Case: The Tinnevelly-Tuticorin Electricsupply Co. Ltd., Vs. Its Workmen

(xi) by the appellate tribunal.If that be the true position then bonus has always been an admissible expenditure under the scheme of the Act, and as such there is no conflict between the scheme of the Act and the claim made by the respondents in the present case.Incidentally, we may add that this point appears to have been conceded by the appellant before the appellate tribunal.We must accordingly hold that the appellate tribunal was right in coming to the conclusion that the Full Bench formula applied in adjudicating upon the respondents claim for bonus against the appellant in the present proceedings.As we have already indicated, before the fuller bench reached this decision there was a conflict of opinion in the decision of the Labour Appellate Tribunals, but in view of our conclusion it is unnecessary to refer to the said earlier decisions. 17. That takes us to the merits of the award. The first point is in regard to the appellants claim for rehabilitation. Before the Labour Appellate Tribunal it was fairly conceded by the respondent that at least income- tax at seven annas in a rupee on the gross profits less depreciation, and also a contingency reserve of Rs. 6.047 have to be allowed in arriving at the figure of net available surplus for the purpose of bonus payable to the respondents ; and that in regard to normal statutory depreciation the correct figure must be taken to be Rs. 99,038 instead of Rs. 90,393 as given by the industrial tribunal. Then, as to the rehabilitation the appellant has led no evidence at all and so the appellate tribunal refused to grant any sum by way of rehabilitation in addition to the total amount of Rs. 1,13,950. In our opinion, the appellate tribunal was right in holding that the adoption of a factor of 2.7 for all assets purchased before 1945 was not justified, and that the adoption of the figures of the estimated life of the assets from the Schedule to the Electric Supply Act without even deducting the respective portions of the life of the assets which had already expired was equally unjustified. In that view of the matter we do not see how the appellant can make any grievance against the finding of the appellate tribunal on the question of rehabilitation. The appellate tribunal has fairly observed that, in future if a dispute arises between the appellant and its employees, the appellant may substantiate its claim for rehabilitation by leading proper evidence. 18. The claim of the appellant for the triple shift allowance in respect of the mains has been allowed by the appellate tribunal and there is no dispute in respect of it; but it is urged that Rule 8 of the Income-tax Rules justifies the appellants claim in respect of all its electric plant and machinery under Entry IIIE (1). Rule 8 provides that the allowance under S. 10 (2) (vi) of the Act in respect of depreciation of buildings, machinery, plant of furniture shall be a percentage of the written down value or original cost, as the case may be, equal to one-twelfth the number shown in the corresponding entry in the second column of the following statement. There are two provisos to this rule which it is not necessary to set out. The appellant makes a claim under IIIE (1) which deals with electric plant, machinery and boilers, whereas, according to the respondents, the appellants case in this behalf falls under IIIC (4) and (5) which respectively deal with underground cables and wires and overhead cables and wires. The argument for the respondents is that in respect of these items the appellants claim is inadmissible. In support of this argument the respondents rely upon the remark against item 3 on page8 of the Rules. This remark would show that the benefit claimed by the appellant does not apply to an item of machinery or plant specifically excepted by the letters N, E, S, A being shown against it. These letters are the contraction of the expression No Extra Shift Allowance. There is no doubt that these letters are to be found against item in IIIC (4) and (5). Therefore, the point which arose for decision before the appellate tribunal was whether the appellants claim falls under IIIE (1) or IIIC (4) and (5). The appellate tribunal has observed that the appellant made no attempt to show that any such claim for shift depreciation in respect of its cables and wires had been put forward by it before the income-tax authorities, or that it was held to be admissible by them. It has also observed that if the appellants case was true that the cables and wires fell under IIIE (1) it was difficult to understand why separate provision should have been made in respect of depreciation of cables and wires under IIIC (4) and (5). Besides, the appellate tribunal was not satisfied that such cables and wires would depreciate in value to a materially greater extent when electrical energy is allowed to pass through them for more than one shift. That is why, on the materials as they were available on the record, the appellate tribunal saw no reason why the appellant should be allowed any extra shift depreciation in respect of under ground and overhead cables by way of a prior charge. The appellants claim for the provision of Rs. 23,516 in that behalf was, therefore, rejected. It would thus be seen that the appellant seeks to claim this amount by way of prior charge ; and in substance this claim has been rejected by the appellate tribunal on the ground that sufficient material has not been placed before it by the appellant on which the claim could be examined and granted. In such a case we do not see how we can interfere in favour of the appellant. The present decision will not preclude the appellant from making a similar claim in future and justifying it by leading proper evidence.

