# Aluminium Corporation v. Their Workmen and Others

- **Citation:** [1964] 4 S.C.R. 429
- **Court:** Supreme Court of India
- **Decided:** 1963-08-14
- **Bench:** P. B. Gajendragadkar, K. N. w ANCHOO, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/aluminium-corporation-v-their-workmen-and-others-3160
- **Pages:** 7

## Headnote

Industrial DiJ·pute-Award of bonus-Full Bench FormulaAllou1ance under rehabilitation charges-Burden of proof-RvidenUary valt.te of statements in balance sheets.
The appellant is a manufacturer of aluminium, having two
factories one near Asansol and another in Asansol.
A dispute
haviti.g arisen between the appellant and the respondent on
the
question of bonus for the year 1957-58 it was referred to the
Industrial Tribunal by the Government of West Bengal.
A similar dispute arose between the appellant and its workmen in the
second factory and this also was referred to the same tribunal. In
the second dispute the parties submitted joint petitions before
the tribunal agreeing to abide by the award on the bonus question in the first dispute and requesting that sin1ilar award be made
in the second dispute also.
In the first dispute the Tribunal
awarded a bonus equivalent to three months basic wages inclusive
of the amount that had already been paid by the company voluntarily.
An a\vard was made in the second dispute also in
similar terms. In determining the amount of available surplus the
Tribunal applied the rules embodied in the Full Bench Formula
which was approved by this Court in Associated Cement Co. Ltd.
v. Its workmen, [1959] S.C.R. 925, and allowed Rs. 43 lacs as
return on reserve used as working capital and allowed nothing
under the head rehabilitation
charge.
The appellant
appealed
.against both the awards by way of special leave granted by
this
Court.
'
.
On behalf of the appellant it was contended that there was
no justification in rejecting the claim under the head rehabilitation charge. It was urged that the balance sheet of the company
would by itself show \Vhat part of reserve was used as working 01.~ital and a comet way of reaching at the figure of reserve
}963
Major
S. S. Khanna
v
Brig.
F. /. Dillon
1963
August 14
1963
Aluminium
Corporation
v.
Their Workmen
and
Others
430
SUPREME COURT REPORTS
[1964J
used as working capital would be by deducting the current liabilities of' the company in rhe balance sheet fron1 the current assets
as shown therein.
Held : ( i) The burden to prove any prior charge under the
head of rehabilitation lies on the employer and that unless
the
employer has by proper evidence established its cl-aim
to
some
a1nount as rehabilitation charge the clain1 must be rejected.
In
the present case the materials on the basis of which the multipliers
and Cevisers have been arrived at have not been established
by
proper evidence and l"herefore the tribunal was justified in reject·
ing the claim under the head rehabilitation charge.
(ii) Regarding the claim of prior charges under the head
"return
on reserve
used
as
working
capital"
the appellant
gave \.videly
diff~rent estimates .and this fact gives Sofie justification in refusing to accept any of these as correct. The mere statements in the balance sheet as regards current assets and liabilities cannot be taken as correct. They have to be established by
proper evidence by those responsible for preparing the balance sheet
or Py other competent witnesses.
This has not been done in the
present case.
Petted Turkey Dye Works v. Dye and Commercial Workert
Union [1960] 2 S.C.R. 906, Khandesh Spg. and Wvg. Mills Co.
Ltd. v. Rastriya Girni Kamgar Sangh, fa/gaon, [1960] 2 S.C.R.
841, Bengal Kagazkol Mazdoor Union v. The Titagarh Paper Mills
Co. [ 1964 J 3 S.C.R. 38, referred to.
(iii) The practice on the part of etnplriyers to show the
entire a1nount of reserve available for use as working capital as
the actual amount used was wrong.
(iv) For
deciding
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 and the Tribunal is not
concerned with what is paid by the company to its officers.
The Tribunal has not committed any error in fixing the bonus
figures .and the appeals are therefore dismissed.
