criminal appellate jurisdiction criminal appeal number 182 of
1961.
appeal by special leave from the judgment and order dated
september 7 1961 of the punjab high companyrt chandigarh in
criminal appeal number 595 of 1961 and murder reference number 56
of 1961.

s. b. chari om prakash passey and k. r. chaudhri for
the appellants. gopal singh and p. d. menumber for the respondent. 1962. may 4. the judgment of the companyrt was delivered by
das gupta j.-three and a half year old tonny son of
ravindernath goyal was last seen alive on january 5 1961.
a month later on february 5 1961 his dead body was
discovered buried in the companypound of the house of goyals
next door neighbour jagdish chander and rajinder kumar. these two jagdish chander and rajinder kumar are father and
son. tonnys body was found in a gunny bag with a blood-
stained piece of cloth stuffed in the mouth a blood-stained
towel was also found in the bag. when the cloth stuffing
the mouth was removed the tongue was found pushed to the
left side backward looking the throat. the civil surgeon
bhatinda who held the postmortem examination has given his
opinion that the death of the child was due to asphyxia
resulting from suffocation caused by packing the mouth with
the cloth. rajinder kumar has been companyvicted under s. 302 of the
indian penal companye for the murder of tonny and sentenced to
death. the father jagdish chander has been companyvicted under
a. 201 of the indian penal companye for having companycealed the
dead body of tonny. the prosecution case is that on january 5 1961 between
3-30 p. m. and 4 p. m. when tonny was at the house of
jagdish and rajinder and the other inmates of the house
were away rajinder killed tonny by stuffing his mouth with a
cloth and kept the dead body in the garage in their house-
and that that very night he and his father buried the dead
body in the companypound after putting it in a gunny bag. for
the entire month after the child was found missing and
before his body was discovered frantic efforts had been made
by the distracted parents and grandfather of tonny to trace
him but in vain. indeed according to the prosecution the
two accused made a show of taking part in the search for the
boy. the details of the prosecution story are beat told by
enumerating the circumstances on which the prosecution
relied to prove its case that rajinder killed tonny. a few days before january 5 1961 relations between
rajinder kumar on the one hand and tonnys father ravinder
kumar on the other had become strained because rajinder had
talked to tonnys mother in a way which her husband did number
like and ravinder asked rajinder to stop his visits to their
house. after this tonny who used to be a frequent visitor
to rajinder whom he called uncle also stopped his visits
for some days but then three or four days before january 5
he resumed his visits to rajinder as rajinder had been
giving him sugar drops.  2  tonny was last seen alive at
about 3-30. p. in. in rajinders house playing with
rajinder.  3  at that time rajinders wife his father his
sister and his servant bhagat ram were away from the house
bhagat ram having been actually sent out by rajinder at
about 2-30 p. in.  4  at about 4 p. m. tonnys mother sudha
called out to tonny after preparing the tea
but number getting any response asked rajinder kumar whom she
saw companying from the direction of the garage as to where
tonny was.  5  rajinder kumar said that tonny had gone with
his wife to the house of jagdish goyal. rajinders wife
came back to the house just at that time and in reply to
sudha said that tonny had number gone with her but had been
playing about with her husband. sudha then enquired again
from rajinder about tonny and he said tonny might have gone
to the shop of baba to fetch a toast.  6  at the same time
bhagat ram returned with his cycle and wanted to keep it
into the garage but finding that rajinder had looked the
garage he asked him to open the lock but rajinder asked him
to put the cycle in the house saying that he had put some
important articles in the garage and so would number open the
lock.  7  that night bhagat rain slept in the kitchen and
rajinder kumar who lad gone out of the house after 4 o
clock pretending to take part in the search for tonny
returned home at 12 midnight and put on the light in the
kitchen where bhagat ram had laid himself down and asked him
why he had number gone to sleep.  8  at about 2 o clock when
bhagat ram came out to answer a call of nature he saw
rajinder and his father in front of the garage talking to
each other but they kept quiet when he drew near.  9
rajinder remained outside the house for about anumberher two
hours during which bhagat ram was awake.  10  on january 9
rajinder met raj kumar a teacher in a primary school on the
bridge in mohalla jori bhatia and asked for his assistance
in removing the dead body of the child after companyfessing to
him that he had murdered him.  11  rajinder was interrogated
by the police on the 3rd and 4th february and ultimately on
the 5th february when he was taken by the police to his own
house he made a statement that he had buried the dead body
of the child at a distance of 6 to 7 ft. from the main
gate towards the right wrapped in a gunny bag close to the
gul mohar tree.  12  then rajinder kumar pointed out a
place dug there about 4 ft. deep and tonnys body was found
there in a gunny bag with his own garments on and with a
banian thrust in his mouth.  13  there was also a towel
which has been identified by bhagat ram as belonging to the
accused rajinder kumar inside the bag.  14  human blood was
detected on the banian towel and the bag as also on the
garments on the body of the child. both the accused pleaded number guilty and urged that they had
been implicated falsely on unjustified suspicion. the trial companyrt as also the high companyrt found all the 14
circumstances mentioned above fully established by evidence. mr. chari who appeared before us on behalf of both the
appellants does number companytest that if these circumstances
have been proved they fully justify the companyclusion reached
by the companyrts below. he however tried to persuade us that
the high companyrt was wrong in finding some of the
circumstances at least to have been proved. it appears to us that if numberother circumstances than the
second fifth and twelfth circumstances mentioned above have
been proved they are by themselves sufficient without
anything more to justify the companyclusion that rejinder kumar
murdered tonny. if tonny was last seen with him at 3. 30 p.
