BAREILLY ELECTRICITY SUPPLY COMPANY LIMITED Vs. WORKMEN

JUDGEMENT

(1.) , J: The Appellant is an Electricity Supply Co., and in this Appeal by Special Leave challenges the Award made against it, by the Industrial Tribunal (III) at Allahabad on 15/11/1965. The dispute between the Appellant and its Workmen is one relating to the bonus payable for the year 1960-61. As an amicable settlement could not be arrived at, the State of U. P. by its order dated 24-1-1962 referred the following dispute for adjudication to the Tribunal:

(2.) ON behalf of the Appellant it is contended that the Tribunal was in error in disallowing depreciation on account of (a) double shift, (b) Income-tax, (c) return on working capital, (d) amount required for rehabilitation, (e) contingency reserve and (f) development reserve, the latter two of which were statutory reserves which the undertaking had to provide for, under the schedule to the Electricity (Supply) Act.

(3.) THE Full Bench formula concerns the claim of capital to prior charges which have to be taken into account to give a fair return to the investor and also to keep the industry working efficiently which in the long run will enure to the benefit of labour. THE item considered as prior charges are: (1) fair return on - (a) paid up capital; (b) working capital; (c) reserves ultilised as working capital which obviates the necessity to borrow at higher rates of interest. (2) Amount of money required for replacements, rehabilitation and modernization of machinery. (3) Depreciation allowed by the Income-tax authorities being only a percentage of the written down value, the fund set apart yearly for depreciation and designated under that head would not be sufficient for those purposes, so an extra amount would have to be annually set apart under the heading reserves to makeup the deficit. THE question what is the ratio of the available surplus which could be awarded as a bonus was also considered. THE Full Bench felt that the answer was not an easy one, but essentially the quantum of bonus must depend upon the relative prosperity of the concern during the year under review which is reflect in the amount of surplus; the need of labour at existing wages is also a consideration of importance. It observed in para 37: