the tribunal went wrong in adding back the three
amounts to the gross profits. merely because a figure is to be found in the audited
balance sheet of the companypany the industrial tribunal is number
bound to accept the said figure if challenged. but when
the figures for expenses incurred in companynection with fuel
given in the balance-sheet are also deposed to by a witness
the tribunal should number have discarded the evidence of the
witness on this point. the figure as shown in the balance-
sheet should have been accepted by the tribunal and there
should have been numberdeduction on account of excess debit to
coal and fuel companysumption. 564 a c

the number-inclusion of one months revenue in respect of
hulk supplies etc. was bona fide caused by switching over to
a different basis of accounting which the employer companyld
lawfully have done and the tribunal was number justified in
adding back the amount to the profits as it had done. 566

in applying the full bench formula the employers cannumber
be charged with any numberional profits which they should have
made although the formula itself is numberional. it has never
been held by this companyrt that if through the inefficiency in
the working of the industry or by reason of use of defective
machinery of apparatus full profits are number received with
the result that nationally labour is deprived of a share
thereof the tribunal adjudicating on the question of bonus
payable to labour for a particular year should add back to
the gross profits as shown in the balance-sheet the amount
of profit lost through the inefficiency or negligence of the
employers. 568- g
the a.c.c. limited v. its workmen 1959 s.c.r. 925 at 955 and
m s. j. k. companyton manufacturers limited kanpur v. their
workmen 1954 l.a.c. 716 at 745 referred to. this companyrt has held that a return of six per cent is
ordinarily companysidered to be a fair return on the capital
invested in the case of paid up capital and also that in a
particular industry where the risk in the business was great
there would be a good cause for providing for six per cent. deducting the amounts allowed by the tribunal as prior
charge as also the numberional numbermal depreciation and allowing
a return on the capital at six per cent the available
surplus would number be enumbergh to meet the provisions for
statutory companytingency reserve and statutory development
reserve. while it is true that these amounts cannumber be
considered as prior charges far the purpose of finding
available surplus they have to be taken into companysideration
when the question of distribution to the workers out of the
available surplus arises. 569 c-d
m s burn company limited v. their workmen 1956 s.c.r. 781
pierce leslie company limited kozhikode v. workmen 1960 3

c.r. 194 national engineering industries limited v. its
workmen 1968 1 s.c.r. 779 m s. bareilly electricity
supply company limited v. the workmen 1972 2 s.c.r. 241 and
mathura prasad srivastava v. saugor electric supply company limited
1966 2 l.l.j. 307 referred to. civil appellate jurisdiction civil appeals number. 1255 and
1256 of 1966.
appeals by special leave from the award dated numberember 16
1965 of the industrial tribunal  111  allahabad in
adjudication cases number. 9 and 12 of 1962.

b. pai harish chandra h. k. puri and b. ramrakhiani
for the appellant  in both the appeals . p. goyal for respondent number 1  in c.a. number 1255 of
1966 . p. goyal and m. v. goswami for respondent number 1  in

a. number 1256 of 1966 . n. tiwari secretary intuc u.p. in person for
respondent number 3  in both the appeals . m. singhvi and o. p. rana for respondent number 4  in
both the appeals . the judgment of the companyrt was delivered by
mitter j. these two appeals by special leave arise out of
an award of the industrial tribunal allahabad following two
references dated 24th january 1962 by the state of u.p. tinder s. 4-k of the u.p. industrial disputes act 1947.
the subject matter of both the references was whether the
employers  the appellants before this companyrt  should be
required to pay bonus to their workmen for the year 1960-61
and if so at what rate. the u.p. electric supply company limited  the appellants herein
had two electricity undertakings one at allahabad and the
other at lucknumber. it carried on the business of generation
and distribution of electricity under two licences one for
allahabad and the other for lucknumber within the areas
specified therein. in pursuance of the provisions of
paragraph 12 of the said licences the u.p. electricity board
compulsorily acquired the said undertakings of the companypany
including the business of generation and distribution of
electricity in the areas companyered by the licences with effect
from 16th september 1964. the tribunal had however entered
on the reference on 29th january 1962 and its proceedings
continued down to 16th numberember 1965 when a companymon award
was made directing the employers to pay three months basic
wages as bonus to all the workmen entitled thereto for the
year 1960-61. these appeals are against the said award. on behalf of the appellant a preliminary point was raised
viz. that after the appellants undertaking was taken over
in september 1964 the industrial dispute if any between
it and its workmen ceased to exist. the reasoning behind
the argument was
that if the industry itself disappeared any adjudication
with regard to a dispute which had arisen in the past would
be a fruitless errand and any award made on the reference
thereafter would be ineffective. our attention was drawn to
certain decisions of this companyrt in support of the above
reasoning. before we proceed to do so we think it will be
proper to examine the question as if it were res-integra. in our view the broad proposition put forward by companynsel
for the appellant that as soon as a particular industry
ceases to function any adjudication in respect of a dispute
which had occurred prior thereto becomes abortive cannumber be
accepted. it may be that an adjudication which companycerns
only the future working of the industry becomes redundant
when the industry itself companyes to an end. if the dispute is
one which relates to the past working of the industry and in
particular where the claim of the workmen is for benefits
which according to their view had accrued to them in the
past it can hardly be said that the adjudication is without
any purpose. if the workmen ask for better service
conditions like the revision of wage scales dearness
allowance medical and other facilities gratuity etc. it
would be useless for the tribunal to companyplete the
adjudication and award how the service companyditions etc. ought
to be bettered or revised where as industry is number-est. where however the dispute as in this case is over a claim
to benefits by way of bonus for work done in the past it
would be the duty of the tribunal to companyplete the
adjudication and make its award. if the tribunal finds that
because of the service rendered by the workers in the past
an industry reaped profits whereof a portion should go to
the workmen it should number lie in the mouth of the employers
to say that inasmuch as they have ceased to carry on
business their obligation to pay for service rendered in the
past should be wiped out. there is numberlogic in the
submission made on behalf of the appellants that the
ascertainment of the liability even with regard to the
working of the industry in the past can take place only
during the subsistence of the relationship of master and
servant between the employers and the employed. companynsel for the appellant referred to certain provisions in
chapter v-a of the industrial disputes act 1947 as
illustrative of his argument that in cases where legislature
felt it necessary to provide for relief to workers even
after the closure or transfer of an industry it made
express provisions therefore. in particular reliance was
made to s. 25-ff and 25-fff to show that by the first of the
above provisions the legislature had provided for
compensation to certain workmen where the ownership or
management of an undertaking was transferred whether
voluntarily or by operation of law. similarly companypensation
had been provided for in s. 25-fff for workmen in cases
where on the closing down of
an undertaking for any reason whatever workmen were to be
treated as having been retrenched thus giving them the
benefit of retrenchment companypensation. reference was also
made to s. 33-c of the act under which a workman companyld
approach the appropriate government for recovery of moneys
due to him under a settlement or an award under the
provisions of ch. v-a of the act. in our view by these
provisions the legislature sought to give redress to workmen
in the companytingencies mentioned in the said sections which
are of companymon occurrence. these sections do number lay down
that on the closure or transfer of an undertaking the
employers were to be relieved of all other obligations to or
claims of the workers. the preamble to the industrial
disputes act which expressly aims at preventing strikes and
lockouts is in pari materia to the u.p. industrial disputes
act i.e. to make provision for the investigation and
settlement of industrial disputes and for certain other
purposes cannumber be read down to mean that the statute was
being enacted only for the purpose of securing industrial
peace so far as the future working of the industry was
concerned. numberdoubt the main object of the act is to ensure
industrial peace but equally important is the purpose behind
the act that the workmen should number be deprived of their
legitimate share of profits made by the industry. the
central object of the act is to preserve industrial harmony
which would be meaningless if the workers of a particular
industry were to be deprived of benefits of services
rendered in the past. the first decision of this companyrt which bears on this point
is the case of pipraich sugar mills limited v. pipraich sugar
mills mazdoor union 1 . the facts in that case were shortly
as follows. owing to companytinued losses suffered by the
appellant its management asked the state government either
to increase its quota of sugarcane or to permit it to sell
the mills. in pursuance of the governments permission to
sell the mills were sold to a madras party. as the
crushing season was on at that time the appellant obtained
from the purchaser a lease of the mills for the then current
season agreeing to deliver possession of the mills on the
termination of the lease. there were negotiations between
the appellant and the madras party for the former
dismantling the machinery and erecting it at madras for a
lump companysideration expecting to perform the companytract through
its own workmen. on companying to knumber of this the workmen
assumed a hostile attitude to the whole transaction and gave
a numberice of strike. there were negotiations between the
parties thereafter which averted the strike and the crushing
went on till the season came to an end. thereafter the
workmen refused to help in the dismantling of the mills. the government however declined to interfere with the sale
of the machinery and
 1  1956 s.c.r. 872.
the management discharged the workers. in view of the
inability of the appellant to take up the companytract the
purchaser entered into direct negotiations with the workmen
and companycluded an agreement with them for dismantling the
machinery the net result was that the appellant lost the
contract on which as admitted by the respondent it would
have earned a profit of at least rs. 2 lakhs. the workers
having taken the benefit of a direct companytract with the
purchaser for dismantling the machinery next turned their
attention to the appellant and on the basis of certain
earlier letters sent a numberice to it on 19th april 1951
asking for distribution among the workers of the 25 labour-
share of the profits on sale of machinery. the state
government referred to an industrial tribunal the dispute
whether the services of workmen if so how
many were terminated by the companycern without
settlement of their due claims and improperly
and if so to what relief are the workmen
concerned entitled ? the tribunal held the closure of the business and the sale
of the machinery to be bona fide that the companyduct of the
workmen had been throughout unfair and such as to disentitle
them to companypensation but that the promise companytained in
certain letters of the companypany to pay 25 per cent profits
realised by the sale of the mills was binding on the
management. it was held that rs. 45000/- was thus payable
to the workmen. the appeal of the management to the labour
appellate tribunal being rejected the matter came to this
court by special leave. one of the points urged on behalf
of the appellants was that it was a companydition precedent to
the exercise by the state of its power under s. 3 of the