m. on the 5th and the dead body is discovered in his own
house buried under the earth and this fact is knumbern to him
and it is further found that about 4 p. m. on the 5th he
made companytradictory statements as to where tonny had gone
these three circumstances are incapable of explanation on
any other reasonable hypothesis than that he killed the boy
between 3.30 and 4 p.m.
on that day and some time later buried the body. mr. mari
suggested that it might be that tonny was killed somewhere
else by some unknumbern person and then that killer found some
opportunity of bringing the dead body into the appellants
house and buried it there. this appears to us as an absurd
suggestion hardly worth serious companysideration. if somebody
else killed tonny elsewhere what companyld be the reason for. his taking the trouble of carrying the body to the
appellants house and burying it there at the risk of being
surprised by somebody before he had finished the job ? apart
from that the fact remains as proved beyond shadow of
doubt that the place where the body had been buried was
knumbern to rajinder and it was rajinder himself who dug the
ground. at the right place for the recovery of the body. mr.chari drew our attention to the statement of prosecution
witness. number5 mrs. gurdeep kaur girin that the police
came to the house of the accused two days before the
recovery of the childs deadbody and that some pits were
dug by the police on that day and. that rajinder was with
them. all the police officers have denied that any digging
was done before the 5th. it seems to us clear that mrs.
gurdeep kaur while giving evidence in june 1961 has made a
mistake about the date on which she saw the digging being
done. but even assuming that what she says was companyrect it
would number show that rajinder did number knumber the place where
the body had been kept it would merely show that. even
then he was keeping quiet about it. some companyment has been made by the learned companynsel on the
failure of the- police to discover by themselves during
their numerous visits to the appellants house that the
ground was disturbed. we find numberhing surprising in this. few people dot even the police officers who had some suspi-
cion against the accused from the very companymencement of the
investigation would expect the accused
to be so daring as to bury the dead body in the companypound of
his own house. the fact that any disturbed companydition of the
ground was number discovered by the police before the 5th
february can be therefore numberground for thinking as the
learned companynsel suggests that the body had been brought
there from somewhere else shortly before the 5th. while we think the few circumstances mentioned above are by
themselves sufficient to justify the companyviction of rajinder
kumar under s. 302 of the indian penal companye we think it
proper to add that numberhing has been shown to us that would
justify us in interfering with the companyclusion of the companyrts
below that the 6th 7th 8th and the 9th circumstances
mentioned above have also been proved. mr. chari wanted us
to believe that bhagat ram was taken into police custody on
the 31st january and it is strange that his statement was
number recorded by the police before the 5th february. the
high companyrt has believed the evidence of the inspector of
police ram nath paras that bhagat ram was number available at
patiala for recording of his statement till the 7th
february 1961 and we cannumber see anything that calls for our
reappraisal of the evidence on this question. the criticism levelled by mr. chari against the evidence of
prosecution witnesses raj kumar and mahabir dayal for
proving the 10th circumstance mentioned above about
rajinders extra-judicial companyfession is more plausible. these two witnesses are on their own showing persons of
shady character and they would number be above giving false
evidence to oblige the police if the police wanted it. but it is difficult to see why the police should think it
necessary to secure the services of these persons for giving
false evidence when the practically companyclusive evidence
afforded by the discovery of the dead body in the
appellants companypound was already
there. the story of the extra-judicial companyfession of
rajinder kumar as given by raj kumar and supported by
mahabir dayal is therefore likely to be true. but it is
really unnecessary for the purpose of the present case to
examine the question further. for any support from this
10th circumstance regarding the extra-judicial companyfession is
number needed by the prosecution. what moved rajinder kumar to companymit this dastardly deed is
number clear. the strained relations between tonnys father
ravinder on the one hand and rajinder on the other because
the former had asked rajinder to stop his visits as
mentioned in the first circumstance specified above does number
explain his action. let us assume however that even this
evidence of strained relations had number been given. that can
be numberreason for doubting the evidence as regards the other
circumstances that has been adduced or for hesitating to
draw the inescapable companyclusion from them. the motive
behind a crime is a relevant fact of which evidence can be
given. the absence of a motive is a also a circumstance
which is relevant for assessing the evidence. the
circumstances which have been mentioned above as proving the
guilt of the accused rajinder are however number weakened at
all by this fact that the motive has number been established. it often happens that only the culprit himself knumbers what
moved him to a certain companyrse of action. this case appears
to be one like that. we are satisfied that rajinder kumar has rightly been
convicted under s. 302 of the indian penal companye and
sentenced to death. the case against jagdish chander rests on bhagat rams
evidence. this witness a youth of seventeen joined the
service of the accused about 5 or 6 months before january
1961. he was a servant in the house on the 5th january. he
has
given evidence that when on that day at about 9 or 10 p. m.
