# KHANDESH SPG. & WVG. MILLS CO. LTD v. THE RASHTRIYA GIRNI KAMGAR SANGH, JALGAON

- **Citation:** [1960] 2 S.C.R. 841
- **Court:** Supreme Court of India
- **Decided:** 1957-08-20
- **Case number:** CIVIL APPELATE JURISDICTION: Civil Appeal No. Khand'5h SPG & 257 of 1958
- **Bench:** P. B. Gajend_Ragadiur, K. SuBBA RAo, K. c. DAS GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/khandesh-spg-wvg-mills-co-ltd-v-the-rashtriya-girni-kamgar-sangh-jalgaon-1788
- **Pages:** 11

## Headnote

Industrial Dispute-Bonus-Fu.ll Bench Formula-Rehabilitation-Reserves used as working capital-Mode of Proof.
In ascertaining the surplus available for the payment of
bonus according to the Full Bench formula the Industrial Court
allowed the statutory depreciation but did not give any credit for
the rehabilitation amount claimed. The Industrial Court estimated
the amount required for rehabilitation at Rs. 60 lakhs; out of
this amount it deducted Rs. 51 lakhs representing the reserves
and the balance of Rs. 9 lakhs spread over a period of 15 years
gave the figure of Rs. 60,000 as the amount that should be set
apart for the year in question for rehabilitation. This amount
being less than the statutory depreciation the Industrial Court
held that the appellant was not entitled to any deduction on
account of rehabilitation as a prior charge. The appellant contended that the balance-sheet disclosed that the entire reserves
had been used as working capital and consequently the said
reserves should not be excluded from the amount claimed towards
rehabilitation.
Held,
that the appellant had failed to prove that the
reserves had in fact been used as working capital and as such the
amount was i;ightly deduct11d by the Industrial Court from the
amount fixed for rehabilitation.
The Associated Cement Companies Ltd. v. Its Workmen. "[1959]
S.C.R. 925, referred to.
In view of the importance of the item of rehabilitation in the
calculation of the available surplus it was necessary for tribunals
to weigh with great care the evidence of both parties to ascertain
every sub-item that went into or was subtracted from the item of
rehabilitation. If parties agreed, agreed figures could be accepted.
If they agreed to a decision on affidavits, that course could be
adopted. But in the absence of agreement the procedure
prescribed by 0. XIX, Code of Civil Procedure had to be followed.
The accounts, the balance~sheet and profit and loss accounts were
prepared by the management and the labour had no hand in it.
When so much depended on this item it was necessary that the
Industrial Court insisted upon a clear proof of the item of rehabilitation and also gave a real and adequate opportunity to labour
to canvass the correctness of the particulars furnished by the
employers.
Indian Hume Pipe Company, Ltd. v. Their Workmen.
[r960]
2 S.C,R. 32, Tata Oil Mills Company Ltd. v. Its Workmen. [r960]
I S.C.R I. and Anil Starch Products Ltd. v. Ahmedabad Chemical
Workers' Union. C.A. No. 684 of 1957 (not reported), referred to.
z960
January 22.
842
SUPREME COURT REPORTS [1960(2)]
r96o
CIVIL APPELATE JURISDICTION:
Civil Appeal No.
Khand'5h SPG & 257 of 1958.
wvG. Mill;
Appeal by special leave from the Award dated
co. Ltd.
August 20, 1957, of the Industrial Court, Bombay, in
v.
Reference (IC) No. 197 of 1956.
TheRoshtriyaGirni
O. K. Daphtary
Solicitor - General of India.
Kainf:Z~a~;,ngh, S. N. Andley, J.B. Dadachanji and Rameshwar Nath,
·
for the appellant.
Subba Rao].
B. P. Maheshwari, for the respondent.
I. N. Shroff, for Interveners Nos. 1 and 2.
The Intervener No. 3 did not appear.
