Subba Rao, J. -
(1.)This appeal raises the question as to what extent the reserves can be deducted from the amount required for rehabilitation of plant and machinery and also as to the manner by which the deductible reserves can be ascertained. It would be enough if we narrated only the facts relevant to the question raised. The appellant, Khandesh Spinning and Weaving Mills Company Limited, is a textile mill and its factory is situate at Jalgaon. The respondent, Rashtriya Girni Kamgar Sangh, represents the employees of the appellant-Company. The respondent on behalf of the employees issued a notice to the appellant under S. 42 (2) of the Bombay Industrial Relations Act, 1946, demanding payment of reasonable bonus for the period from January 1, 1955 to December 31, 1955. Negotiations in this regard having failed, the respondent made a reference to the Industrial Court under S. 73A of the said Act for arbitration of the dispute arising out of the said notice.
(2.)The arbitrator, i.e., the Industrial Court, following the "Full Bench Formula", ascertained the surplus to be Rs. 2.20 lakhs after deducting the prior charges from the gross profits of the Company, but it did not give any credit to the rehabilitation amount apart from the statutory depreciation. The Industrial Court disallowed this item for the following reasons:It estimated the amount required for rehabilitation at Rs. 60 lakhs; out of this amount it deducted Rs. 51 lakhs representing the reserves and the balance of Rs. 9 lakhs spread over a period of 15 years gave the figure of Rs. 60,000 as the amount that should be set apart for the year in question for rehabilitation. As the statutory depreciation was Rs. 83,639, it came to the conclusion that the Company would not be entitled to any allocation as a prior charge for rehabilitation. After excluding the said item of rehabilitation, it fixed the surplus in a sum of Rs. 2.20 lakhs and awarded to the employees four months' basic wages as bonus.
(3.)The learned Solicitor General contended that the Industrial Court accepted the position that the reserves were used as working capital, but deducted the said amount from the amount required for rehabilitation on a wrong and unjustified assumption that, as the amounts so required would be spent for rehabilitation over a course of 15 years by instalments, the temporary user of the said reserves would not affect the question as they would be released in part or in whole in future years. He argued that this assumption was contrary to the view expressed in decided cases and also the principle governing the ascertainment of the amount for rehabilitation purposes.