CIVIL APPELLATE ruRISDICT!ON : Civil Appeals Nos. 238
and 818 of 1962.
Appeals by special leave

## Text

j
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4 S.C.R.
SUPREME COURT REPORTS
429
of its powers under s. 115 of the Code.
The appeals must therefore fail and I agree with the
order proposed by my learned brother Shah, J.
Appeals dismissed.
• ALUMINIUM CORPORATION
tl.
THEIR WORKMEN AND ORS.
(P. B. GAJENDRAGADKAR, K. N. w ANCHOO AND K. c. DAS
GUPTA, Jj.)
Industrial DiJ·pute-Award of bonus-Full Bench FormulaAllou1ance under rehabilitation charges-Burden of proof-RvidenUary valt.te of statements in balance sheets.
The appellant is a manufacturer of aluminium, having two
factories one near Asansol and another in Asansol.
A dispute
haviti.g arisen between the appellant and the respondent on
the
question of bonus for the year 1957-58 it was referred to the
Industrial Tribunal by the Government of West Bengal.
A similar dispute arose between the appellant and its workmen in the
second factory and this also was referred to the same tribunal. In
the second dispute the parties submitted joint petitions before
the tribunal agreeing to abide by the award on the bonus question in the first dispute and requesting that sin1ilar award be made
in the second dispute also.
In the first dispute the Tribunal
awarded a bonus equivalent to three months basic wages inclusive
of the amount that had already been paid by the company voluntarily.
An a\vard was made in the second dispute also in
similar terms. In determining the amount of available surplus the
Tribunal applied the rules embodied in the Full Bench Formula
which was approved by this Court in Associated Cement Co. Ltd.
v. Its workmen, [1959] S.C.R. 925, and allowed Rs. 43 lacs as
return on reserve used as working capital and allowed nothing
under the head rehabilitation
charge.
The appellant
appealed
.against both the awards by way of special leave granted by
this
Court.
'
.
On behalf of the appellant it was contended that there was
no justification in rejecting the claim under the head rehabilitation charge. It was urged that the balance sheet of the company
would by itself show \Vhat part of reserve was used as working 01.~ital and a comet way of reaching at the figure of reserve
}963
Major
S. S. Khanna
v
Brig.
F. /. Dillon
1963
August 14
1963
Aluminium
Corporation
v.
Their Workmen
and
Others
430
SUPREME COURT REPORTS
[1964J
used as working capital would be by deducting the current liabilities of' the company in rhe balance sheet fron1 the current assets
as shown therein.
Held : ( i) The burden to prove any prior charge under the
head of rehabilitation lies on the employer and that unless
the
employer has by proper evidence established its cl-aim
to
some
a1nount as rehabilitation charge the clain1 must be rejected.
In
the present case the materials on the basis of which the multipliers
and Cevisers have been arrived at have not been established
by
proper evidence and l"herefore the tribunal was justified in reject·
ing the claim under the head rehabilitation charge.
(ii) Regarding the claim of prior charges under the head
"return
on reserve
used
as
working
capital"
the appellant
gave \.videly
diff~rent estimates .and this fact gives Sofie justification in refusing to accept any of these as correct. The mere statements in the balance sheet as regards current assets and liabilities cannot be taken as correct. They have to be established by
proper evidence by those responsible for preparing the balance sheet
or Py other competent witnesses.
This has not been done in the
present case.
Petted Turkey Dye Works v. Dye and Commercial Workert
Union [1960] 2 S.C.R. 906, Khandesh Spg. and Wvg. Mills Co.
Ltd. v. Rastriya Girni Kamgar Sangh, fa/gaon, [1960] 2 S.C.R.
841, Bengal Kagazkol Mazdoor Union v. The Titagarh Paper Mills
Co. [ 1964 J 3 S.C.R. 38, referred to.
(iii) The practice on the part of etnplriyers to show the
entire a1nount of reserve available for use as working capital as
the actual amount used was wrong.