•'
1960 January 22, The Judgment of the Court was
delivered by
SuBBA RAO J.-This appeal raises the quest.ion as
to what extent the reserves can be deducted from the
amount required for rehabilitation of plant and
machinery and also as to the manner by which the
deductible reserves can be ascertained. It would be
enough if we narrated only the facts relevant to the
question raised. The appellant., Khandesh Spinning
and Weaving Mills Company Limited, is a textile mill
and its factory is situate at Jalgaon. The respondent,
Rashtriya Girni Kamgar Sangh,
represents the
employees of the appellant-Company. The responde11t
on behalf, of the employees issued a notice to the
appellant under s. 42(2) of the Bombay Industrial
Relations Act, 1946, demanding payment of reasonable bonus for the period from January 1, 1955 to
December 31, 19()5.
Negotiations in this regard
having failed, the respondent ma

## Text

-
-
,
S.C.R.
SUPREME COURT REPORTS
841
KHANDESH SPG. & WVG. MILLS CO. LTD.
v.
THE RASHTRIYA GIRNI KAMGAR SANGH,
JALGAON
(P. B. GAJEND_RAGADIUR, K. SuBBA RAo, AND
K. c. DAS GUPTA; JJ.)
Industrial Dispute-Bonus-Fu.ll Bench Formula-Rehabilitation-Reserves used as working capital-Mode of Proof.
In ascertaining the surplus available for the payment of
bonus according to the Full Bench formula the Industrial Court
allowed the statutory depreciation but did not give any credit for
the rehabilitation amount claimed. The Industrial Court estimated
the amount required for rehabilitation at Rs. 60 lakhs; out of
this amount it deducted Rs. 51 lakhs representing the reserves
and the balance of Rs. 9 lakhs spread over a period of 15 years
gave the figure of Rs. 60,000 as the amount that should be set
apart for the year in question for rehabilitation. This amount
being less than the statutory depreciation the Industrial Court
held that the appellant was not entitled to any deduction on
account of rehabilitation as a prior charge. The appellant contended that the balance-sheet disclosed that the entire reserves
had been used as working capital and consequently the said
reserves should not be excluded from the amount claimed towards
rehabilitation.
Held,
that the appellant had failed to prove that the
reserves had in fact been used as working capital and as such the
amount was i;ightly deduct11d by the Industrial Court from the
amount fixed for rehabilitation.
The Associated Cement Companies Ltd. v. Its Workmen. "[1959]
S.C.R. 925, referred to.
In view of the importance of the item of rehabilitation in the
calculation of the available surplus it was necessary for tribunals
to weigh with great care the evidence of both parties to ascertain
every sub-item that went into or was subtracted from the item of
rehabilitation. If parties agreed, agreed figures could be accepted.
If they agreed to a decision on affidavits, that course could be
adopted. But in the absence of agreement the procedure
prescribed by 0. XIX, Code of Civil Procedure had to be followed.
The accounts, the balance~sheet and profit and loss accounts were
prepared by the management and the labour had no hand in it.
When so much depended on this item it was necessary that the
Industrial Court insisted upon a clear proof of the item of rehabilitation and also gave a real and adequate opportunity to labour
to canvass the correctness of the particulars furnished by the
employers.
Indian Hume Pipe Company, Ltd. v. Their Workmen.
[r960]
2 S.C,R. 32, Tata Oil Mills Company Ltd. v. Its Workmen. [r960]
I S.C.R I. and Anil Starch Products Ltd. v. Ahmedabad Chemical
Workers' Union. C.A. No. 684 of 1957 (not reported), referred to.
z960
January 22.
842
SUPREME COURT REPORTS [1960(2)]
r96o
CIVIL APPELATE JURISDICTION:
Civil Appeal No.
Khand'5h SPG & 257 of 1958.
wvG. Mill;
Appeal by special leave from the Award dated
co. Ltd.
August 20, 1957, of the Industrial Court, Bombay, in
v.
Reference (IC) No. 197 of 1956.
TheRoshtriyaGirni
O. K. Daphtary
Solicitor - General of India.
Kainf:Z~a~;,ngh, S. N. Andley, J.B. Dadachanji and Rameshwar Nath,
·
for the appellant.