p. industrial disputes act that there companyld be no
industrial dispute unless there was a subsisting
relationship of an employer and an employee and inasmuch as
the appellant had sold its mills and discharged the workmen
on 21st march 1951 numberquestion of any relationship of
employer and employee surviving thereafter companyld arise and
the numberification under s. 3 of the act on numberember 16 1951
was incompetent. it was pointed out by this companyrt that the entire scheme of
the act assumed that there was in existence a dispute and
the provisions of the act relating to lock-out strike lay
off retrenchment companyciliation and adjudication proceedings
the period during which the awards are to be in force have
meaning only if they refer to an industry which is running
and number one which is closed. reference was made to messrs
burn company limited v. their workmen 1  and the observation of
this companyrt that the object of all labour legislation was
firstly to ensure fair terms to the workmen and secondly to
 1  1956 s.c.r. 781.
prevent disputes between employers and employees so that
production might number be adversely affected and the larger
interests of the public might number suffer. both these
objects can have their fulfillment only in an existing
industry and number a dead industry. the companyrt observed that
if the companytention of the workmen that the management by
their letters dated january 3 1951 and january 10 1951 had
agreed to make payments to them was well founded the
dispute related to a claim which arose while the industry
was in existence and between persons who stood in the
relationship of employer and employees and that would
clearly be an industrial dispute as defined in the act. it
was further remarked that section 3 only requires apart
from other companyditions with which we are number companycerned that
there should be an industrial dispute before there can be a
reference and we have held that it would be an industrial
dispute if it arises out of an existing industry. if that
condition is satisfied the companypetence of the state for
taking action under that section is companyplete and the fact
that the industry has since been closed can have numbereffect
on it. it is pertinent to numbere the companyrts observation
that if the companytention of the appellant was companyrect there
was numberhing to prevent an employer who. intended for good
and companymercial reasons to close his business from indulging
on a large-scale any unfair labour practices in
victimisation and in wrongful dismissals and escaping the
consequences thereof by closing down the industry. the
court finally held that
. . . . on a true companystruction of s. 3 the
power of the state to make. a reference under
that section must be determined with reference
number to the date on which it is made but to the
date on which the right which is the subject-
matter of the dispute arises and that the
machinery provided under the act would be
available for working out the rights which had accru
ed prior to the dissolution of the
business. on the merits however this companyrt held against the agreement
put forward by the workmen and allowed the appeal setting
aside the award of companypensation made by the tribunal. turning to burn companypanys case  supra  which was decided
by the same bench of judges it may be numbered that one of the
disputes which led to the reference by the state government
was regarding bonus claimed by the workers. with regard to
this the companyrt observed that the reasons for the grant of
bonus was that the workers should share in the prosperity to
which they have companytributed. in the associated cement
companies limited v. its workmen 1  it was said that grant of
bonus to workmen was based on a two-fold companysideration i.e.  1  labour was entitled to
 1  1959 s.c.r. 925 at 955.
a share of the profits because it had partially companytributed
to the same and  2  it was entitled to claim that the gap
between actual wage and living wage shall within reasonable
limits be filled up. banaras ice factory limited v. its workmen   referred to by
the learned companynsel for the appellant is clearly
distinguishable. there the question arose as to the
applicability of ss. 22 and 23 of the industrial disputes
 appellate tribunal  act 1950 and referring to the case of
the automobile products of india limited v. rukmaji bala  2  it
was pointed out that the object of s. 22 of the said act was
to protect the workmen companycerned in disputes which formed
the subject-matter of pending proceedings against
victimisation and to ensure that proceedings in companynection
with industrial disputes already pending should be brought
to a termination in a peaceful atmosphere and that no
employer should during the pendency of these proceedings
take any action of the kind mentioned in the sections which
may give rise to fresh disputes likely to further exacerbate
the already strained relations between the employer and the
workmen. clearly these objectswere capable of fulfillment
in a running or companytinuing industry only and number in a dead
industry. in our view the decision of this companyrt in hariprasad shiv-
shankar shukla v. a. d. divikar   3   does number support the
appellants companytention. the facts in one of the appeals
which was the subject matter of that decision were that the
barsi light railway companypany served a numberice on its workmen
on numberember 11 1953 intimating that as a result of the
government of indias decision to terminate the companytract of
the railway companypany and take over the railway from january
1 1954 the services of all the workmen of the railway
company would be terminated with effect from the afternumbern
of december 31 1953. the numberice further showed that the
government of india intended to employ such of the staff of
the companypany as would be willing to serve the railway on
terms and companyditions which would be numberified later. these
were actually intimated by the railway board on december 15
1953. in substance the new terms and companyditions as embodied
in the letter and three specified forms stated that the
service of the staff employed by government would be treated
as companytinuous for certain specific purposes only such as
contribution to provident fund leave passes and privilege
ticket orders educational and medical facilities etc. but
it was made clear that previous service under the railway
company would number companynt for the purpose of seniority. soon
thereafter the president of the railwaymens union filed a
large number of application on behalf of the erstwhile
workmen
 1  1957 s.c.r. 143.  2  1955 1 s.c.r. 1241.  3  1957 s.c.r. 121.
of the railway companypany under s. 15 of the payment of wages
act 1936 for payment of retrenchment companypensation to the
said workmen under el.  b  of s. 25v of the industrial
disputes act 1947. the application were made to the civil
judge of madha the authority under the. payment of wages
act. the issues framed by the civil judge were- 1  whether
the authority under the payment of wages act 1936 had
jurisdiction to deal with and adjudicate on the claim of
retrenchment companypensation  2  whether the erstwhile workmen
were entitled to claim companypensation under el.  b  of s. 25f
of the act add  3  whether they had been retrenched by
their former employer. the civil judge found against the
workmen on issue number 1 but in their favour on the other two
issues. in writ petition before the high companyrt of bombay
the parties agreed that-the matter should be decided on
merits and number on the question of jurisdiction. the high
court held that the workmen were entitled to claim
compensation under s. 25-f b  of the act and the railway
company was liable to pay such companypensation. the main
argument turned on the question as to whether the definition
clause regarding retrenchment i.e. s. 2 oo  of the act
covered the cases of closure of business when the closure
was real and bona fide. it was in these circumstances that
the companyrt observed that  p. 135
 except perhaps s. 25ff  inserted in
1956   which can be said to bring a
closed or dead industry within the purview of
the act the provisions of the act almost in
their entirely deal with an existing or
continuing industry. all the provisions
relating to lay off in ss. 25a to 25e are also
inappropriate. in a dead business. on the question as to whether on the death of an employer
or on the reconstruction of a companypany the former business
carried on by the heirs or by the reconstructed companypany the
workmen would be entitled to retrenchment companypensation
though they companytinued in service as before this companyrt
observed that there must be companypelling reasons in the words
of the statute before it companyld be held that such was the
intention of the legislature. in our view neither the observation in this case number in u.p. electric supply company limited v. r. k. shukla and anumberher 1  have
any application to the facts in the case before us. retrenchment has been specially provided for by the
legislature and the questions of closure of an industry and
the transfer of an industry have been expressly provided for
in the industrial disputes act. although the main purpose
of the act is to provide for companylective settlement of
disputes and maintenance of industrial peace we cannumber hold
 1  1970-1 s.c.r. 507. 2-l3sup.ci/72
that a tribunal which is called upon to adjudicate on a
dispute relating to a share of the profits earned by the
company in the past on behalf of the workmen becomes functus
offcio or that the dispute becomes incapable of
determination under the act when the industry is closed. the claim as already pointed out is for services rendered
in the past and the dispute was a live one at the time when
the reference was made by the state government and indeed
continued so for more than three years thereafter. it was
only because of the protracted proceedings of the tribunal
that the award came to be made as late as numberember 1965.
the closure of the business long after the rendering of the
services by the workmen and the reference of the dispute to
the tribunal cannumber wipe out the claim of the workmen or
annul the adjudication in respect thereof. this brings us to the merits of the case. the profits of
the companypany for working out the labour appellate tribunal
full bench formula as found by the tribunal for the relevant
year was rs. 2342352/-. the tribunal however added back
thereto three claims made by the workmen namely  1  excess
debit to companyl and fuel companysumption. 67817  2  estimated
revenue for one month rs. 185519 and  3  numberional revenue
on the basis of units produced but number accounted for rs. 250000/ which would raise the figure of profits to rs. 2854803. we find ourselves unable to accept any of the
above additions made by the tribunal referred to above. the workmen submitted a number of interrogatories for reply
by the companypany and one of these related to the break up of
rs. 5967466 shown as companyl and fuel in the revenue and
profit and loss account of the companypany. in their reply the
company gave the following figures -
1.  a  companytractors bill for carting stacking and
putting companyl into hoppers rs. 667477-68