(iv) For
deciding
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 and the Tribunal is not
concerned with what is paid by the company to its officers.
The Tribunal has not committed any error in fixing the bonus
figures .and the appeals are therefore dismissed.
CIVIL APPELLATE ruRISDICT!ON : Civil Appeals Nos. 238
and 818 of 1962.
Appeals by special leave from the awards dated October 21, 1960, and May 17, 1961 of the Fifth Industrial
Tribunal, West Bengal in Cases Nos. VIII-77 of 1959 and
VIII-93 of 1959 respectively.
A. V. Viswanatha Sastri and B. P. Mah~shwctri, for
the appellant (in both the appeals).
.
/anardhan Sharma, for the respondents (in the both
appeals).
August 14, 1963. The Tudgment of the Court was delivered by
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•
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4 S.C.R.
SUPREME COURT REPORTS
431
DAs GuPTA J.-These appeals by special leave are
against an award of the Fifth Industrial Tribunal, West
Bengal, on. the question of bonus for the year 1957-58 to
workmen of the appellant-Company.
The appellant
which is engaged in the manufacture of aluminium from
basic material has its factory at J. K. Nagar near Asansol
in West Bengal. A dispute having arisen between the ap-
, pellant and some of its workmen on the question of bonus
for the year 1957-58 it was referred to the Fifth Industrial
Tribunal, West Bengal, by an order of the Government of
West Bengal. In another reference made by that Government to the same Tribunal on May 2, 1959 a dispute
between the Company and its workmen employed at
its factorv at J. K. Nagar, Asansol, on the question
of
bonus for the year 1957-58 was one of the matters referred. In the first reference the Tribunal has awarded in
favour of the workmen bonus
equivalent to three
months' basic wages inclusive of the amount (equivalent
to half a month's basic wages) that has already been paid
by the Company voluntarily. In the second reference the
parties filed joint petitions before the Tribunal agreeing
to abide by any decision or award whatsoever passed by
the Tribunal regarding the bonus issue in the first reference and requesting that similar award be made regarding the issue of bonus in both references. The Tribunal accordingly passed an order in the second reference
that the workmen would get the same bonus as awarded
in the first reference. The result of this is that the workmen covered by the second reference would also be entitled to three months' basic wages as bonus for the year
1957-58.
Applying the rules embodied in what is known as the
Full Bench Formula evolved by the Labour Appellate
Tribunal in 1950 and approved by this Court in Associated Cement Companies Ltd., v. Its Workmen(') for
calculation of profit bonus the Tribunal held
that
the
available surplus was Rs. 4.63 lacs. It pointed out that
if bonus equivalent to three months' basic wage was given
to workmen, still the Company will have Rs. 3.91
lacs.
as the available surplus inclusive of the refund of incometax on account of bonus, which meant an expenditure of
-
(') [1959] S.C.R. 925.
1963
Alu mini""'
Corporation
v.
Their w,,..~
men 111111
Others
Das G1'pta f.
196'!
Aluminium
·Corporation
v.
Their Workmen
and
Others
Das Gupta J.
432
SUPREME COURT REPORTS
[1964]
only R>. 0.72 lacs on this head by the Company. In reaching this figure of Rs. 4.63 lacs as the available surplus the
Tribunal allowed Rs. 0.43 lacs as return on reserves
used as working capital and allowed nothing under the
head rehabilitation charge. In support of the appeals Mr.
Vishwanatha Sastri has vehemently challenged the
Tribunal's view on both these matters.
On the question of rehabilitation charge Mr. Sastri
contended that there was no justification whatsoever for
rejecting the claim on this head altogether. It has to be
remembered in this connection that by a series of decisions of this Court it is now well settled that the burden
to prove any prior charge under the head rehabilitation lies on the employer and that unless the employer
has by proper evidence established its claim to some
amount as rehabilitation charge the claim must be rejected.
The appellant adopted a curious procedure.
It examined its Manager and through him put in statements
showing its calculations of available surplus.
