B.N. Banerjee, J.
1. The petitioners, who were originally in the employment of Balmer Lawrie & Co., Ltd., in its managing agency department for Waygood Ottis, Ltd., London (installers of elevators and escalators), joined service under respondent 4, Ottis Elevator Company, (India) (Private), Ltd., in the year 1954, on the termination of the aforesaid managing agency agreement. One of the conditions, on which the petitioners took up service under respondent 4 company, on transfer from Balmer Lawrie & Co., Ltd., it was alleged, was that the said respondent 4 company would assume liability for all social benefits which the workmen used to receive under their former employer.
2. In support of the aforesaid allegation, reliance was placed on the following term of agreement between Balmer Lawrie & Co., Ltd., and respondent 4 company, which is set out below:
Ottis (India) will assume all liability for social benefits for such employees of Balmer Lawrie from and after the time they are transferred to Ottis (India).
3. Puja bonus, at the rate of one month's basic salary, was alleged to be one of the social benefits enjoyed by the workmen. Respondent 4 company, it was further alleged, paid and continues to pay the said bonus to the petitioners, since after they joined service under respondent 4 company. This is not, however, admitted by respondent 4 company.
4. In the years 1957 and 1958, the petitioners workmen claimed profit-sharing bonus and raised an industrial dispute. The said dispute was referred by the respondent State Government to the fourth industrial tribunal for adjudication the issue referred being:
Additional bonus for the years 1957 and 1958.
The stand taken by the petitioners workmen, in their written statement before the tribunal, was that respondent 4 company bad earned substantial profits during the years 1957 and 1958 and should pay profit-sharing bonus to the employees at the rate of three months' basic salary, in addition to the bonus paid at the time of the pujas.
5. The stand taken by respondent 4 company. in its written statement before the tribunal, was that the company started functioning in the year 1954 and apart from the fact that it had to finish some unfinished contracts entered into by Balmer Lewrie & Co., Ltd., as managing agents of Waygood Ottis, Ltd., London, it was a new business and the business had yet to stabilize. It was further alleged that at the time when the employees of Balmer Lawrie & Co., Ltd., joined the employment under respondent 4 company, it did not assume any liability for social benefits, conferred by Balmer Lawrie. & Co., Ltd., to its employees, who were all engaged on fresh terms and conditions of service. It was also alleged that respondent 4 company never paid bonus as puja bonus to its employees. Bonus, such as paid by respondent 4 company, was always related to profit earned and was paid to the employees at the time most convenient for them to receive the same. It was also alleged that the claim for* additional bonus for the years 1957 and 1958 was entirely misconceived and should be rejected.
6. Prior to the hearing of the dispute by the tribunal, the petitioners made an application for leave to deliver certain interrogatories with reference to the audited balance sheets, on which respondent 4 company made its calculations relating to available surplus for the years 1957 and 1958. The tribunal rejected the application with the following observations:
The union wants to know by the interrogatories as to:
(1) Why American system of accountancy had been adopted and if the Registrar, Joint Stock Companies, accepted the balance sheet ?
(2) Why discrepancies, arise as to amount shown as bills allotted and costs incurred for sale and service completed ?
(3) Why profits arising from work in progress had not been shown ?
(4) Why certain income and expenditure had been wrongly included ?
The company in reply stated that the questions put are premature, perplexing, vexatious and unnecessary.
Under Section 11(3), Industrial Disputes Act the tribunal is vested with the same powers as are vested in a Court under Civil Procedure Code in respect to compelling production of documents and material objects.
Prima facie it appears that the matter about which the informations are sought for can be clarified by the accountant of the company.
The learned lawyer for the company con-tended that all the questions raised would be explained away by the accountant who would be examined in the case as an expert competent to give opinion as the mode of preparation of balance sheet.
Order 11. of the Civil Procedure Code provides for the procedure for
(1) delivery of interrogatories and answer to interrogatories;
(2) discovery of documents;
(3) production of documents;
(4) inspection of documents.