Subba Rao].
B. P. Maheshwari, for the respondent.
I. N. Shroff, for Interveners Nos. 1 and 2.
The Intervener No. 3 did not appear.
•'
1960 January 22, The Judgment of the Court was
delivered by
SuBBA RAO J.-This appeal raises the quest.ion as
to what extent the reserves can be deducted from the
amount required for rehabilitation of plant and
machinery and also as to the manner by which the
deductible reserves can be ascertained. It would be
enough if we narrated only the facts relevant to the
question raised. The appellant., Khandesh Spinning
and Weaving Mills Company Limited, is a textile mill
and its factory is situate at Jalgaon. The respondent,
Rashtriya Girni Kamgar Sangh,
represents the
employees of the appellant-Company. The responde11t
on behalf, of the employees issued a notice to the
appellant under s. 42(2) of the Bombay Industrial
Relations Act, 1946, demanding payment of reasonable bonus for the period from January 1, 1955 to
December 31, 19()5.
Negotiations in this regard
having failed, the respondent made a reference to the
Industrial Court under s. 73A of the said Act for
arbitration of the dispute arising out of the said notice.
The arbitrato_r, i.e. the Industrial Court, following
the "Full Bench Formula", ascertained the surplus to
be Rs. 2·20 lakhs after deducting the prior charges
from the gross profits of the Company, but it did not
give any credit to the rehabilitation amount apart
from the statutory depreciation. The Industrial Court
disallowed this item for the following reasqns: It
estimated the amount required for rehabilitation at
Rs. 60 lakhs; out of this amount it deducted Rs. 51
lakhs representing the reserves and the balance of
Rs. 9 lakhs spread over a period of 15 years gave the
-
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·t-
'
-
S.C.R.
SUPREME COURT REPORTS
843
figure of Rs. 60,000 as the amount that should be set
I96o
apart for the year in question for rehabilitation. As E<h
d--;:;PG &
the statutory depreciation, was Rs. 83,639, it came to
~nv~~ Mill;
the conclusion that the Company would not be entitled
co. Ltd.
to any allocation as a prior charge for rehabilitation.
v.
After excluding the said item of rehabilitation, itTheRashtriyaGirni
fixed the surplus in a sum of Rs. 2•20 lakhs and Kamgar Sangh,
awarded to the employees four months' basic wages
falgaon
as bonus.
The learned Solicitor General contended that the
Subba Rao f.
Industrial Court accepted the position that the
reserves were used as working capital, but deducted
the said amount from the amount required for rehabilitation op a wrong and unjustified assumption
that, as the amounts so required would be spent for
rehabilitation over a course of 15 years by instalments, the temporary user of the said reserves would
not affect the question as they would be released in
part or in whole in future years. He argued that
-this assumption was contrary to the view expressed
in .decided cases and also the principle governing
the ascertainment of the 'am.ount for rehabilitation
purposes.
On the contrary the learned counsel for the respondent argued that the Industrial Court only assumed
that the reserves had been utilised as working capital,
as in the ·view taken by it, it did not in the least
matter whether the reserves were so utilised or not
and that, even if that view was wrong, the appellant
could not succeed, unless it proved by relevant and
acceptable evidence that the reserves were so utilised
and that it did not place before .the Industrial Court
any such evidence to prove that fact. The first question, therefore, is, what is the scope of the finding of
the Industrial Court in this regard? The Industrial
Court in dealing with the contentions of the parties
before it observed as follows :
"lt is true that until some amount is required
to be spent for rehabilitation, replacement or
modernization, reserves must be used as working
capital, but Shri Vimadalal's argument overlooks
that the amount required to be spent for rehabilitation over a course of 15 years is not required to be
•
844
SUPREME COURT REPORTS [IG60 (2)]
I960
spent all at once, but by instalments over a long
period."