A nuJrlber
of statements were put, in each showing the available surplus as nil.
While however in statements 1 and
11
the rehabilitation charge is shown as Rs. 6,27.234.00 it is
shown as Rs. 5,84,534.00 in statements III and IV,
and in statements V and VI the figure is Rs. 10,25,021.00
How such different figures could be arrived at has
not been sought to be explained by its only witness, the Manager. The witness stated that the assets of the Company
were revalued in 1956 by a Committee of which he was
one of the members.
He had added that each of the
assets was ascertained with reference to the Company's
registers and they were divided in blocks according
to
their date of acquisition. A portion of the report made
by the Revaluation Committee was put in. There is nothing however in this or in the witness's evidence that
throws any light on the important question of multiplier
and divisor. On the question of multiplier the witness
says that the multiplier was worked out according to
the procedure as detailed in the Revaluation Report itself. He has not tried himself to explain this basis. It is
by no means clear that he has special knowledge and skill
ih the matter of replacement of the different machinery.
The report was signed also by two pther members, neither
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4 S.C.R.
SUPREME COURT REPORTS
433
of whom hai been examined.
The materials on the
basis of which these multipliers were arrived at have also
not been established by any evidence.
When we turn to the question of divisor the position is even more unsatisfactory. The witness has
not
vouchsafed a word as to how the divisor was arrived at.
It is hardly necessary to point out that the mere submission of a statement prepared in the Company's office
showing a certain divisor cannot meet the requirements
of law unless and until the basis of this calculation
is explained by testimony on oath which can be tested
by cross-examination. The Tribunal was therefore wholly
justified in rejecting the claim for rehabilitation.
On the claim of prior charge under the head "return
on reserves used as working capital", the Tribunal, as
already stated, has allowed Rs. 0.43 lacs. What the Company claims under this head is
difficult to understand.
For, as in the case of rehabilitation charge so also under
this head, different figures have been shown in different
statements.
Statements Nos. I, III and V show the reserves employed in business as Rs. 111,74,162.00, while in
statements II, IV and VI the amount is
shown as Rs.
199,56,718.00. The difference is due to the fact that while ·
in statements I, III and V, the depreciation reserves
is shown as Rs. 86 lacs, the corresponding figure in statements II, IV and VI is more than double of this, being
Rs. 173,82,556.00.
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.
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 an easy and . safe
way of ascertaining the correct figure under this head is
1963
Aluminium
Corporation
v.
Their Workmen
and
Others
Das Gupta/.
i963
A.luminjum
Corporation
v.
Their Workmen
and
Others
Dos Gupta/.
434
SUPREME COURT REPORTS
[1964)
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 accountancy for the proposition that the excess of the readily
realisable, liquid, or current assets oI a concern over its
current liabilities is the proper measure of the working
capital. (See Cropper's Higher Book-Keeping and Accounts
7th Edition, p. 301 ano Pickles on Accountancy, 2nd Edition p. 1325).
There are however two difficulties in the way of accepting Mr. Sastri' s contention. The first is that the mere statements 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(') and Khandesh Spg. and
Weaving Mills Case(')). This was recently emphasised
again in Bengal Kagabkal Mazdoor Union v. The Titagarh
Paper Mills Co. Ltd.(').
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 working 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.
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
( 1) [1960] 2 S.C.R. 906.
( 2) [1960] 2 S.C.R. 841.
_.1-•
( 3) [1964] S.C.R. 38.
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4 S.C.R.
SUPREME COURT REPORTS
435
"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 Company's 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.
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 month's 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 give,; by the Company's 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
workmen's claim of bonus. For deciding therefore what
part of the available surplus should he 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, ,xcluding the officers, was Rs.
50,000. The Tribunal has therefore committed no error in
fixing the bonus figures on this basis.
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.
As all the points raised in the appeals fail, they aredismissed with costs.
Appeafr dismissed.
1963
Aluminium
Corporation
v.
Thdr Workmen
t1nd
Othl!t's
Das Gupta/.