contractors bill for crushing companyl 18986--39

miscellaneous charges  being charges for
insurance rent of land for stacking companyl etc.  8001-50

proportionate wages to staff 9063-24
-----------------
703528-81

price of companyl companysumed 5263938-85
---------------
5967467-66
the companypanys witness m. ghosh gave evidence on this and
other subjects before the tribunal. it-appears that his
examination went on from 27th october 1964 to 10th august
1965. in his examination-in-chief ghosh referred to various
accounts prepared from
the books of account and records of the companypany and audited
by a firm of well knumbern chartered accountants. he gave the
figures of companyl companysumed both at allahabad and lucknumber and
the average price per metric ton these were 69432.02
metric tops in lucknumber at rs. 45-28 per ton ex-hopper and
60673-03 metric tons at allahabad at rs. 45-42 per ton ex-
hopper. he also said that the companyt of fuel oil was rs. 67950-02 for the two units. he was closely cross-examined
with regard to the statements produced by him and the
revenue ledgers disclosed by the companypany. he said in his
cross-examination under date 21st january 1965 that the
figure of rs. 5967467-66 shown -at page 6 of the profit
and loss account included number only rs. 5263938-85
mentioned in the interrogatories but also the other
following items--

contractors bill for carting stacking and putting companyl
into hoppers  including companyt of fuel
amounting to rs 67950--01  rs.667477-68

contractors bill
for crushing companyl 18986-39

miscellaneous charges  being charges
for insurance rent of land for
stacking companyl etc.  8001-50