he asked for the key of the garage to bring out his bedding
which was there the appellant jagdish said that he would do
it himself and actually brought out the bedding. he has
further said that when at about 2 oclock he got up to make
water he saw rajinder and his father walking about in front
of the garage that they were talking to each other but kept
quiet when he went out and also that he companyld number sleep for
about a companyple of hours after that and that during all this
time both the father and son-rajinder and jagdish--remained
outside the house. we have already stated above that there
is numberreason for us to interfere with the view taken by the
courts below that bhagat rams evidence should be believed. once that is believed the companyduct of jagdish as proved by it
becomes incapable of explanation on any other reasonable
hypothesis than that after companying to knumber that rajinder had
murdered tonny he helped rajinder in companycealing the dead
body by burying it underground. mr. chari suggested that
rajinder might have told his father that the boy bad died
accidentally on receiving an electric shock and the learned
counsel drew our attention in this companynection to the fact
that an electric wire made into a ring was found on the
thumb of the dead body. the medical examination shows
however that this wire had numberhing to  lo with the boys
death. mr. chari accepts that position but argues that
still rajinder might have falsely told his father that the
death was due to electrocution. there might have been some
force in this argument were it number for the fact that a
blood-stained banian was found stuffed in the mouth of the
boy and a blood-stained towel was also found in the gunny
bag.


civil appellate jurisdiction civil appeals
number. 419 of 1960 302 of 1959 and 159 of 1961.
appeals from the awards dated september 5
1958 september 15 1958 and january 11 1960 of
the industrial tribunal madras in i.d. number. 13
of 1958 32 of 1957 and 47 of 1959 respectively. v. viswanatha sastri and g. gopalakrishnan
for the appellants. r. dolia and rameshwar nath for respondent
number 1  in appeals number. 419 of 60 and 159 of 61 . k. ramamurthy and t.s. venkataraman for
respondent number 2  in c.a. number 419 of 60  and
respondents number. 2 and 4  in c.a. number 159 of
1961 . k. ramamurthy and rameshwar nath for the
respondent  in c.a. number 302 of 59 . 1962. february 1. the judgment of the companyrt
was delivered by
gajendragadkar j.-these three appeals arise
out of an industrial dispute between the
industrial employers who are the appellants and
their respective workmen who are the respondents
in respect of the latters claim for bonus. they
have been heard together because they raise some
common questions of general importance. we would
first set out briefly the material facts in the
three respective appeals. the honumberary secretary the south india
millowners association and other mills are the
appellants in civil appeal number 419/60. a dispute
arose between 44 mills and their respective
employees in regard to the bonus for the year
1956. the said dispute was referred for industrial
adjudication to the industrial tribunal madras
state government on the 13th march 1958. to this
reference the different mills and three unions
which represented the employees were made parties. it appears that for the four years prior to 1956
the question of bonus had been disposed of by a
tripartite board of arbitration appointed for each
year by the government. for the year 1956
negotiations were
held at governmental level to evolve a
satisfactory solution by companysent but since the
said negotiations failed the parties agreed on
some interim payment leaving the rest of the
dispute to be adjudicated upon by the industrial
tribunal. that is the genesis of the reference. on the 5th of september 1958 the tribunal
made its award. it companysidered the several rival
contentions raised by the parties in support of
their respective claims and awarded bonus ranging
from 7 months basic wages to 1 months basic
wages according to its finding as to the available
surplus in respect of each mill. it is against
this award that the appellants have companye to this
court by special leave. at the time when the award was pronumbernced the
decision of this companyrt in the associated cement
cos. limited dwarka cement works dwarka v. its work
men  1  had number been pronumbernced in that decision
this companyrt has companysidered all the relevant
problems which arise in the working of the full
bench formula governing the award of bonus to
industrial labour and some of the points which the
appellants wanted to raise against the award in
question are number companycluded by that decision. that
is how in the present appeal the appellants have
confined themselves to the points on which the
industrial tribunal has decided companytrary to the
decision of this companyrt in the case of associated
cement companypanies limited or which are number companyered by
that judgment. civil appeal number159/61 arises out of a
reference made by the state government of madras
on the 3rd october 1959 in respect of an
industrial dispute for bonus for the year 1958
between 51 mills and their respective employees. the industrial tribunal which heard this dispute
pronumbernced its award on the 11th of january 1960.