Hhandesl• SPG. & Th
b
t"
d'd
t
d
fi d"
h
wvG. Mills
ese o serva 10ns
I
no
recor
any
n mg t at
co. Ltd.
the reserves were used as working capital. It was
v.
only an assumption made by the Industrial Court, as,
TheRashtriyaGirni in the view taken by it, it was immaterial whether
Hamgar Sangh, the reserves were used as working capital or not. We
Jalgaon
do not think that the aforesaid opinion expressed by
Subba Rao J.
the Industrial Court is sound. In ascertaining the
surplus for the purpose of fixing the bonus for a
particular year, the state of affairs in that year is the
guiding factor. If in a subsequent year any part of
the reserves used as working capital is released, that
amount will have to be taken into account in ascertaining the surplus for that year and so on for subsequent
years : otherwise it will lead to the anomaly of the
reserves being excluded from the amount required for
rehabilitation, though as a matter of fact the entire
reserves were utilised as working capital, and though
in future years they were expected to be released but
in fact not· so released. This would lead to a result
inconsistent with the decisions on the subject which
have clearly laid down that the reserves which have
been used as working capital shall not be deducted
from the amount fixed for rehabilitation.
This result does not advance the case of the appellant, unless it is able to prove by admissible evidence
that it has used the reserves as working capital
during the bonus year in question. The principles
governing the "reserves" in this context are wellsettled. This Court in The Associated Cement Companies Ltd. v. Its Workmen (1) restated the principle
thus at p. 970:
"Before actually awarding an appropriate amount
in respect of rehabilitation for the bonus year
certain deductions have to be made. The first
deduction is made on account of the breakdown
value of the plant and machinery which is usually
calculated at the rate of 5°/0 of the cost price of the
block in question. Then the depreciation and
general liquid reserves available to the employer
are deducted. The reserves which have already
(I) [1959] S.C.R. 923.
]
•
-
. >--
~,
S.C.R.
SUPREME COURT REPORTS
845
been reasonably earmarked for specific purposPs of
I96o
the industry are, however, not taken into account J(andesh SPG. &
in this connection. Last of all the rehabilitation
wvc. Mills
amount which may have been allowed to the
co. Ltd.
employer in previous years would also have to be
v.
deducted if it appears that the amount was avail- The Rahstiiya Girni
able at the time when it was awarded in the past K~mr; Sangh,
and that it had not been used for rehabilitation
a gaon
purposes in the meanwhile. These are the broad
Subba Rao J.
features of the steps which have to be taken in
deciding the employer's claim for rehabilitation
under the working of the formula."
This decision, therefore, lays down, so far as it is
relevant to the present purpose, that two items shall
be deducted from the rehabilitation amout ai;;certained
by adopting the "Full Bench Formula" namely,
(i) general reserves available to the employer; and
(ii) reserves which have not already been reasonably,
earmarked for specific purposes of the industry. The
question is whether the mere availability of reserves
or the simple earmarking for specific purposes would
be sufficient to claim the said amounts as deductions.
'Ve do not think that by using the said words this
Court meant to depart. from the well-recognized
principle that if the general reserves have not been
used as working capital, they cannot be deducted from
the rehabilitation amount. The reserves may be of
two kinds. Moneys may be set apart by a company to
meet future payments which the company is under a
contractual or statutory obligation to meet, such as
gratuity etc. These amounts are set apart and tied
down for a specific purpose and, therefore, they are
not available to the employer for rehabilitation
purposes. But the same thing cannot be said of thA
general reserves: they would be available to the
employer unless he has· used them as working capital.
The use of the words "reasonably earmarked" is also
deliberate and significant. The mere nominal aHocation for binding purposes, such as gratuity etc., in the
company's books is not enough. It must be ascertained by the Industrial Court on the material placed
before it whether the said amount is far in excess of
the requirements of the particular purpose for which
I
846
SUPREME COURT REPORTS [1960 (2)]
z96o
it is so earmark0d and whether it is only a device to
reduce the claim of the labour for bonus.
vVe do not
J{andesh SPG. &
WVG. Mills
suggest that it is the duty of the Industrial Court to
co. Ltd.
ascertain the correct. or exact figure required for a
v.
