B.N. Banerjee, J.
1. An industrial dispute between Messrs. Leonard Biermann (hereinafter referred to as the company) and their workers was referred to the Second Industrial Tribunal, by an order dated August 5, 1959. The scope of the dispute was the demand by the workers for introduction of a scheme for payment of gratuity. The Tribunal came to the conclusion that the company was running at a loss for the last few years and was not in a position to hear the burden of gratuity. In that view of the matter the workers' claim for gratuity was rejected find the Tribunal passed an award accordingly. The award was published,under Section 17 of the Industrial Disputes Act 1947, under a notification, dated July 23, 1960.
2. The propriety of the award is being disputed in this Rule, at the instance of the Workers' Union.
3. A single point was argued for my consideration in this Rule. It was contended that the Balance Sheets of the company, on the basis of which, the Tribunal came to the conclusion about the financial incompetency of the company, were inadmissible in evidence, alternatively that they did not contain true statements about the economic position of the company and should not have been relied upon, particularly after the company had failed to produce their books of account on the basis whereof the Balance Sheets-were purported to have been prepared.
4. It is necessary for me at this stage to refer to certain orders made by the Tribunal relating to production and inspection of documents. On December 2, 1959, the Workers' Union filed an application for a direction on the company to produce the following books and documents, on the plea that the Balance Sheets Bled along with the Written Statement did not show the correct financial position of the company, namely, (1) Ledgers, (2) Cash Books, (3) Journals, (4) Sale Registers, (5) Production Registers, (6) Stock Books, (7) Import Registers (8) Income-tax clearance Certificates, all of the years 1953 to 1959.
5. On the aforesaid application the Tribunal passed the following order, on December 12, 1959:
'The company objects to the production of books of account to the Tribunal. I do not think that the books are necessary. The company should produce the audited balance sheets at the rime of hearing and allow inspection of any books of account called for by the Union's Lawyer in their office On such dates as may be convenient to both the parties'.
6. Thereafter, the Workers' Union filed an application before the Tribunal complaining that the Company did not make inspection of the documents possible by their lawyer. Paragraph 7 of the application is set out below:
'That on 5-1-60 Sri Chatterjee went to inspect the book along with two other members of the Union but the Manager objected to the very presence of those members of the Union on the floor of his Office on the alleged ground that they were retrenched persons and as such inspection was not possible because the Advocate could not get any assistance from the Union members'.
On the aforesaid allegation the Workers' Union prayed for production of the books and documents, called for by the Workers' Union, before the Tribunal.
7. The Company filed an objection to the prayer made by the Workers' Union, the material-portion of which is set out below:
'That with regard to the allegations contained in paragraph 7 of the Union's application it issubmitted that on 5-1-60 Mr. T.P. Chatterjee, Advocate, came for the inspection cf Books along with two Ex-employees of your petitioner, who were retrenched in the month of September, 1959 and as such your petitioners objected in showing the Company's books to the two outsiders. Your petitioner was quite willing to show the Books to the learned Advocate for he Union but the learned Advocate for the Union left without making any inspection'.
8. On February 27, 1960, the Tribunal recorded the following order on the application for production:
'Heard the lawyers. The application by the Union for Production of documents is not pressed on condition that the company produces Balance Sheets for the years 1954-58. The Company's lawyers undertake to produce the audited Balance Sheets within a week. They should be produced accordingly within 7-3-00. The application is rejected as not pressed'.
From the order dated March 7, 1960, it appears that the company produced the audited Balance Sheets for the years 1903 to 1959 and the lawyer for the Workers' Union was allowed opportunity to inspect the Balance Sheets as desired by him.
9. It appears, however, from the order dated May 31, I960, that the workers' Union, apprehending manipulation in the Balance Sheets and Profit and Loss Accounts, renewed the prayer for production of certain books and documents, namely, the sale Registers, Production Registers, Stock Registers, Purchase Registers, Flint Paper, Import Registers, Order and Supply Registers, Cash Books and Bank Rooks, all of the years 1954 to 1959. Thereupon the Tribunal passed the following order:
'The Union's lawyer Sri T.P. Chatterjee has filed a petition in duplicate in the matter of production of some more documents by the company.
Keep the petition in the record and make over one copy to the company. The cornpany is to take note of it.
The case js fixed for hearing on 23-6-60'.