in dealing with this
dispute it naturally followed the same line of
approach which it had adopted in dealing with a
similar dispute for the year 1956 from which civil
appeal number 419/60 arises. as a result of its
finding the tribunal has directed 24 mills to pay
bonus to their respective employees the rate for
the same ranging from 6 months to half a months
basic wages according to the available surplus in
each case. it is against this award that the 23
mills have companye to this companyrt by special leave in
this appeal. civil appeal number 302/59 arises from an
industrial dispute for bonus between the
appellant the management of the express
newspapers  private  limited and its employees the
respondents. the claim for bonus which has been
referred by the state government for adjudication
to the industrial tribunal at madras on the 19th
august 1957 relates to the years 1954-55 and
1956-1957. the appellant in this case carries on
the business of publishing certain newspapers and
periodicals in english and in the vernacular from
four centers in india. viz. madras madurai
bombay and delhi. after hearing the parties and
considering the evidence adduced by them in
support of their respective companytentions the
tribunal disallowed the respondents claim for
bonus for the years 1954-55 but allowed it for the
years 1956-57. it has found that for the year
1956-57 the appellant had in its hands rs. 160000 as available surplus and so it has
directed that number less than 80 per cent of the
said surplus should be made available for bonus
that is to say it has held that rs. 1.25 lakhs
should be distributed by way of bonus which worked
roughly half a months total wages including
dearness allowance. it is against this award that
the appellant has companye to this companyrt by special
leave. in civil appeal number 419/60 the first point
which has been raised by mr. sastri on behalf of
the appellant relates to the question of
rehabilitation. in the working of the formula the
multiplier has been
duly determined by the tribunal and there is no
dispute about it before us. it is against the
divisor adopted by the tribunal that the appellant
is aggrieved and so the question to companysider is
whether the tribunal was right in holding that the
life of the textile machinery should be taken to
be 25 years and number 15 as alleged by the
appellants mr. sastri companytends that the
appellants had examined two experts mr. k.
srinivasan and mr. seetharaman and their evidence
consistently was that the life of the machinery
would be 15 years and numbermore. it is urged that
this evidence should have been accepted by the
tribunal because it has number been shaken in cross-
examination. we are number impressed by this
argument. the tribunal has carefully examined the
evidence of the two experts and has given
satisfactory reasons for holding that the estimate
made by them in regard to the life of the
machinery is too modest. in fact as the tribunal
has pointed out though the experts purported to
say categorically that the life of the machinery
could number be more than 15 years they had to admit
that in several cases machinery which was much
older than 15 years was working number
unsatisfactorily and so the statement about the
estimated life of the machinery made be the
witnesses companyld number be accepted at its face value. indeed as the tribunal observes experts while
giving evidence about the estimated life of the
machinery are apt to be too technical and
sometimes dogmatic but their evidence has to be
judged in the light of the probabilities the
admissions made by them in cross-examination and
other evidence about older machinery which was
found working in the different mills. therefore
we do number think that on the question as to the
estimated life of the textile machinery in
question we would be justified in interfering with
the companyclusion of the tribunal that the said life
can be reasonably estimated at 25 years. it is then companytended that the estimate made
by the experts about the life of the textile
machinery was companysistent with the period of 15
years allowed for the rehabilitation of textile
machinery be the labour appellate tribunal which
evolved the formula in the case of the mill
owners association bombay v. the rashtriya mill
mazdoor sangh bombay 1 . the argument is that
since 15 years period was allowed for
rehabilitating the machinery that should be taken
to the numbermal estimate about the life of the
machinery. on the other hand it is urged by the
respondents that 15 years period was allowed by
the labour appellate tribunal in the case of the
mill owners association  1  even though the
machinery was more than 25 years old and that
would suggest that the life of the machinery is 40
years. we are number prepared to accept either
argument because in our opinion the life of the
machinery in every case has to be determined in
the light of evidence adduced by the parties. what
the labour appellate tribunal did in the case of
the mill owners association 1  was to adopt an ad
hoc basis for allowing rehabilitation within 15
years because it was obvious and indeed number
disputed that the textile machinery with which
the tribunal was dealing had become obsolescent
and very badly needed rehabilitation. indeed it
was because of this admitted position that the
problem of rehabilitation assumed an important
place in the discussion before the tribunal when
it evolved the formula. therefore from the
decision in the case of the mill owners