. .particular purpose; but it is certainly its duty to
The Rashtnya Girni discover whether the so. called earmarking for a partiKamgar Sanah,
l
•
d
·
·
h
c
1
Jalgaon °
cu ar purpose is a
ev10e to mrcurnvent t e ;ormu a.
If it is satisfied that there is such a device, it shall
Subba Rao J.
deduc_t that figure in calculating the rehabilitation
amount and if possible arrive at a real figure for that
purpose. So too, in the case of general reserves when
an employer claims that a specific amount reserved
has been used as working capital, it is the duty of
the Industrial Court to arrive at a finding whether
the said reserves, or any part of them, have been
used as working capital and, if so, to what extent
during the bonus year. Shortly stated before a particular reserve can be deducted from the rehabilitation
'amount it must be established that it has been reasonably earmarked for a binding purpose or the whole or
a part of it ha~ been used as working capital and that
only such part of the reserves coming under either of
the two heads can be deducted from the said amount.
To illustrate, take a particular bonus year, say 1955.
To start with, from the gross profits of that year only
items specifically declared by this Court in The Associated Cement Companies Ltd. v. lt.s Workmen(') to
have a prior charge over the bonus shall be deducted
to arrive at the surplus. No question of deducting
any other amount reserved in regard to the profits
of that year arises. But the company has specifically
earmarked certain amounts for specific binding purposes in 1954 or earlier to meet future binding obligations, such as gratuity etc. ; or has reserved amounts
for general purposes but not to meet any contractual
or statutory obligations and has not utilised the same
as working capital. In the former case the amount
must be deemed to have been utilised and, therefore,
it cannot be deducted from the rehabilitation amount ;
but in the latter case, as the said amounts were not
utilised by the employer as working capital, they
shall be deducted from the rehabilitation amount.
(1) [1959] S.C.R. 925
'
·)
...
S:C.R.
SUPREME COURT REPORTS'
847
What then is the procedure to be followed for
z96o
ascertaining the said facts ? The burden is obviously Kanrlesh SPG . .,,.
on the employer who claims the exclusion of the
wvc. Mills
reserves from the rehabilitation amount on the ground
Co. Ltd.
that they are used as working capital or reasonably
v.
earmarked for a specifie purpose to establish the said TKheRashtri5yaGihrni
amgar
ang ,
facts and to prove the same by relevant and
Jalgaon
acceptable evidence. The importance of this question
in the context of fixing the amount required for
Su~ba Rao J.
rehabilitation cannot be over-estimated. The item
of rehabilitation is generally a major item that enters
into the calculations for the purpose of ascertaining
the surplus and, therefore, the amount of bonus. So,
there would be a teudency on the part of the
employer to inflate this figure and the employees to
deflate it. The accounts of a company are prepared
by the management. The balance-sheet and the
profit and loss account are also prepared by the
company's officers.
The labour have no concern in
it. · When so much depends on this item, the principles of equity and justice demand that an Industrial
Court should insist upon a clear pro.of of the same
and also give a real and adequate opportunity to the
labour to canvass the correctness of the particulars
furnished by the employer.
Cases coming before us disclose that the Industrial
Courts and Labour Tribunals are not bestowing so
much attention on this aspect of the case as they
·should. Some of the tribunals act on affidavits and
sometimes even on balance-sheets and extracts of
accounts without their being proved in accordance
with law.
For the purpose of holding an enquiry or a
proceeding under the Bombay Industrial Relations
Act, 1946, s. 118 of the said Act confers on the
Industrial Court the same powers as are vested in
Courts in respect of-(a) proof of facts by affidavits;
(b) summoning and enforcing t.he attendance of any
person and examining him on oath; (c) compelling
the production of documents; and (d) issuing commissions for the examinations of witnesses.
In
Courts facts have to be established either by oral
evidence or by documentary evidence proved in the
100
848
SUPREME COURT REPORTS [1960(2)]
r960
manner prescribed by law.
