The I ntlore Iron and Stttl Registered Swck- kolders' Assn. v. The State of Madhya Pradesh Uajendragadkar July 28. [1962] assent. This provision also shows that the decla· ration made by the Act was intended to be pros·
pective in operation and it would affect lawsmade !j,fter the commencement of the Act, and that clearly must mean that if a law had been passed prior to the commencement of the Act and it
authorised the imposition of a tax on the sale or purchase of certain commodities its validity can- not be challenged on the ground that the said com- modities have been subsequently declared by the
Act to be essential for the life of the community. The impugned notification with which we are con- cerned and the Act under which it has been issued are thus outside the purview of s. 3 of the Act.
That in substance IS the finding made by the High Court on the second contention raised before it by the appellant. In our opinion, the conclusion of the High Court on this point is right.
In the result the appeafa fail and are. dis- missed with costs. Appeals dismissed. THE AHMEDABAD MISCELLANEOUS INDUSTRIAL WORKERS' UNION v. THE AHMEDABAD ELEC'1'RICITY CO. LTD. (K.N. WANCHOO and K.C. DAS GUPTA, JJ.)
Bonus-Payable by electricity company-Depr,ciation- Modt nf calculation-Indian. -Ineome-ta,v Act (11 af 1922), Rules-Scli. VII-Electricity (Supply) Act, W48 (54 of 1.948). The respondent, which is an electricity company, con·
tested the claim of the appellant for three months' wages as bonus on the ground that if calculation was made on the Full Bench Formula evolved by the Labour Appellate Tribunal and approved by this Court in the Associated Cement Companies
Ltd. v. Its Workmen, (l!J59) S. C.R. 925, there would be no surplus available to pay the bonus. The question which arose for decision was \Vhcther d.:;preciation should be calcu- lated according to the provisions of Income-tax Act and the . t
' I 2 S.C.R. SUPREl'IE COURT REPORTS rules framed thereunder or in accordance with the provisions of the Seventh Schedule to the Electricity (Supply) Act, 1948. Heid, that the Income-tax rules should be applied in
calculating depreciation under the Full Bench formula in preforence to the provisions of the Seventh Schedule to the Electricity (Supply) Act, 1948 even in the cases of electricity companies.
U.P. Electric Sllpply Company Ltd. v. Their Workmen, (1955) (2) L. L.]. 431, Shree Jleenakshi Mills Ltrl. v. The Workmen, ( 1958) S.C.R. 878 and Tinnevelly Tuticorin Electric Supply Co. v. Its Workmen, (1960) 3 S.C.R. 68, considered. The Jli ll Owners Asaociation v. Rashtriya Mill Mazdoor
San7, Bombay, (1950) 2 L. L.J 1247, referred to. CrHL APPELLATE JURISlJICTION: Civil Appeal No. 479 of 1960. Appeal by specid leave from the Award dated August 13, 1959, of the Industrial Court
Bombay in Ref. (I.C.) No. 159 of 1957. G. T. Daru, k. Udayaruthnam and S.S. Shulda, for the appellant. Vimarlalal, J. B. Dadacltanji, Revinder N(irain and 0. G. _,ffathur for the respondent.
1961. July 28. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave in an industrial matter. The -ippellant is the Ahmedabad Miscellaneous Industrial Workers'
Union, and the dispute wliich went for adjudica- tion before the Industrial Uourt Bombay was with respect to bonus for the year ending Septem- ber 1956. The appellant claimed that three
months' wages should be awarded as bonus by the respondent, which is the Ahmedabad Electri- city Company Limited. The contention of the respondent was that if a calculation was made in
accordance with the Full Bench Formula evolved by the Labour Appellate Tribunal and approved The Ahmed.abad Miscellaneous Industrial Workers' Uni.on v. The Ah1Md.abad Electricity Ca.
Ltd. Wanchoo J. The Ahrnedahad J1iscellaneous 1 ndustrial · TV orkers' Union v. The Ahmedabad Electricity Go. Ltd. Wanchoo J, SUPREME COURT llEPORTS (1962) by this Court in the Associated Cement Comvcmies
Ltd. v. 11.i Worbnen ('), there wuulJ be no avail- able surplus from which any bonus could be awarded. The Industrial Court accepted the con- tention of the respondent and rejected the appel-
lant's claim. The main dispute in the Industrial Court centred on three points namely- (i) whether depreciation should be cal- culated according to the provisions of the Income-tax Act and the rules framed there-
under or in accordance with the provisions contained in the Seventh Schedule to the Electricity (Supply) Act, No. LIV of 1948; (ii) whether any deduction should be allowed as a prior charge towards contingen-
cies reserve created under the Electricity (Supply) Act ; and (iii) whether any deduction should be allowed on account of income-tax. The Industrial Court held against the appellant
on all the three points and found that there was uo available surplus from which auy bonus could be awarded. Hence this appeal by special leave. It is uot in dispute between the iparties that
if depreciation is calculated in accordance with the rules framed under the Income-tax Act, there will be no available surplus, from which bonus could be awarded. The main question
therefore that ,arises in this appeal is whether depreciation should be calculated according to the Rules framed under the Income-tax Act or in accordance with the Seventh Schedule to the
Electricity (Supply) Act. If this question is de- cided against the appellant. it would be unneces- sary to decide the other two points on which the parties were at variance in the Industrial Court.