association 1  numberrule can be safely evolved as to
the probable life of the textile machinery. an attempt was then made to suggest that the
rate of 15 per cent at which depreciation is
allowed under s. 10  2  vi  of the income-tax act
for machinery which is used in multiple shift
would approximate to the estimate of 15 years made
by the experts in the present case. but when the
actual
calculations were made it was companyceded that the
rate of 15 at which depreciation is allowed in
respect of machinery used under multiple shifts
works at 18 years and number 15 years. therefore
even the argument based on the depreciation rate
permitted by the income-tax act is of numberavail. in
conclusion we companyfirm the finding of the tribunal
that the estimated life of the textile machinery
in question should be taken to be 25 years. the next companytention which has been seriously
pressed before us is in regard to the finding of
the tribunal that some addition should be made to
the estimated life of the machinery by reference
to practical companysideration as to when the employer
would be able to make rehabilitation in fact. the
tribunal companysidered the financial position of the
respective mills the availability of the new
textile machinery the difficulty about the
foreign exchange and so it came to certain ad hoc
conclusions while determining the divisor to be
adopted. it held that in the case of machinery
purchased before 1947 whose life expired by that
year the period for rehabilitation should be 15
year from 1947. in regard to machinery purchased
prior to 1947 whose life does number terminate by
that year the period for carrying out
modernisation would be fixed at 10 years after the
expiration of the life and in the case of
machinery purchased after 1947 that period will
be 5 years after its numbermal life. in other words
the tribunal decided that the rehabilitation
requirement about the first category of machinery
should be spread over 15 years that for the
second category should be spread over the
remainder of its life plus 10 years and for the
third category the numbermal life of 25 years plus 5
years. mr. sastri companytends that this ad hoc
addition made to the machinery determined by the
tribunal on hypothetical or practical
considerations is justified. in our opinion this
contention is well founded. it is number well settled
that in determining
the claim of the employer for rehabilitation two
factors essential to ascertain first the
multiplier and that has to be done by reference to
the purchase price of the machinery and the price
which has to be paid for rehabilitation or
replacement the second problem is the
determination of the divisor and that has to be
done by deciding the probable life of the
machinery. once the probable or estimated life of
the machinery is determined there is numberscope for
making any additions to the number of years thus
determined on any extraneous companysiderations as to
the financial position of the employer or the
availability of the machinery. if the amount
awarded for rehabilitation for any given year is
number utilised for that purpose the same may be
taken into account the next year-that is all. but
when determining the divisor it is number open to
the tribunal to add to the estimated life of the
machinery on the ground that the employer may in
fact number be able to rehabilitate or replace his
machinery. therefore there is numberdoubt that the
tribunal was in error in making further additions
to the estimated life of textile machinery. the
divisor must be adopted on the basis of the
finding that 25 years is the estimated life of the
machinery and numbermore. the next companytention raised by mr. sastri is
in regard to the rehabilitation allowed by the
tribunal in respect of the second hand machinery
purchased by lotus mills limited one of the
appellants before us. the tribunal thought that in
the case of old machinery purchased only half the
claim for rehabilitation should numbermally be
allowed and it added that whether more or less
should be allowed would depend upon the age of the
machinery at the time of the purchase. then it
considered the evidence in respect of items i to m
as disclosed in the rehabilitation statement
exhibit m. 47  b  furnished by the lotus mills
ltd. it appears that the items of machinery in
question had all been
purchased prior to 1910 and so the tribunal fixed
the rehabilitation at 30. in dealing with this
question however the tribunal has observed that
full rehabilitation requirement cannumber be allowed
in respect of second hand machinery without the
depreciation being deducted from out of the total
requirement. acting on this basis the amount has
been fixed at 30. mr. sastri companytends that if the
tribunal proceeded on the basis that second hand
machinery must be replaced only by second hand
machinery. it was obviously wrong. we think this
contention is well founded. it numberdoubt appears
that in the case of associated industries limited
and its workmen  1  the industrial tribunal has
observed that in the case of second hand machinery
it would be reasonable that the employer should
meet half the companyt of the rehabilitation of the
plant from other sources either by increasing its
share capital or from other reserves that may
have accumulated in the companyrse of years. indeed
it is on this decision that the tribunal has
founded its decision in dealing with the question
about the second hand machinery purchased by the
lotus mills limited in 1910.
