The balance-sheet of a Company is not sufficient to prove the fact of utilisation of any reserve as working capital.

Judgment

DAS GUPTA, J. : The only point raised in this appeal by the employer, Petlad Turkey Red Dye Works Limited, Petlad, against the award of an Industrial Tribunal of a sum 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 per cent interest on Rs. 2,27,000 standing and the deprecation 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 utilised as working capital no return thereon was allowable for the purposes of deciding on the amount to be deducted as prior charges in applying the Full Bench Formal. 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 in no reason whatsoever for making an exception in this respect as regards depreciation reserves.

2. 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 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 capital during the period under consideration we would have thought fit to calculate the amount allowable as return thereupon and deducted it from the amount ascertained as surplus by the Industrial Tribunal. On an examination of the record, however, we cannot discover any such material. All that we have is that the employer company in its written statement claimed interest on reserves as working capital at Rs. 32,000 the rate of return being mentioned as 4 per cent. It was not mentioned therein in so many words that the depreciation fund was part of the reserves employed as working capital. It is claimed however that such an averment was implicit in the claim of Rs. 32,000 as the amount allowable as return on reserves employed as working capital,. Assuming that this is so it still remained the duty of the Company to prove that any portion of the depreciation fund was actually utilised as working capital. It was suggested before us that this averment by implication that the depreciation fund was also used as working capital was not challenged by the workers. This suggestion is obviously incorrect. We find that in Exhibit U/1 a statement submitted on behalf of the workers containing calculations for the available surplus, Rs. 3,000 was shown as the amount deductible on working capital at 2 per cent. That is, a sum of Rs. 1,50,000 out of the reserves was stated to have been used as working capital. The employer s statement in Exhibit C/3 dated July 12, 1957, shows a deduction of "Interest at 4 per cent on Reserves employed as working capital - Rs. 32, 000". A similar claim is made in Ex. C/4, an alternative statement filed on behalf of the employer on July 12, 1957. The workmen also filed a statement showing calculations of bonus made by them on the same date, i.e., July 12, 1957. This is marked as Ex. U/3. According to this, return at the rate of 4 per cent on working capital of Rs. 1,66,000 while according to workmen, the reserves used as working capital was stated to be Rs.1,66,000 while according to the employer this amount was no less than 8 lakhs. It is quite clear therefore that the workmen had at no stage admitted either expressly or by implication the employer s claim that any portion of the depreciatio