(I) (1959) S.C.R. 925. 2 S.C.R. SUPREME COURT R.EPORTS !I:!'/ What <leprnciation shoulcl be allowccl in t.l1e C'ase of electricity oompanios eamc up for Utill81· dcration before the Appellate Tribunal iu l!IGi:i
in thCJ case of U. P. Electric ihtp/'ly C'o111pC!n!f Ltd. v. J'heir Workmen('), and it was vrossccl hdMo it that in tho case of electricity ~ot11pa11i0s dO]Jl'ecia- tion should be <lcductecl in the manner spoc:ified
in the Seventh Schedule to the Electricity (Supply) Act. The Appellate Tribunal pointed out that in the long rnn the resnlt of the application of t,he two methods would .be the same ; but it pre-
ferred to give as prior charge income-tax dcpreoia-· tion as it was in keeping with the Fn ll ]~c-Hoh formula and was not likely to raise fresh problems. It appears that since then, as pointed out by
the Industrial Court, various Industrial Tribunalq have been allowing cleprcciation'aouording to the income-tax rates and not according to the Seventh Schedule to the Eleptricity (Supply) Act in the
case of electricity companies also.· The U.P. Elec- tr·ic Supply Company's case (') came up for consideration before this Court in 1.'he 8hree JJfeenakshi ,lfills .J,[d. v. The1'.r Workmen (') and
was approved. This Go1u·t then approved the decision of the Appellate Tribunal disallowing initial a,nd additional depreciation in calculating depreciation for purposes of ·the Full Bench
formula but accepted th<1t depreciation according.to income-tax rates should be dedueted. It is true that The Meenakshi 11lill's wse (')was not dealing with ·an electricity comp:iny and this Court did
not have· occasion to consider th" point directly ; even· so, this Court approved the decision in the U. P. EleGtric Supply Company's case(') wit,h respect to depreciation and could not have been
unaware of the fact that the Appellate Tribunal had applied the income-tax rules for purposes 0£ depreciation to electricity companies in preference (I) (1955) 2L. L.J. 431. (2) (1958) S. C .. R. 87.8.
The Ahmcdabad Miscellaneous Industrial Workers' Union v. The Ahmedabad Electricity Co. Ltd. Wanchoo J. The Ahmedabad Miscellaneou" Industrial Workers' Union v. The Ahmdabad Electricity Co.
Ltd. Wanchoo J. \J38 [ 1!!62] to the provisions of the Seventh Schedule to the Eleet1frity (Supply) Act. Further in The Tinnevdly-Tuticorin Electric Supply Co. Ltd. v. Its Workmen (1), this Court
dealt with the ease of an electricity company direc•tlv. It had then occasion to consider the U. P. ·Electric S1Lpply Company's case l') again and pointed out that that case decided two ques-
tions of law. The first was in regard to the applicability of the Full Bench formula to electri- city companies, and the second was with respect to the extent of statutory depreciation to be
allowed under the Full Bench Formula. It was pointed out that the decision on the second point by which the income-tax rules were applied for purposes of depreciation to electricity companies
with the exception of initial and additional depre- ciation was approved by this Court in the Meenakshi Mill's case ('). It is again true that in the Tinne- velly-Tuticorin ·Electric Supply Company's case (')
the question whether depreciation should be allowed in accordance with the income-tax rules or under the Seventh Schedule to the Electricity (Supply) Act for the purposes of the Full Bench
formula was not directly raised ; but in effect the decision in the U. P. Electric Supply Cornpany's case (') where the Appellate Tribunal had applied the income-tax rules of depreciation in preference
to the provisions of the Seventh Schedule to the Electricity (Supply) Act, was approved. In the circumstances it seems to us that it is not open to the appellant to raise the question that the provi-
sions of the Seventh Schedule to the Electricity (Supply) Act should be applied for purposes of calculating depreciation in preference to the income-tax Tates in working out the Full Bench
formula. (I) (1960) 3 S. C.R. 68. (3) (I 958) S.C.R. 878. (2) (1955) 2 L.L.J. 431. (4) (1960) 3 S.C.R.68. 2 S.C.R But, assuming. that the question is still open because it was never directly raiijed in this Court
and specifically decided, we a!'e of opinion that. the income-tax rules shoulcl be appliecl ip working out depreciation under the Fn 11 Bench formula in preference to the provisiou~
of the Seventh Schedule to tho Electricity (Supply) Act. It was pointed out in T·innvelly- Tuticori:n Electriq 8upply Go.'8 mse (1) that 1..he pro- visions in tl,le Electricity (Supply) Act contained in
s. 57 and the Sixth ancf Seventh Schedules to the Act were for a special purpose, namely, to work :out t.he charges to be recovered from consum<>rs for the supply of electricity. It was also observed
that the provisions of the Electricity (SnJ)ply) Act and its Schedules were meant. for operation .in the field covered by the Act and t.hat the principles of industrial adjudication were wholly different
and hacl to be worked out in their own way in the industrial field. It seems to us therefore that in working ou't available sur1ilus according to the Full Bench' formula, the same prinoiple with res-
pect to depreciation should be applied in tbe case of electricitx companies as in the case of all other industrial concerns. As the ,Appellate Tribunal pointed out, the result in the long run would be
the same, though there might be difference in some vears. Besides, in the foi·muln. when it was evolved in 1950 (see The ivlill-Owners' .Assoc·iation· 'v.-The Rashtriya ~f!ill'Jfazdoor f::ia,n.yh Bombay.('), the' depre- ciation intended to be allowed was as provided in
th{: rules under the Income-tax Act. The Appel- hte Tribunal pointed this out. in t·hP [·. P. Ehc:tric S·tipply Oompan's case (') and said the Full Bench formula allowed depreciation according to income-
ta.x rates. It seems tu us therefore that in the field of iudustriti.l relations in connection with which the Full Bench formnla was 0voh·ed (I) (1960) 3 S. C.R. 68. (2) (1950) 2 L. L.J. 1247.
