Full Bench formula allowed depreciation according to the income-tax rates. It seem to us therefore that in the field of industrial relations in connection with which the Full Bench formula was evolved it is proper that the formula should be worked out as it was evolved without injecting into it the provisions contained in the Seventh Schedule to the Electricity (Supply) Act. This will work for uniformity in all industrial concerns; and as pointed out in Associated Cement Companies case 1959 SCR 925 : (AIR 1959 SC 967 ), "the formula had on the whole worked fairly satisfactorily in a large number of industries all over the country, and the claim for bonus should be decided by tribunals on the basis of this formula without attempting to revise it". If the provisions of the Seventh Schedule to the Electricity (Supply) Act which, as we have pointed out, were evolved for a special purpose, were to be injected into this formula, the result would be that electricity companies would stand in a group by themselves when compared with other industrial concerns, and the uniformity that the formula had achieved in the matter of bonus would be destroyed. The consequence then will be that in identical situations electricity companies may have to pay bonus while other industrial concerns to which income-tax rates of depreciation would be applied may not have to do so. It seems to us that this is not desirable, particularly when we remember that electricity companies are public utility companies.6. Another reason why we think that the income-tax rates of depreciation should be applied for the purposes of the Full Bench formula in the case of electricity companies, also is that income-tax rates provide for a quicker building up of the depreciation fund. This to our mind is all to the good in the case of public utility companies like those providing electricity so that they may be in a position to have funds at their disposal in case of unforeseen difficulties resulting in the necessity of replacing plant and machinery earlier than what is provided under the Seventh Schedule to the Electricity (Supply) Act.7. There is yet another reason which inclines us to approve the view taken by the Appellate Tribunal in U. P. Electric Supply Companys case 1955-2 Lab LJ 431 (LATIBom. That case settled the law in 1955 and has since been followed throughout the country. We feel that we should not disturb that decision, unless there are good reasons for doing so - and none as been shown. If anything, it appears to us that this is not the time to disturb that decision which has now been followed throughout the country for the last six years, for the whole question of bonus is under reference to a high-powered commission which will go into the matter afresh and will necessarily consider the question of the revision of the Full Bench formula. As this Court pointed out in Associated Cement Companies case 1959 SCR 925 : (AIR 1959 SC 967 ), the problem raised by the question of the revision of the Full Bench formula is of such a character that it could only be considered by a high-powered commission. That is now being done and it seems to us in the circumstances that we should not disturb the decision arrived at by the Appellate Tribunal in U. P. Electric Supply Companys case, 1955-2 Lab LJ 431 (LATI-Bom) on this question.8. It follows therefore that the Industrial Court was right in allowing depreciation in accordance with the rates prescribed under the Rules framed under the Income-tax Act. As we have already pointed out, if that is done, there will de no available surplus in this case, from which bonus could be awarded. In the circumstances we do not think it necessary to decide the other two points relating to the contingencies reserve and income-tax, which were raised before the Industrial Court.

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

Explanation:
0[ds]In the circumstances it seems to us that it is not open to the appellant to raise the question that the provisions of the Seventh Schedule to the Electricity (Supply) Act should be applied for purposes of calculating depreciation in preference to the income-tax rates in working out the Full Bench formula.5. But, assuming that the question is still open because it was never directly raised in this Court and specifically decided, we are of opinion that the income-tax rules should be applied in working but depreciation under the Full Bench formula in preference to the provisions of the Seventh Schedule to the Electricity (Supply)Act. It was pointed out in Tinnevelly-Tuticorin Electric Supply Co.s case 1960-3 SCR 68   : (AIR 1960 SC 782  ) that the provisions in the Electricity (Supply) Act contained in S. 57 and the Sixth and Seventh Schedules to the Act were for a special purpose, namely to work out the charges to be recovered from consumers for the supply the electricity. It was also observed at the provisions of the Electricity (Supply) Act and its Schedules were meant for operation in the field covered by the Act and that the principles of industrial adjudication were wholly different and had to be worked out in their own way in the industrial field. It seems to us therefore that in working out available surplus according to the Full Bench formula, the same principle with respect to depreciation should be applied in the case of electricity companies as in the case of all other industrial concerns. As the Appellate Tribunal pointed out, the result in the long run would be the same though there might be differences in some years. Besides, in the formula when it was evolved in 1950 (see Mill-Owners Association v. Rashtriya Mill Mazdoor Sangh Bombay 1950-2 Lab LJ 1247 (LATI-Bom) the depreciation intended to be allowed was as provided in the rules under the Income-tax Act.Another reason why we think that the income-tax rates of depreciation should be applied for the purposes of the Full Bench formula in the case of electricity companies, also is that income-tax rates provide for a quicker building up of the depreciation fund. This to our mind is all to the good in the case of public utility companies like those providing electricity so that they may be in a position to have funds at their disposal in case of unforeseen difficulties resulting in the necessity of replacing plant and machinery earlier than what is provided under the Seventh Schedule to the Electricity (Supply) Act.7. There is yet another reason which inclines us to approve the view taken by the Appellate Tribunal in U. P. Electric Supply Companys case 1955-2 Lab LJ 431 (LATIBom. That case settled the law in 1955 and has since been followed throughout the country. We feel that we should not disturb that decision, unless there are good reasons for doing so - and none as been shown. If anything, it appears to us that this is not the time to disturb that decision which has now been followed throughout the country for the last six years, for the whole question of bonus is under reference to a high-powered commission which will go into the matter afresh and will necessarily consider the question of the revision of the Full Bench formula. As this Court pointed out in Associated Cement Companies case 1959 SCR 925   : (AIR 1959 SC 967  ), the problem raised by the question of the revision of the Full Bench formula is of such a character that it could only be considered by a high-powered commission. That is now being done and it seems to us in the circumstances that we should not disturb the decision arrived at by the Appellate Tribunal in U. P. Electric Supply Companys case, 1955-2 Lab LJ 431 (LATI-Bom) on this question.8. It follows therefore that the Industrial Court was right in allowing depreciation in accordance with the rates prescribed under the Rules framed under the Income-tax Act. As we have already pointed out, if that is done, there will de no available surplus in this case, from which bonus could be awarded. In the circumstances we do not think it necessary to decide the other two points relating to the contingencies reserve and income-tax, which were raised before the Industrial Court.