{"id":167904,"date":"1967-10-06T00:00:00","date_gmt":"1967-10-05T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/national-engineering-industries-vs-its-workmen-on-6-october-1967"},"modified":"2017-08-27T15:22:33","modified_gmt":"2017-08-27T09:52:33","slug":"national-engineering-industries-vs-its-workmen-on-6-october-1967","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/national-engineering-industries-vs-its-workmen-on-6-october-1967","title":{"rendered":"National Engineering Industries … vs Its Workmen on 6 October, 1967"},"content":{"rendered":"
Supreme Court of India<\/div>\n
National Engineering Industries … vs Its Workmen on 6 October, 1967<\/div>\n
Equivalent citations: 1968 AIR 538, \t\t 1968 SCR (1) 779<\/div>\n
Author: Shelat<\/div>\n
Bench: Shelat, J.M.<\/div>\n
           PETITIONER:\nNATIONAL ENGINEERING  INDUSTRIES LTD.\n\n\tVs.\n\nRESPONDENT:\nITS WORKMEN\n\nDATE OF JUDGMENT:\n06\/10\/1967\n\nBENCH:\nSHELAT, J.M.\nBENCH:\nSHELAT, J.M.\nBHARGAVA, VISHISHTHA\n\nCITATION:\n 1968 AIR  538\t\t  1968 SCR  (1) 779\n CITATOR INFO :\n RF\t    1968 SC 963\t (21)\n R\t    1971 SC2521\t (18)\n RF\t    1971 SC2567\t (1,10)\n RF\t    1972 SC1954\t (16,18,20)\n F\t    1973 SC 353\t (38)\n\n\nACT:\nIndustrial Dispute-Bonus-Calculation of rehabilitation\tcost\nof  machinery-Use  of  multiplier  whether  necessary\twhen\nrelevant  quotations of price of  machinery  available-Item-\nwise   and  block-wise\testimate  when\t desirable-Need\t  of\ngraduated  divisor  when machinery  installed  over  several\nyears-Interest\tallowable  on paid up capital, rate  may  be\nadjusted  reasonably-Life of machinery, estimate  of--Laches\nmay be taken into account in considering claim for bonus.\n\n\n\nHEADNOTE:\nThe workmen of the appellant company demanded bonus for\t the\nyears 1956-57 to 1959-60.  The Tribunal disallowed the claim\nfor  1956-57 on the ground that it was belated\tand  allowed\nthe demand for the rest of the years 1957-58 to 1959-60.  In\nworking out the available surplus for distribution as  bonus\nthe  Tribunal  in general followed the\tFull  Bench  formula\nevolved\t by  the  Labour Appellate  Tribunal.\tAgainst\t the\nTribunal's award the company as well as the workmen appealed\nto the Supreme Court by special leave under Art. 136 of\t the\nConstitution.  Both sides raised contentions with regard  to\nthe  rehabilitation  allowances\t in  respect  of  plant\t and\nmachinery  for\tthe three years in question and\t the  method\nfollowed  by  the Tribunal in calculating  them.   The\tmain\nquestion for decision arose out of the company's  contention\nthat  since  it\t furnished  quotations\tfor  all   machinery\nincluding  the\told machinery, the Tribunal  ought  to\thave\naccepted those quotations as equivalent to replacement\tcost\nas  it did in the case of new machinery instead of  adopting\nthe  notional  method of working out  multipliers  and\tthen\narriving at replacement cost by multiplying that  multiplier\nwith the estimated cost to the sellers.\nHELD:\t  (i)  The  multiplier is at best  an  approximation\narrived\t at  from  the\ttrend  of  price  level\t during\t the\nascertained  intervening  period.   But\t when  the  cost  of\nreplacement is ascertained from quotations of prices for the\nyear  of  replacement  such  cost s  more  accurate  than  a\nnotional  one  worked  out  from  the  multiplier.   It\t  is\ntherefore not always necessary to arrive at a multiplier for\nestimating the probable cost of replacement. [789 C-D].\nIn  the\t present  case\tsince  the  Tribunal  accepted\t the\nquotations' and worked out the multiplier in the case of new\nmachinery by dividing the quotations by the original cost it\nought  to have followed the same method in the case  of\t old\nmachinery as it had before it the cost of the old  machinery\nas new and the cost of replacement, both unchallenged by the\nunion.\t If the rehabilitation cost was calculated  in\tthis\nmanner there would be no available surplus with the  company\nand hence no bonus would be payable.' [787 H-788A; 787 A-B].\n(ii) It\t is  well  established\tthat  in  the  case  of\t old\nmachinery  the employees cannot insist that  such  machinery\nshould\tbe replaced by old machinery.  For working  out\t the\nrehabilitation\tcost of such. machinery it ' is the cost  of\nnew  machinery\tthat is to replace the old which has  to  be\ntaken into consideration. [787 F-G].\n(iii).\t  Whenever  it is possible to estimate itemwise\t the\nprobable cost of machinery in the year of replacement such a\nmethod\tis not only permissible but is more desirable.\t The\nblockwise estimate has.\n780\nto be resorted to when itemwise estimate is not possible  as\nwhen  the industry owns several factories and the number  of\nplant and machinery is so large that it becomes difficult to\nmake an estimate of replacement cost itemwise. [789 B-C; 788\nG-H].\n(iv) The  contention  on  behalf of the\t workmen  that\tthe\nreplacement  cost should be worked out on the basis  of\t the\nprice  level  during the bonus year could not  be  accepted.\nThe   test  is\tthe  probable  cost  of\t  replacement\twhen\nrehabilitation becomes due.  If the bonus year and the\tyear\nof rehabilitation coincide, the price level during the bonus\nyear would no doubt be the relevant basis.  But when they do\nnot coincide and the due year of rehabilitation is the\tyear\nbeyond the bonus year that which is relevant is the probable\ncost of replacement during that year. [790 H; 791 A-B].\n(v)  Ordinarily, the Tribunal has to satisfy itself that  no\ncost  of expansion is injected in the  rehabilitation  cost.\nIn  the\t present case, however, it did not appear  from\t the\nrecord\tthat  any question of expansion arose as  the  Union\naccepted  the  quotations as equivalent to  the\t replacement\ncost, [791 F-G].\n(vi) The Tribunal was justified in taking the price rise  in\nrespect\t of the machinery installed in the bonus,  years  as\nzero.  Though the prices for such machinery in 1963-64\twere\navailable,  considering that its life was 15 years,  it\t was\ntoo early to find out with any precision the probable  trend\nof prices during the intervening years. [793 EG].\n(vii)\t  The  Tribunal\t was  wrong  in\t giving\t a   uniform\nremainder  life of 7 years to old machinery irrespective  of\nthe  year  of  its installation.  Taking  the  life  of\t old\nmachinery  to  be 10 years, the old machinery  purchased  in\n1950-51 would require replacement in 1960-61 and so on.\t  In\nthat  case the remainder life in the bonus year\t 1957-58  of\nold machinery installed in 1950-51 would clearly be 3 years,\nof old machinery installed in 1955-56 8 years, of  machinery\ninstalled  in 1956-57 9 years and that installed in  1957-58\n10 years.  The divisor therefore could not be the uniform  7\nfor  all  the three years but a graduated one on  the  basis\nthat  the estimated life of the old machinery was 10  years.\n[793 H; 794 B.]\n(viii)\t  The  Tribunal\t was  justified,  in  view  of\t the\ndecision of this Court in     the  South  India\t Millowners'\nAssociation's case, in taking the whole cost   of  the\t old\nmachinery  as  depreciation,  but  it  made  a\tmistake\t  in\ndeducting it twice over. [795 B-C].\n(ix) The  company  not\tbeing  an  investment  company,\t its\ninvestments in shares  of other joint state companies  prima\nfacie represented extra\t capital  not required\tas  working'\ncapital,  for  otherwise the company could not\thave  spared\nthis amount for investment in the stocks of other companies.\nThe  Tribunal  was right in treating this  Investment  as  a\ncapital asset and in refusing to treat the loss therefrom as\ntrading\t expenditure.  The Tribunal at the same\t time  could\ndeduct this amount from the rehabilitation cost because that\namount was avilable to meet the rehabilitation cost. [797 H;\n798 A].\n(x)  Though  the Full Bench formula provided for payment  of\nnet  interest at 6 per cent annum on paid up  capital.\tthat\nrate  is not to be regarded as something inflexible.   While\nawarding interest if\n781\nthe  Tribunal  were to find that if it were to grant  6\t per\ncent interest on paid up capital. nothing or no\t appreciable\namount\twould be left for bonus, it can adjust the  rate  of\ninterest so as to accommodate reasonably the claim for bonus\nand  thus  must meet the demands of both  as  reasonably  as\npossible. [798 G; 799 B].\n(xi) In fixing the life of machinery the principle that\t the\nTribunal  has to bear in mind is that the life of  machinery\nis  the\t period during which it is estimated  to  work\twith\nreasonable efficiency and not the period during which it has\nactually  been\toperated,  that\t is,  till  it\tbecomes\t too\ndeteriorated  for  use.\t In the present\t case  the  Tribunal\nfixed the period of 15 years after considering the  evidence\nand the nature of the industry.\t There was no reason why its\ndetermination should be interfered with. [799 G-H].\n(xii)\t  The  Tribunal was right in not excluding the\tcost\nof  spares  from the price of machinery for the\t purpose  of\ncalculating  rehabilitation cost.  In the case of  imported\nmachinery spares are generally included in the purchase\t and\ntheir  cost  must  be included in the  purchase\t price,\t the\nreason being that in case of breakdown the company would not\nhave  to  wait\tfor an indefinite period  for  ordering\t and\nobtaining the spares. [800 B].\n(xiii)\t  The statutory depreciation and development  rebate\nallowable under the Income-tax Act are not relevant for\t the\npurpose of calculating rehabilitation requirement.  Only the\nnotional normal depreciation need be deducted. [801 C-D].\n(xiv)\t  The claim for bonus in respect of 1956-57 was made\nmore   than  18\t months\t after\tthe  closure  of   accounts.\nIndustrial   adjudication.   ;Is   bound   to\ttake\tinto\nconsideration  delay  and laches before it calls,  upon\t the\nother  side  to reopen its accounts closed  long  ago.\t The\nTribunal was therefore right in rejecting the claim on\tthe-\nground of laches. [801 F-G].\nMillowners' Association.  Bombay v. Rashtriya Mill  Mazdoor,\nSangh, Bombay [1950] L.L.J. 1247, Associated Cement Co: Ltd.\nv.  Its\t Workmen [1959] S.C.R. 925, Management\tof  Rajendra\nMills Ltd. v. Their Workmen<\/a> [1960] 1. L.L.J. 53, The Workmen\nv. The National Tobacco Co. [1966] 2 L.L.J. 200, South India\nMillowners'  Association  &  Ors.  v.  Coimbatore   District\nTextile Workers' Union and Others<\/a> [1962] 1 L.L.L. 223, G. F.\nMills  v. Its Workmen., A.I.R.<\/a> 1958 S.C. 382.\tSouth  India\nMillowners'  Association  and Ors.  v.\tCoimbatore  District\nTextile\t Workers' Union and Or,,<\/a>;.,, [1962] Supp.  2  S.C.R.\n926, Pierce Leslie & Co. v. Its Workmen,<\/a> [1960] 3 S.C.R. 194\nand Bengai.  Kagazkar Mazdoor Union & Ors. v. Titagarh Paper\nMills Co. and Ors.<\/a> [1963] 2 L.L.J. 358, referred to;\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 356 and 357
\nof 1966.\n<\/p>\n
Appeals\t by special leave from the Award of  the  Industrial
\nTribunal, Rajasthan in Case No. 9 of 1961.\n<\/p>\n
Niren  De, Addl.  Solicitor-General, Sobhag Mal fain an(  B.