10. At the hearing of the case, the application for production of document does not appear to have been pressed. The Tribunal however, rejected the plea of the Workers' Union not to accept the Balance Sheet figures as correct, until they were supported by relevant books and registers, with the following observations:
'It has been argued that the figures in the balance-sheets should not be accepted as correct without proof from relevant books and registers-I should mention in this connection that the Union made an application On 2nd December, 1959 praying for a direction on the Company to produce certain registers and account books and allow inspection thereof. The Company objected to such production and the matter was heard on 18th December, 1959 when the Company was directed to 'produce the audited balance-sheets and to allow inspection of the account books mentioned in the application by the Union's lawyer in the company's office. The Union complained on 6th January, 1960 that the company had not allowed such inspection. It appears, however, from the petitions and correspondence on record that the company did not actually refuse inspection either by the General Secretary or by the lawyer of the Union but objected to inspection by two representatives of the Union who accompanied the lawyer. In terms of the order passed on 18th December, 1959 the Company was quite justified in refusing inspection by persons other than the Union's lawyer. The persons objected to were retrenched employees of the Company. The inspection could, have been made by the lawyer and the Secretary of the Union but this was not done. This matter was heard on 27th February, 1960 when the Tribunal was informed that the application for production of the account books would not be pressed by the Union on condition, that the Company produced its balance-sheets for the year 1954-58. The Company then produced its audited balance sheets for 1953-59 which were inspected by the Union's lawyer. Finally the Union filed a petition on 30th May, 1960 stating that it challenged the correctness of the figures in the balance-sheets and that the company should support the figures by production of its account books and registers. It has been argued that the balance-sheets should be wholly rejected because the company has not adduced any evidence in support of the same from its books and registers.
Reference has been made in this connection. ;to two recent decisions of the Supreme Court in the cases of Khandesh Spinning and Weaving; Mills Co. Ltd., Jalgaon v. Rashtriya Girni Kamgar Sangh, Jalgaon and Petlad Turkey Red Dye Works Co. Ltd. v. Dyes and Chemical Workers Union, 1960-1 Lab LJ 541: , : (1960)ILLJ541SC and: : (1960)ILLJ548SC respectively- In these cases, however, the formula laid down by the Full Bench of the Labour Appellate Tribunal for the calculation of net surplus for award, of bonus was being considered and the question which arose for decisions was whether the figures in a balance-sheet could be taken as proof of a claim of what portion of the reserve had actually been used as working capital without any evidence being given in support of such a claim apart from the balance-sheet It was held that a mere statement in a balance-sheet was not sufficient proof on the point and that the burden was on the party who asserted such statement to be correct to prove the same by relevant and acceptable evidence. The observations in these two cases were thus made in connection with the particular question which arose for decision therein and it cannot be contended that the result of these decisions is that all the statements and figures in an audited balance-sheet should be suspected and held to be incorrect until they are supported and corroborated by other evidence'.
11. The arguments in the alternative forms, advanced on behalf of the petitioner Workers Union, deserve careful consideration.
12. Under Section 1 of the Indian Evidence Act, the Act of its own force applies to all judicial proceedings jn or before any court. The expression 'Court' is defined in Section 3 of the Indian Evidence Act as follows:
'Court includes all Judges and Magistrates, and all persons, except arbitrators legally authorised to take evidence'.
Under Section 11(3) of the Industrial Disputes Act;
'Every Board, Court, Labour Court, Tribunal and National Tribunal shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure 1908 (V of 1908), when trying a suit, in respect of the following matters, namely:
(a) enforcing the attendance of any person and examining him on oath;
(b) compelling tiie production of documentsand material objects;
(c) issuing commissions for the examinationof witnesses;
(d) in respect cf such other matters as maybe prescribed; and every inquiry or investigation by a Board Court, Labour Court, Tribunal or National Tribunal, shall be deemed to be judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code (XLV of 1860)'.
13. Section 11(8) of the Industrial Disputes Act further provides;
'Every Labour Court, Tribunal or National Tribunal shall be deemed to be a civil court for the purposes of Sections 480 and 482 cf the Code of Criminal Procedure 1898 (Act V of 1898).'
14. On an analysis of all the aforementioned section, it will appear that Industrial Tribunals are authorised to take evidence and may be treated as Courts within the meaning of Section. 3 of the Indian Evidence Act. But proceedings before such Tribunals are to be deemed as judicial proceedings only within the meaning of Sections 193 and 228 of the Indian Penal Code and such Tribunals are to be deemed as Civil Courts only for the purposes of Sections 480 and 482 of the Code of Criminal Procedure. For all other purposes the Tribunals shall not be deemed to be Civil Courts and the proceedings before them shall not be treated as judicial proceedings.
