# SUPREME COURT REPORTS [1960 (2)) PETLAD TURKEY RED DYE WORKS LTD v. DYES & CHEMICAL WORKERS' UNION, PETLAD & AK:R

- **Citation:** [1960] 2 S.C.R. 906
- **Court:** Supreme Court of India
- **Decided:** 1957-08-17
- **Case number:** Civil Appeal No. 258 of 1958
- **Bench:** P. B. Gajendragadkar, K. Subba Rao, K.C. Das Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/supreme-court-reports-1960-2-petlad-turkey-red-dye-works-ltd-v-dyes-chemical-1802
- **Pages:** 6

## Headnote

Working capital-Reserve fund utilised as such-Return, if atty
available-Balance sheet, if proof of reserve actually used as working
capital.
The Industrial Tribunal, in the process of ascertaining the
available surplus, disalJowed a claim of the appelJant employer
for interest on a certain sum of money standing in the depreciation fund and alleged to have been used as working capital. If
this claim was alJowed and the amount claimed deducted as a
prior charge, the employees would not be entitled to any bonus
as there would be no surplus. The Industrial Tribunal was of
opinion that even if the depreciation reserve was utilised as
\vorking capital no return thereon was allo\vable in deciding
what amount was to ,be deducted as prior charge. On appeal
the appellant contended, inter alia, that the balance sheet of
the employer company placed before the Industrial Tribunal
itself showed that~the entire sum of depreciation fund was used
as working capital.
Held, that any portion of the reserve fund actualJy utilised
as working capital in the year under consideration should be
treated as entitled to a reasonable rate of return and the amount
thus ascertained deducted as a prior charge in ascertaining the
available surplus.
The balance sheet did not by itself prove the fact of utilisation of any reserve as working capital and the law required that
such an important fact as the utilisation of the reserve as
working capital had to be proved by the employer by evidence
on affidavit or otherwise after giving opportunity to the workmen
to contest the correctness of such evidence by cross-examination.
Management of Trichinopoly Mills Ltd. v. National Cotton
Textile Mills Workers Union, C.A. No. 309 of 1957. and Khandesh
Spg. & Weaving Mills Co. Ltd. v. The Rashtriya Girni Kamgar
Sangh, J algaon, C.A. No. 257 of 1958, folJowed.
Indian Hume Pipe Co. Ltd. v. Their Workmen. (1959) II
L.L.J. 357, explained.
CrvrL