But Order XIX of the
1,ande.<h SPG. & Code of Civil Procedure empowers the Court to have
Wl'G. Mills
particular facts proved by affidavits. Under rule 1
co. Ltd.
thereof, "any Court may at any time for sufficient
v.
reason order that any particular fact or facts may be
The RashtriyaGirniproved by affidavit, or that the affidavit of any
J(amgar Sangh, witness may be read at the hearing, on such condiJalgaon
tions as the Court thinks reasonable".
But it is
subject to the proviso that where it appears to the
Subba Rao J.
Court that either party bona fide desires the production of a witness for cross-examination, and that
such witness can be produced, an order shall not be
made authorizing the evidence of such witness to
be given by affidavit.
Under rule 2, "upon any
application evidence may be given by affidavit, but
the Court may, at the instance of either party, order
the
attendance
for
cross-examination
of
the
deponent". A combined effect of the relevant provisions is that ordinarily a fact has to be proved by
oral evidence, but the Courts, subject to the conditions laid down in Order XIX, may ask a particular
fact or facts to be proved by affidavits. Industrial
Courts may conveniently follow the said procedure.
In view of the importance of the item of rehabilitation in the matter of arriving at the surplus for
fixing the bonus, principles of equity and justice
demand that tribunals should weigh with great care
the evidence adduced by the management as well as
by the labour to ascertain every sub-item that goes
into or is subtracted from the item of rehabilitation.
If the parties agree, agreed figure can be accepted. If
they agree to a decision on affidavits, that course
may be followed.
But in the absence of an agreement, the procedure prescribed in Order XIX of the
Code of Civil Procedure may usefully be followed by
the tribunals so that both the parties may have full
opportunity to establish their respective cases.
Recent decisions of this Court
emphasize this
aspect of the matter. In Indian Hume Pipe Company
Ltd. v. Their Workmen (1 ), the balance-sheet was
relied upon for proving that the amounts were
available for use as working capital and that the
(>) [1959] S,C,R, 925
I
'
S.C:R.
SUPREME COURT REPORTS
849
balance-sheet showed that they were in fact so used.
I 96o
Bhagwati, J., who delivered the judgment of the
Court, presumably to meet the contention that the Kandesh SPG. &
h d
b
d
b
d
362
WYG. Mills
balance-sheet a not een prove , o serve at p.
h
~~
t us:
v.
"Moreover, no objection was urged in thiSTkeRashtriyaGirni
behalf, nor was any finding to the contrary recorded· Kamgar Sangh,
by the tribunal."
Jalgaon
In that case it was conceded that the reserves were
I
Subba Rao ].
in fact used as working capital.
t is suggested that
the learned Judge solely relied upon the relevant
items in the balance-sheet in support of his conclusion and that the said observation was only an
additional ground given by him, but we are inclined
to think that the Court would not have accepted the
items in the balance-sheet as proof of user if it was
not satisfied that no objection was taken in that
behalf. In Tata Oil Mills Company Ltd. v. Its
Workmen (1 ), a similar question was raised. It was
contended by the labour in that case that the
depreciation reserve was not used as working capital
and therefore no return should be allowed on the said
reserve. The Chief Accountant of the Company made
an affidavit on behalf of the Company that the said
depreciation reserve, along with others, had been
used as working capital. This Court accepted the
affidavit for the year in question, but made the
following observations for future guidance:
"It will, however, qe open to the workmen in
future to show by proper cross-examination of the
company's witnesses or by proper evidence that
the amount shown as the depreciation reserve was
not available in whole or in part to be used as
working capital and that whatever may be available
was not in fact so used in the sense explained
above. In the present appeal, however, we must
accept the affidavit of the chief accountant."
These observations also recognized the necessity to
give an opportunity to the workmen to cross-examine
the witnesses put forward by the management to
prove the user of any particular reserve as working
capital. This Court once again dealt with the same
(1) (1959) S.C.R. 924.
850
SUPREME COURT REPORTS
[1960(2)]
subject in Anil Starch Products Ltd. v. Ahmedabad
Chemical Workers Union (1).
