Case: U.P. Electricity Supply Co. Ltd Vs. Workmen &amp; Ors

2. The U. P. Electric Supply Co., Ltd. (the appellants herein) had two electricity undertakings, one at Allahabad and the other at Lucknow. It carried on the business of generation and distribution of electricity under two licences one for Allahabad and the other for Lucknow within the areas specified therein. In pursuance of the provisions of paragraph 12 of the said licences the U. P. Electricity Board compulsorily acquired the said undertakings of the company including the business of generation and distribution of electricity in the areas covered by the licences with effect from 16th September, 1964. The Tribunal had however entered on the reference on 29th January 1962 and its proceedings continued down to 16th November 1965 when a common award was made directing the employers to pay three months basic wages as bonus to all the workmen entitled thereto for the year 1960-61. These appeals are against the said award.

Court's reasoning:
4. In our view, the broad proposition put forward by counsel for the appellant that as soon as a particular industry ceases to function any adjudication in respect of a dispute which had occurred prior thereto becomes abortive cannot be accepted. It may be that an adjudication which concerns only the future working of the industry becomes redundant when the industry itself comes to an end. If the dispute is one which relates to the past working of the industry and in particular where the claim of the workmen is for benefits which according to their view had accrued to them in the past it can hardly be said that the adjudication is without any purpose. If the workmen ask for better service conditions like the revision of wage scales, dearness allowance, medical and other facilities, gratuity etc. it would be useless for the Tribunal to complete the adjudication and award how the dispute vice conditions etc, ought to be bettered or revised where the industry is non est. Where however the dispute as in this case, is over a claim to benefits by way of bonus for work done in the past, it would be the duty of a for Tribunal to complete the adjudication and make its award. If the Tribunal finds that because of the service rendered by the workers in the past an industry reaped profits whereof a portion should go to the workmen it should not lie in the mouth of the employers to say that inasmuch as they have ceased to carry on business their obligation to pay for service rendered in the past should be wiped out. There is no logic in the submission made on behalf of the appellants that the ascertainment of the liability even with regard to the working of the industry in the past can take place only during the subsistence of the relationship of master and servant between the employers and theour view, by these provisions the legislature sought to give redress to work in the contingencies mentioned in the said sections which are of common occurrence. These sections do not lay down that on the closure or transfer of an undertaking the employers were to be relieved of all other obligations to or claims of the workers. The preamble to the Industrial Disputes Act which expressly aims at preventing strikes and lockouts is in pari materia to the U.P. Industrial Disputes Act i.e. "to make provision for the investigation and settlement of industrial disputes, and for certain other purposes" cannot be read down to mean that the statute was being enacted only for the purpose of securing industrial peace so far as the future working of the industry was concerned. No doubt the main object of the Act is to ensure industrial peace but equally important is the purpose behind the Act that the workmen should not be deprived of by the legitimate share of profits made by the industry. The central object of the Act is to preserve industrial harmoney which would be meaningless if the workers of a particular industry were to be deprived of benefits of services rendered in the past.In our view neither the observations in this case nor in U. P. Electric Supply Co. Ltd, v. R. K. Shukla, (1970) 1 SCR 507   = (AIR 1970 SC 237  ) have any application to the facts in the case before us. Retrenchment has been specially provided for by the legislature and the questions of closure of an industry and the transfer of an industry have been expressly Provided for in the Industrial Disputes Act.Although the main purpose of the Act is to provide for collective settlement of disputes and maintances of industrial peace we cannot hold that a tribunal which is called upon to adjudicate on a dispute relating to a share of the profits earned by the company in the past on behalf of the workmen becomes functus officio or that the dispute becomes incapable of determination under the Act when the industry is closed. The claim, as already pointed out is for services rendered in the past and the dispute was a live one at the time when the reference was made by the State Government and indeed continued so for more than three years thereafter. It was only because of the protracted proceedings of the tribunal that the award came to be made as late as November 1965. The closure of the business long after the rendering of the services by the workmen and the preference of the dispute to the tribunal cannot wipe out the claim of the workmen or annul the adjudication in respect thereof.12. This brings us to the merits of the case. The profits of the company for working out the Labour Appellite Tribunal Full Bench formula as found by the Tribunal far the relevant year was Rs. 23,42,352/-. The tribunal however added back thereto three claims made by the workmen, namely, (1) excess debit to coal and fuel consumption Rs. 67,817; (2) estimated revenue for one month Rupees 1,85,519 and (3) notional revenue on the basis of units produced but not accounted for Rs. 2,50,000/-, which would raise the figure of profits to Rupees 28,54,803. We find ourselves unable to accept any of the above additions made by the tribunal referred tocan be little doubt that the company was using a diesel engine for the generation of electricity the hire of which alone cost the company Rs. 2,00, 000 in the relevant year and mention is made of the use of the diesel engine in the Directors report D/- 28th August, 1961. This is also borne out by the answer to interrogatory No. 4 submitted by the workmen to the employers. In his cross-examination Ghosh said that the figure of Rs. 59,67,467-66 had been taken from the revenue ledger of the head office and without reference to the revenue account statements he could not say whether the value shown against coal and fuel was in respect of the coal consumed or wins the amount spent for purchase of coal during the month. According to him coal was purchased both at the units and through the head office. The tribunal wrongly observed that it was for the first time