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of <h1>Industrial Court deducts rehabilitation costs, dismisses appeal, awards bonus.</h1> <h3>Khandesh Spg. & Wvg. Mills Co. LTD. Versus The Rashtriya Girni Kamgar Sangh, Jalgaon</h3> Khandesh Spg. & Wvg. Mills Co. LTD. Versus The Rashtriya Girni Kamgar Sangh, Jalgaon - 1960 AIR 571, 1960 SCR (2) 841 Issues Involved:1. Extent of reserves deductible for rehabilitation of plant and machinery.2. Manner of ascertaining deductible reserves.3. Burden of proof regarding the use of reserves as working capital.4. Procedures for proving facts in Industrial Court proceedings.Detailed Analysis:1. Extent of Reserves Deductible for Rehabilitation of Plant and Machinery:The primary issue in this appeal was determining the extent to which reserves can be deducted from the amount required for the rehabilitation of plant and machinery. The appellant, a textile mill, argued that the reserves should not be deducted from the rehabilitation amount. The Industrial Court, however, deducted Rs. 51 lakhs from the required Rs. 60 lakhs for rehabilitation, leaving a balance of Rs. 9 lakhs to be spread over 15 years, resulting in Rs. 60,000 for the year in question. This was excluded from the surplus calculation since the statutory depreciation was Rs. 83,639, leading to a surplus of Rs. 2.20 lakhs and awarding the employees four months' basic wages as a bonus.2. Manner of Ascertaining Deductible Reserves:The judgment emphasized that the reserves used as working capital should not be deducted from the rehabilitation amount. The Industrial Court's assumption that the reserves would be released in future years was deemed unsound. The state of affairs in the bonus year is the guiding factor. If reserves are used as working capital, they should not be deducted from the rehabilitation amount, even if they might be released in future years. The judgment cited the principle from The Associated Cement Companies Ltd. v. Its Workmen, stating that general reserves available to the employer and reserves not earmarked for specific purposes should be deducted from the rehabilitation amount.3. Burden of Proof Regarding the Use of Reserves as Working Capital:The burden of proof lies on the employer to establish that the reserves were used as working capital or reasonably earmarked for a specific purpose. The judgment stressed that the employer must provide relevant and acceptable evidence to prove the use of reserves as working capital. The Industrial Court must ascertain whether the reserves were used as working capital during the bonus year. The judgment highlighted that mere nominal allocation in the company's books is insufficient; it must be proven that the reserves were genuinely used as working capital.4. Procedures for Proving Facts in Industrial Court Proceedings:The judgment outlined the procedure for proving facts in Industrial Court proceedings under the Bombay Industrial Relations Act, 1946. Section 118 of the Act confers the same powers as vested in Courts for proof of facts by affidavits, summoning and enforcing attendance, compelling production of documents, and issuing commissions for witness examinations. The judgment recommended following the procedure prescribed in Order XIX of the Code of Civil Procedure, allowing facts to be proved by affidavits, subject to conditions that ensure both parties have the opportunity to cross-examine witnesses.The judgment emphasized the necessity of giving the labor an opportunity to challenge the correctness of the employer's evidence regarding the use of reserves as working capital. It criticized the Industrial Courts and Labour Tribunals for not paying sufficient attention to this aspect and relying on affidavits or balance sheets without proper proof.Conclusion:In the present case, the appellant failed to prove that the reserves were used as working capital. The balance sheet alone was insufficient without proper proof. The Industrial Court rightly deducted Rs. 51 lakhs from the rehabilitation amount, and the statutory depreciation exceeded the remaining amount, justifying the exclusion of the entire rehabilitation amount from the surplus calculation. The appeal was dismissed with costs, affirming the Industrial Court's decision.
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