That appea.! also raised
1'""d"h Sl'G. & the question whether return should be allowed on the
lVVG . • ~fills
depreciation reserve used as working capital. It was
Co. Ltd.
v.
contended for the labour in that case that the
The Rashtriya Girni depreciation reserve was not used as working
Hamgar Sangh capital. Rejecting the said contention,· \V'anchoo,
Jalgaon
J
b
d
Subba l?ao ].
., o serve :
" It is enough to say in that connection that an
affidavit was filed by the manager of the company
to the effect that all its reserves including the
depreciation fund had been used as working capital.
The manager appeared as a witness for the company before the Tribunal and swore that the
affidavit made by him was correct. He was crossexamined as to the amount required for rehabilitation, which was also given by him in that affidavit;
but no question was put to him to challenge his
statement that the entire depreciation reserve had
been used as working capital.. ....... In the circumstances, we must accept the affidavit so far as the
present year is concerned and hold that the working
capital was l{s. 34 lacs."
Notwithstanding the said finding, the learned Judge
took care to reserve the rights of the workmen in
future by making the following observations:
... It will, however, be open to the workmen in
future to show by proper cross-examination of the
company's witnesses or by proper evidence that the
amount shown as depreciation reserve was not
available in whole or in part as explained above to
be used as working capital and that whatever was
available was not in fact so used."
This judgment again reinforces the view of this Court
that proper opportunity should be given to the labour
to test the correctness of the evidence given on
affidavit on behalf of the management in regard to
the user of the reserves as working capital.
What is the position in the present case ? It is not
suggested that there is any reserve which has been
reasonably earmarked to discharge a contractual or
statutory obligation.
We are only concerned with
\1) Civil Appeal No. 684 of 1957 (not reported)
•
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S.C.R.
SUPREME COUl~T REPORTS
851
general reserves.
:The 'learned· .Solicitor _General
r 96o
contends that the balance-sheet discloses that the
entire reserves have been used as working capital and Kandesh SPG. &
h
h
.
d
d'd . ·
-
th'
•t•
·
WVG Mills
t at t e respon ent . I_ not canvass
__ IS ~OSI 10n m
Co.· Ltd.
the statement filed by It before the Industrial Court.
v.
We have already pointed out that the balarice-sheet,TheRdshtriyaGirni
without its being proved by a pers.on competent to do Kamgar Sangh,
so, cannot prove that any reserves have been utilised
Jalgaon
as working capital. In the written-statement filed
Subba Rao].
by the appellant before the Industrial Court, no
specific allegation is made that the reserves were
utilised as working capital, though in its statement o~
calculations the said reserves were not excluded from
the amount claimed towards rehabilitation. As there
ii no specific allegation, the respondent also in its
statement did not deny the said fact, but in its
statement of calculations it did not deduct the
reserves from the rehabilitation amount. Therefore,
it must be held that the respondent did not accept
the position that the reserve funds were utilised as
working capital. Strong reliance is placed upon the
evidence of the General Superintendent of the appellant-Company, but a perusal of that evidence discloses
that the said witness has· not depmied that -the
Company used the .reserves as working capital; nor
does the said witness seek to prove either the balanceslieet or · any extract taken therefrom. -
In the
circumstances, the respondent had 1no _ opportunity
to cross-examine him in respect of the alleged user of
the reserves. For the aforesaid reasons, -we, have no
option but to hold that Rs. 51 lakhs representing the
reserves were not used as working capital and, therefore, the said .amount ,was rightly deducted bythe
Industrial Court from Rs. 60 lakhs fixed by it-towards
rehabilitation. As the balance of Rs. 9 lakhs _ sp!'ead
over 15 years came to ·only Rs. 60,000 during the
bonus year and as the ·statutory depreciation was
Rs. 83,639, the Industrial Court rightly excluded .the
entire rehabilitation amount from its.calculations in
arriving at the surplus.
. _
No other · points were raised before us. In the
result, the appeal fails and is dismissed with costs. ·
... : .. ,
·
· Appeal di8m_i8s~d. _