\nP.  Maheshwari, for the appellant (in C. A. No. 356 of\t1966
\nand respondent (in C. A. No. 357 of 1966).\n<\/p>\n
782<\/span><\/p>\n
M.   K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the
\nappellants  (in C. A. No. 357 of 1966) and  respondents\t (in
\nC.As. No. 356 of 1966).\n<\/p>\n
The Judgment of the Court was delivered by,
\nShelat,\t J. These two appeals by special leave, one  by\t the
\nappellant company and the other by, its workmen are directed
\nagainst\t the  award  dated May 4,  1964\t of  the  Industrial
\nTribunal,  Rajasthan  to  which\t reference  was\t made  under
\nsection 10(1)(d) of the Industrial Disputes Act, 1947.\t The
\ndispute\t referred to the Tribunal related to  the  workmen’s
\ndemand\tfor bonus for the years 1956-57 to 1959-60.  By\t the
\nsaid award the Tribunal disallowed the claim for 1956-57  on
\nthe  ground that it was belated and allowed the\t demand\t for
\nthe rest of the years 1957-58 to 1959-60.\n<\/p>\n
In  working  out the available surplus for  distribution  as
\nbonus  the  Tribunal  in general  followed  the\t Full  Bench
\nformula\t  evolved  by  the  Labour  Appellate  Tribunal\t  in
\nMillowners’  Association, Bombay v. Radhtriya  Mill  Mazdoor
\nSangh,\t Bombay(1)  and\t approved  by  this  Court  in\t the
\nAssociated  Cement Co. Ltd. v. Its Workmen.<\/a>(2) The  Tribunal
\nworked\tout first the gross profits for the said  years\t and
\nthe  prior charges deductible therefrom and arrived  at\t the
\navailable surplus.  For the year 1957-58 gross profits found
\nwere  Rs.  28.29 lacs, Rs. 25.36 lacs for  1958-59  and\t Rs.
\n34.92  lacs  for 1959-60.  There is no dispute\tabout  these
\nfigures.   The Tribunal then ascertained the  prior  charges
\ndeductible from the gross profits.  There is no dispute with
\nregard\tto  the\t figures for  depreciation,  income-tax\t and
\nwealth\ttax.   As  regards interest  allowable\ton  paid  up
\ncapital,  the  Tribunal\t allowed  6%.  per  annum  tax\tfree
\ninterest  for 1957-58 and 1958-59.  For 1959-60 the  Company
\nremanded interest at the rate of 8.57% by reason of a change
\nin he Income-tax law having been made during the year.\t The
\nUnion,\ton  the other hand, claimed that only 6\t %  interest
\nshould be allowed.  The Tribunal allowed a mean between\t the
\ntwo,  viz.,  7 1\/4.  There was no question  of\tinterest  on
\nworking\t ;capital as it was not the Company’s case that\t any
\nreserve\t was utilised as working capital similarly there  is
\nno  dispute  with regard to the\t rehabilitation\t charge\t for
\nbuildings allowed by the Tribunal.  Apart from the question.
\nas  to\tinterest allowable on paid up capital for  the\tyear
\n959-60, the main dispute. in these appeals is with regard to
\nthe  rehabilitation  allowances\t in  respect  of  plant\t and
\nmachinery  for\the three years in question  and\t the  method
\nfollowed by the Tribunal in calculating them.
\n(1)  [1950] I.I.J. 1247.\n<\/p>\n
(2)  [1959] S.C.R 925.\n<\/p>\n
\t\t\t    783<\/span><\/p>\n
The Company ever since its commencement has been  purchasing
\nnew  and also old reconditioned machinery.  As\tregards\t new
\nmachinery  the Company furnished, (a) cost to  the  Company,\n<\/p>\n
(b)  the  current  price  during the year  1963-64  and\t (c)
\npercentage in the   rise   in  prices.\t The  Company\talso
\nfurnished in respect of reconditioned machinery (a) cost  to
\nthe  Company and (b) estimated cost which its vendors  would
\nhave  paid if they had purchased it as new in the  years  in
\nwhich  the Company installed the old machinery.\t In  respect
\nof  the\t old  machinery\t the cost to  the  Company  and\t the
\nestimated cost to the sellers according to the Company\twere
\nas follows:-\n<\/p>\n
————————————————————\n<\/p>\n
Year\t\tCost to the\t      Estimated cost to\n\t\t    Company\t\t the sellers\n<\/pre>\n
————————————————————-\n<\/p>\n
\t\t   (In lacs)\t      (In lacs)\nUpto 1952-53\t    13.87\t\t20.05\n1953-54 to 1955-56  3.49\t\t 5.23\n1956-57\t\t    1-40\t\t 2.10\n9157-58\t\t    1-77\t\t 2.65\n<\/pre>\n
————————————————————-\n<\/p>\n
Total\t\t   20.03\t\t30-03\n<\/p>\n
————————————————————
\nThe  difference\t between  the cost to the  Company  and\t the
\nestimated  cost\t to the sellers thus come to 150%.   No\t old
\nmachinery  was\tpurchased during 1958-59 and  1959-60.\t The
\nCompany\t also produced quotations of prices  for  equivalent
\nmachinery  current  in\tyear 1963-64.\tThe  Union  did\t not
\ndispute\t (a) the figures of cost to the Company of  the\t new
\nmachinery as given in its statement Ex.\t M2, (b) the figures
\nof  cost of old machinery to the Company and  its  estimated
\ncost to the sellers as given in Ex.  M 3 and (c) the  quota-
\ntions  of  prices received by the Company  in  1963-64\tfrom
\nmanufacturers  of these machines, both old and new,  “except
\nin the case of machinery installed, during the bonus years.”
\nThe Tribunal worked out the rehabilitation requirements\t for
\nthe years 1957-58 to 1959-60 in a Chart which is Annexure  A
\nto the award.  Since the controversy in these appeals mainly
\ncenters\t round\tthe figures of\trehabilitation\trequirements
\nallowed\t by  the Tribunal it is expedient to  set  out\tthat
\nAnnexure:<\/p>\n
\n784<\/span>\n784(a)\nPeriod\t Cost\tCost as\t   Multi- Total\t   Less\t   Balance\n\t       shown by\t   plier\t  break-\n\t       Co. in\t\t\t     down\n\t\tEX. M.\t\t\t     value 5%\n1\t   2\t  3\t      4\t\t5\t6\t  7\n1050-51-\nNew\t   16.30  16.30\t     3.36     54.77   0.81     53.96\nOld\t   13.37  20.05\t\t      67.37    Nil     67.37\n1951-52-\nNew\t    1.43   1.43\t     1.87      2.67   0.07\t2.60\n1952-53-\nNew\t    2.18   2.18\t     1.47      3.21   0.11\t3.10\n1953-54-\nNew\t    1.12   1.12\t      2.28     2.55   0.06\t2.49\nOld\t    1.24   1.86\t      2.28     4.24   . ..\t4.24\n1954-55-\nNew\t    3.71    3.71      1.86\t6.90   0.19\t6.71\nOld\t    1.95    2.93      1.86\t5.45   Nil\t5.45\n1955-56-\nNew\t    6.93    6.93      2.18     15.11\t0.35   14.76\nOld\t    0.30    0.45      2.18\t0.98\tNil\t0.98\n     1956-57-\nNew   13.11\t13.11\t 2.35 30.80\t0.66 30.14\nOld  1.40   2.10    2.35 4.93 Nil   4.93\n1957-58-\nNow  3.39 3.39 1    3.39 0.17 3.22\nOld  1.77 2.65 1    2.65 Nil  2.65\n1958-59-\nNew  12.95     12.95\t 1    12.95\t0.65 12.30\n1959-60-\nNew  30.76     30.76\t 1    30.76\t1.54 29.22\n784(b)\n Minus deprociation\t Balance    Divisor   Annual\n\t\t\t\t\t      Require-\n\t\t\t\t\t\tment\n       8\t\t9\t     10\t      11\n\t\t\t\t\t(Rupees in lakhs)\nTotal cost as new & old Machy30.03  24.35\t7    3.48\nDepre-written off upto 31-3-57\n\t    48.83\t\t2.60\t   8\t 0.32\n\t\t\t\t3.10\t   9\t 0.34\nInvestment as on 31-3-57\t 2.49\t   10\t  0.25\n\t   18.22\t\t4.24\t   7\t  0.61\nTotal\t  96-98\t\t\t6.71\t  11\t 0.61\n\t   ..\t\t\t5.45\t   7\t 0.78\n\t\t\t       14.76\t  12\t  1.23\n\t\t\t\t0.98\t   7\t 0.14\n\t\t\t       30.14\t    1\t 3 2.32\n\t\t\t\t4.93\t    7\t  0.70\n\t\t\t\t3.22\t    14\t  0.23\n\t\t\t\t2.65\t     7\t  0.38 11.39\n\t\t\t       12.30\t    14\t  0.88 12.27\n\t\t\t       29.22\t    14\t  2.08 14.35\n785<\/span>\n<\/pre>\n
It  will  be  observed from Annexure  A\t that  the  Tribunal
\naccepted  as regards new machinery the Company’s figures  of
\ncost and quotations as cost of replacement and dividing\t the
\ncost  of replacement by the original cost to the  Company  I
\nworked\tout  multipliers  for  each  year.   This   dispute,
\nhowever, is with regard to the multipliers arrived at by the
\nTribunal in respect of old machinery.\n<\/p>\n
In Annexure A, the Tribunal adopted 3.36 multiplier in\tres-
\npect  of old machinery installed in 1950-51, i.e., the\tsame
\nmultiplier  which it worked out in respect of new  machinery
\ninstalled during that year.  For the years 1953-54 to  1957-
\n58  the Tribunal accepted the Company’s figures\t which\twere
\nagreed to by the Union, viz., of cost to the Company and the
\nestimated cost to their vendors if the latter had  purchased
\nthat   machinery   as  new  in\tthe  respective\t  years\t  of
\ninstallation.\tThe  Company also produced  quotations\tfrom
\nmanufacturers  of machinery itemwise in its Confi-Annex.   I
\nand 2. These quotations were for some machines for  1959-60,
\nfor some for 1960-61 and the rest for 1961-62.\tIt would  be
\nsafe to say that the average cost of these machines was\t the
\ncost  prevalent in 1960-61.  Though the average cost of\t the
\nmachinery  was thus available, the Tribunal in the  case  of
\nold machinery worked out multiplier for each of these  years
\nand  then  arrived at the figure of Rs. 85.62  lacs  as\t the
\ntotal replacement cost of that machinery by multiplying\t the
\nestimated  cost\t to  the seller with  the  multiplier.\t The
\nCompany’s  contention  was that since the Company  had\tfur-
\nnished\tquotations  for\t all  machinery\t including  the\t old
\nmachinery,  the\t Tribunal  ought  to  have  accepted   those
\nquotations  as equivalent to replacement cost as it  did  in
\nthe  case of new machinery instead of adopting the  notional
\nmethod\tof  working  out multipliers and  then\tarriving  at
\nreplacement  cost  by multiplying that multiplier  with\t the
\nestimated cost to the sellers.\n<\/p>\n
A multiplier is the ratio between the original cost and\t the
\ncost  of replacement.  It is one of the methods of  arriving
\nat  the hypothetical cost of replacement at a  future  date.