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

Explanation:
0[ds]The Act is a self- contained code intended to regulate the business and affairs of electricity concerns including the claim of their employees for bonus, and as such an industrial dispute between such concerns and their employees in regard to bonus must be determined solely by reference to the provisions of the Act and not by the application of the Full Bench formula, As to the quantum of bonus which should be awarded it would depend upon the circumstances in each case;12. It would thus be clear that the provisions of the Act in general and those of the Sixth Schedule in particular, are no doubt intended to control and regulate the rates chargeable to consumers and to provide the method and the machinery by which the electrical system of the country could be properly co-ordinated and integrated. The rates chargeable are fixed, so is a reasonable return provided for. But it is not as if the Act intends to guarantee a minimum return to the undertaking. What it purports to do is to prohibit a return higher than the one specifiedThere is really no conflict between the Act and the principles of industrial adjudication. In fact they cover different fields and their relevance and validity is beyond question in their respective fields14. As we have just indicated the method of accounting required by the Act in preparing the working-sheet is substantially different from the commercial method of accounting which yields the gross, profits in the form of profit and loss account.Determination of gross profit is the first step which industrial tribunals take in applying the Full Bench formula. Such gross profit cannot be ascertained from the working-sheet prepared under the Act. It is not denied that the appellant has to keep accounts under the Companies Act on a commercial basis. That being so, in dealing with the respondents claim for bonus, it is the balance-sheet and the profit and loss account prepared by the appellant that must be taken as the basis in the present proceedings, and that is precisely what the tribunals below have done.Therefore, we are satisfied that the Labour Appellate Tribunal was right in coming to the conclusion that the respondents claim for bonus must be governed by the application of the Full Bench formula. In our opinion, it is difficult to accept the appellants argument that the construction placed by the appellate tribunal on the latter part of this clause is not reasonably possibleAfter the insertion of this clause there can be no doubt that the amount paid by the employer to his employees by way of bonus would definitely be admissible expenditure under paragraph 17 (2)(b). In our opinion the insertion of this clause can be more reasonably explained on the assumption that the Legislature has thereby clarified its original intention. Even when cl. (xi) was enacted the intention was to include claims of bonus under expenses covered by the said clause, but in order to remove any possible doubt the Legislature thought it better to provide specifically for bonus under a separate category. Otherwise, it is difficult to appreciate how contributions to Provident Fund were treated as admissible expenditure all the time since they were covered by cl. (xii) and bonus could not have been treated as admissible expenditure under cl. (xi). That is why we are on the whole prepared to agree with the construction put upon cl. (xi) by the appellate tribunal.If that be the true position then bonus has always been an admissible expenditure under the scheme of the Act, and as such there is no conflict between the scheme of the Act and the claim made by the respondents in the present case.Incidentally, we may add that this point appears to have been conceded by the appellant before the appellate tribunal.We must accordingly hold that the appellate tribunal was right in coming to the conclusion that the Full Bench formula applied in adjudicating upon the respondents claim for bonus against the appellant in the present proceedings.As we have already indicated, before the fuller bench reached this decision there was a conflict of opinion in the decision of the Labour Appellate Tribunals, but in view of our conclusion it is unnecessary to refer to the said earlier decisions. In our opinion, the appellate tribunal was right in holding that the adoption of a factor of 2.7 for all assets purchased before 1945 was not justified, and that the adoption of the figures of the estimated life of the assets from the Schedule to the Electric Supply Act without even deducting the respective portions of the life of the assets which had already expired was equally unjustified. In that view of the matter we do not see how the appellant can make any grievance against the finding of the appellate tribunal on the question of rehabilitation. The appellate tribunal has fairly observed that, in future if a dispute arises between the appellant and its employees, the appellant may substantiate its claim for rehabilitation by leading proper evidence18. The claim of the appellant for the triple shift allowance in respect of the mains has been allowed by the appellate tribunal and there is no dispute in respect of it. There are two provisos to this rule which it is not necessary to set out. The appellant makes a claim under IIIE (1) which deals with electric plant, machinery and boilers, whereas, according to the respondents, the appellants case in this behalf falls under IIIC (4) and (5) which respectively deal with underground cables and wires and overhead cables and wiresThere is no doubt that these letters are to be found against item in IIIC (4) and (5). Therefore, the point which arose for decision before the appellate tribunal was whether the appellants claim falls under IIIE (1) or IIIC (4) and (5). The appellate tribunal has observed that the appellant made no attempt to show that any such claim for shift depreciation in respect of its cables and wires had been put forward by it before the income-tax authorities, or that it was held to be admissible by them. It has also observed that if the appellants case was true that the cables and wires fell under IIIE (1) it was difficult to understand why separate provision should have been made in respect of depreciation of cables and wires under IIIC (4) and (5). Besides, the appellate tribunal was not satisfied that such cables and wires would depreciate in value to a materially greater extent when electrical energy is allowed to pass through them for more than one shift. That is why, on the materials as they were available on the record, the appellate tribunal saw no reason why the appellant should be allowed any extra shift depreciation in respect of under ground and overhead cables by way of a prior charge. The appellants claim for the provision of Rs. 23,516 in that behalf was, therefore, rejected. It would thus be seen that the appellant seeks to claim this amount by way of prior charge ; and in substance this claim has been rejected by the appellate tribunal on the ground that sufficient material has not been placed before it by the appellant on which the claim could be examined and granted. In such a case we do not see how we can interfere in favour of the appellant. The present decision will not preclude the appellant from making a similar claim in future and justifying it by leading proper evidence.