(3) (1955) 2 L. L. J. 431. 1961 . Tl1e Ahmedabad 1lfiscellaneous 1 ndu·strial lVfJrke,rs' Union v. 1'he Ahmedabarl I~lecti-fcify Co., ltd. Jranchoo J. .-!' The Ahmedabad M iscel Z..neoi;s
Industrial Workers' Union v. The Ahmeda~ad Electricity Co., Ltd. IVanchoo J. [1962) it is proper that the formula should be worked out as it was evolved without injecting into it the pro-
visions contained in the Seventh Schedule to the Electricity (Supply) Act. This will work for uni- formity in all industrial concerns ; and as pointed out in the Associated Cement Companies' case (1),
"the formula had on the whole worked fairly satis- factorily in a large number of industries all over the country, and the claim for bonus should be decided by tribunals on the basis of this formula
without attempting to revise it". If the provisions of the Seventh Schedule to the Electricity (Supply) Act which, as we have pointed out, were evolved for a special purpose, were to be injected into this
formula, the result would be that electricity com· panies would stand in a group by themselves when compared with other industrial concerns, and the uniformity that the formula had achieved in the
matter of bonus would be destroyed. The conse- quence then will be that in identical situations electricity companies may have to pay bonus while other industrial concerns to which income-tax rates
of depreciation would be applied may not have to do so. It seems to us that this is not desirable, particularly when we remember that electricity companies are public utility companies.
Another reason why we think that income-tax rates of depreciation should be applied for the purposes of the Full Bench formula in the case of electricity companies also is that income-tax rates
provide for a quicker building up of the deprecia- tion fund. This to our mind is all to the good in the case of public utility companies like those pro- viding electricity so that they may be in a position
to have funds at their disposal in case of unfore- seen difficulties resulting in the necessity of repla- cing plant and machinery earlier than what is pro- vided under the Seventh Schedule to the Electricity
(Supply) Act. (I) (1959) S. C.R. 925. 2 S.C.R. There is yet another reason which inclines us to approve the view taken by the Appellate Tribunal in the U. P. Electric Supply Company's
mse (' ). That case sett.led the law in 1955 and has since been followed throughout the country. We fed th11t we should not disturb that decision, unless there are good reasons for doing so-and none Las
bet•n shown. If anything, it appears to us th~.t this is not the time to disturb that decision which has now been followed throughout the country for the last six years, for the whole question of bonus is
under refrroncc to a high-powered commission which will go into the matter afresh and will necessarily consider the question of the revision of the Full Bruch form!Jla. As this Court pointed out in the
Assoc·irJ,ted Cement Company's case (2), the problem mised by the question of the revision of the Full Bench formula is of such a character that it could only he considered by a high-powered commisRion.
That is now being done and it seems to us in the circumstances that we should not disturb the decision arrived at by the Appellate Tribunal in the U. P. Electric Supply Company's case (1) on this
question. It follows therefore that the Industrial Court was right in allowing depreciation in accordance with the rates prescribed under the Rules framed under the Income-tax Act. As we have already
pointed out, if that is done, there will be no avail- able surplus in this case, from which bonus could be awarded. In the circumstances we do not think it necessary to decide the other two points relating
to the contingencies reserve and income-tax, which were raised before the Industrial Court. The appeal fails and is hereby dismissed. In the cir- cumstances we pass no order as to costs.
(I) (1955) 2 L.LJ. 431. (2) (l 9j9) S.C.R. 925. Appeal dismissed. The Ahmedabad Miscellaneous I nduslrial Workers' Union v. The Ahm edabad Electricity Co., Ltd. Wanchoo J.