in his cross-examination that Ghosh had stated that the contractors bill of Rs. 6,67,477-68 included the cost of fuel amounting to Rs. 67,952-02. As already noted Ghosh in his examination-in-chief had mentioned the cost of fuel oil at Rs. 67,950-02. The Tribunal also observed that the company had not produced any record and what ever they had stated in reply to the interrogatories or in reply to thecomments, after inspection, did not corroborate the statement of Ghosh that out of the contractors bill for Rs. 6,67,477-68 a sum of Rs. 67,952-02 was in respect of the cost of fuel oil The tribunal went by the two certificates Exs. E-2 arid E-3 issued by the chartered accountants both dater 22nd December 1961 giving the figure: of coal consumed at the two generating stations and their average price Per: metric ton and on that basis reached the conclusion that the company had spent Rs. 58,98,650-90 on fuel for the relevant year and contrasting this figure with Rs. 59,67,467-66 concluded that there was an excess expenditure on this item in the sum of Rupees 67,817/-.14. In our view the Tribunals conclusion cannot be accepted. It was the same firm of chartered accountant; who issued Exs. E-2 and E-3 who were responsible for preparation of the balance-sheet and profit and loss account of the company which were accepted by, the income-tax department. While it is true that merely because a figure is to be found in the audited balance-sheet of the company an industrial tribunal is not bound to accept the said figure if challenged. It must be said that when the figures for expenses incurred in connection with fuel given in the balance-sheet are also deposed to by a witness who gives the breakup thereof and says even in his examination-in-chief that the cost of fuel oil was Rs. 67,950-02 which is repeated in cross-examination and the witness is not asked in particular as to how this figure was arrived at, although the witness was examined for nearly 10 months, the tribunal should not have discarded his evidence on this point. The break up of the figure Rs. 59,67,467-66 was disclosed as early as 25th August 1962 of which Rs. 7,03,528-81 accounted for (1) contractors bills for carting, stacking and putting cool into hoppers, (2) contractors bill for crushing coal, (3) miscellaneous charges (4) proportionate wages to staff and (5) price of coal consumed and the books of account and records of the company were made available for inspection to the workers. In these circumstances the different figures of the break up should not have been disregarded by the tribunal: more so, because the chartered accountants were giving certificates only in respect to the expenses for coal delivered into the hoppers in the accounting year. It being undisputed that the company was using a diesel plant for generating electricity it would be surprising if no expenses were incurred for purchasing the diesel oil to run it with. It may be that in the different accounts of the company cost of fuel oil was not separately recorded but was put under the general head of raw material for running and working the turbines namely, coal. Not one of the several witnesses examined on behalf of the workmen had made any statement that fuel oil was not required by the company for the relevant year of account. In our view, the figure of Rs. 59,67,467-66 as shown in the balance-sheet should have been accepted by the tribunal from which there should have been no deduction of the figure Rs.our view, the tribunals approach to the question was wholly unwarranted. The loss of electric energy was fairly high in all the months both at Allahabad and at Lucknow except for one or two months out of the year. There was no suggestion on behalf of the workmen that electric energy could have been surreptitiously dealt with by the company either for depriving the workmen of their share of the profit or for any other purpose. Electric energy as is well known cannot be transmitted except through transmission lines and without any surreptitious manipulation of the meters of which there was no allegation all energy produced at the power station as also those supplied to consumers whether in bulk or otherwise would be duly recorded in the meters. What was not so recorded could only be due to loss in transmission or conversion. unusually high wastage would certainly indicate serious leakage and inefficient working unless it was explained by some break down. But in applying the Full Bench formula the employers cannot be charged with any notional profits which they should have made although the formula itself ishas never been held by this Court that if through the inefficiency in the working of the industry or by reason of use of defective machinery or apparatus full profits are not received with the result that notional the labour is deprived of a share thereof, the tribunal adjudicating on the question of bonus payable to labour for a particular year should add back to the gross profits as shown in the balance-sheet the amount of profit lost through the inefficiency or negligence of theview of the decisions of this Court we find ourselves unable to accede to this argument. Allowing return on share capital at 8% we have to deduct Rupees 3,36,000 from the surplus balance already mentioned, namely, Rupees 4,51,143 which reduces the balance to Rupees 1,15.143/-. In this view of the matter it is not necessary to go into the question as to whether and if so what amount should be provided for as prior charges by way of return on working capital or rehabilitation requirement. But what we cannot ignore is the statutory contingency reserve and the statutory development reserve the figures for which put forward by Company and accepted by the tribunal were Rupees 1,07,291 and 2,02,709 making a total of Rupees 3,10,000/- while it is true that these amounts cannot be considered as prior charges for the purpose of finding out the available surplus they have to be taken into consideration when the question of distribution to the workers out of the available surplus arises: See Mathura Prasad Srivastava v. Saugor Electric Supply Co. Ltd, (1966) 2 Lab LJ 307 (SC).20. In this case the tribunal awarded no less than three months basic wages by way of bonus. The monthly basic wage bill of all the employees was between Rupees 74.000 and Rupees 75,000/-. It was contended on behalf of the workers that if Rs. 2,25,000/- was to be paid as bonus the company would get a rebate of 45% thereof by way of Income-tax which would give the company an additional sum of Rupees 1,01,250 -.Even so the available surplus together with this would not be enough to meet the provision for statutory contingency reserve and statutory development reserve. Even if we were to provide for one months basic wages by way of bonus, there would not be way of money in the hands of the company to make provision for the said resetves.