- (1.) -This appeal founded on a certificate granted by the High court of Bombay is against its order of dismissal in limini of the appellant's writ petition against the award, dated 22/10/1966, passed by the Industrial court under the Bombay Industrial Relations Act XI of 1947. The appellant manufactures silk and art-silk cloth and is a proprietory concern owned by Macks Hard (P. ) Ltd. , who purchased it in 1962. In-the accounting year 1964 the appellant had 60 workmen on its roll. By a letter, dated 14/09/1965, the workmen made a demand for 20% bonus on their total wages for the year 1964, that being the maximum allowable under the Payment of Bonus Act, 1965. The appellant's reply to the said demand was that it was liable to pay bonus at the rate of 4% only. Conciliation 256 between the parties having failed, the workmen referred the dispute to the industrial court for arbitration under Section 73-A of the Act. To their statement of claim the workmen filed an Annx. showing certain calculations according to which the allocable surplus and available surplus came to Rs. 48,782. 00 and Rs. 29,269. 00 respectively. By the said statement of claim they also called upon the appellant to produce its duly audited and authenticated statement of accounts, their aforesaid calculations being based on a kachha statement of accounts furnished to them by the appellant. In these calculations the workmen calculated return at 8.5% on a capital shown at Rs. 5,43,774. 00. In its written statement the appellant made a grievance that the work- men had rushed to the court basing their demand on a Kachha balance-sheet and profit and loss account supplied to them and that the appellant was therefore filing therewith as Annx. 'a' a duly audited balance-sheet and profit and loss account. The appellant submitted that according to its calculations based on the said balance-sheet and the profit and loss account, the year 1964 ended in loss and therefore its liability to pay bonus could only be at the rate of 4%. In its calculations filed as Annexure' B' to its written statement the appellant showed a net profit of Rs. 1,90,617. 00 from which, however, it sought to deduct the two sums in dispute, namely, (1) Rs. 2,06, 060. 00 and (2) Rs. 70,589. 00 as return at 8.5% on the capital of Rs. 8,30,460. 00. The tribunal accepted the figure of Rs. 1,90,617. 00 as the net profit for the year but disallowed the deductions of Rs. 2,06,060. 00 and Rs. 70,589. 00 rejecting the appellant's contentions (1) that the said sum of Rs. 2,06,060. 00 was deductable from the net profit as that amount represented customs duty which though re- fundable was not in fact received during the year from the customs authorities and (2) that the appellant's capital at the commencement of the accounting year was Rs. 8,30,460. 00. The tribunal held that though the said amount of customs duty may not have been actually received, it did not cease to be the earnings during the accounting year and therefore that amount could not be deducted from net profit. As regards capital, the tribunal accepted the workmen's contention that it came to Rs. 3,52,457. 00 only and a return at 8.5% on that amount only was claimable as a prior charge. The tribunal accepted the workmen's calculations and allowed bonus at the maximum rate of 20% as demanded by them. Aggrieved by the award, the appellant filed the writ petition which the High court dismissed summarily presumably on the ground that the said award did not contain any error of law apparent on the face of the record.
(2.) The only question therefore which counsel raised before us was that the 'tribunal was in error in not deducting the said amount of customs duty refund from the net profit and in not allowing as a prior charge return at 8,5% on the whole of the said amount of Rs. 8,30,460. 00.
(3.) As regards the amount of customs duty, the profit and loss account produced by the appellant before the tribunal showed the refund amount of Rs. 2,06,060. 00 on the credit side. On the expenditure side, the appellant had debited sundry amounts, such as excise duty, interest, rent, etc. Counsel for the appellant admitted that the appellant was maintaining its accounts on mercantile system and therefore amounts would be credited and debited as they accrued due and not when they were actually received or expended. The amounts debited on the expenditure side, therefore, must have been so done as and when they became due and not when they were actually paid. On the credit side also, the amounts would be credited not when they were received but as and when they accrued due. The amount of customs duty refund consequently would have to be credited as earnings when it was allowed or, and became payable and not when it was actually refunded. That being theposition, the tribunal was clearly right in refusing to deduct the amount of customs duty refund from the said amount of net profit.;