PETLAD TURKEY RED DYE WORKS LTD. versus DYES & CHEMICAL WORKERS UNION, PETLAD & ANR.

Citation: [1960] 2 S.C.R. 906 · Decided: 03-02-1960 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

February, 3 
• 
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 deprecia-
tion 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 utilisa-
tion 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 Indus-
trial 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 ca

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