\nBut  where  the\t cost of replacement  is  available  through
\nquotations  and\t these quotations are not  disputed  by\t the
\nUnion it would not be necessary to resort to a\thypothetical
\nmultiplier  or if the multiplier must be ascertained it must
\nbe  the ratio of the cost to the employer and the  estimated
\ncost of replacement actually proved through the\t quotations.
\nAccording  to the Company in the case of old  machinery\t the
\nmultiplier so calculated would be-\n<\/p>\n
     1950-51\t\t  ....3.98\n     1953-54\t\t  ....7.83\n     1954-55\t\t  ....3.49\n     1955-56\t\t  ....2.47\n     1956-57\t\t  ....4.75\n     1957-58\t\t  ....2.29\n786<\/span>\n<\/pre>\n
The total cost of replacement of old machinery on the  basis
\nof  these multipliers or in the alternative on the basis  of
\nthe  quotations would then come to Rs. 121.70  lacs  instead
\nRs.  85.62  lacs, the difference being of  Rs.\t36.08  lacs.
\nTherefore,  even if the divisor of 7 uniformly_\t applied  by
\nthe Tribunal in Annex.\n<\/p>\n
A were to be accepted, as correct, Rs. 36.08\/7=Rs. 5.16 lacs
\nwould
\n have to be added for rehabilitation requirement for each of
\nthe  bonus  years.   If that is done  the  entire  available
\nsurplus found by the Tribunal would be wiped out.
\nIt will be seen from the Tribunal’s Annex.  A that so far as
\nnew machinery is concerned the Tribunal accepted the figures
\nof original cost and the quotations furnished by the Company
\nand worked out multipliers for\/all the years from 1950-51 to
\n1959-60\t by simply dividing the quotations by  the  original
\ncost.\tThe question is, should not the Tribunal  have\talso
\nfollowed  the same method in the case of old machinery\twhen
\nit had before it the estimated cost to the seller, i.e., the
\ncost  of  old machinery if purchased as new in the  year  of
\ninstallation and the quotations for that machinery.  If that
\nwere  done  there  would be no necessity of  finding  out  a
\nnotional  multiplier.\tIn that event as  seen\tabove  there
\nwould be a difference of Rs. 36.08 lacs which would have  to
\nbe  added to the figure of Rs. 85.62 lacs worked out by\t the
\nTribunal  as  total rehabilitation cost in  respect  of\t old
\nmachinery.\n<\/p>\n
Mr.  Ramamurti however argued that though the Union had\t not
\ndisputed  the quotations those quotations were for the\tyear
\n1963-64 when the Tribunal was adjudicating the dispute, that
\nit is always necessary to first find out the multiplier\t and
\nthen  work out the rehabilitation cost and that the cost  of
\nmachinery in the bonus year or years must be reflected while
\nworking\t out  the rehabilitation cost even if  the  year  of
\nreplacement worked out from the average life of machinery is
\nlater.\t It is now well established that in the case of\t old
\nmachinery  the employees cannot insist that  such  machinery
\nshould\tbe  replaced  by old  machinery.   For\tworking\t out
\nrehabilitation cost of such machinery it is the cost of\t new
\nmachinery that is to replace the old which has to be  taken
\ninto  consideration.  The Company as aforesaid produced\t two
\nkinds  of  figures  both  accepted  by\tthe  Union  and\t the
\nTribunal:  (1)\tthe estimated cost to the seller if  he\t had
\npurchased  the old machinery as new in the respective  years
\nof  its\t installation  and  (2)\t quotations  of\t prices\t  of
\nmachinery  which would replace it.  The Tribunal had  before
\nit thus the cost of the machinery if it were new in the year
\nof  installation  and  the cost of its\treplacement  by\t new
\nmachinery.   There  was therefore no  particular  reason  in
\ndistinguishing\tthe  old  from the  new\t machinery  for\t the
\nfigures of costs and replacements in both the cases were  on
\nthe  footing  that  the old  machinery\twas  new  machinery.
\nTherefore  since  the Tribunal accepted the  quotations\t and
\nworked\tout the multiplier in the case of new  machinery  by
\ndividing  the quotations by the original ‘cost it  ought  to
\nhave
\n787<\/span>
\nfollowed the same method in the case of old machinery as  it
\nhad  before it the cost of the old machinery as new and\t the
\ncost or replacement, both unchallenged by the Union.
\nThe question still is whether the quotations can be the sole
\ncriterion   for\t working  out  rehabilitation\tcost.\t The
\nprinciple accepted in the Full Bench formula and approved by
\nthis Court in the case of Associated Cement Co. Ltd (1)\t was
\nthat payment of bonus is in recognition of the\tcontribution
\nof  labour  in\tthe profits earned by the  industry  and  to
\nassist labour to overcome as far as possible the  difference
\nbetween the actual wage and the living wage.  The Formula at
\nthe  same  time accepted the point of view of  the  industry
\nthat   investment  made\t by  it\t must  imply  a\t  legitimate
\nexpectation  of\t securing recurring returns and\t that  could
\nonly be ensured by machinery being continuously kept in good
\nworking order.\tSuch maintenance would necessarily be to the
\nadvantage  of the labour, for, the better the machinery\t the
\nlarger\tthe earnings and the brighter the chance of  earning
\nbonus.\t It  is on this twin consideration that\t the  amount
\nnecessary for rehabilitation is recognised as a prior charge
\non the gross profits when surplus profit for distribution as
\nbonus is being worked out.  It is true that depreciation  is
\nallowed by the tax laws but that is only to the extent of  a
\npercentage on the written down value.  The depreciation fund
\nset apart on that basis would obviously be insufficient\t for
\nrehabilitation\tand therefore an extra amount would have  to
\nbe annually set apart notionally to make up the\t deficiency.
\nThat  is  the  reason  for the\tFull  Bench  formula  having
\naccepted the industry’s claim to rehabilitation in  addition
\nto  the\t admissible depreciation.  While  ascertain  in\t the
\nclaim of rehabilitation the Tribunal has first to  ascertain
\nthe  cost  of  the machinery to the  employer  and  then  to
\nestimate its probable future life.  It then becomes possible
\nto  anticipate\tapproximately the year\twhen  the  machinery
\nwould need replacement and it is the probable price of\tsuch
\nreplacement at such future date that ultimately decides\t the
\namount\tto  which  the\tindustry  is  entitled\tby  way\t  of
\nreplacement  cost.   The  question is how  to  estimate\t the
\nprobable  price\t of  machinery\tat  such  future  date?\t  As
\nobserved  in  the Associated Cement Company’s  case(1)\tsuch
\nprobable price can be considered itemwise where the industry
\ndoes  not  own too many factories and In itemwise  study  of
\nmachinery  is reasonably possible.  It is when the  industry
\nowns several factories and the number of plant and machinery
\nis so large that it becomes difficult to make an estimate of
\nreplacement cost itemwise that the estimate has to be block-
\nwise.\tIn  either  case the Tribunal has  to  estimate\t the
\nprobable   cost\t of  replacement  at  the  time\t when\tsuch
\nreplacement  would  become due.\t Such  in  estimate  depends
\nobviously on several uncertain factors.\t The estimate of the
\nprobable   life\t  of  machinery\t is  itself  a\t matter\t  of
\nanticipation and
\n(1) [1959] S.C. R. 925.\n<\/p>\n
L\/p(N)7SCI-11
\n788<\/span>
\nthe  estimate of the probable trend of price during the\t In-
\ntervening period is also to a degree a matter of conjecture.