15. It is often said that the proceeding before an Industrial Tribunal is a quasi-judicial proceeding.
'The use of the term 'quasi' for which the best synonym is 'not exactly' is **** a confession of vagueness', oil announcement that precise definition is impossible. Yet, if it cannot be defined .with precision, it can, at least be explained in concrete terms. The term describes the application by administrative officers of a broadly stated legislative policy to concrete cases by a procedure patterned after that used by a Court of law.'
(See American Administrative Law' by Bernard Schwartz, Ed. 1950, pp. 57-58). The Industrial Disputes Act was enacted, as the preamble shows, to make provision for investigation and settlement of industrial disputes and for other purposes appearing in the said Act. The object of the Act is, inter alia, to enforce industrial peace through the medium amongst others of Tribunals under a procedure patterned after the procedure in court of law, although not under the same procedure. A proceeding before an Industrial Tribunal, although deemed to be a judicial proceeding for certain purposes is not strictly a judicial proceeding in the sense that it calls for a decision on a question of legal right in dispute between the parties involving either a finding of fact or application of a fixed rule or principle of law Or involving both. Since the proceeding before an Industrial Tribunal is not wholly a judicial proceeding but merely a quasi-judicial proceeding, Section 1 of the Indian Evidence Act does not make the Act applicable of its own force to such a proceeding. An Industrial Tribunal, therefore, is entitled to proceed on the basis of oral or documentary evidence, which may not be strictly admissible in evidence under the Indian Evidence Act. This is also the opinion expressed by p.B. Mukharji, J. in Harchura. Tea Estate v. Labour Appellate Tribunal, : (1961)ILLJ174Cal .
16. In the view that I take, I overrule the first branch of the contention advanced on behalf of the petitioner Workers' Union that the Balance Sheets exhibited before the Tribunal were not admissible in evidence.
17. J now turn to the alternative branch cf the contention that the Balance Sheets should not have been solely relied upon, in the absence of supporting books of accounts, to find out the economic position of the company.
18. What were exhibited before the Tribunal Were not merely the Balance Sheets but also the Profit and Loss Accounts of the Company.
19. A Balance Sheet is a statement prepared from records kept on the basis of double entry showing, as at a given date, the sources from which an enterprise derived its funds (for example, from share-holders, creditors, partners or proprietors) and the various ways in which these funds wore invested, or applied (for example, in fixed assets, current assets, investments, loans, and advances and other claims). Jt is a statement in a summarised form of the balances of the ledger accounts remaining after all revenue and expense, accounts have been closed by transfer to revenue or profit and loss account.
20. A profit and Loss Account is an account designed to show the amount of net pro fit earned or net loss incurred during the financial period covered by the account, also the various headings under which the profits had been earned, and expenses incurred. The balance of the Profit and loss Account, in case cf profit, is included in the liabilities column of the Balance-Sheet and, in case of loss, in its asset column.
21. The evidentiary value of Balance Sheets came up for consideration before the Supreme Court several times in recent years. To begin with there is the case of Indian Hume Pipe Co. Ltd. v. Their Workmen, : (1959)IILLJ357SC in which the Balance Sheet of the Company was accepted as good evidence to prove that certain amounts, out of reserve, were actually used as working capital. Jt was however, pointed out by the Supreme Court, in the case of Khandesh Spinning and Weaving Mills case, : (1960)ILLJ541SC that the observation, in Indian Hume Pipe Co.'s case : (1959)IILLJ357SC (supra) was not intended to lav down the law that a Balance Sheet by itself was good evidence to prove any fact as regards the actual utilisation of reserves as working capital. Then again, in the case of Management of Trichinopoli Mills Ltd. v. National Cotton Textile Mill Workers Union, : (1960)IILLJ46SC the Supreme Court observed that the Balauce Sheet itself did not prove the fact of utilisation of any reserve as working capital and that the law required that such an important fact as the utilisation of a portion of the reserve as working capital was to be proved by the employer by evidence given on affidavit or otherwise and after giving an opportunity to workmen to contest the correctness of such evidence by cross-examination. The same view was reiterated by the Supreme Court in the case of : (1960)ILLJ548SC .
22. Before I part with this point, I need notice another decision by the Supreme Court reported in 1959 (II) SCA 280 (Associated Cement Co., Ltd. v. Their Workmen,) in which the Supreme Court, in laying down a formula for calculation of Bonus, held in favour of accepting the gross profit appearing at the foot of the profit and Loss Account of a company without submitting such Statement to close scrutiny. Nevertheless the Supreme Court held out a word of caution, namely, mala fide entries in the debit side and also glaring items of extraneous credit and debit must be excluded therefrom.