It appears that the tribunal can exercise such powers as the civil Court with respect to that portion of order 11. Civil Procedure Code, which is confined to production of documents and inspection thereof and not to those relating to delivery of interrogatories.
Besides, I uphold the contention of the company that the matters over which answers are sought for can be given by the expert accountant by his evidence.
In the circumstances, I refuse permission to deliver interrogatories as made by the union.
7. By its award, the tribunal came to the conclusion that the appointment of the petitioners under respondent 4 company was a new appointment and the liability as to fulfilment of the benefits available to the workmen, as social benefits, could not be traced back to a period prior to that time. It farther held as follows:
A. As already found by me, the workmen under this company entered into their engagement in relationship as master and servant under this company since September 1954. The workers got bonus in Calcutta on the eve of Durga Pujas in 1955, 1950, 1957 and 1958 at the rate of one month's basic pay. The employees at Bombay and Delhi got the same rate of bonus on the eve of Dewali and Christmas. At the same time the bonus as was paid in 1955 though amounting to one month's basic pay was shared by Balmer Lawrie & Co. In view of the fact that Balmer Lawrie & Co. happened to be the employer for the months of August and September and that the workmen came under the employment of this company from October 1954. Even ignoring the fact that the payment of bonus in 1955 had been shared between the two companies, it can at best be said in favour of the workmen that they got bonus at the rate of one month's basic wages in 1955 and in 1956. Such payment of bonus for two years is not a sufficiently long period in order to ripen into a custom to create any right in favour of the workmen to justify a claim for each bonus in the following years. Nor can it be said that an implied condition of service for a bonus had developed in their favour. I, therefore, hold that in deciding the claim of additional bonus for the years 1957 and 1958, I shall have to take into account the amount already received by the workmen in the shape of bonus at the rate of one month's basic wages for each of the years, treating the same as profit bonus in order to determine if the claim for additional sum can be sustained, on the basis of the profits earned in those years.
B. Besides showing that the company had followed the mode of accounting in the preparation of profit and loss account somewhat different from what is done by other companies, I do not find any reason to hold that the profit and loss account do not show the correct state of things and that any items of income and expenditure, which are extraneous trading result of the company, had been incorporated therein to make a show of lesser profit than what had been actually earned by the company. The union had ample opportunity to cross-examine the accountant of the company at length and he had sufficiently explained the particular entries made in the profit and loss account. Apart from the certificate of the auditor, the accountant stated that the company could prove each item of income and expenditure with reference to the books of accounts.
The union in giving the calculation as to available surplus has reconstructed the profit and loss account in a novel manner. According to the version of the union, the gross earnings of the company should be calculated after adding together the amounts shown under the heads of ' bills rendered in advance' and those bills during the year both on account of sales and services and deduct from the same items of income derived under several beads as service. Bales, bills, etc (nine in number, marked by me with alphabet 'A' and 'I' in the profit and loss account sheet, Ex. 0). Now, be far as Income derived from the bills submitted by the company are concerned, the company's version, as supported by profit and loss account, is that only the amount of income as per bills both outstanding and for the current year as relate to completed portion of work is taken into account for the purpose of calculating the trading income end that is why the amount of the outstanding bills for which the work had not been completed is deducted for the purpose of finding out the real income. A separate list of the outstanding work and the amount under the bills thereof is submitted by the company in support of the contention. What is thus done by the company is to add together the amount of outstanding bills and the amount for the bills submitted during the year and deduct from the total that portion of the bill, work for which is not completed during the year and arrive at the income derived from the completed work under these bills in course of that year. It is to be noted that in the balance sheet the company has separately shown the work in progress as an item of asset and the figure under that head is a little excess of the amount shown under the head of ' uncompleted work with reference to the bills' It is pertinent to note in this connexion that the calculation of available surplus as submitted by the union is not supported by any oral evidence of the person who had prepared the same. In order to challenge the correctness of the entries of profit and loss account as prepared by the company, which is certified by the auditors as correct, it is necessary for the union to establish the same either by cross-examination of the accountant of the company produced at the dock or/and by examining an expert in their side. The union did not examine any expert witness to satisfy the tribunal as to how the calculation of available surplus as submitted from the Bide of the union had been done, even though the union insisted upon reconstruction of the balance sheet after challenging the correctness of the entries of the balance sheet and the profit and loss account of the company. In the circumstances, I find no reason to accent and rely upon the calculation given by the union as to available surplus. There is also no reason as to why the statement of accounts as shown in the profit and loss account of the company should be discarded and that I should proceed to reconstruct the same in the manner as demanded by the union.