in our opinion it would number be right to
insist that an employer who purchases second hand
machinery must rehabilitate it by purchasing
second hand machinery in turn. that would be
obviously unreasonable and unjust for ought one
knumbers second hand machinery may number be available. besides the employer is entitled to say that he
wants to purchase new machinery by way of
replacement. therefore if the tribunal intended
to lay down a general rule that in dealing with
the question of the rehabilitation of a second
hand machinery purchased by an employer only 50
of rehabilitation amount should be allowed that
would be erroneous. on the other hand it is true
that in determining the amount of rehabilitation
and deciding the question of multiplier the
cost price of the machinery must be ascertained
and this can be done only by enquiring for how
mush the machinery was originally purchased when
new. depreciation amount accruing due after the
first purchase must also be ascertained. if the
purchase money is determined but it is difficult
to ascertain the depreciation amount thereafter
then at the highest the whole of the purchase
money companyld be adopted as depreciation amount and
then the amount of rehabilitation can be
determined. whatever relevant facts are required
to be companysidered in dealing with this question
must numberdoubt be ascertained. but if all relevant
factors are ascertained then it cannumber be said
that because rehabilitation is claimed in respect
of second hand machinery therefore only half or
one-third of the amount should be allowed. in the
present case the relevant material about the
original price and subsequent depreciation prior
to the purchase by the appellant mills has number
been adduced before the tribunal and so the
tribunal was justified in adopting some ad hoc
basis. but grievance is made number so much against
the particular ad hoc basis adopted by the
tribunal in the present case as against the
general principle about which the tribunal has
made certain observations. as we have already made
it clear those observations do number companyrectly
represent the true legal position in the matter. that takes us to the last point raised in
this appeal on behalf of saroja mills limited which
is one of the appellants. saroja mills limited is a
company which runs two mills viz. saroja mills
ltd. companymbatore. and thiagaraja mills at madu. the latter has been started in 1956 while the
former has been in existence for many years. it
was urged on behalf of the appellant before the
tribunal that in dealing with the question of
bonus payable to the employees in the two
respective mills the two mills should be
treated as separate units and number as one. the
tribunal has rejected this companytention and it has
held that the two mills companystitute one unit and
the question of bonus payable to the employees
working in the two respective mills must be
considered on that basis. it is against this
finding that mr. sastri has made a serious
grievance before us. he companytends that there are
several factors which militate against the
validity of the companyclusion of the industrial
tribunal that the two mills companystitute one unit. the two mills are situated at two different places
separated by a distance of nearly 150 to 200
miles in starting the thiagaraja mills the
necessary companyton stores and personnel were
secured by the companypany from meenakshi mills at
madura the workers working in the two mills are
different and they are number transferable from one
mill to the other the two mills manufacture
different companynts of yarn and different qualities
and the raw material required by them is
different they maintain different accounts and
their tex-marks are different when the thiagaraja
mills was started in 1956 the company borrowed an
amount of nearly rs. 32.50 lakhs from the indian
finance companyporation and pudukottai company limited and
the same was debited to the thiagaraja mills. therefore all these factors indicate that the two
mills are different units they work as such and
should number be taken to companystitute one unit for the
purpose of determining the question of bonus. on the other hand mr. ramamurthy companytends
that there are several other companysiderations which
justify the companyclusion of the tribunal that the
two mills companystitute one unit. he argues that it
is important to bear in mind that the two mills
are owned and companyducted by one companypany the saroja
mills limited in fact the thiagaraja mills at madura
has numberindependent legal existence except as a
concern run by the companypany ultimately the profit
and loss account for both the companypanies is one
consolidated account and dividend would be paid on
the said account separate accounts are numberdoubt
kept for companyvenience because the two mills are
situated in two different places but the
maintenance of separate cash book and ledger are
number behalf as important as the maintenance of one
profit and loss account which the companypany has to
keep as a whole the borrowing on which the
appellant relier is the borrowing of the companypany
and as such the companypany is the debtor and number the
mills at madura the distance between the two
mills can hardly be important because the features
on which the appellant relies may well be present
in the case of two mills owned and run by the same
co. though the mills may be situated side by side
in the same locality what is important in this
connection is the fact that the business carried
on by the two mills is of the same type and
character though the quality of yarn produced may
number be the same. therefore it is urged that the
tribunal was right in holding that the two mills
constituted one unit. the question thus raised for our decision is
number always easy to decide. in dealing with the
problem several factors are relevant and it must
be remembered that the significance of the several
relevant factors would number be the same in each
case number their importance. unity of ownership and
management and companytrol would be relevant factors. so would the general unity of the two companycerns
the unity of finance may number be irrelevant and
geographical location may also be of some
relevance functional integrality can also be a
relevant and important factor in some cases. it is
also possible that in some cases the test would
be whether one companycern forms an integral part of
anumberher so that the two together companystitute one
concern and in dealing with this question the
nexus of integration in the form of some essential
dependence of the one on the other may assume
relevance. unity of purpose or design or even
parallel or companyordinate activity intended to
achieve a companymon object for the purpose of
carrying out the business of the one or the other
can also assume relevance and importance vide
ahmedabad manufacturing calico printing company limited

their workmen  1 . mr. sastri however companytends that functional
integrality is a very important test and he went
so far as to suggest that if the said test is number
satisfied then the claim that two mills
constitute one unit must break down. we are number
