UNITED BLEACHERS PRIVATE LTD Vs. INDUSTRIAL TRIBUNAL

JUDGEMENT

(1.) THE industrial tribunal, Madras, on a reference made to it of a dispute, inter alia relating to fixation of bonus for the year 1957-53, declined to accept the profit and loss statement furnished by the United Bleachers (Private) Ltd. , Madras, but calculated the available surplus for purposes of computation of bonus on revised basis of the rates charged for non-member customers of the concern and fixed one and a half months' wages as bonus payable to the workmen for the year. This petition under Article 226 of the Constitution is to quash that award.

(2.) THE short contention for the petitioner is that the tribunal was ex facie in error in reopening the balance sheet of the company for the year 1957-58, which showed a loss for the year, and calculating the receipts of the company on an imaginary basis to arrive at the available surplus. United Bleachers (Private), Ltd. , as the name itself implies, is engaged in the business of bleaching grey cloth for its members who are themselves, mills, and also to outside customers. For the year in question the concern charged third parties at a rate of 20 per cent higher than that charged to its members. The balance sheet was prepared on that basis. It la common ground that on that basis there would be no surplus profit, but on other hand there would be a deficit for the year. But on behalf of the workers it was said that the profits of the company should be calculated as if its member B had also been charged at the same rate as outsiders and if that were done, there would be available surplus to allow bonus. This contention found favour with the industrial tribunal which reopened the balance sheet and arrived at the bonus payable to the workmen as already mentioned.

(3.) IT is well settled that for arriving at the available surplus for purposes of bonus the profit and loss account as furnished by the management will have to be taken as the basis, and it is only when there is justifiable suspicion about the debit entries or genuineness of the accounts on which the balance sheet has been drawn up, or there is prima facie proof of mala fides that it will be within the purview of a tribunal to go behind the balance sheet and compute the available surplus on a different basis which it may consider to be appropriate and just in the light of the relative facts and circumstances. In Associated Cement Companies v. their workmen 1959-I L. L. J. 644 at 663 the Supreme Court, referring to this aspect, observed: The working of the formula begins with the figure of gross profits taken from the profit and loss account which are arrived at after payment of wages and dearness allowance to the employees and other items of expenditure. As a general rule, the amount of gross profits thus ascertained is accepted without submitting the statement of the profit and loss account to a close scrutiny. If, however, it appears that entries have been made on the debit side deliberately and mala fide to reduce the amount of gross profits, it would be open to the tribunal to examine the question and if it is satisfied that the impugned entries have been made mala fide, it may disallow them. Again in Crompton Parkinson (Works) v. its workmen 1959-II L. L. J. 382 at 387 the Supreme Court reiterated the principle in these words: In the absence of cogent and compelling evidence leading to the definite conclusion and finding that a purported expenditure was sham or bad been made with the express object of minimizing the profits with a view to deprive the workmen of their bonus, it is no part of duty of an industrial tribunal to substitute its own judgment as to what was or was not commercially justified in the place of the judgment exercised by the company and its directors in whom in law the management of the company is confided.