\nHowever, the entire process of ascertaining replacement cost
\nis  hypothetical depending largely on expert  evidence.\t  It
\nwould  appear  therefore that whenever it  is  possible.  to
\nestimate itemwise the probable cost of machinery in the year
\nof replacement, such a method is not only permissible but is
\nmore desirable.\t The block-wise estimate has to be  resorted
\nto when item-wise estimate is not possible.  Where therefore
\nthere is clear evidence of the probable price of each  piece
\nof machinery itemwise when replacement is to become due,  it
\nwould be more accurate to proceed on the basis of such price
\nand it would not be necessary to find out multipliers,\tsuch
\nmultipliers being after all the ratio between the: cost, and
\nthe probable cost of replacement, ascertained from the trend
\nof prices during the intervening years.\t The multiplier thus
\nis  at\tbest an approximation arrived at from the  trend  of
\nprice  level during the intervening period.  But  where\t the
\ncost of replacement is ascertained from quotations of prices
\nfor the year of replacement such cost is more accurate\tthan
\na  notional  one  worked out from  the\tmultiplier.   It  is
\ntherefore not always necessary to arrive at a multiplier for
\nestimating the probable cost of replacement.
\nIn the instant case the Tribunal estimated the life for\t old
\nmachinery at 10 years and that for new machinery at 15 years
\nafter taking into consideration the fact that the  machinery
\nwas worked at least since 1955-56 on three shifts a day\t and
\nthe  fact that it is being used for manufacturing  precision
\nmachines.   On\tthis basis the old  machinery  installed  in
\n1950-51\t became due for replacement in 1960-61 and the\trest
\nof  it installed in succeeding years would become due  after
\n10 years from the respective years of its installation.\t  It
\nis  in\tevidence  that though the average life\tof  the\t old
\nmachinery  was\texhausted it was still being  worked  though
\nuneconomically.\t  It  was agreed that the  entire  machinery
\nneeded\timmediate replacement and this fact was accepted  by
\nthe  Tribunal.\t It  is well established  that\tan  employer
\ncannot be allowed to postpone the date of replacement on the
\nfooting\t that he has operated the machinery in\tfact  beyond
\nits  average  life and thus boost the  cost  of\t replacement
\ntaking\tadvantage of the rise in price every year.   In\t the
\ninstant\t case  however\t‘that  cannot  be  said\t to  be\t the
\nposition.  As stated earlier, the quotations produced by the
\nCompany\t represented  an average price as near\tas  possible
\nprevailing  during the period for replacement.\t Since\tthey
\nwere not disputed by the Union they were the best  available
\ndata.\tThere  was  therefore all the more  reason  for\t the
\nTribunal  to  have worked out the cost of  replacement\tfrom
\nthese  undisputed  quotations instead of  working:  out\t the
\nmultipliers  and  then arriving at the total  re.  placement
\ncost.\tOn  the\t basis\tof  these  quotations  even  if\t the
\nmultipliers  were to be worked out the multipliers  and\t the
\ncost of replacement of old machinery would be as follows:\n<\/p>\n
789<\/span><\/p>\n
————————————————————\n<\/p>\n
       Old machinery esti-   Replacement cost\t  Multiplier
\nYear   mated cost to the     proved byquota-\n<\/p>\n
       seller if he had pur- tions disputedby
\n       chased as new in the  the Union
\n       year of its installa-<\/p><\/blockquote>\n
       tion not disputed by
\n\t  the Union\n<\/p>\n
————————————————————\n<\/p>\n
\t\t\t     (Rs. in lacs.)   (Rs. in lacs)
\n1950-51\t    20.05\t\t 79.72\t\t  3.98
\n1953-54\t     1.86\t\t 14.57\t\t  7.83
\n1954-55\t     2.93\t\t 10.25\t\t  3.49
\n1955.56\t     0.45\t\t  1.11\t\t  2.47
\n1956-57\t     2.10\t\t  9.97\t\t  4.75
\n1957-58\t     2.65\t\t  6.08\t\t  2.29\n<\/p>\n
———————————————————–\n<\/p>\n
\t    30.04\t\t121.70\n<\/p>\n
———————————————————–
\nThe  replacement  cost thus arrived at would be\t Rs.  121.70
\nlacs  as against Rs. 85.62 lacs as worked by  the  Tribunal.
\nIndeed,\t where\tthe cost of replacement is  proved  itemwise
\nfrom  price  quotations and they are undisputed\t it  becomes
\ndifficult  to appreciate how the total cost  of\t replacement
\ncan be less than the cost proved through quotations.
\nCounsel for the Union, however, urged that while working out
\nthe  replacement cost it is the cost during the\t bonus\tyear
\nwhich  is  relevant  and  therefore  though  the  Union\t had
\naccepted  the  quotations  they\t would\tnot  be\t the  proper
\ncriterion  and the price prevalent during each of the  bonus
\nyears  would  be the relevant price.  He also  argued  that.
\neven  if  the  quotations were to be  accepted\tas  cost  of
\nreplacement  the  prices of only those\tmachines  which\t are
\nrequired for replacement and not for expansion which can  be
\nthe  basis of estimation.  As regards the first argument,  a
\nsimilar\t contention  was raised in Associated  Cement  Co.’s
\ncase(1) and was rejected.  At p. 967 of the report the Court
\nsaid:\n<\/p>\n
“What the Tribunal has to do in determining such cost (i.e.,
\nprobable cost of replacements) is to project the price level
\ninto the future and this can Be more satisfactorily done. if
\nthe  price  level  which has to be projected  in  future  is
\ndetermined  not\t only in the light of the  prices  prevalent
\nduring\tthe bonus year but also in the light  of  subsequent
\nprice levels.”\n<\/p>\n
The  submission that it is the price level during the  bonus
\nyear which is the criterion therefore is not correct,.\t The
\ntest is the probable cost of replacement when rehabilitation
\nbecomes\t  due,\t If  the  bonus\t year  and   the   year\t  of
\nrehabilitation coincide the price
\n(1) [1959] S.C.R. 925.\n<\/p>\n
790<\/span><\/p>\n
level  during the bonus year would no doubt be the  relevant
\nbasis.\t But where they do not coincide and the due year  of
\nrehabilitation is the year beyond the bonus year that  which
\nis relevant is the probable cost of replacement during\tthat
\nyear  and the Tribunal therefore would have to consider\t all
\nrelevant evidence necessary to estimate the cost during that
\nfuture\tyear.\tWhere  there is\t tangible  evidence  through
\nquotations  of prices for that year and such quotations\t are
\nnot in dispute the Tribunal does not have to conjecture what
\nthe   trend  of\t price\tlevel  would  be  by   taking\tinto
\nconsideration the price level during the intervening  period
\nwhich would include the bonus year.\n<\/p>\n
However\t this  does not mean that the Tribunal\tmust  mecha-
\nnically\t accept\t the quotations.   The\trehabilitation\tcost
\nallowed under C the Full Bench formula is the probable\tcost
\nof  rehabilitation which while including modernization\tdoes
\nnot   include  expansion.   But\t the   distinction   between
\nmodernization and expansion may in some cases be subtle\t and
\nnot  capable of clear distinction.  The\t question  therefore
\nwould always be whether replacement of one machine by a\t new
\none  is the introduction of modem machinery or one which  is
\nan  item  of expansion.\t If it is an item of  expansion\t its
\ncost  naturally has to be excluded.  The test is whether  by
\nthe  introduction  of  the  new\t machinery  the\t  production
\ncapacity is likely to be significantly augmented, If that is
\nfound  the Tribunal would have to apportion the cost on\t the
\nbasis  that replacement is partly modernization\t and  partly
\nexpansion.  On the other hand, E if the increased production
\nis  not significantly on the higher side it would be a\tcase
\nof modernization incidental to replacement.  The question is
\non whom is the burden of proving whether a given replacement
\namounts to.expansion,or modernization.\tIt seems to us\tthat
\nsince  it is the employer who seeks replacement cost, it  is
\nfor  him  to  satisfy the Tribunal as to what  will  be\t the
\noverall\t cost  of replacement and in doing so it is  he\t who
\nmust  satisfy that the cost is of replacement only and\tdoes
\nnot  include  any expansion of machinery.  Counsel  for\t the
\nUnion was therefore right in saying that the Tribunal has to
\nsatisfy itself that no cost of expansion is injected in\t the
\nrehabilitation cost.  In the present case, however, it\tdoes
\nnot  appear from the record that any question  of  expansion
\nGarose as the Union accepted the quotation as equivalent  to
\nthe replacement cost.  Consequently, the Tribunal  proceeded
\non the footing that the entire machinery had become due\t for
\nreplacement  and  the prices proved by\tquotations  were  of
\nmachines  to be replaced in the process of  replacement\t and
\nmodernisation  and  not expansion.   According\tto  Rajendra
\nMills  Ltd(1) the employer has to discharge this  burden  by
\nadducing  proper  evidence  and giving the  other  party  an
\nopportunity  to,  test the correctness of that\tevidence  by
\ncross-examination  and\tmerely bringing on  record  balance-
\nsheets,\t for  instance, would not be enough. (see  also\t the
\nWorkmen v. The National Tobacco Co.(2).\n<\/p>\n
(1)  [1960] 1 L.L.J. 53.\n<\/p>\n
(2)  [1966] II L.L.J. 200.\n<\/p>\n
791<\/span><\/p>\n
But in the present case there is no question of the  Company
\nnot having properly discharged the burden, for, it not\tonly
\nproduced   balance-sheets  but\talso  produced\t statements,
\nquotations  and\t examined two expert  witnesses,  Jones\t and
\nDesai.\t  These\t  witnesses  were  cross-examined   on\t the
\nstatements relied on by the Company in regard to the cost to
\nthe Company, the estimated cost of replacement, the  average
\nlife  of  machinery etc.  The Union  also  the\tConfidential
\nAnnexs.\t  1  and  2  which  showed  itemwise  the  cost\t  of
\nreplacement  as\t proposed by the Company and  quotations  of
\nprices therefor.  These Annexs. also indicated that where  a
\nmachine\t was  to be replaced not by the same kind but  by  a
\nmodern\tone it was to be substituted for two or more of\t the
\nold machines.  This was presumably done to avoid  expansion.
\nIt is true that in respect of the old machinery installed in
\n1953-54\t and 1956-57 the multiplier calculated on the  basis
\nof the quotations comes to 7.83 and 4.75 respectively  while
\nit  ranges from 2.29 to 3.98 for the rest of the years.\t  At
\nfirst sight the multiplier might suggest that there might be
\nan element of expansion in the case of those machines.\t But
\nit  was\t pointed  out that the prices  of  those  particular
\nmachines had gone unusually high and furthermore that in the
\nprocess\t of  replacement the modern machines which  were  to
\nreplace\t the old ones were in the approximate proportion  of
\none  for two.  It cannot therefore be validly said that\t the
\nCompany\t had not placed sufficient materials to\t enable\t the
\nUnion  to check up by cross-examination whether this was  a,
\ncase of expansion or not.\n<\/p>\n
Mr.  Ramamurti’s  contention next was that even\t though\t the
\nquotations  were not disputed by the Union, taking  them  as
\nthe  sole basis for estimating the replacement cost was\t not
\nsatisfactory as the Union had qualified its acceptance by  a
\nreservation that it did so except for machinery installed in
\nthe  bonus  1 years.  This argument does not  appear  to  be
\ntenable.   Exhibit M2 shows that so far as the\tbonus  years
\nare  concerned\told machinery was installed in\t1956-57\t and
\n1957-58\t only.\tThe cost of such machinery for\t1956-57\t was
\nRs. 1,39,871 and that for 1957-58 was Rs. 1,76,730.  On\t the
\nbasis of the Union’s reservation the Tribunal did not accept
\nthe  quotations for machinery installed in those  years\t and
\nfixed  the  replacement\t cost on the  basis  of\t multipliers
\ncalculated by it de hors the quotations.  It is difficult to
\ncomprehend  such an approach by the Tribunal.  The  Tribunal
\naccepted  the  quotations  in  regard to  the  rest  of\t the
\nmachinery  and\tworked out the multiplier on  the  basis  of
\nthose  quotations.   The  Union\t did  not  challenge   those
\nquotations and the multiplier calculated therefrom.  If\t the
\nquotations  for the new machinery for all the years and\t for
\nold  machinery for the years, except the bonus\tyears,\twere
\naccepted  by  the Union and the Tribunal also, there  is  no
\nreason why the quotations for the bonus years could be\tsaid
\nto be unacceptable., No objection to the replacement cost of
\nthe  new  machinery was taken even in regard  to  the  bonus
\nyears.\tAs regards the old. machinery the Union accepted the
\nCompany’s  figures  both as to cost to the Company  and\t the
\nestimated cost to the seller if he had
\n792<\/span>
\n     purchased\tit as new.  Even if a multiplier has  to  be
\ncalculated  it\twould  be the ratio  between  the  estimated
\nsellers\t cost  and  the probable cost  of  replacement.\t  So
\ncalculated both the old and new machinery stand on the\tsame
\nfooting because it is the seller’s estimated price if he had
\npurchased  it new in the year of its installation  that\t was
\ntaken by the Tribunal for arriving at the multiplier.\tThat
\nbeing  so,  the multiplier in both the cases  would  he\t the
\nratio between the cost in the case of new machinery and\t the
\nestimated  cost to the seller in the case of  old  machinery
\nand  the cost of replacement proved by the  Company  through
\nquotations.  If the quotations were acceptable to the  Union
\nin  regard to new machinery and the old machinery  installed
\nin  the\t years\texcept the bonus years it  is  difficult  to
\nunderstand how quotations for the old machinery installed in
\nbonus years could be questioned especially as the Union\t did
\nnot  produce  any data, to prove them incorrect.,  In  these
\ncircumstances,\twe  are\t of the view  that  the\t multipliers
\narrived\t at  by the Tribunal in the case  of  old  machinery
\n,were\tnot  correct.\tThe  Tribunal  should  have   either
\ncalculated  the replacement cost from the quotations  proved
\nby  the\t Company  itemwise  or if it had  to  work  out\t the
\nmultiplier  it should have done so by finding out the  ratio
\nbetween\t the  estimated cost to the seller accepted  by\t the
\nUnion  and  the\t quotations  proved  by\t the  Company.\t The
\ndeficiency in following this method comes to Rs. 36 lacs and
\nodd as stated earlier.\n<\/p>\n
Regarding the new machinery purchased during the bonus years
\nthe  Tribunal  held that the price rise for  such  machinery
\ncannot\tbe  taken  to be more than zero.   In  Ex.   M2\t the
\nCompany has given the quotations for this machinery and\t has
\nworked\tout therefrom the multiplier for each of  the  bonus
\nyears,\tviz., 2.35 for 1956-57, 3.37 for 1957-58,  1.48\t for
\n1958-59\t and  1.66  for\t 1959-60.  Presumably  the  Tribunal
\nthought that though the prices for this machinery in 1963-64
\nwere  available, considering that its life was 15  years  it
\nwas  too early to find out with any precision the  trend  of
\nprices\tduring\tthe  intervening years.\t  With\tthe  gradual
\ngrowth\t of   indigenous   production\tand    corresponding
\navailability of these machines it would be difficult to\t say
\nwhether the same trend would continue or not by the time the
\nyear for its replacement was reached.  It is not possible to
\nsay therefore that the Tribunal’s view that the price  rise
\nof such machinery should be taken as zero was  unreasonable.
\nIn the case of machinery purchased in 1950-51 and onward its
\nperiod of replacement would commence from 1965 and  onwards.
\nIt was possible from the quotations produced by the  Company
\nto  predicate for such machinery the trend of price but\t not
\nso in the case of machinery purchased in very recent  years.
\nIn their case the quotations may not be taken for granted as
\nshowing any definite trend in price level.
\nAs  stated  earlier, the Tribunal has given in Annex.\tA  a
\nuniform\t  remainder  life  of  7  years\t to  old   machinery
\nirrespective of the year of its installation.  This. in\t our
\nview, is not correct.  Taking
\n793<\/span>
\nthe life of old machinery to be 10 years, the old, machinery
\npurchased  in 1950-51 would require replacement\t in  1960-61
\nand so on.  ‘In. that case the remainder life in the  bonus
\nyear  1957-58  of old machinery installed in  1950-51  would
\nclearly be 3 years, of old machinery installed in 1953-54, 6
\nyears,\tof old machinery installed, in 1955-56 8  years,  of
\nmachinery installed in 1956-57 9 years and that installed in
\n1957-58\t 10 years.  The divisor therefore could not  be\t the
\nuniform\t 7  for all these years but a graduated one  on\t the
\nbasis  that  the estimated life of old machinery was  10  In
\nestimating  the rehabilitation requirement of each year\t the
\ngraduated divisor should have been used.\n<\/p>\n
The  question  which raises a serious  controversy  is\twith
\nregard\tto  the\t figure\t of Rs. 24.35  lacs  found,  by\t the
\nTribunal  as the total cost of rehabilitation in respect  of
\nmachinery  both old and new installed in 1950-51.   Dividing
\nthis figure by 7 as the remainder life for both the types of
\nmachinery  the\tTribunal  allowed  Rs.\t3.48  lacs  as\t the
\nrehabilitation\trequirement for that year.  Counsel for\t the
\nCompany\t objected to the Tribunal’s calculations on  various
\ngrounds.   It will be seen from column 7 of Annex.   A\tthat
\nwhereas\t the Tribunal accepted the Company’s quotations\t for
\nnew machinery it did not do so in the case of old  machinery
\nand  calculated instead the replacement cost by means  of  a
\nmultiplier.   It is difficult to say on what  principle\t the
\nmultiplier  3.36 for old machinery was adopted\texcept\tthat
\nthe Tribunal adopted the same multiplier which it calculated
\nin  the\t case  of new machinery by  working  out  the  ratio
\nbetween the cost to the Company and the price of replacement
\nas  appearing  from  the  quotations.\tSince  the  Tribunal
\nadopted that principle for new machinery it would be logical
\nthat it should similarly do so in the case of old  machinery
\nalso  as  the basic cost adopted was the cost price  to\t the
\nseller\tif he had bought that machinery as new\tin  1950-51.
\nThe  total cost of machinery old and new would in that\tcase
\nbe  Rs.\t 54.77 lacs plus Rs. 75 lacs, i.e. Rs.\t133.77\tlacs
\ninstead\t of  Rs. 54.77 lacs less 5 % break  down  i.e.,\t Rs.
\n53.96  lacs for new and Rs. 67.37 lacs for old machinery  as
\ncalculated  by the Tribunal.  The figure of Rs.\t 67.37\tlacs
\nwas arrived at by multiplying Rs. 20.05, the estimated\tcost
\nto  the\t seller\t by the multiplier 3.36.  According  to\t the
\nTribunal the gross replacement cost would be Rs. 121.33 lacs
\ninstead\t Rs.  133.77 lacs.  The figure of  Rs.\t121.33\tlacs
\narrived at by the Tribunal cannot be sustained as it was not
\njustified  in  calculating  replacement\t cost  for  the\t new
\nmachinery  in  one  way and that for the  old  machinery  in
\nanother way.\n<\/p>\n
The  next miscalculation said to have been committed by\t the
\nTribunal  was in deducting the depreciation for\t the  entire
\nold machinery installed during 1950-51 to 1957-58, i.e., Rs.
\n30  lacs from the total replacement cost for  1950-51.\t The
\nTribunal took the whole of the cost of old machinery to\t the
\nseller,\t i.e., Rs. 30 lacs, as depreciation.  For  that\t the
\nTribunal derived support from the
\n794<\/span>
\ndecision in South India Millowners’ Association and Ors.  v.
\nCoimbatore  District  Textile Workers’,\t Union\tand  Ors.<\/a>(1)
\nwhere while dealing with old machinery. this Court has\tsaid
\nthat where purchase price is determined but it is  difficult
\nto ascertain the depreciation amount thereafter then at\t the
\nhighest\t the whole of the purchase money would be  taken  as
\ndepreciation amount.\n<\/p>\n
Assuming  that the Tribunal was entitled to treat the  price
\nof  the old machinery, viz., Rs. 30 lacs as depreciation  it
\nwas  not  correct  on  its  part  to  deduct  it  from\t the
\nreplacement  cost.  The reason is that it also deducted\t Rs.