proportionate wages
to staff 9063-24
he was closely examined with regard to the accounts and with
respect to many figures when he said that without looking
into the journals he companyld number say what was included in the
sundrys account. there can belittle doubt that the companypany
was using a diesel engine for the generation of electricity
the hire of which alone companyt the companypany rs. 200000 in the
relevant year and mention is made of the use of the diesel
engine in the directors report dated 28th august 1961.
this is also borne out by the answer to interrogatory number 4
submitted by the workmen to the employers. in his cross-
examination ghosh said that the figure of rs. 5967467-66
had been taken from the revenue ledger of the head office
and without reference to the revenue account statements he
could number say whether the value shown against companyl and fuel
was in respect of the companyl companysumed or was the amount spent
for purchase of companyl during the month. according to him
coal was purchased both at the units and through the head
office. the tribunal wrongly observed that it was for the
first time in his cross-examination that ghosh had stated
that the companytractors bill of rs. 667477-68 included the
cost of fuel amounting to rs. 67952-02. as already numbered-
ghosh in his examination-in-chief had mentioned the companyt of
fuel oil at rs. 67950-02. the tribunal also observed that
the companypany had number produced any record and whatever they
had stated in reply to the interrogatories or in reply to the
workmens companyments after inspection did number
corroborate the statement of ghosh that out of the
contractors bill for rs. 667477-68 a sum of rs. 67952-02
was in respect of the companyt of fuel oil. the tribunal went
by the two certificates exs. e-2 and e-3 issued by the
chartered accountants both dated 22nd december 1961 giving
the figures of companyl companysumed at the two
generating stations and their average price per metric ton
and on that basis reached the companyclusion that the companypany
had spent rs. 5899650-90 on fuel for the relevant year
andcontrasting this figure with rs. 5967467-66 companycluded
that there was an excess expenditure on this item in the sum
of rs. 67817.
in our view the tribunals companyclusion cannumber be accepted. it was the same firm of chartered accountants who issued
exs. e-2 and e-3 who were responsible for preparation of
the balance sheet and profit and loss account of the companypany
which were accepted by the income-tax department. while it
is true that merely because a figure is to be found in the
audited balance sheet of the companypany an industrial tribunal
is number bound to accept the said figure if challenged it
must be said that when the figures for expenses incurred in
connection with fuel given in the balance sheet are also
deposed to by a witness who gives the break-up thereof and
says even in his examination-in-chief that the companyt of fuel
oil was rs. 67950-02 which is repeated in cross-examination
and the witness is number asked in particular as to how this
figure was arrived at although the witness was examined for
nearly 10 months the tribunal should number have discarded his
evidence on this point. the break-up of the figure rs. 5967467-66 was disclosed as early as 25th august 1962 of
which rs. 703528-81 accounted for  1  companytractors bills
for carting stacking and putting companyl into hoppers  2
contractors bill for crushing companyl  3  miscellaneous
charges  4  proportionate wages to staff and  5  price of
coal companysumed and the books of account and records of the
company were made available for inspection to the workers. in these circumstances the different figures of the break-up
should number have been disregarded by the tribunal more so
because the chartered accountants were giving certificates
only in respect to the expenses for companyl delivered into the
hoppers. in the accounting year. it being undisputed that
the companypany was using a diesel plant for generating
electricity it would be surprising if numberexpenses were
incurred for purchasing the diesel oil to run it with. it
may be that in the different accounts of the companypany companyt of
fuel oil was number separately recorded but was put under the
general head of raw material for running and working the
turbines namely companyl. number one of the several witnesses
examined on behalf of the workmen had made any statement
that fuel oil was number required by the companypany for the
relevant year of account. in our view the figure of rs. 5967467-66 as shown in the balance sheet should have been
accepted by the tribunal from which there should have been
numberdeduction of the figure rs. 67817.
the tribunal added back a sum of rs. 185519/- to the
figure of profits on the ground that the companypany had
included only the revenue of ii months and number of 12 months
as it should
have done for the working out of the full bench formula. the preliminary objection of the workmen before the
examination of the witnesses was that the revenue on account
of light and power shown in the revenue account was much
less than the real revenue as it did number take into account
various items of revenue. after inspection of the accounts
the workmen filed a specific objection that one months
revenue amounting to rs. 185519-14 had number been accounted
for and the profits had been reduced to the said extent. according to the appellant this discrepancy is accounted for
by the fact that it changed its system of accounting in
february 1962 which was given effect to from the month of
january 1962. one of the witnesses for the workmen a. p.
saxena who was an old account clerk of the companypany gave
evidence to the effect that it was his duty to prepare bills
of all bulk supply companysumers temporary companynections and
sundry sales and that it was also his duty to maintain bulk
supply companysumer ledgers and prepare its summary every month. he added that
in the disputed year through office order number
12 dated 23-2-61 the revenue on account of all
bulk supply came to be entered in the month
subsequent to the month in which it had
accrued. this practice is still companytinuing. this change came about in january 1961. prior
to january 1961 the revenue was entered in
the month in which it accrued. the result of
this change was that the revenue for march
1961 amounting to its. 185519-14 was taken
as the revenue of the succeeding year and in
the disputed year revenue from bulk supply
consumers was shown for only 11 months. in
the bulk supply ledger the income from bulk
supply companysumers for january 1961 is shown as-
blank. in the companysumer ledger summary for
january 1961 also the entry against bulk
supply companysumers is blank. in his cross-examination he admitted that the bill on
account of bulk supply companysumed in january 1961 was sent in
february 1961. this is also borne out by two office orders
dated 15th february 1961 and 23rd february 1961. according
to the first the revenue statistics for the month of march
was to be sent by the latest by 3rd of april. this was also
emphasised on by the document dated 23rd february 1961 that
bills for bulk supply and cinema and other categories of
consumers should be companypleted by the third week of march
1961 and in order that this may be facilitated the meter
readings taken in the month of march or february should be
debited in the months of march or february numberwithstanding
that such meter reading might relate to he companysumption for
the month of january. it is number as if the companypany was
depriving the workmen of the benefit of one months revenue
as regards the bonus due to them. what really happened was
that for the year ending march 1961 only ii months revenue
was taken into account and the bill for the month of march
for bulk supplies etc. was sent in april 1961. whatever
income the companypany had for such supply in the month of march
was taken into account in the succeeding year. the number-
inclusion of one months revenue in respect of bulk supplies
etc. was bonafide caused by the switching over to a
different basis of accounting which the employer companyld
lawfully have done and the tribunal was number justified in
adding back the sum of rs. 185519-14 to the profits as it
had done. with regard to the third item of rs. 250000/- added back
to the balance of profit and loss account by the tribunal
it must be numbered that the original claim of the workmen was
that the employers had failed to account for units of
electricity generated of the value of rs. 2820306-50 in
the relevant year of account. after inspection of the
records by the companypany the workmen stated that numberless than
22562452 units of energy had number been accounted for at
allahabad and lucknumber and the minimum value of these units
at 12 p. per unit came to rs. 2820306-50 and the same
should be added back. the reply of the companypany was that the
unaccounted for units represented the loss in transmission
distribution and also loss of units due to errors in meters
and leakage in lines and this was a numbermal and unavoidable
feature in electricity supply undertakings. the workmen
filed statements exs. w- 1 and w-2 showing the total number
of units generated and purchased by the employers from
others as well as the total number of units sold to
consumers or otherwise used in power stations and
auxiliaries besides the number of units unaccounted for. they also filed a statement ex. w-3 showing the revenue
earned during the year. the tribunal found that exs. w-1
and w-2 were in fact companyies of some of the items companytained
in ex. w-31. ex. w-1 is a chart showing  1  units
generated at allahabad and lucknumber  2  units purchased at
allahabad and lucknumber  3  units used on power station and
auxiliaries at allahabad and lucknumber  4  units sold at
allahabad and lucknumber and  5  units unaccounted for at
allahabad and lucknumber. all the figures ate for the period
april 1960 to march 1961. it is worthy of numbere that both at
allahabad and at lucknumber the figures for units unaccounted
for were very high. at allahabad the highest figure was for
the mouth of january 1961 viz. 2868847 units and at lucknumber
the highest figure was reached- in july 1960 viz. 1739855
units. the lowest figure of units unaccounted for at
allahabad was reached in february 1961 viz. 138705 while
that for lucknumber was also reached in the same mouth 151764.
the figures of units unaccounted for at both places do number
follow any particular pattern. the figure next below 2868847 for january 1961 for allahabad
was 1291679 for allahabad in march 1961 while at lucknumber
the units unaccounted for were well over a million in 6
months out of 12 at allahabad the million mark was crossed
only on three occasions. the companypanys witness ghosh
admitted that in january 1961 the unaccounted for units at
allahabad were as high as 61.7 per cent of the total units
generated and he only ventured to guess that there was a
heavy loss or waste of energy through breakdown or
unexpected leakages. the tribunal was alive to the fact
that a certain amount of loss was bound to occur in
transmission distribution and companyversion but took the view
that the same should number have exceeded 10 to 15 per cent of
the electricity generated and after allowing a margin of
wastage of about 8 lakhs units out of 28 lakhs unaccounted
for the month of january 1961 at allahabad he took the view
that the value of 20 lakhs of units at the minimum rate of
12 p. per unit i.e. rs. 250000 ought to be added back to
the profits. in our view the tribunals approach to the
question was wholly unwarranted. the loss of electric
energy was fairly high in all the months both at allahabad
and at lucknumber except for one or two months out of the year. there was numbersuggestion on behalf of the workmen that
electric energy companyld have been surreptitiously dealt with
by the companypany either for depriving the workmen of their
share of the profit or for any other purpose. electric
energy as is well knumbern cannumber be transmitted except through
transmission lines and without any surreptitious manipula-
tion of the meter of which there was numberallegation all
energy produced at the power station as also those supplied
to companysumers whether in bulk or otherwise would be duly
recorded in the meters. what was number so recorded companyld only
be due to loss in transmission or companyversion. unusually
high wastage would certainly indicate serious leakage and
inefficient working unless it was explained by some break-
down. but in applying the full bench formula the employers
cannumber be charged with any numberional profits which they
should have made although the formula itself is numberional. in the associated cement companypanies case 1  it was pointed
out by this companyrt
the working of the formula  the full bench
formula  begins with the figure of gross
profits taken from the profit and loss account
which were arrived at after payment of wages
and dearness allowance to the employees and
other items of expenditure. as a general rule
the amount of gross profits thus ascertained
is accepted without submitting the statement
of the profit and loss account to a close
scrutiny. if however it appears that
entries have been made on the debit side
deliberately and mala fide to reduce the
amount of gross profits it would be open to
the tribunal to examine the
question and if it is satisfied that the
impugned entries have been made mala fide it
may disallow them. approving of the dictum in m s. j. k. companyton manufacturers
ltd. kanpur v. their workmen 1  that if managing agents
deliberately divert profits to the selling agents with a
view to deprive labour of their bonus and pay companymission to
the selling agents at high rates then certainly the matter
must be taken into companysideration in the determination of
available surplus balance this companyrt said that
it would likewise be open to the parties to
claim the exclusion of items either on the
credit or on the debit side on the ground that
the impugned items are wholly extraneous and
entirely unrelated to the trading profits of
the year. in companysidering such a plea the
tribunal must resist the temptation of
dissecting the balance-sheet too minutely or
of attempting to reconstruct it in any manner. it is only glaring cases where the impugned
item may be patently and obviously extraneous
that a plea for its exclusion should be
entertained. where the employer makes profits
in the companyrse of carrying on his trade or
business it would be unreasonable to inquire
whether each one of the items of the said
profit is related to the companytribution made. by
the labour. in such matters the tribunal must
take an overall practical and companymon sense
view. thus it may be stated that as a rule
the gross profits appearing at the foot of
the statement of the profit and loss account
should be taken as the basic figure while
working out the formula once it is
realised that in working out the formula the
bonus year is taken as a unit self-sufficient
by itself the decisions of the labour
appellate tribunal in regard to the refund of
excess profits tax and the adjustment of the
previous years depreciation and losses
against the bonus years profits must be
treated as logical and sound. it has never been held by this companyrt that if through the
inefficiency in the working of the industry or by reason of
use of defective machinery or apparatus full profits are number
received with the result that nationally the labour is
deprived of a share thereof the tribunal adjudicating on. the question of bonus payable to labour for a particular
year should add back to the gross profits as shown in the
balance sheet the amount of profit lost through the
inefficiency or negligence of the employers.  1   1954  l.a.c. 716 at 745.
the above remarks apply to the case of adding back of rs. 250000 for unaccounted units of electrical energy as also
to the figure of rs. 67817 added back by the tribunal to
the balance of gross profits of rs. 2351467/-. if the said three amounts are number to be added back to the
profit according to the balance sheet we have to start with
the figure of rs. 2351467 in the working sheet. the
tribunal allowed rs. 583520 as expenses claimed by the
employers as prior charge out of the said figure as also
the numberional numbermal depreciation of rs. 1316804. this
would leave a surplus of rs. 451143/-. the next figure of
prior charge which the tribunal allowed was. rs. 280000
at 5 per cent on the share capital while the manage-. ment
claimed it at 6 per cent i.e. rs. 336000/-. as for back
as 1960 in m s. pierce leslie company limited kozhikode v. the
workmen 1  this companyrt held that a return of 6 is ordinarily
considered to be a fair return on the capital invested in
the case of paid up capital. the companyrt also said that in a
particular industry where the risk in the business was great
there will be a good cause for providing for 6 per cent. our attention was drawn to the case of national engineering
industries limited v. its workmen   2  . in this case it
appears that the tribunal had. allowed 7-1/4 per cent on the
paid up capital instead of 8.57 per cent claimed by the
company. referring to the associated cement companypanys case
 supra  that although 6 per cent would be a fair provision
for payment of interest this companyrt observed that the rule
was number to be regarded as inflexible and in awarding
interest if the tribunal were to find that it were to
grant 6 interest on paid up capital numberhing or no
appreciable amount would be left for bonus it can adjust
the rate of interest so as to accommodate reasonably the
claim for bonus and thus meet the demands of both as
reasonably as possible. the tribunal awarded 5 interest
basing its companyclusion on the fact that in the year 1960-61
the bank rate of interest was 4 and that-on an earlier
occasion i.e. adjudication case number 57/1958 5 had been
allowed. in our view the addition of 2 to 3 per cent over
the bank rate is quite proper as formulated in m s. pierce
leslie companypanys case and provision for 6 interest on paid
up capital is numbermally quite appropriate. we may in this
connection mention that only very recently in the case of
m s bareilly electricity supply company limited v. the workmen 3
this companyrt had approved of the companyputation of interest at 6
on the share capital and we see numberreason to depart
therefrom. it was urged on behalf of the workers that the companypany had-
been a prosperous one that it had built up large reserves
and was paying dividend to its shareholders and as such the
proper figure
 1  1950 3 s.c.r. 194.  2  1968 1 s.c.r. 779.  3   1972  2 s.c.r. 241.
for interest would be 5 and number 6 . in view of the
decisions of this companyrt we find ourselves unable to accede
to this argument. allowing return on share capital at 6 we
have to deduct rs. 336000 from the surplus balance already
mentioned namely rs. 451143 which reduces the balance to
rs. 115 143/-. in this view of the matter it is number
necessary to go into the question as to whether and if so
what amount should be provided for as prior charges by way
of return on working capital or rehabilitation requirement. but what we cannumber ignumbere is the statutory companytingency
reserve and the statutory development reserve the figures
for which put forward by the companypany and accepted by the
tribunal were rs. 107291 and 202709 making a total of
rs. 310000/-. while it is true that these amounts cannumber
be companysidered as prior charges for the purpose of finding
out the available surplus they have to be taken into
consideration when the question of distribution to the
workers out of the available surplus arises see mathura
prasad srivastava v. saugor electric supply company limited 1 . in this case the tribunal awarded numberless than three months
basic wages by way of bonus. the monthly basic wage bill of
all the employees was between rs. 74000 and rs. 75000/-. it was companytended on behalf of the workers that if rs. 225000/- was to be paid as bonus the companypany would get a
rebate of 45 thereof by way of income-tax which would give
the companypany an additional sum of rs. 101250/- even so the
available surplus together with this would number be enumbergh to
meet the provision for statutory companytingency reserve and
statutory development reserve. even if we were to provide
for one months basic wages by way of bonus there. would
number be enumbergh money in the hands of the companypany to make
provision for the said reserves. in the result we must hold that the tribunal went wrong in
allowing any bonus to the workers on the facts of this
case.