23. From the aforesaid decisions it appears that Balance Sheets and from and Loss Accounts, both summaries prepared from the account books by the company, are admissible in evidence before the Tribunal and may be relied upon if correctly prepared. But as the Supreme Court observed in Petlad Turkey Red Dye Works Company's case (supra):
'It has to be borne in mind that in many cases the Directors of the Companies may feel inclined to make incorrect statements in these Balance Sheets for ulterior purposes. While that is no reason to suspect every statement made in the Balance Sheets, the position is clear that we cannot presume the statements made therein to be always correct. The burden is on the party who asserts a statement to be correct, to prove the same by relevant and acceptable evidence.'
24. The question then is, was the company liable, In the instant case, to adduce further evidence in proof of us Balance Sheets and profit and Loss Accounts and to prove that the aforesaid two sets of document presented the correct financial position of the company? The answer to the question would be in the affirmative, if there be materials or circumstances to doubt the authenticity of the two sets of documents. At one stage of the proceeding, it is true, the Workers' Union aid express a doubt as to the correctness of the Balance Sheets and called for production of books and documents on which the same wore based' The Workers Union, however, later on gave up the stand and elected to be satisfied if only the Company produced its audited Balance Sheets. That the Company did. The workers Union also had inspection of the said documents. The last call by the Workers Union to compel the Company to produce their books of account and other documents was in the nature of rcving discovery, in which they aspired to fish, out of the account books, some materials to show that the balance Sheets and the profit and Loss Accounts had not been correctly prepared. This they were not entitled to do and the Tribunal below acted rightly in not encouraging them so to do.
25. In the particular facts and circumstances of this case, J hold that the Tribunal below was not wrong in proceeding on the basis of the Balance Sheets and Profit and loss Accounts, exhibited in the case, in finding cut the financial position of ihe Company. Then again, there were other documentary and oral evidence which the Tribunal considered in arriving at the conclusion as to the economic incompetency of the company to introduce a Scheme for payment of gratuity.
26. The fundamental principle in allowing gratuity is that it is a retirement benefit or a benefit after long service, a provision for old age and the trend of the recent authorities is in favour of allowing the employees the double benefit of provident fund and gratuity. Bhagwati, J., in Express News Paper (Private) Ltd. v. Union of India, : (1961)ILLJ339SC quoted with approval the following observation of the Labour Appellate Tribunal in the case of Workmen, Ahmedabad Municipal Corporation, v. Ahmedabad Municipal Corporation, 1955 Lab AC 155:
'We are, therefore, of the considered opinion that Provident Fund provides a certain meaning or relief only and a portion of that consists of the employees wages that he or his family would ultimately receive and that this prevision in the present day condition is wholly insufficient and two retirement benefits when the finances of the concern permit ought to be allowed.'
27. The Supreme Court had again to consider the reasonableness of introduction of gratuity scheme in the case of Bharatkhand Textile . Ahmedabad v. Textile Labour Association, : (1960)IILLJ21SC in which Gajendragadkar, J. observed:
'The scheme has been further attacked on the ground that before framing it the industrial court has not considered the extent of the liabilities already imposed on the industry. It has been strenuously argued before us that in assessing the extent of the liabilities the actual liabilities accrued as the result of the scheme has not been taken into account and the serious strain imposed on the industry by the imposition of excise duty has also been overlooked; on the other hand, undue importance has been attached to bonus shares and no account has been taken of the industry's obligation to contribute to the State Insurance, Scheme. We are not impressed, by these arguments. The argument about the actual liability accrued is really theoretical and cannot have much practical significance. If it is suggested that in framing a scheme of gratuity the capacity to pay should bo determined only if the employer can set apart a fund to cover the whole of the liability theoretically accrued, then gratuity schemes can be very rarely framed. Such schemes are long-term schemes and a fund to cover the total liability in that behalf must inevitably be built up in course of time year by year.'
28. From the latest pronouncement of the Supreme Court it will appear that it is not necessary for a company to possess a large surplus in hand so as to cover at a time the whole of the liability for gratuity theoretically incurred. Therefore, if the financial position of an employer is such that it is possible for such employer to build up a gratuity fund by setting apart some money year by year then a claim for introduction of a gratuity scheme should be allowed.
29. In the instant case, however, the Tribunal was satisfied that the company was consistently sustaining losses for the last several years and was not in a position to bear the burden of gratuity. Faced with losses year by year, it is not possible for the Company even to start building up a gratuity found, at present. That being so the Tribunal was right in rejecting the claim for gratuity.
30. In the view that I take, I discharge the Rule. Nothing contained in this judgment shall disentitle the workers from renewing their claim for gratuity when the company sees better days.
31. There will be no order as to costs in thisRule.