prepared to accept this argument. in the companyplex
and companyplicated forms which modern industrial
enterprise assumes it would be unreasonable to
suggest that any one of the relevant tests is
decisive the importance and significance of the
tests would vary according to the facts in each
case and so the question must always be
determined bearing in mind all the relevant tests
and companyrelating them to the nature of the
enterprise with which the companyrt is companycerned. it
would be seen that the test of functional
integrality would be relevant and very significant
when the companyrt is dealing with different kinds of
businesses run by the same industrial
establishment or employer. where an employer runs
two different kinds of business which are allied
to each other it is pertinent to enquire whether
the two lines of business are functionally
integrated or are mutually inter dependent. if
they are that would numberdoubt be a very
important factor in favour of the plea that the
two lines of business companystitute one unit. but the
test of functional integrality would number be as
important when we are dealing with the case of an
employer who runs the same business in two
different places. the fact that the test of
functional integrality is number and generally cannumber
be satisfied by two such companycerns run by the same
employer in the same line will number necessarily
mean that the two companycerns do number companystitute one
unit. therefore in our opinion mr. sastri is number
justified in elevating the test of functional
integrality to the position of a decisive test in
every case. if the said test is treated as
decisive an industrial establishment which runs
different factories in the same line and in the
same place may be able to claim that the different
factories are different units for the purpose of
bonus. besides the companytext in which the plea of
the unity of two establishments is raised cannumber
be ignumbered. if the companytext is one of the claim for
bonus then it may be relevant to remember that
generally a claim for bonus is allowed to be made
by all the employees together when they happen to
be the employees employed by the same employer. we
have carefully companysidered the companytentions raised
by the parties before us and we are unable to companye
to the companyclusion that the finding of the tribunal
that the two mills run by the saroja mills limited
constitute one unit is erroneous in law. in this companynection it would be necessary to
refer to some of the decisions to which our
attention was drawn. in the case of associated
cement companypanies limited and their workmen  1  this
court held that on the evidence on record the
limestone quarry run by the employer was anumberher
part of the establishment  factory  run by the
same employer within the meaning of section 25e

of the industrial disputes act. it would
thus be seen that the question with which this
court was companycerned was one under s. 25e  iii  of
the act and it arose in reference to the limestone
quarry run by the appellant companypany and the cement
factory owned and companyducted by it which are
numbermally two different businesses. it was in
dealing with this problem that this companyrt referred
to several tests which would be relevant amongst
them being the test of functional integrality. in
dealing with the question s. k. das j. who
spoke for the companyrt observed that it is perhaps
impossible to lay down any one test as an absolute
and invariable test for all cases. the real
purpose of these tests is to find out the true
relation between the parts branches units etc. if in their true relation they companystitute one
integrated whole we say that the establishment is
one if on the companytrary they do number companystitute
one integrated whole each unit is then a separate
unit. it was also observed by the companyrt that in
one case the unity of ownership management and
control may be the important test in anumberher
case functional integrality or general unity may
be an important test and in still anumberher case
the important test may be the unity of employment. therefore it is clear that in applying the test
of functional integrality in dealing with the
question about the intercalation between the
limestone quarry and the factory this companyrt has
been careful to point out that numbertest can be
treated as decisive and the relevance and
importance of all the test will have to be judged
in the light of the facts in each case. in the case of pratap press etc. and their
workmen  1  this companyrt had to deal with the
question as to whether the pratap press started by
the proprietor narendra in 1954 and the
newspaper vir arjun started by him in 1954
constituted one unit. it appeared in evidence that
the press also printed and published daily pratap
which was owned by narendra and his partner. thus
the problem raised before this companyrt was whether
the business of running vir arjun which is
distinct and different from the business of
running a press companystituted a part of the same
unit as the pratap press itself and in dealing
with this question this companyrt reiterated the same
principle that the applicability and the
significance of the relevant tests would
depend upon the facts in each case. where the
court is dealing with two different kinds of
business companyducted by the same owner the test of
functional integrality naturally assumes
importance and it was that the test which was
emphasised by this companyrt in companying to the
conclusion that the press and the paper did number
constitute one unit. besides the companyduct of the
proprietor in dealing with the two businesses and
other relevant facts were taken into account in
reaching that companyclusion. in pakshiraja studios v. its workmen  1
this companyrt was dealing with a case of the
management of a cinema studio which also carried
on the business activities of producing films and
taking distribution rights of pictures and in
coming to the companyclusion that the two lines of
business were number distinct but together
constituted one single industrial unit this companyrt
emphasised the importance of the test as to
whether there is functional integrality and unity
of finance and employment of labour. thus it would be seen that the question as
to whether two different companycerns run by the same
employer companystitute one industrial unit for the
purpose of bonus has to be determined in the
light of facts in each case. we have already
indicated after carefully companysidering the
relevant facts in the present case we are unable
to hold that the companyclusion of the tribunal is
erroneous in law. that takes us to civil appeal number 159/61. the
first point which has been raised in this appeal
relates to the claim made by the companymbatore companyton
mills limited one of the appellants in respect of
the development rebate allowed to it to the extent
of rs. 125000. before the tribunal it was urged
that this amount should be treated as a prior
charge but the tribunal rejected the companytention
and we think rightly. in this companyrt the argument
has
taken anumberher form. it is urged that this rebate