\n48.8  3 lacs (to which we. shall presently refer  to)  which
\namount\tincludes depreciation of Rs. 30 lacs.  The  Tribunal
\nthus  deducted Rs. 30 lacs as depreciation twice over.\t The
\ndeduction of Rs. 30 lacs was thus clearly an error.
\nCounsel\t for  the Company next objected to the\tsum  of\t Rs.
\n48.83 lacs having been deducted from rehabilitation cost  in
\nrespect\t of  machinery, old and new, installed\tin  1950-51.
\nThe  objection was two-fold: (1) that the Tribunal erred  in
\ndeducting  the whole of this amount from the  rehabilitation
\ncost in respect of 1950-51 machinery, and (2) that the\tsaid
\namount\trepresents  total deprecation,\ti.e.,  the  notional
\nWritten\t down value of all machinery up to the year  1956-57
\nand  is shown as such in the balance-sheet for 1956-57.\t  It
\nwas urged that, since this amount represents depreciation on
\nvarious\t kinds\tof  assets,  viz.,  bungalows,\tplants\t and
\nmachinery,   cars  and\ttrucks,\t furniture  and\t tools\t and
\nimplements, the whole of this amount should not be  deducted
\nwhen calculating rehabilitation provision for the  machinery
\nof  1950-51  and should be deducted  only  when\t calculating
\nrehabilitation\tprovision for each item in respect of  which
\nthis depreciation has been included in the accounts.  We  do
\nnot  think that this submission can be accepted.  No  doubt,
\nthe  sum  of Rs. 48.83 lacs represents\tdepreciation  up  to
\n31-3-1957 in respect of plant, machinery, buildings, as well
\nas other items of property, but there is no principle  which
\nrequires  that depreciation fund in respect of a  particular
\nitem must only be utilised in rehabilitating the same  item.
\nThe Tribunal held that the entire depreciation fund must  be
\nutilised for rehabilitation of those items of property which
\nrequire\t rehabilitation at the earliest point of time,\tthat
\nis the machinery of 1950-51 which needed replacement earlier
\nthan the other items of property.  We do not think that this
\ndecision  of  the Tribunal was in any  way  unreasonable  as
\nwould justify interference.\n<\/p>\n
As regards the second objection the principle is that  while
\narriving at the rehabilitation cost deduction should be made
\nof all available funds.\t It was argued that an amount  which
\nis a notional depreciation mentioned in the accounts for the
\npurpose only of showing the true Value of fixed assets would
\nnot  be a reserve which in point of fact can be said  to  be
\navailable for replacement, and that it is on account of this
\nthat the decisions mention reserves including
\n(1)  [1962] 1 L.L.J. 223.\n<\/p>\n
765<\/span><\/p>\n
depreciation  reserve which, if available, are liable to  be
\ndeducted  from rehabilitation cost.  The contention is\tthat
\nthis  amount being merely a notional depreciation is a\tmere
\npaper  entry and does not represent any\t available  reserve.
\nReliance  was placed on G. F. Mills v. Its Workmen<\/a>(1)  where
\nthe  Court set aside deduction of Rs. 30 lacs;\tthe  Company
\nhad raised a debenture loan of Rs. 50 lacs on credits on the
\nground that that amount was locked up in Pakistan and  could
\nnot be brought to India for the Company’s use. it was argued
\nthat  the principle thus is that the amount to\tbe  deducted
\nmust   in   reality  be\t available  to\tthe   employer\t for
\nreplacement.\n<\/p>\n
As found by the Tribunal the Company’s fixed assets were  of
\nthe value of about Rs. 110 lacs.  The Union’s contention was
\nthat as against this amount the Company’s subscribed capital
\nwas Rs. 60 lacs; the Company had raised a debenture loan  of
\nRs. 50 lacs on the security of its fixed assets and thus the
\nsubscribed capital and the debenture loan were sufficient to
\nmeet the whole cost of the fixed assets.  On this basis\t the
\nTribunal  upheld the Union’s contention that Rs. 48.83\tlacs
\nshown  as  depreciation were available\ttowards\t replacement
\ncost  as no part of it could have gone in the investment  of
\nfixed assets.  Counsel for the Company, however, pointed out
\nthat the debenture loan was raised in’ 1958-59 and  therfore
\nthat  amount  cannot  be said to be available  at  any\trate
\nduring\tthe year 1956-57.  But this fact taken in  isolation
\ndoes not furnish a correct picture of the fund available  to
\nthe Company during the bonus years.  The balance-sheets show
\nthat  besides the said loan of Rs. 50 lacs the\tCompany\t had
\nobtained’a,  secured  loan of Rs. 6.50 lacs in\t1956-57\t and
\nanother loan of Rs. 24.68 lacs in 1957-58.  Except producing
\nthe balance-sheets the Company led no evidence to show as to
\nhow  these  loans  had been  utilised,\twhether\t as  working
\ncapital,  or  in acquiring fixed assets.   Apart  from\tthis
\nfact, we do not see how the fact that the debenture loan was
\nraised in 1958-59 makes any difference.\t Though the life  of
\na  large part of the machinery had run out the\tCompany\t had
\nnot replaced any of it and was carrying on its work with the
\nworn out machinery even though its working was uneconomical.
\nThe Tribunal has found and the parties also were agreed that
\nthe   entire  machinery\t required   immediate\treplacement.
\nTherefore, the question was how much rehabilitation cost the
\nCompany\t would\trequire.   In  calculating  such  cost\t the
\nTribunal  was  entitled to take note of the fact of  Rs.  50
\nlacs having been raised as debenture loan on the security of
\nits  fixed assets presumably because that loan was  required
\nfor  rehabilitating  the  fixed assets.\t  Even\tso,  Counsel
\nargued,\t the question would still be whether Rs. 48.83\tlacs
\nrepresented an available fund for rehabilitation or  whether
\nthey  represented a mere paper entry for showing  the  true
\nvalue  of  machinery in 1956-57.  In our view..\t it  is\t not
\nnecessary for us to go into the question whether a sum shown
\nas notional depreciation without its being shown as  reserve
\ncan be treated or
\n(1) A.I.R. 1958 S.C. 382.\n<\/p>\n
796<\/span><\/p>\n
  not  as  a fund available for rehabilitation\tnor  whether
\nsuch depreciation is or is not deductible even if it is\t not
\navailable as a fund.  The Company produced, Ex.\t M-4 showing
\nthe,   amount  which  according\t to  it\t was  required\t for
\nrehabilitation\tfor  the  bonus years.\t According  to\tthat
\nstatement  the Company would require Rs. 110.20\t lacs, Rs.
\n127.06\tlacs,  Rs. 149.87 lacs and Rs. 155.91 lacs  for\t the
\nfour bonus years respectively.\tIn working out these amounts
\nthe    Company\titself\tdeducted Rs.  48.25  lacs  from\t the
\nrehabilitation requirement for the year 1956-57 and  pointed
\nout  in\t a  footnote that that amount was  comprised  of  an
\ninvestment  of Rs. 18.22 lacs in stocks and shares  and\t Rs.
\n30.03 lacs as depreciation, taking the entire estimated cost
\nto the seller of old machinery if such seller had  purchased
\nit  as\tnew.  In face of this admission it is  difficult  to
\nappreciate  how\t the Tribunal can be said to have  erred  in
\ntreating  Rs.  48.83 lacs as available fund.   We  may\talso
\nmention\t that before the Tribunal the argument was not\tthat
\nthe  amount  of\t Rs.  30.03  lacs  was\tmerely\ta   notional
\ndepreciation  and  not\ta fund\tactually  available  to\t the
\nCompany.  The Company’s contention on the contrary was\tthat
\nthe  whole of Rs. 48.83 lacs was utilised in  fixed   assets
\nand therefore was not available for replacement.  The Tribu-
\nnal  rejected that contention on the ground that except\t for
\nthe balance-sheet which did not give precise information  as
\nto how that amount-was deployed by it. the Company had\tnot
\nproduced. its accounts to show that that amount was utilised
\ntowards acquiring fixed assets.\t Counsel argued that if that
\nwas the view of the  Tribunal the Company ought to have been
\ngiven an opportunity of showing its sources of fixed assets.
\nThere  is no merit in this contention.\tIt was\tthe  Company
\nwho  had  the necessary information.  The onus\twas  on\t the
\nCompany to explain from its accounts and other data that the
\namount of Rs. 30 lacs and odd was not available.  As regards
\nRs.  18.22  lacs the amount being an  investment  in  liquid
\nassets\tit  is\tdifficult to say why the  Tribunal  was\t not
\njustified in treating it as available for rehabilitation.
\nBut the Company’s contention was that the investment of\t Rs.