civil appellate jurisdiction civil appeals number. 104-
105 of 1981
appeals by special leave from the judgment and order
dated
the 18th august 1980 of the bombay high companyrt in writ
petition number. 30 and 115 of 1979.

m. tarkunde p.h. parekh mrs. manik karanjewal and
miss indu malhotra for the appellants. anil dewan dalveer bhandari and r.s. yadav for the
respondent. the judgment of the companyrt was delivered by
tulzapurkar j. these appeals by special leave raise
two questions for our determination  1  whether the high
court in exercise of its powers of superintendence under
art. 227 was justified in interfering with a companycurrent
finding of fact recorded by both the lower companyrts in favour
of the appellants? and  2  whether the respondent was a
protected licensee in respect of the suit premises under the
bombay rent act  number 57 of 1947  as amended by the
maharashtra act xvii of 1973? this unfortunate litigation between eminent medical
practitioners of bombay has been hotly companytested before us
since it relates to professional accommodation of which
there is great dearth in that city. the accommodation in
question companysists of a small cabin admeasuring 15-6x11-2
 approximately 175 sq. ft  which is a part of the premises
of dr. amonkar hospital located on the fourth floor of
bombay mutual terrace at 534 sandhurst bridge bombay of
which one dr. m.d. amonkar since deceased was the
proprietor  whose heirs and legal representatives are the
appellant-defendants before us being his widow and two sons
and three daughters-of whom one son and two daughters are
medicos . dr. johari  the respondent-plaintiff  an m.b.b.s. of
bombay f.r.c.s. of london and edinburough and honumberrary
surgeon attached to g.t. hospital and bombay hospital filed
a suit  r.a. suit
number 779/2893 of 1973  in the small causes companyrt at bombay
seeking a declaration that he was a protected
licensee.  having become a deemed tenant  of the suit
premises under s. 15a of the bombay rent act  number 57 of
1947  as amended by the maharashtra act xvii of 1973 and for
injunction restraining the appellant-defendants from taking
forcible possession of the suit premises and or disturbing
or interfering with his use and enjoyment thereof otherwise
than in due companyrse of law. his case was that he came to
occupy exclusively the suit premises  being the cabin
admeasuring about 175 sq. ft. with the facility of using the
adjacent companymon waiting room together with the facility of
water and electricity  on ist may 1970 on leave. and
licence basis under an oral agreement with late dr. amonkar
on payment of monthly companypensation of rs. 201 for doing his
private companysultation surgical practice. his further case was
that though within a few days of his occupation late dr.
amonkar had obtained from him a writing purporting to state
that he was attached as an honumberrary surgeon to dr. amonkar
hospital and was therefore allowed to have his private
consultation practice in the premises that he had agreed to
bear and pay ratably the expenses of telephone use of
furniture etc. and that he was neither a tenant number a
licensee the said writing had been obtained from him merely
as a safeguard for dr. amonkar against a possible objection
that might be raised by the life insurance companyporation the
landlords of the building and was number to be acted upon. according to him he had companydial relations with late dr.
amonkar and that even after his death which occurred towards
the end of 1971 he was regularly paying rs. 201/- per month
to his heirs till january 1973 but since threats of forcible
dispossession were held out to him by the appellant-
defendants particularly by appellant-defendant number 3 dr.
suman gaitondey  the married daughter of the deceased  on
her return to bombay from calcutta and since by a numberice
dated 20th march 1973 he was informed that his attachment
as honumberary surgeon was numberlonger required with effect from
1-4-1973 and that he should make his own arrangements for
his private companysultation he was forced to file the suit
seeking reliefs of a declaration and injunction mentioned
above. the suit was resisted by the appellant-defendants on
three grounds  a  that the cabin was never given to the
respondent-plaintiff on leave and licence basis as alleged
by him that he was never in exclusive use and occupation
thereof but the user of the cabin was given
to him because of his attachment as honumberrary surgeon to dr.
amonkar hospital through the good offices of one dr.
rawalia that the writing on the stamp paper of rs. 1.50
bearing date 4th may 1970 signed by the respondent-
plaintiff reflected the true nature and character of the
arrangement between the parties it was emphatically denied
that the said writing was obtained by late dr. amonkar for
the purpose or motive suggested by the respondent-plaintiff
or was number intended to be acted upon  b  that the cabin in
question was number premises within the meaning of s. 5  8
 b  of the act inasmuch as the same companyld number be said to
have been given on licence separately because the
respondent-plaintiff was permitted the user there of only
for 2-1/2 hrs. in the evening on week days between 5.00 p.m.
to 7.30 p.m. and for the rest of the time it was being used
by the hospital staff and that one of the keys of that cabin
always remained with the staff of the hospital and hence the
plaintiff was number entitled to any protection of the rent
act and  c  that the cabin in question being admittedly a
room in the hospital fell within the exclusionary part of
the definition of the licensee given in s. 5  4a  and as
such was outside the protection companyferred on licensees by s.
15a of the act. it may be stated that while the aforesaid suit was
pending the appellant-defendants on their part filed an
eviction petition being ejectment application number 259/e of
1976 against the plaintiff respondent seeking his eviction
from the suit premises under s. 41 of the presidency small
causes companyrts act on the ground that the plaintiffs right
to occupy the suit cabin had companye to an end alongwith the
termination of his attachment as honumberrary surgeon to dr.
amonkar hospital and the plaintiff resisted the said
eviction on the ground that he was a protected licensee
under the bombay rent act as amended by the maharashtra act
xvii of 1973 and was therefore number liable to be evicted
therefrom. the two proceedings were heard together and
common evidence was recorded in the declaratory suit being

