Judgement

GOSWAMI, J.:- This appeal by special leave is directed against the award of the Industrial Tribunal, Maharashtra. Several items including the claim of 30 percent wage rise were referred to the Tribunal for adjudication. The tribunal granted all the reliefs except with regard to two demands which were not pressed. The Tribunal granted 25 per cent increase in wages. Hence this appeal.

2. Even according to the Tribunal the total additional financial burden of the company (Appellant herein) in accordance with the award will come to Rs. 1,16,687.18. The Company owns a press employing 150 workers. The State Government prescribed minimum wages with a special allowance under the Minimum Wages Act for press employees. It is not disputed before us that the company s wage scale is not lower than the prescribed minimum wages. The company pleaded before the Tribunal its inability to bear any more financial burden. The company produced the accounts and showed that it was incurring losses in several years (1968-69, 1970-71 and 1971-72).

3. We are dealing with a case of a company whose employees are in receipt of some kind of a fair wage, not bare minimum wage at subsistence level: It is well settled that while the question of capacity to pay is irrelevant in the case of minimum wage, the matter of a fair wage stands on a different footing. In case of a fair wage, besides the principle of industry cum region the company s capacity to bear the financial burden must receive due consideration. The past performances of the company and the future prospects with a totality of the picture must be present in the mind of, the adjudicator in deciding a dispute of this nature.

4. The tribunal was conscious of its duty to ascertain the financial capacity of the company but in doing so adopted an absolutely wrong approach resulting in erroneous conclusion. The Tribunal seems to have computed the profits of the appellant for each year on the assumption that the capital expenditure incurred in a particular year must have come out of the profits of that year and, therefore, to arrive at the correct trading result, the amount of the capital expenditure must be added back This assumption, with great respect, betrays ignorance of the true function of the Profit and Loss Account and fails to take note of the basic principle of accountancy that capital expenditure does not go into the profit and loss account. There can, therefore be no question of adding back the amount of the capital expenditure to the profit and loss appearing in the Profit and Loss Account for the purpose of arriving at the correct trading result. Equally patent is another error committed by the Tribunal, namely of adding back the carried forward loss of the previous years on the footing that it is not genuine to the profit or loss appearing at the foot of the Profit and Loss Account in order to determine the true profit or loss of the particular accounting year. This exercise on the part of the Tribunal is based on the assumption that the carried forward loss of the Previous years is taken into account in arriving at the profit or loss appearing in the Profit and Loss Account of the particular accounting year, and therefore, if such carried forward loss is not genuine,it must be excluded in computing the Profit or Loss of a the particular accounting year and to that extent the real profit or loss would stand enhanced. But this assumption is clearly wrong. The Profit and Loss Account of a particular accounting year never includes the carried forward loss of the previous years. It merely reflects the trading results of the year in question. If any particular item debited in the Profit and Loss Account is wrong, it may be added back but the carried forward loss of the Previous year not being an item of debit in the Profit and Loss Account, it is impossible to see how it can be added back to arrive at the true profit or loss. The Tribunal was therefore clearly in error in taking the view