\n18.22  lacs  in shares can either be treated as\t a,  trading
\ntransaction  carried out in the ordinary course of  business
\nor  as\ta  capital asset.  If it was treated  as  a  trading
\ntransaction the Tribunal ought to have allowed Rs. 1.72 lacs
\nwhich  was  the loss in 1957-58 in these shares\t as  trading
\nexpenditure  and  the  Tribunal ought not  have\t added\tthat
\namount to the gross profits for that year.  In doing so, the
\nTribunal  treated  the investment as capital  asset  and  it
\ncould  not  therefore  deduct  Rs.  18.22  lacs\t as  a\tfund
\navailable  for\trehabilitation\tcost.  We fail\tto  see\t any
\ncontradiction  on  the part of the Tribunal.   The  balance-
\nsheet  for  the year 1956-57 contains two  Schedules-,\tSche
\ndule  A\t shows\tfixed  assets and  Schedule  B\tshows  trade
\ninvestments  of the value of Rs. 18,21,571 \/-.\tThe  Company
\nnot being an investment Company the investment of Rs.  18.22
\nlacs  in shares of other joint stock Companies\tprima  facie
\nrepresents extra capital not required as working capital for
\notherwise the Company could not have spared this amount\t for
\ninvestment in the stocks of other
\n797<\/span>
\ncompanies.    The  Tribunal  was  right\t in  treating\tthis
\ninvestment  as a capital asset and in refusing to treat\t the
\nloss therefrom as trading expenditure.\tThe Tribunal at\t the
\nsame  time could deduct this amount from the  rehabilitation
\ncost   because\tthat  amount  was  available  to  meet\t the
\nrehabilitation cost. The investment in shares could  easily,
\nif  the\t Company was so minded, be converted into  cash\t and
\nutilised for replacement of its worn out machinery.  But  it
\nwas said that even if the amount of Rs. 18.22 lacs could  be
\nheld  deductible that figure was not correct, for the  value
\nof  investment was ,Rs. 11.23 lacs at the close of the\tyear
\n1957-58\t as shown in the balance-sheet for that year.\tThis
\ncontention  is not correct.  What appears to have been\tdone
\nin 1957-58 was that instead of showing the entire investment
\nof  Rs. 18.22 lacs as trade investments as in  the  previous
\nyear, the investments, were classified into investments\t and
\ncurrent\t assets.  The value of investments at the  beginning
\nof the year is shown at, Rs. 18.22 lacs but at the close  of
\nthe  year  the shares of companies other than  the  National
\nBearing Company (Jaipur) Ltd., a subsidiary of the appellant
\ncompany,  were\tregrouped and shown as\tcurrent\t assets\t and
\ntheir  cost was shown at Rs. 6.57 lacs instead of Rs.  13.71
\nlacs  as shown at the close of the preceding  year.   Except
\nproducing the balance-sheet for 1957-58 the Company gave  no
\nexplanation before the Tribunal as to why these\t investments
\nwere  re-grouped  and on what footing  they  were  revalued.
\nBesides,  the  figure of Rs. 18.22 lacs does not  appear  to
\nhave been disputed before the Tribunal and the Tribunal\t was
\nnever  told  that  the investments  during  that  year\twere
\nreduced\t to  ‘Rs. 11.23 lacs.  It would\t not  therefore\t be,
\nright  to  say that the Tribunal erred in taking  Rs.  18.22
\nlacs as a, fund available for rehabilitation.
\nThe  next contention was as to 7 1\/4 % interest\t allowed  by
\nthe Tribunal on paid up capital instead of 8.57% claimed  by
\nthe  company.  By the Finance Act of 1959 the  provision  in
\nthe  Income-tax\t Act that the Income-tax  paid\ton  dividend
\ndistributed to the shareholders was deemed to have been paid
\non behalf of the shareholders was abrogated.  The contention
\nwas that though the corporation tax was reduced in that year
\nfrom 51.5% to 45% the Company since 1959 had on the whole to
\nbear at larger burden of tax and therefore the Company would
\nnot get a net tax free 6 % interest unless interest at 8.75%
\nwas  granted.\tIt  is true that  the  Full  Bench  formula,
\nprovided for payment of net interest at 6% per annum on paid
\nup  capital,  but as pointed out in  the  Associated  Cement
\nCo.’s cave(1) and subsequent decisions of the Tribunals\t the
\nrate  of  6 % interest is not to be  regarded  as  something
\ninflexible.   In awarding- interest on paid up\tcapital\t and
\nalso  on  working capital the proper approach  is  that\t the
\nindustry  is entitled to a reasonable return on\t investments
\nmade in establishing and running concerns it its risk.\t At
\nthe same time the claim for bonus is no longer treated as an
\nex-gratia  payment.  It is recognised on  the  consideration
\nthat
\n(1) [1959] S.C.R. 925.\n<\/p>\n
798<\/span><\/p>\n
labour\tis entitled to claim a share in the trading  profits
\nof  the\t industry as it partially contributes to  the  same.
\nSince  the  industry  and  labour  both\t contribute  to\t the
\nultimate  trading profits both are entitled to a  reasonable
\nshare.\tWhile awarding interest if the Tribunal were to find
\nthat  if it were to grant 6 % interest on paid\tup  capital,
\nnothing or no appreciable amount would be left for bonus, it
\ncan adjust the rate of interest so as to accommodate reason-
\nably  the claim for bonus and thus meet the demands of\tboth
\nas  reasonably as possible.  If the Tribunal were  to  award
\ninterest  at a rate lower than 6% after considering all\t the
\nrelevant  facts\t we  do\t not think  that  the  employer\t can
\nlegitimately  claim that it has erred in doing so.   If\t the
\nTribunal has exercised its discretion after consideration of
\nall  the  relevant  facts this Court  would  not  ordinarily
\ninterfere with such exercise of its discretion.
\nThese  were all- the contentions raised by Counsel  for\t the
\nCompany in the Company’s appeal To the extent that we Accept
\nas hereinabove the Company’s contentions, Annexure A to\t the
\naward  will  have to be modified.  These  modifications\t are
\nshown in the charts thereto annexed and collectively “A”.
\nWe now proceed to consider the Workmen’s appeal.
\nCounsel for the Union argued that the Tribunal ought to have
\nfixed  the  life  of the Dew machinery at  25  years  as  is
\nusually done and not at 15 years.  In some cases, it is true
\nthat  Tribunals\t have  fixed 25\t years\tas  the\t machinery’s
\naverage\t life.\tThere can however no rigidity in fixing\t the
\nlife  of  machinery,  since  it\t differs  from\tindustry  to
\nindustry.  Consequently, there can be no hard and, fast rule
\napplicable to all sorts of machinery. (cf.  The\t Millowners’
\nAssociation,   Bombay(1)   and\t South\t India\t Millowners’
\nAssociation(2). In the present case the Tribunal had  before
\nit evidence showing that the industry required machinery  of
\nspecial\t precision  and was therefore  not  comparable\twith
\nmachinery such as that in textile mills for which 25  years’
\nlife was fixed.\t In suggesting the life of 25 years for this
\nmachinery  Counsel for the Union did not give  any  specific
\nreason\texcept that 25 years of life has been fixed in\tsome
\ncases.\t He  could  not also show any instance\twhere  in  a
\nsimilar\t industry life of machinery was fixed for more\tthan
\n15  years.  The principle that the Tribunal has to  bear  in
\nmind  is  that the life of machinery is\t the  period  during
\nwhich it is estimated to work with reasonable efficiency and
\nnot  the period during which it has actually been  operated,
\nthat  is, till it becomes too deteriorated for use.  (Pierce
\nLeslie\t& Co. v. Its Workmen.)<\/a>(3) Since the  Tribunal  fixed
\nthe  period of 15 years after considering the  evidence\t and
\nthe   nature  of  industry  there  is  no  reason  why\t its
\ndetermination need be interfered with.\n<\/p>\n
(1) [1950] L.L.J. 1247.\t (2)  [1962] Suppl, 2 S.C.R. 926.
\n(3)  [1960] 3 S.C.R. 194 at 200.\n<\/p>\n
799<\/span><\/p>\n
Counsel’s next contention was that the Tribunal ought not to
\nhave  accepted the quotations which were for 1963-64 as\t the
\nbasis  for calculating the total rehabilitation\t cost.\t But
\nthe  quotations were never disputed by the Union.  Even\t so.
\nargued\tMr.  Ramamurti, they contained the  cost  of  spares
\nwhich  at any rate ought to have been excluded.\t We  confess
\nit  is\tdifficult to appreciate this part of  the  argument.
\nThe  machinery\tin  question  is in  a\tlarge  way  imported
\nmachinery.  It is common knowledge that when such  machinery
\nis purchased spares are generally included in such  purchase
\nand  their cost must be included in the purchase price,\t the
\nreason being that in case of breakdown the Company would not
\nhave  to  wait\tfor an indefinite period  for  ordering\t and
\nobtaining,  the\t spares.   It was then\tsaid  that  the\t new
\nmachinery  which  would replace the old might  well  contain
\nitems of expansion which the Tribunal ought to have reckoned
\nand  excluded.\tWhile dealing with the Company’s  appeal  we
\nhave  already  dealt with this aspect and  for\tthe  reasons
\nstated\tthere  this argument must be rejected We  must\talso
\nreject\tthe argument that the Tribunal had  disregarded\t the
\nincreasing trend of indigenous manufacture of machinery.  In
\nfact; Confidential Annexs.  1 and 2 produced by the  Company
\ncontain quotations wherever possible of a number of machines
\nof indigenous manufacture.\n<\/p>\n
The  next contention related to old machinery and the  argu-
\nment  was  that the Company had\t discarded  machinery  worth
\nabout Rs. 18 lacs in respect of which the Company ought\t not
\nto  get\t any rehabilitation cost.  The argument\t appears  at
\nfirst  sight attractive but loses its force when the  actual
\nposition  is  ascertained.  The balance-sheet for  the\tyear
\n1959-60\t shows\tthat  machinery worth  Rs.  17.62  lacs\t was
\ndiscarded during that year.  Similarly tools and  implements
\nof the value of Rs. 8.57 lacs were also discarded.  To\tthat
\nextent\tdeductions  were made in the total  value  of  fixed
\nassets.\t In showing depreciation of plant and machinery\t Rs.
\n10.91  lacs. being the depreciation of these  machines\twere
\nalso  deducted from the total depreciation so far  shown  in
\nthe previous balance-sheets.  The result was that the  total
\ndepreciation  including\t depreciation  for  machinery  added
\nduring the year was brought down from Rs’ 48.37 lacs to\t Rs.
\n44.20 lacs.  The evidence of Desai shows that the  machines’
\nLedger\tmaintained  by the Company shows only  the  list  of
\nmachines in actual operation-, which means that the  discar-
\nded  ones  are\t‘not  shown in\tthat  list.   The  machinery
\ndiscarded during this year was thus taken out from the fixed
\nassets as if it did not exist.\tThe depreciation in  respect
\nof  it\twas also deducted from the  total  depreciation\t and
\ntherefore  no rehabilitation was in  fact claimed  for\tsuch
\nmachinery.\n<\/p>\n
Mr.  Ramamurti\tnext urged that the Tribunal ought  to\thave
\nallowed only 30% of rehabilitation cost for old machinery as
\nwas done in South India Millowners’ Associations’s  Case(1).