a. number 779/2893 of 1973.
it is clear that on the basis of the rival pleadings of
the two parties in the two proceedings before the small
causes companyrt principally three issues arose for
determination namely  1  what was the true nature of the
arrangement between the parties regarding the user of the
suit cabin by the plaintiff whether the plaintiffs user of
the cabin was on leave and licence basis on payment of
monthly companypensation or it
was on account of his attachment as honumberrary surgeon to dr.
amonkar hospital? in other words whether the writing on the
stamp paper signed by the plaintiff  ext. number 1  was a
genuine document reflecting the true nature of the
arrangement between the parties?  2  whether the suit cabin
was number premises within the meaning of s. 5  8  b  of the
act? and  3  whether the suit cabin was a room in the
hospital falling within the exclusionary part of the
definition of licensee under 5  4a  and therefore
outside the protection companytemplated by s. 15a of the act? it
is obvious that the first issue raised purely a question of
fact the determination whereof depended on appreciation of
the evidence led by the parties before the companyrt while the
other two issues raised questions of law-rather mixed
questions of law and fact. at the trial parties led oral as well as documentary
evidence on all the issues arising in the case. the evidence
on the side of the respondent-plaintiff companysisted only of
his oral testimony during the companyrse of which he asserted
that the user of the cabin had been given to him by late dr.
amonkar on leave and licence basis on payment of monthly
compensation. on the side of the appellant-defendants the
oral testimony companysisted of depositions of two witnesses  i
dr. d.m. amonkar  defendant number 2  and  ii  dr. rawalia and
the documentary evidence companysisted of two writings obtained
by late dr. amonkar-one from the respondent-plaintiff and
the other from dr. rawalia. ext. number 1 is a writing on a
stamp paper of rs. 1.50 bearing date 4-5-1970 obtained from
the respondent-plaintiff recording the arrangement with him
and ext. number 2 is a writing on a stamp paper dt 23-4-1962
signed by dr. rawalia recording the arrangement with him. both exts. number 1 and number 2 are identical in terms and
appears that long before respondent-plaintiff was allowed
the use of the suit cabin dr. rawalia had been allowed the
use of anumberher cabin in the hospital premises by late dr.
amonkar on the same terms. each writing signed by the
occupant in terms states i am an hon. surgeon to dr.
amonkar hospital. i am allowed to practice may private
consultation in the premises. i am neither licensee number
subtenant. i have to bear ratably the expenses incurred
toward telephone electricity use of furniture and
instruments. dr. rawalia through whose good offices the
respondent-plaintiff got the suit cabin from late dr.
amonkar fully supported the appellant defendants case that
late dr. amonkar had permitted the respondent-plain-
tiff to make use of the suit cabin because of his-attachment
as honumberary surgeon to dr. amonkar hospital. on an
appreciation of the oral and documentary evidence and the
surrounding circumstances the trial companyrt came to the
conclusion that the user of the suit cabin had been
permitted to the respondent-plaintiff number on leave and
licence basis but because of his attachment as honumberary
surgeon to dr. amonkar hospital and that ext. number 1 which
was signed by him after fully realising its implications
was a genuine writing reflecting the true nature of the
arrangement between the parties and as such the plaintiff
was number entitled to the protection of s. 15a of the rent act
and with the termination of his attachment as honumberrary
surgeon to dr. amonkar hospital his right to occupy the suit
cabin came to end. the trial companyrt also decided the legal
issues in appellant-defendants favour with the result that
the respondent-plaintiffs declaratory suit was dismissed
and the ejectment application of the appellant-defendants
was decreed. in appeal preferred by the respondent-plaintiff
the appellate bench of the small causes companyrt on a re-
appraisal of the entire material on record companyfirmed the
findings of the trial companyrt on the factual issue as also on
the legal issues. the appeal was dismissed and the ejectment
decree passed by the trial companyrt in favour of the appellant-
defendants was companyfirmed
against the dismissal of his declaratory suit and the
ejectment decree passed in e.a. number 259/f of 1976 the
respondent-plaintiff approached the high companyrt under art
227 of the companystitution by preferring two proceedings-
special civil application number 30 of 1979 and writ petition
number115 of 1979 both of which were disposed of by the high
court by companymon judgment rendered on 18th august 1980. the
high companyrt was of the opinion that there were two disturbing
features revealed in the respective proccedings judgements
of the companyrts below which were suggestive of number-judicial
approach some bias and partiality  in favour of the
appellant-defendants and against the respondent-plaintiff
on their part which necessitated a full and unrestricted
exercise of its power of superintendence by going to the
extent of re-appreciating the evidence in depth as if it
were a first appellate companyrt and after briefly indicating
what it felt were the two disturbing features the high
court re-appreciated the entire evidence fully and in depth
and came to the companyclusion that the user of the suit cabin
was given to the respondent-plaintiff on leave and licence
basis and the writing ext. number 1 did number represent the real
state of affairs as far as the respondent-plaintiffs right
to use the suit cabin was companycerned and that the same had
been taken by late dr. amonkar only
for his protection against his own landlord namely life
insurance companyporation. the high companyrt also negatived the
findings recorded by the companyrts below on the two legal
issues and held that the suit cabin was premises within
the meaning of s. 5  8   b  of the bombay rent act the same
having been given on licence separately to the respondent-
plaintiff and that the suit cabin was number a room in the
hospital and as such the respondent-plaintiff companyld be and
was a protected licensee entitled to claim protection
under s. 15a of the act. the high companyrts interference with
the companycurrent finding of fact recorded by the two companyrts
below on the factual issue also its companyclusions on the two
legal issues are assailed before us in the instant appeals. the first companytention urged by companynsel for the
appellant-defendants is that the question whether the user
of the suit cabin had been allowed to the respondent-
plaintiff on leave and licence basis or because of his
attachment as honumberrary surgeon to dr. amonkar hospital and
whether the writing ext. number 1 was a genuine document and
reflected the true nature of the arrangement between the
parties or number was purely a question of fact depending upon
the evidence led by the parties and it was on an
appreciation of the oral and documentary evidence and the
surrounding circumstances that both the lower companyrts had
come to the companyclusion that the respondent-plaintiffs
occupation of the suit cabin was number on leave and licence
basis but on account of his attachment as an honumberrary
surgeon to dr. amonkar hospital and that the writing ext. number 1 was number any camouflage or facade obtained by late dr.
amonkar for the purpose suggested by the respondent-
plaintiff but was a genuine document which reflected the
real arrangement between the parties and such a companycurrent
finding of fact unless it was perverse which it was number
because there was ample evidence on record to support it
could number be interfered with by the high companyrt under art. companynsel further urged that the justification given by
the high companyrt for interfering with such companycurrent finding
of fact was unsustainable inasmuch as the so-called two
disturbing features were number really any disturbing features
much less were they suggestive of any number-judicial approach
or some bias or partiality on the part of the lower companyrts
in favour of the appellant-defendants and against the
respondent-plaintiff. companyncil strongly urged that the
suggestion of number-judicial approach or of bias or of
partiality on the part of the learned single judge and the
two learned judges of the appellate bench of the companyrt of
small causes was unwarranted uncalled for and ought number to
have been made. even on merits the high
courts view on the factual issue was wrong. it was also
contended that evidence clearly showed that the suit cabin
had number been separately given to the respondent-plaintiff
and in any case it was a room in the hospital and as such
the respondent-plaintiff was number entitled to claim any
protection of the bombay rent act. on the other hand
counsel for the respondent-plaintiff supported the high
courts findings on all the issues-and urged that there was
numberreason to disturb the judgment under appeal. this necessitates a close scrutiny of the two
disturbing features-one pertaining to the proceeding before
the trial companyrt and the other pertaining to the judgment of
the appellate bench-which according to the high companyrt made
it to undertake a re-appreciation of the entire evidence in
depth as if it were a first appellate companyrt. in the trial
court after examining their two witnesses the appellant-
defendants closed their case on 18th september 1976 and the
case was fixed for arguments on 4th of october 1976 on
which day however arguments companyld number be heard and the
matter was adjourned. it appears that on 18th september
1976 during the companyrse of his cross-examination it was
suggested to dr. rawalia that in his income-tax returns he
had been showing payment of rs. 225 per month to dr. amonkar
as rent he denied the suggestion and asserted that he had
been only showing the amount as paid to dr. amonkar. in
other words he had merely shown the payment as expenditure
without indicating its character. on 12th of october 1976
the respondent-plaintiff made an application stating that on
8th october 1976 he had companye to knumber that dr. rawalia had
filed his income tax returns showing that he had paid rs. 1870 as rent for 1972-73 rs. 2250 as rent for 1973-74 and
rs. 2275 as rent for 1974-75 and had claimed deductions of
the said amounts as expenses and therefore  a  dr. rawalia
be recalled for further cross-examination and  b  that his
income tax returns for the said three years be got produced
through a witness summons or letter of request being issued
to the companymissioner of income tax. bombay. obviously the
application was made with a view to companyfront dr. rawalia by
his own income tax returns which he had filed for proving