8. The method adopted by the tribunal in finding out available surplus, if any, is set out below:
1957 Gross profit ... 1,02,123
iation ... 26,587
Deduct incometax ... 31,436
Deduct return on
1958 Gross profit ... 1,29,775
iation ... 28,567
Deduct incometax 55,622
Deduct wealth tax ... 7,770
Deduct return on
Total deficit ... 12,434
9. On the basis of the above calculation and taking into account the amount of bonus already paid for the aforesaid years, the tribunal rejected the claim of the petitioners as to additional bonus.
10. Aggrieved by the award, the petitioners workmen moved this Court, under Article 226 of the Constitution, for the Quashing of the award and obtained this rule.
11. Mr. Phanindra Kumar Sanyal, learned advocate for the petitioners, argued three points in support of this rule. He con-tended, in the first place, that the tribunal was wrong in disallowing interrogatories. He contended, in the next place, that the profit and loss account of respondent 4 company had not been properly made out in that it took into account credits and debits which were referable not only to the accounting year but to those of the previous years also. He contended lastly that the tribunal should not have taken into account the amount paid as puja bonus in determining the additional bonus payable to the workmen.
12. I take up for consideration the arguments of Mr. Sanyal in the order made.
13. The right to obtain discovery by interrogatories is to be found in order 11, Rule 1, of the Code of Civil Procedure which reads as follows:
In any suit the plaintiff or defendant by leave of the Court may deliver interrogatories in writing for the examination of the opposite parties or any one or more of such parties and such interrogatories when delivered shall have a note at the foot thereof stating which of such interrogatories each of such persons is required to answer: Provided that no party shall deliver more than one set of interrogatories to the same party without an order for that purpose : Provided also that interrogatories which do not relate to any matters in question in the suit shall be deemed irrelevant, notwithstanding that they might be admissible on the oral cross-examination of a witness.
14. Every party to a suit is entitled to know the nature of his opponent's base, so that he may know beforehand what case he has to meet at the hearing. But he is not entitled to know the facts which constitute exclusively the evidence of his opponent's case. Every suit contemplates two sets of facts, namely: (1) facts which constitute a party's case; this must be pleaded with sufficient details (?); and (2) (sic) facts which constitute a party's case to be proved, namely, evidence which need not be pleaded (vide order 6, Rule 2, of the Code of Civil Procedure). A party to a cause may administer interrogatories on the material facts relied upon by the other party for his claim or defence, as set out in the pleading, but not on the evidence by which a party's case may be proved. The interrogatories sought to be administered by the present petitioners do not relate to the pleading by respondent 4 company but relate to the evidence, which may disprove the pleading. Therefore, even apart from the reasonings given by the tribunal in rejecting the application for leave to administer interrogatories, I hold that the petitioners had no right to administer interrogatories of the type applied for.
15. In support of his second contention Mr. Sanyal relied upon the following observation by the Supreme Court in Indian Hume Pipe Company, Ltd. v. their workmen 1959 II L.L.J. 357 at 361:
It is also well-settled that calculation of the surplus available for distribution should be made having regard to theworkingof the industrial concern in the relevant accounting year without taking intoconsideration the credits or debits which are referable to the working of the previous years.