\nThat case
\n(1) [1962] Spp. 2 S.C.R. 926.\n<\/p>\n
800<\/span><\/p>\n
does  not  lay down any such rule. 30% only was\t allowed  in
\nthat case as an ad-hoc figure because the Association  there
\nhad  failed to produce materials showing the original  price
\nand  subsequent\t depreciation  and  this  Court\t refused  to
\ninterfere  with\t that figure as the Tribunal  had  no  other
\nalternative  except  to adopt an ad-hoc\t basis.\t  The  Court
\nhowever made it clear that in the case of old machinery\t the
\ncost  price of such machinery must be ascertained  and\tthis
\ncan be done by enquiring for how much the machinery could be
\noriginally  purchased  when  new.   There  is  therefore  no
\nwarrant for saying that only 30% of the rehabilitation\tcost
\ncan be allowed in the case of old machinery.
\nWe  cannot also agree with Mr. Ramamurti’s  contention\tthat
\nthe  Tribunal in calculating the rehabilitation\t requirement
\nfor  the bonus years was wrong in taking only  the  notional
\nnormal\tdepreciation  and  not\tthe  statutory\tdepreciation
\nincluding  development rebate permissible under the  Income-
\ntax  Act.  In Associated Cement Co.’s Case(1) at p. 994,  in
\nthe  Chart prepared by this Court only. the notional  normal
\ndepreciation   was   deducted\twhile\tthe   rehabilitation
\nrequirement.   It was when the Court calculated the  Income-
\ntax  payable by the Company that it deducted  the  statutory
\ndepreciation  from  the\t gross\tprofits\t (see  also   Bengal
\nKagazkal  Mazdoor Union & Ors. v. Titagarh Paper  Mills\t Co.
\nLtd. & Ors.<\/a>(2)
\nThe  last contention was that the Tribunal should  not\thave
\nrejected the bonus claim for 1956-57.  The balance-sheet for
\nthe  year  1956-57  was\t published  in\tDecember  1957,\t the
\nCompany’s accounts were closed and appropriations of profits
\nfor  that  year were made latest by the end  of\t 1957.\t The
\nclaim for bonus was raised for the first time by the Union’s
\nresolution  of July 24, 1959, that is, more than  18  months
\nafter  the closure of accounts.\t The claim for\t1956-57\t was
\nthus clearly belated and the Tribunal was right in  refusing
\nto compel the Company to reopen its accounts and to readjust
\nappropriations\tmade long before the demand was raised.\t  It
\nhas to be remembered that a claim, for bonus is not one\t for
\ndeferred wages.\t Its recognition in industrial\tadjudication
\nis based on the desirability of a balance of adjustments  of
\nthe   different\t interests  concerned  in   the\t  industrial
\nstructure  of a country in order to promote harmony  amongst
\nthem  on  an ethical and  economic  foundation.\t  Industrial
\nadjudication  therefore is bound to take into  consideration
\ndelay  and  laches before it calls upon the  other  side  to
\nreopen\tits accounts closed long ago.  We do not think\tthat
\nthe Tribunal was in any error in rejecting the claim on\t the
\nground\tof  laches.  The principle that aches are  fatal  to
\nsuch a claim has long been accepted in a series of decisions
\nboth by the Tribunals and by this Court.\n<\/p>\n
(1)  [1959] S.C.R. 925.\n<\/p>\n
(2)  [1963] II L.L.J. 358
\n801<\/span>
\nCalculation of annual requirement for rehabilitation of\t old
\nmachinery
\n801(a)
\nPeriod\t  Cost Cost as\t Multi-\t   Total    Less  Balance
\n\t       shown by\t plier\t   Break-\n<\/p>\n
\t       Co. in\t\t   down\n\t       Ex. M.\t\t   Value\n\t\t\t\t    5%\n1\t   2\t  3\t  4\t    5\t     6\t    7\n1950-51\t 13.37\t20.05\t 3.97\t  79.72\t    1.00   78.72\n1953-54\t  1.24\t1.86\t7.85\t  11.57\t    0.0914.48\n1954-55\t  1.95\t     2.93     3.50 10.25      0.15     10.10\n1955-56\t  0.30\t .45\t 2.47\t     1.11\t0.02\t1.09\n1956-57\t   1.40\t   2.10\t    4.75      9.97\t .11   9.96\n1957-58\t  1.77\t  2.65\t 2.29\t6.08\t  .13\t   5.95\n801(b)\nDeductions\t\tBalance\t\tDivisor\t      Annual\n\t\t\t\t\t\t     Require-\n\t\t\t\t\t\t     ment\n8\t\t\t    9\t\t  10\t       11\n(i) 48.83 Depreciation\t   11.67\t   3\t       3.89\n(ii)18.22 Available\n\t  Resourcess\n    67.05\n\t\t\t   14.48\t   6\t       2.41\n\t\t\t   10.10\t   7\t       1.44\n\t\t\t     1.09\t    8\t\t0.14\n\t\t\t     9.86\t    9\t\t1.10\n\t\t\t      0.95\t\t\t  10\n0.59\n\t\t\t\t\t  Total\t\t9.57\n802 (a)\nPeriod\t  Cost\t cost as  Multi-   Total     Less    Balance\n\t\t shown by  plier\t     Break\n\t\t Co.in\t\t\t down\n\t\t Ex.M.\t\t\t       value\n\t\t\t\t\t      5%\n  1\t   2\t   3\t    4\t\t   5\t    6\t   7\n1950-51\t 16.30\t16.30\t 3.36\t       54.77  0.81  53.96\n1951-52\t  1.43\t  1.43\t  1.87\t\t 2.67\t 0.07\t2.60\n1952-53\t  2.18\t  2.18\t  1.47\t\t 3.21\t 0.11\t3.10\n1953-54\t  1.12\t 1.12\t 2.28\t\t2.55\t0.06  2.49\n1954-55\t  3.71\t  3.71\t  1.96\t\t 6.90\t0.19  6.71\n1955.56\t  6.93\t  6.93\t 2.18\t      15.11\t0.35  14.76\n1956.57\t 13.11\t13.11\t 2.35\t      30.80    0.66   30.14\n1957-58\t  3.39\t 3.39\t 1\t   3.39\t  0.17\t  3.22\n1958-59\t  12.95\t 12.95\t  1\t      12.95   0.65   12.30\n1959-60\t  30.76\t  30.76\t   1\t       30.76  1.54   29.22\n802(b)\nDeductions\t    Balance\t  Divisor\t   Annual\n\t\t\t\t\t\t   Require-\n\t\t\t\t\t\t   ment\n    8\t\t       9\t    10\t\t     11\n\t\t   53.96\t    8\t\t   6.75\n\t\t    2.60\t    9\t\t   0.29\n\t\t    3.10\t  10\t\t   0.31\n\t\t    2.49\t  11\t\t   0.23\n\t\t    6.71\t  12\t\t   0.56\n\t\t   14.76\t  13\t\t   1.14\n\t\t   30.14\t  14\t\t   2.15\n\t\t    3.22\t  15\t\t    0.21\n\t\t   12.30\t  15\t\t    0.82\n\t\t   29.22\t  15\t\t    1.95\n802(c)\n<\/pre>\n
TOTAL ANNUAL, REQUIREMENT FOR OLD) AND NEW MACHINERY
\n\t\t      Old\t    New\t\t    Total
\n1957-58……\t     9.57\t   11.64\t    21.21
\n1958-59……\t   (additional)\t   0.82\t\t   22.03
\n1959-60…..\t   (additional)\t    1.95\t   23.98
\n803(a)
\n     Years\t\t     Machinery\t\t    Building
\nTotal
\n     1957-58\t\t 21.21\t\t  0.72\t\t 21.93
\n1958-59\t\t   22.03\t     0.77\t 22.80
\n1959-60\t\t   23.98\t      0.82\t  24.80
\n803(b)
\n\t  (Figures in lacs)
\nNational Normal Depre-\t\t     Balance to be  provided
\nciation allowed during\t\t     out of profits
\n     the year to be deducted
\n\t 9.10\t\t\t\t     12.83
\n\t 9.00\t\t\t\t     13.80
\n\t 10.83\t\t\t\t     13.97
\n803(c)
\nDetailed  Calculations\tof available surplus for  the  three
\nbonus years
\n\t\t\t\t   (Figures in lacs)
\n\t\t\t\t  1957-58  1958-59  1959-60
\nGross Profits\t\t\t   28.34    25.36     34.92
\nLess Notional Normlal Depreciation  9.10     9.00     10.83
\n\t\t\t\t   19.24    16.36     24.09
\nLess Income tax\t\t\t    8.18     7.48      7.31
\n\t\t\t\t    11.06    8.88     16.78
\nLess Wealth Tax\t\t\t     0.28    0.29      .. ..\n<\/p>\n
\t\t\t\t    10.78    8.59      16.78\nLess return on paid up capital\t     3.60    3.60\t4.35\n\t\t\t\t     7.18     4.99     12.43\n<\/pre>\n
Less  additional  provision for\t rehabilitation\t for  plant,
\nmachinery and buildings\t\t  12.8313-8013.97
\nvailable Surplus\t\t     Nil       Nil\t Nil
\n804<\/span>
\nThe,  Chartst showing calculations of available surplus\t for
\nthe  A\tthree bonus years show that in all  these  years  no
\nsurplus\t remains available for distribution of\tbonus  after
\nmaking\tprovision  for\trehabilitation.\t As  a\tresult,\t the
\nappeal by the Company must be allowed and the direction made
\nby  the Tribunal for payment of bonus for these three  years
\nhas to be set aside.  In the circumstances of this case, the
\nparties will bear their own costs.  The appeal by the  Union
\nis dismissed.  There will be no order as to costs.\n<\/p>\n
G.C.\t\t\t Appeal dismissed.\n805<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India National Engineering Industries … vs Its Workmen on 6 October, 1967 Equivalent citations: 1968 AIR 538, 1968 SCR (1) 779 Author: Shelat Bench: Shelat, J.M. PETITIONER: NATIONAL ENGINEERING INDUSTRIES LTD. Vs. RESPONDENT: ITS WORKMEN DATE OF JUDGMENT: 06\/10\/1967 BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. BHARGAVA, VISHISHTHA CITATION: 1968 AIR 538 1968 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-167904","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nNational Engineering Industries ... vs Its Workmen on 6 October, 1967 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/national-engineering-industries-vs-its-workmen-on-6-october-1967\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"National Engineering Industries ... vs Its Workmen on 6 October, 1967 - 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