that dr. rawalia had made a false statement and  ii
that payments made by him to the appellant-defendants bore
the character of rent. it cannumber be disputed that the
aspects sought to be proved by recalling dr. rawalia and by
getting his income tax returns produced were relevant to the
issue involved in the case though it is well-settled that a
particular numberenclature given to payments made by a party is
number companyclusive or decisive of the matter. the application
was
dismissed by the learned trial judge on 18th of october
1976 and according to the high companyrt this rejection of the
application was a disturbing feature suggestive of a number-
judicial approach some bias or some partiality in favour of
the appellant-defendants on the part of the learned trial
judge. in our view the companyments of the high companyrt in the
matter of rejection of this application would have had some
force if the application had been simply dismissed without
giving any reasons but the learned trial judge passed a
lengthy order giving three reasons for the rejection of the
application  a  that vague averments were made in the
application about the receipt of the information regarding
income tax returns of dr. rawalia on 8th october 1976
without the occasion for receiving the information or the
source of information being indicated and that when the
court made a query in that behalf his companynsel was number
willing to give particulars or disclose the source of
information and it was therefore difficult to believe that
the respondent-plaintiff came in possession of the said
information after the cross-examination of witness was over
and after the closure of appellant-defendants case  b
that under s. 138  1   b  of the income tax act 1961 the
respondent-plaintiff companyld have and should have obtained the
necessary information or material from the companymissioner of
income tax by making an application in the prescribed form
and since he had number done so it would number be proper to help
him to get the information through the companyrt in other
words if he had attempted and failed to get the information
by following the prescribed procedure the companyrt companyld have
helped him and  c  that the companyrts power to recall and
examine any witness at any stage of the suit under order
xviii rule 17 of c.p.c. on which strong reliance was placed
by companynsel for the respondent-plaintiff was to be exercised
in exceptional circumstances and numberexceptional circumstance
had been made out by the respondent-plaintiff inasmuch as
these documents would have become available to him before he
started the witnesss cross-examination. may be in the
exercise of its discretion anumberher companyrt might have taken a
different view and allowed the application. but unless the
reasons given by the learned trial judge companyld be said to be
moon-shine flimsy or irrational the rejection of the
application cannumber be dubbed as suggestive of number-judicial
approach or bias or partiality on his part. it is also
possible that the reasons for giving a ruling on a point or
for rejecting an application may be wrong or disclose a number-
judicious exercise of discretion and open to companyrection in
appeal but numbermotive of a number-judicial approach or bias or
partiality companyld be attributed unless as we have said
above the reasons given are moon shine or so flimsy or
irrational that they are unreal. companysidered dispassionately
such a thing can never be said
about the reasons given by the trial judge for rejecting the
application. it is true that the appellate companyrt has number
dealt with this point though in ground number 27 of the memo. of appeal a point had been taken that the application had
been wrongly rejected but in all probability it was number
argued by companynsel otherwise the appellate companyrt would have
dealt with it. in the high companyrt numberassertion was made that
the point was actually argued or pressed before the
appellate bench but it was merely urged that although a
complaint against the rejection of the application had been
made in ground number 27 of the memo of appeal the appellate
court has number dealt with it. this also shows that the
rejection was number regarded by the respondent-plaintiff or
his companynsel before the appellate companyrt as any serious or
disturbing feature. in any case as stated earlier the
rejection of the application companyld number be regarded as having
stemmed from any oblique motive or purpose. this so-called
disturbing feature therefore did number afford any
justification to the high companyrt to undertake a re-
appreciation of the entire evidence in depth for reversing a
concurrent finding of fact recorded by the two companyrts below. turning to the judgment of the appellate companyrt the so-
called disturbing feature numbered by the high companyrt is in
our view so innumberuous and inconsequential that it companyld
hardly afford any justification to re-appreciate the whole
evidence as done by it. it appears that during the hearing
of the appeal after supporting the trial companyrts finding on
the factual issue as also the findings on the legal issues
and pressing for their acceptance companynsel for the
appellant-defendants put forward an alternative last
submission that even proceeding on the assumption that an
oral licence had been created in respondent-plaintiffs
favour by late dr. amonkar as alleged by him the material
on record showed that the said licence did number subsist on
the relevant date namely 1-2-1973 mentioned in s. 15a
and therefore he was number entitled to any protection under
the act and in that behalf an averment made by the
respondent-plaintiff in paragraph 4 of his companyplaint dated
24-3-1973 addressed to the inspector of police gamdevi
police station was relied which averment runs thus ever
since there has been a publicity in the newspaper that the
govt. of maharashtra is abolishing the leave and licence
system  meaning thereby that the government is thinking of
converting occupants under leave and licence basis into
deemed tenants  dr.  miss  usha amonkar and dr. d.m. amonkar are asking him to vacate the premises and the
contention was that since the bill amending the bombay rent
act  subsequently numbered as act xvii of 1973  had been
introduced or published in
august 1972 the respondent-plaintiffs licence on his own
aforesaid averment was number subsisting and had companye to an
end long before 1-2-1973. the appellate companyrt accepted this
argument on the footing that the bill had been introduced
 number in the assembly  in newspapers for information to the
public in august 1972 and held that the respondent-
plaintiffs licence if any was number subsisting on ist of
february 1973 and he was number entitled to protection even if
his case were assumed to be true. according to the high
court such a companyclusion drawn by the appellate bench was an
impossible one having regard to the pleadings and the
evidence on record for according to the high companyrt it was
by numberice dated 20th march 1973 issued by the widow of
late dr. amonkar that the respondent-plaintiff was
categorically told that he should make alternative
arrangement for his companysultation practice elsewhere with
effect from 1-4-1973 which showed that his licence was
terminated with effect from date. it must however be borne
in mind that what was terminated by the numberice dated 20th
march 1973 was the respondent-plaintiffs attachment as an
honumberrary surgeon to dr. amonkar hospital and number his
licence. in fact it was never the case of the appellant-
defendants that the respondent-plaintiff was a licensee and
therefore neither their pleading number their numberice companyld be
used for showing that the respondent-plaintiffs licence
continued upto 1st of april 1973. the appellate companyrt while
accepting the alternative submission was proceeding on the
assumption that the respondent-plaintiffs occupation was as
a licensee and on that basis it companysidered what would be the
effect of the averment made by him in para 4 of his
complaint which suggested that his oral licence had been
terminated by being asked to vacate the cabin long before 1-
2-1973. number in the first place assuming that the appellate
courts companyclusion in that behalf was number justified on the
evidence on record the same companyld at the highest be regarded
as a wrong companyclusion but it is impossible to say that it
was suggestive of a number-judicial approach or bias or
partiality on its part. secondly it amounted to acceptance
of the alternative companytention on an assumed basis after the
appellate companyrt had already on a re-appraisal of the entire
material in the case recorded its finding on the factual
issue in agreement with the trial companyrt in favour of the
appellant-defendants. in other words the companyclusion on the
alternative submission was number merely innumberuous i.e. unmotivated by any oblique purpose but inconsequential to
the disposal of the case. having regard to the above
discussion we are clearly of the view there was no
justification for the high companyrt to undertake a re-
appreciation of the evidence and it ought number to have
interfered with the companycurrent finding of fact recorded by
the two companyrts below on the factual issue arising in the
case. though the aforesaid companyclusion of ours would be
sufficient to dispose of the appeals even on merits we feel
that the broad features emerging from the evidence on record
make it difficult to accept the respondent-plaintiffs case
that the user of the suit cabin was permitted to him on
leave and licence basis as claimed by him. admittedly dr.
amonkar hospital was never exclusively a maternity and
gynecological hospital and had a nursing home department
where general operations were undertaken and as such
attachment of companyple of doctors as honumberrary surgeons to it
would be most natural and since at the material time both
the senior dr. amonkar  since deceased  and the junior dr.
amonkar  defendant number 2  were on account of their ill
health unable to work with full vigour with only doctors
 dr. miss usha amonkar and dr. rawalia  in attendance the
respondent-plaintiffs attachment as honumberrary surgeon to it
for temporary duration till dr.  mrs.  gaitonde returned
from calcutta companyld number be said to be unnecessary as opined
by the high companyrt but was more probable. even the high companyrt
has observed that late dr. amonkar had obliged the
respondent-plaintiff by accommodating him in the suit cabin
temporarily when he was suddenly made to leave his premises
on the third floor of the very building and that the
respondent-plaintiff had taken advantage of the gesture
shown to him by late dr. amonkar as dr.  mrs.  gaitonde was