## Text

February, 3
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906
SUPREME COURT REPORTS [1960 (2))
PETLAD TURKEY RED DYE WORKS LTD.
v.
DYES & CHEMICAL WORKERS' UNION,
PETLAD & AK:R.
(P. B. GAJENDRAGADKAR, K. SUBBA RAO AND
K.C. DAS GUPTA, JJ.)
Working capital-Reserve fund utilised as such-Return, if atty
available-Balance sheet, if proof of reserve actually used as working
capital.
The Industrial Tribunal, in the process of ascertaining the
available surplus, disalJowed a claim of the appelJant employer
for interest on a certain sum of money standing in the depreciation fund and alleged to have been used as working capital. If
this claim was alJowed and the amount claimed deducted as a
prior charge, the employees would not be entitled to any bonus
as there would be no surplus. The Industrial Tribunal was of
opinion that even if the depreciation reserve was utilised as
\vorking capital no return thereon was allo\vable in deciding
what amount was to ,be deducted as prior charge. On appeal
the appellant contended, inter alia, that the balance sheet of
the employer company placed before the Industrial Tribunal
itself showed that~the entire sum of depreciation fund was used
as working capital.
Held, that any portion of the reserve fund actualJy utilised
as working capital in the year under consideration should be
treated as entitled to a reasonable rate of return and the amount
thus ascertained deducted as a prior charge in ascertaining the
available surplus.
The balance sheet did not by itself prove the fact of utilisation of any reserve as working capital and the law required that
such an important fact as the utilisation of the reserve as
working capital had to be proved by the employer by evidence
on affidavit or otherwise after giving opportunity to the workmen
to contest the correctness of such evidence by cross-examination.
Management of Trichinopoly Mills Ltd. v. National Cotton
Textile Mills Workers Union, C.A. No. 309 of 1957. and Khandesh
Spg. & Weaving Mills Co. Ltd. v. The Rashtriya Girni Kamgar
Sangh, J algaon, C.A. No. 257 of 1958, folJowed.
Indian Hume Pipe Co. Ltd. v. Their Workmen. (1959) II
L.L.J. 357, explained.
CrvrL
APPELLATE JURISDICTION:
Civil Appeal
No. 258 of 1958.
Appeal by special leave from the Award dated
August 17, 1957, of the Industrial Tribunal, Bombay,
in Keference (IT) No. 15 of 1957.
I.M. N anavati, S. N. Andley, J.B. Dadachanji and
Rameshwar Nath, for the appellant,
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S.C.R.
SUPREME COURT REPORTS
907
B.K.B. Naidu and I. N. Shroff, for respondent
N 0. 1.
P. T. Red Dye
I. N. Shroff, for interveners Nos. 1 and 2.
works Ltd.
1960, February 3.
The Judgment of the Court was
v.
delivered by
Dyes & Chemical
D.As GUPTA, J.-The only point raised in this Workers' Union
appeal by the employer, Petlad Turkey Red Dye
Works Ltd., Petlad, against the award of an Industrial Tribunal of a sum of Rs. 9,839 equivalent to one
month's basic wages is as regards the correctness of
the disallowance, in the process of ascertaining the
available surplus, of a claim of 4% interest on
Rs. 2,27,000 standing in the depreciation fund said to
have been used as working capital. If this claim was
allowed and the amount claimed deducted as a prior
charge no surplus would remain so that the employees
would not be entitled to any bonus. The Industrial
Tribunal was of opinion that even if the depreciation
reserve was utilized as working capital no return
thereon was allowable for the purposes of deciding
on the amount to be deducted as prior eharges in
applying the Full Bench Formula. In this view it
was clearly wrong.
Numerous decisions of this Court
make it abundantly clear that any portion of the
reserve actually utilized as working capital in the
year under consideration should be treated as entitled
to a reasonable rate of return and the amount thus
ascertained deducted as a prior charge in ascertaining
the available surplus. There is no reason whatsoever
for making an exception in this respect as regards
depreciation reserves.
The question remains, however,
whether this
amount of Rs. 2,27,000 in the depreciation fund was
actually used as working capital. The Tribunal did
not think it necessary to consider this question, as in
its view even if this entire amount has been utilised
as working capital no return was allowable. If on
the materials on.the record it was possible to reach a
conclusion that any reserve or any portion of it was
used as working capital during the period under
CQnsideration we would have thought fit to calculate
the · amount allowable as return thereupon and
deducted it from the amount ·ascertained as surplus
Das Gupta].
•
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908
SUPREME COURT REPORTS [1960 (2)]
• z96o
by the Industrial Tribunal. On an examination of
P. T. Red Dye
the record, however, we cannot discover any such
works Ltd.
material. All that we have is that the employer
v.
Company in its written statement claimed interest on
Dyes & Chemfral reserves as working capital at Rs. 32,000 the rate of
Workers' Union return being mentioned as 4%. It was not menDas Gupta f· tioned therein in so many words that the depreciation
fund was part of the reserves employed as working
capital. It is claimed however that such an averment
was implicit in the claim of Rs. 32,000 as the amount
allowable as return on reserves employed as working
capital. Assuming that this is so it still remained
the duty -of the Company to prove that any portion
of the depreciation fund was actually utilised as
working capital. It was suggested before us that this
averment by implication that the depreciation fund
was also used as working capital was not challenged
by the workers. This suggestion is obviously incorrect.
We find that in Exhibit U/l a statement submitted
on behalf of the workers containing calculations for
the available surplus Rs. 3,000 was shown as the
amount deductible on working capital at 2%. That
is, a sum of Rs. 1,50,000 out of the reserves was
stated to have been used as working capital. The
employer's statement in Exhibit C/3 dated July 12,
1957, shows a deduction of"Interest at 4% ou Reserves
employed as working capital-Rs. 32,000". A similar
claim is made in Ex. C/4, an alternative statement
filed on behalf of the employer on July, 12, 1957. The
workmen also filed a statement showing calculations
of bonus made by them on the same date i.e., July, 12,
1957. This is marked as Ex. U/3. According to this,
return at the rate of 4% on working capital of
Rs. 1,66,000 was allowable as deduction. Thus,
according to workmen, the reserves used as working
capital was stated to be Rs. 1,66,000 while according
to the employer this amount was no less than 8 lakhs.
It is quite clear therefore that the workmen had at
no stage admitted either expressly or by implication