16. Relying on the aforesaid observation, Mr. Sanyal contended that in the profit and loss account for the year 1958, respondent 4 company was wrong in starting with the following figures:
January 1958. 46,37,682.49 61,335.00
year ... 44,01,419.92 66,472.00
during the year ... 63,00,180.41 18,815.00
So also for the year 1957 respondent 4 company, Mr. Sanyal contended, was wrong in starting with the following figures:
1 January 1957. 23,75,719.83 25,751,00
the year ... 35,14,587.66 58,029.00
Less billed In
the year ... 46,37,682.49 61,335.00
17. Mr. Sanyal contended that this was taking into consideration the debits and credits of the previous years and was hit by the observation of the Supreme Court in Indian Hume Pipe Company case 1959-II L.L.J. 357 (vide supra).
18. The objection in this form, however, was not taken before the tribunal. What was contended before the tribunal was that bills rendered in advance and bills during the year on account of sales and service should both be added and therefrom should be subtracted items of income derived from service and sales bills, etc., nine in number, as indicated before the tribunal. The argument in the form made before the tribunal did not quarrel with the numerator obtained by adding up the two sums of bills in advance and bills during the year but merely disputed the denominator.Mr. Sanyal, however, now seeks to dispute the numerator on the basis of the observation of the Supreme Court in Indian Hume Pipe Company case 1959-II L.L.J. 357 (vide supra). It is too late for him to try to do so.
19. The accounts of respondent 4 company, Mr. Meyer, learned advocate for respondent 4 company argued, were kept under the American Cost Accountancy System. Under that system accounting in each year of account is self-contained and nothing is carried forward. This peculiarity in the American system of accounting was noted by the Supreme Court in the case of First National City Bank v. Commissioner of Incometax, Bombay : 42ITR17(SC) . The basic objective of cost accounting system
is the determination of units costs of manufacturing various products or rendering a service or distributing products. Management uses this basic information to guide it in making decisions which will maintain or increase the profits of a firm. Suchpolicies involve measuring productive efficiencies, computing break-even points, and establishing sales policies.
This cost accounting system is made up of a series of forms, journals, ledgers, accounting entries, and managerial reports integrated into an efficient series of procedures so that the unit costs can be determined promptly and used in making managerial decisions.' [Vide 'Cost Accounting, Principles and Practice by John J. W. Neuner-1962 Edn.]
20. Regard being had to the system under which the accounts of respondent 4 company are kept, it is necessary for the company to start the account of every year with the figures of bills rendered in advance at the beginning of each accounting year. The figure represents the amount of bills in advance on contracts not completed during the previous year and takes the place of carry-forwards under the English system of accounting. That is the type of explanation which appealed to the tribunal, as will appear from extracts from the award quoted above, and, in my opinion, rightly so. On ultimate analysis the two accounts respectively represented the trading results of the relevant accounting years. I, therefore, overrule the second branch of argument advanced by Mr. Sanyal.
21. The last argument may be shortly disposed of. The tribunal came to the conclusion that the bonuses paid during the earlier years and also in the years 1957 and 1958 were profit-sharing bonus and not puja bonus paid as a condition of service. That finding was not shown to be wrong. That being so, the tribunal was not wrong in taking into consideration the bonus in determining whether any additional bonus should be paid for the years 1957 and 1958 out of the available surplus.
22. The calculation adopted by the tribunal in arriving at the figure of the available surplus is, in my opinion, not erroneous, nor is the system under which the accounts are kept wrong. Mr. Sanyal could not justify why bills on account of service, sales, bills, etc, only (nine items in number as contended before the tribunal) and not the bills on the amount of uncompleted work during the year should be deducted out of the total of bills rendered in advance in January each year together with the amount of bills during the year. That being so, I am of opinion, that profits as made by respondent 4 company and as found by the tribunal do not accommodate additional claims for bonus as made by the petitioners.
23. In the view taken by me, all the arguments advanced on behalf of the petitioners' workmen fall and I discharge this rule.
24. There will be no order as to costs.