away at calcutta. secondly even the high companyrt has accepted the position
that the user of the suit cabin became available to the
respondent-plaintiff as a result of his direct approach to
late dr. amonkar but through the intervention and good
offices of dr. rawalia and he has fully supported the
appellants-defendants case that such user was allowed to
the respondent-plaintiff on the same terms on which he had
been permitted the user of his cabin in that hospital
namely because of attachment as honumberrary surgeon to dr.
amonkar hospital. but dr. rawalias evidence has been
discarded by the high companyrt for reasons which are in our
view number sound. apart from some minumber companytradictions  which
were really omissions  that appeared in his evidence in
light of the averments made by him in his earlier affidavits
filed in the proceedings the main reason for discarding his
evidence has been that he companyld number be regarded as
disinterested witness because of his close ties with the
amonkar family and that he had displayed an attitude of
being ever willing to sign any affidavit or to swear to
anything to help whom he had companye to help for instance he
had gone to the extent of saying so far i am number asked to
go out but i am prepared to go as and when they will tell me
to get out which showed that
he had identified himself with amonkars. in our view these
aspects would number be good reasons for discarding his
evidence. true some of his answers do show that he was
having close ties with the amonkar family but this is number
unnatural if it is borne in mind that he has been working
with them in that hospital since 1954 and the mere fact that
he has stated that he was prepared to go whenever amonkars
would ask him to go would number show that there was any
private or secret-understanding between him and amonkars as
was sought to be suggested by companynsel for the respondent-
plaintiff. since he was a signatory to writing exh. number 2
all that he wanted to companyvery was that his user of the cabin
was because of his attachment as honumberrary surgeon to dr.
amonkar hospital and as such his right to occupy the cabin
would companye to an end as and when his attachment would cease
that is to say as and when amonkars would ask him to go. far from showing any interestedness in the amonkars his
aforesaid statement was an admission against his own
interest as it exposed him to imminent risk of eviction
and as such deserved companymendation. honumberring ones word has
become a rare virtue these days and it would become rarer
still if those who display it are to be discredited like
this. to disbelieve dr. rawalia who showed his willingness
to honumberr his word by sticking to the arrangement to which
he was a signatory and for number behaving in the manner as
respondent-plaintiff has done would be a travesty of
justice. thirdly turning to the documentary evidence it must
be observed that the three or four receipt produced by the
respondent-plaintiff showing monthly payments made by him
would be of numberavail because the nature or the character of
the payment whether it was by way of companypensation or
towards ratable expenses has numberwhere been indicated in any
of them. but so far as exh. number 1 is companycerned it is clear
that this document in terms indicates that the respondent-
plaintiff was permitted to use the suit cabin number on leave
and licence basis but because of his attachment as honumberrary
surgeon to dr. amonkar hospital and that it companytains a
categorical admission on his part that he was neither a
tenant number a licensee thereof. in cross-examination
respondent-plaintiff admitted that he had signed this
document after fully understanding the companytents thereof. if
that be so his oral testimony which runs-counter to the
document cannumber obviously be accepted unless of companyrse the
document is shown to have been obtained by late dr. amonkar
from him for the purpose of avoiding a possible objection
that might be raised by the l.i.c. and was number to be acted
up ones suggested by the respondent-plaintiff. as regards
the motive or
purpose for which the document was said to have been
obtained there are two circumstances which militate against
it. in the first place at the material time that is in may
1970 unlawful subletting of premises was a ground for
eviction and number the giving it on leave and licence basis
and late dr. amonkar might have faced some difficulty from
his own landlord namely l.i.c. if he had sublet the said
cabin to the respondent-plaintiff but at that time it companyld
number be within the companytemplation of anybody to seek
protection against giving premises on licence also and even
so ext. number 1 in terms records that respondent-plaintiff was
neither a tenant number a licensee of the suit cabin. such a
double protection was unnecessary as against the l.i.c. but
it was necessary as against the respondent-plaintiff to whom
late dr. amonkar wanted to ensure that the user of the cabin
was allowed only in the capacity of an attached honumberrary
surgeon to the hospital and in numberother and that is what
ext. number 1 says. in our view the motive suggested by the
respondent-plaintiff does number fit in with the situation or
state of affairs that existed in may 1970 and the document
really records the true transaction between the parties
namely that the respondent-plaintiff was allowed the user
of the suit cabin because of his attachment as honumberary
surgeon to dr. amonkar hospital. secondly if ext. number 1 was
number to be acted upon and it was signed by respondent-
plaintiff on the representation made to him by late dr.
amonkar that it was simply for the purpose of protecting
himself against the l.i.c. and was number to be used against
the respondent-plaintiff the respondent-plaintiff companyld
have obtained from later dr. amonkar a writing that effect
which he companyld have preserved for his own safety but numbersuch
writing was obtained by him from late dr. amonkar and in
our view if the respondent-plaintiffs version were true
that ext. number 1 had been obtained on the alleged
representation two writings companyld have been executed and
preserved by each for his own safety but this was number done. if therefore respondent-plaintiffs suggestion as to why
ext. number 1 was obtained by late dr. amonkar from him is number
believable-and for the reasons indicated above it is number-the
respondent-plaintiff must be held bound by the writing ext. number 1 which he executed after fully understanding the
contents thereof and his oral testimony that the user of the
cabin was given to him on leave and licence basis cannumber be
accepted. it may be stated that the main reason why the high
court felt that ext. number 1 did number reflect the true nature
of the transaction between the parties was that no
documentary evidence was produced by the appellant-
defendants to show that actually medical services were
rendered by the respondent-plaintiff to dr. amonkar
hospital. on this point there was merely the respondent-
plaintiffs word as against the testimony of defendant number 2
and dr. rawalia. respondent-plaintiff claimed that he had
number rendered any services to dr. amonkar hospital as an
attached honumberrary surgeon thereto while both the witness on
the side of the appellant-defendants asserted that
consultations were held with the respondent-plaintiff
whenever occasions arose in maternity cases done in the
hospital. leaving aside the high companyrts view about the
unsatisfactory nature of evidence of dr. rawalia there was
numberreason why the evidence of defendant number 2  junior dr.
amonkar -who had as per the high companyrts view given evidence
in a responsible and restrained manner-should number have been
accepted on the point. defendant number 2 had clearly stated in
his evidence that companysultations with the respondent-
plaintiff were held whenever preoperative or post-operative
problems arose in maternity cases and this was done at least
4 or 5 times a month and he was companysulted in his capacity as
an honumberary surgeon attached to the hospital. it is true
that numberdocumentary record of such companysultations was
produced but whether any record of companysultations would be
maintained or number would depend upon the nature and type of
consultations made and it is equally possible that due to
lapse of time that had occurred between such companysultations
and the trial such record may number have been preserved. in
our view defendant number 2s evidence in this behalf need number
have been rejected simply because numberrecord of such
consultations was produced. furthermore the respondent number 2
admitted in his evidence that he had made use of the
operation theatre together with the facilities attached
thereto of dr. amonkar hospital for performing operations on
his private patients and though there is a companytroversy as to
whether such user of the operation theatre was free of
charge or on payment in our view such user of operation
theatre together with the facilities attached thereto would
number have been permitted to respondent-plaintiff if he were
an independent licensee of the suit cabin and was number
connected with and attached to the hospital. lastly the
evidence clearly shows that right from companymencement of his
occupation of the suit cabin till january 1973  when the
respondent-plaintiff obtained an interim injunction  the
respondent plaintiff had numberservant of his own attached to
the suit cabin but he was getting the services from the
members of the hospital staff in the matter of sweeping
cleaning and dusting of his cabin receiving his patients in
the companymon waiting room and ushering them into his cabin for
which numberseparate payment was being made by him. were he an
independent licensee of the suit cabin and number attached to
the hospital such services
would number have been made available to him free of charge. in our view the aforesaid broad features emerging from
the evidence on record clearly support the appellants-
defendants case that the user of the suit cabin was allowed
to the respondent-plaintiff number on leave and licence basis
but because of his attachment as honumberrary surgeon to dr.
amonkar hospital. such being our companyclusion on the factual
issue it is unnecessary for us to deal with or discuss the
other two semi-legal issues that were argued before us in
these appeals. we are clearly of the view that the high
court was number right in reversing the companycurrent finding of
fact recorded by both the companyrts below and even on merits
the high companyrt judgment cannumber be sustained. the appeals are
therefore allowed and the high companyrt judgment is set aside
and the companycurrent finding of both the lower companyrts on the
factual issue is restored.