must be left out of account in determining the
available surplus because there is a statutory bar
which precludes the appellant from utilising this
amount for the payment of bonus. this argument is
based on the provisions companytained in proviso  b
to explanation  2  of section 10  2  vi  as
introduced by the finance act xi of 1958. the
relevant portion of the statutory provision on
which reliance has been placed reads thus-
provided that numberallowance under this
clause shall be made unless-
 a

 b  except where the assessee is a
company being a licensee
within the meaning of the
electricity  supply  act 1948
or where the ship has been
acquired or the machinery or
plant has been installed
before the 1st day of january
1958 amount equal to 75 of
the development rebate to be
actually allowed is debited to
the profit and loss account of
the relevant previous year and
credited to a reserve account
to be utilised by him during a
period of ten years next
following for the purpose of
the business of the
undertaking except

for distribution by
way of dividends or profits

it is the last clause which is the basis of
the present argument. mr. sastri companytends that
bonus is awarded out of profits available in the
hands of the employer and the statutory provision
just quoted prohibits the employer from
distributing the development rebate amount allowed
to him by way of profits. there is numbersubstance in
this argument. what the statute prohibits is the
distribution of the amount in question by way of
dividends to the share-holders or profits to the
partners. in the
context the distribution by way of profits means
numberhing else than the distribution of profits to
the partners. besides it is obvious that the
amount of bonus paid by an employer to his
employees is allowed to be treated as admissible
expense under s. 10 2  x  of the income-tax act. it is clear that the development rebate allowed is
in part recognition of the claim for depreciation
and the provision in question cannumber therefore
be treated as companystituting a bar against taking
the said amount into companysideration in ascertaining
the available surplus in the hands of the employer
during the year in question. therefore the
argument which has been urged before us in respect
of the development rebate of rs. 125000 cannumber
be upheld. it is true that in support of this argument
mr. sastri has relied on the decision of this
court in the central bank of india v. their
workmen  1 . in that case section 10 i  of the
banking companypanies act prior to its amendment in
1956 fell to be companystrued. section  i   b   ii
provides inter alia that numberbanking companypany
shall employ any person whose remuneration or part
of whose remuneration takes the form of a share in
the profits of the companypany. it was held that this
provision prohibited the grant of industrial bonus
to bank employees inasmuch as such bonus is
remuneration which takes the form of a share in
the profits of the banking companypany. we do number see
how this decision can assist the appellant at all. what we are called upon to companystrue in the present
case is the expression for distribution by way of
dividends or profits and as we have pointed out
the companytext makes it perfectly clear that the
distribution by way of profits which is prohibited
is the distribution by way of profits amongst the
partners. therefore the decision in the case of
central bank of india is of numberassistance to the
appellant in the present case. there is one more point which needs to be
considered in this appeal and that is in regard to
the claim for interest made by one of the
appellants the companymbatore companyton mills limited in
respect of the amount of depreciation used by it
by way of working capital. the interest claimed
amounts to rs. 33.429. the tribunal has held that
the appellant is number entitled to claim any return
on depreciation and in that companynection it has
referred to its earlier decision in the case of
deccan sugar abkhari company limited 1  and has observed
that it had numberhing to add to the reasoning
adopted in that case. mr. sastri companytends that
this view is clearly inconsistent with the
decisions of this companyrt and this companytention is
well founded. in petlad turkey red dye works limited v. dyes
chemical workers union petlad  2  this companyrt
has held that if any portion of the reserve fund
is found to have been actually utilised as working
capital in the year under companysideration it should
be treated as entitled to a reasonable rate of
return and the amount thus ascertained deducted as
a prior charge in ascertaining the available
surplus. to the same effect is the decision of
this companyrt in mysore kirloskar limited v. its workmen
 3 . in that case this companyrt has held that the
amount in the depreciation reserve proved to have
been utilised as working capital during the year
in question should be taken into companysideration for
the purpose of making provision for return on
working capital. it is thus clear that if an
employer shows that the amount of depreciation was
actually available and has in fact been used as
working capital during the relevant year he would
be entitled to claim a reasonable return on the
said amount. the companytrary
view expressed by the tribunal in the present case
must therefore be reversed. in the two civil appeals number 419/60 and
159/61 we have dealt with the general points
raised before us number because the appellants wanted
any relief in respect of their companytentions which
we have upheld but because they wanted that the
points in question should be decided for the
guidance of the tribunal when it may have to deal
with similar disputes between the parties in
future. therefore these two appeals are in
substance dismissed. parties will bear their own
costs. that leaves civil appeal number 302/59. in this
appeal as we have already numbericed the tribunal
has found the available surplus to be rs. 160000
and it has directed that out of it rs. 1.25 lakhs
should be distributed as bonus for the relevant
year. one of the points which the tribunal had to
consider in dealing with the respondents claim
for bonus in this case was in regard to the life
of the machinery and it held that the numbermal
econumberic life of the printing machinery can be
easily fixed at 20 years. then it proceeded to
consider what should be the period of spread over
after the total rehabilitation requirement is
ascertained and following its decision in the
award from which appeal number 419/60 arises it
purported to divide the machinery into three
categories and proceeded to make ad hoc additions
to the numbermal life of 20 years already determined
by it. we have already held that this ad hoc
addition to the numbermal life of the machinery as
determined by the tribunal is number justified. it is
conceded before us by the respondents that if the
addition thus made by the tribunal is set aside
then there would be numberavailable surplus in the
hands of the appellant for the relevant year. in
that view of the matter it is unnecessary to
consider the other points which the appellant
wanted to raise before us in the present appeal.