the employer's claim that any portion of the depreciation fund was utilized as working reserve.
On behalf of the appellant it was strenuously
contended, however, that the balance.sheet of the
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S.C.R
SUPREME COURT REPORTS
909
Company which was placed before the Industrial
P. T. Red Dye
Works Ltd.
Tribunal will itself show that the entire sum of
depreciation fund of Rs. 2,27,000 was used as working
capital. The balance-sheet does show a sum of
v.
Rs. 2,27 ,000 as the depreciation fund.
Assuming for Dyes &- Chemical
the purposes of the present case that this was the Workers' Union
actual sum standing in the depreciation reserve the
. further question is whether the balance-sheet proves
that this sum was utilized as working capital. Assuming further for the purposes of this case that the
analysis of the statement made in the balance-sheet
might indicate that this sum could not but have been
utilised as working capital, it has to be remembered
that no such conclusion is possible unless it is known
as a fact that the statements made in the balancesheets under the different heads are correct statements.
On that there is absolutely no evidence. All that the
balance-sheet, as submitted, shows is that certain
statements were made. The mere fact that the statements were made can never be taken as proving that
the statements were correct.
That is a distinction which the courts of law have
always been careful to make. Thus, if a person is to
prove that he was ill on a particular date, the mere
filing of a certificate of a medical man that he was
ill on that date is not accepted as evidence to show
that he was ill. The correctness of the statement
made in the certificate has to be proved by an affidavit
or oral testimony in court by the Doctor concerned
or by some other evidence. There is no reason why
an exception should be made in the case of balance
sheets prepared by Companies for themselves. It has
to be borne in mind that in m::i.ny cases the Directors
of the Companies may feel inclined to make incorrect
statements in these balance-sheets for ulterior purposes.
While that is no reason to suspect every
statement made in these balance-sheets, the position
is clear that we cannot presume the statements made
therein to be always correct. The burden is on the
party who asserts a statement to be correct to prove
the same by relevant and acceptable evidence. The
mere 1;1ta,tement of the b1J.>lance-ebeet ie of no assistance
Das Gupta] .
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910
SUPREME COURT REPORTS [1960 (2))
to show therefore that any portion of the reserve was
actually utilized as working capital.
P:O·,:,'~~ye
The question whether a balance-sheet can be taken
v.
as proof of a claim of what portion of reserve has
Dyes & Chemical actually been used as working capital was very
Workers· Union recently considered by us in Kha.ndesh Spg. & Weaving
Mill Go., Ltd. v. The Rashtriya Girni Kamgar Sangh,
Jalgaon (Civil Appeal No. 257 of 1958).
As was
Das Gupta j.
pointed out by Subba Rao, J. in that case the balancesheet of a Company is prepared by the Company's
own officers and when so much depends on the
ascertainment of what portion of the reserve was
utilized as working capital, the principles of equity
and justice demand that an Industrial Court should
insist upon a clear proof 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. In that case we also considered an
observation in Indian Hume Pipe Company Ltd. v.
Their Workmen (1 ) which was relied upon for an
argument that the balance-sheet was good evidence
to prove that amounts were actually used as working
capital. As was pointed out in Khandesh Spg. &
Weaving Mills Gase (Supra) this observation was not
intended to lay down the law that a balance-sheet by
itself was good evidence to prove any fact as regards
the actual utilisation of reserves as working capital.
The observation relied on was a
sentence at
page 362 :-"Moreover, no objection was urged in this
behalf, nor was any finding to the contrary recorded
by the Tribunal." If it had been intended to state
as a matter of law that the balance-sheet itself was
good evidence to prove the fact of utilisation of a
portion of the reserve as working capital it would
have been unnecessary to add such a sentence.
This question as regards the sufficiency of the
balance-sheet itself to prove the fact of utilization of
any reserve as working capital was also considered
by us in Management of Trichinopoly Mills Ltd. v.
National Cotton Textile Mills Workers Union (Civil
Appeal No. 309 of 1957) and it was held that the
balance-sheet does not by itself prove any 'such fact
and that the law requires that such an important
(1) (1959) II L.L.J. 357·
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S.C .. R.
SUPREME COURT REPORTS
911
fact as the utilisation of a portion of the reserve as
working capital has to be proved by the employer by
evidence given on affidavit or otherwise and after
giving an opportunity to the workmen to contest the
correctness of such evidence by cross-examination.
We must therefore reject the contention urged on
behalf of the employer-appellant that the balancesheet that has been filed is sufficient to prove that
Rs. 2,27,000 of the depreciation fund was actually
used as working capital. There is, as we have already
stated, no material on the record from which any
conclusion can be reached as regards the utilisation of
the whole or any portion of this sum lying in
depreciation fund as working capital.
The appellant's counsel finally asked that the
matter may be sent back to the Industrial Tribunal
and an opportunity given to him to adduce proper
evidence on this point.
We do not see any circumstance that will justify us in making an order of
remand in a case of this nature.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
THE STATE OF UTTAR PRADESH
v.
HAFIZ MOHAMMAD ISMAIL AND
HAFIZ JAWED ALI
(JAFER IMAM, K. N. WANCHOO AND J. c. SHAH, JJ.)
Criminal Trial-Counterfeit trade mark-Wrappers and labels
of soap made to resemble those of another soap-If CounterfeitIndian Penal Code, I86o (XLV of I86o). ss. 28 and 486.
The respondents were found selling counterfeit Sunlight and
Lifebuoy soaps and were prosecuted under s. 486 of the Indian
Penal Code.
The Magistrate found that the resemblance between
the wrappers and labels in which the soaps were being sold and
those of the genuine soaps was such that a person may be deceived
by it and convicted the respondents. An appeal to the Sessions
Judge was dismissed. On revisl.on the High Court held that the
wrappers and labels were mere colourable imitations of the
genuine trade mark, but were not counterfeit and acquitted the
respondents.
II6
P. T. Red Dye
Wo?hs Ltd.
v.
Dyes &- Chemical
Workers' Union
Das Gupta].
February, 9
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