M/S. Patel Aluminium Private Limited Vs. Maharashtra Shramik Sena &amp; Another
As regards the finding of the Tribunal that there was a functional integrality between different units, who were sister concerns of the appellant and running in the same compound, counsel for the appellant submitted that all the units were private limited companies and being so, each was a different person in the eye of law. Therefore, the Tribunal could not have held that there was functional and financial integrality and the finding was perverse. The Tribunal has in its judgment noted that different units were located in the same compound and services of workmen were transferable from the appellant company to other concerns and vice versa. Transferability from and to different units is an important ingredient which certainly can be taken into consideration while deciding whether there existed functional integrality between the different units. The Tribunal has not taken into consideration any irrelevant fact while reaching the finding of functional integrality and the finding is also based upon the evidence before it. Appreciation of evidence was within the jurisdiction of the Tribunal and we do not find any perversity in the appreciation of the evidence. It is settled principle of law that in exercise of writ jurisdiction under Article 226 or 227 of the Constitution of India, a finding of fact recorded by a subordinate court or a tribunal based on proper appreciation of evidence cannot be set aside on reappreciation of evidence by the High Court unless the finding is based on no evidence or an evidence which, in law, is not admissible or is otherwise perverse. Learned Single Judge did not notice any perversity in the finding of fact recorded by the Tribunal about functional financial integrality and nothing was pointed out to us to show that the finding was in any way perverse.6. However, at the insistence of the learned counsel for the appellant and in order to satisfy our conscience, we have gone through the balance sheets and profit and loss accounts, copies of which are at pages 153 onwards of the compilation. The Annual Report of the appellant for the year 1993-94 contains the figures of profit and loss for that year as well as the comparative figures of the previous year. Profit and loss statement discloses that the appellant company earned gross profit of Rs.42 lakhs in the previous year, i.e. in the year ending 31st March 1993 and gross profit of Rs.17.36 lakhs for the year ending 31st March 1994. The said gross profit was arrived at after deducting from the earnings, cost of raw materials, cost of stores & spares, processing & conversion charges, central excise duty, expenses of power & fuel, and machinery hire charges as also wages and allowances including bonus. From this gross profit, further deduction was made for salaries and other expenses. We fail to see how salaries could be again deducted from the gross profit which was arrived at after deducting wages and allowances including bonus for arriving at net profit. In any event, the burden of proving that additional expenses were incurred for salaries other than wages was clearly on the appellant company which it had not discharged. Similarly, the profit and loss account for the year ending 31st March 1995 shows that the appellant company earned a gross profit Rs.10.86 lakhs. A loss of Rs.39.43 lakhs is shown to have been incurred in the profit and loss account for the year ending 31st March 1996. However, it may be noted that an amount of Rs.11.45 lakhs paid as retrenchment compensation to the workmen and a further sum of Rs.11.45 lakhs paid as expenses of voluntary retirement compensation paid to the workmen is deducted from the income for arriving at the amount of loss. Amount of voluntary retirement and retrenchment compensation paid to the workmen would reduce the expenditure which the appellant company would have incurred in future years had the services of the workmen not been severed under the VRS. The expenses of voluntary retirement compensation and retrenchment compensation paid to the workmen would, therefore, reduce the future stream of expenses which the appellant would have been required to incur over several years in future. Expenses of voluntary retirement and retrenchment compensation therefore are required to be amortized over a period of time or over the next few years to arrive at a true and correct financial position of a company. Loss shown on account of deduction of entire expenses of VRS in the year in which they were incurred cannot, in our opinion, be considered to represent the true financial position of the company. In any event, the appellant ought to have explained in its evidence the necessity of deducting all the expenses of VRS in the financial year in which the expenses were incurred if at all it wanted to deduct all the expenses in that financial year. This was not explained by the appellant. The appellant examined Shri Nayan ohanbhai Patel, Executive Director of the appellant company, but did not examine any person from its accounts department to prove the profit and loss account and various entries therein. When questions were sought to be put to Shri Patel regarding the entries in the balance sheet and profit and loss account, he could not explain the entries therein and pleaded lack of knowledge. He stated: "It is correct to say that I am unable to explain the queries asked regarding the balance sheet and profit and loss account." Thus the balance sheets and profit and loss statements were not legally proved and for three of the four years for which statements were produced, they showed that the appellant was making profits. 7. We have referred to the profit and loss statements and the cross examination of Shri Patel regarding the balance sheet and profit and loss statements not with a view of reappreciation of evidence, but only for satisfying our conscience that the findings reached by the Tribunal are not in any way perverse and are possible findings based on appreciation of evidence.
1[ds]The Tribunal has in its judgment noted that different units were located in the same compound and services of workmen were transferable from the appellant company to other concerns and vice versa. Transferability from and to different units is an important ingredient which certainly can be taken into consideration while deciding whether there existed functional integrality between the different units. The Tribunal has not taken into consideration any irrelevant fact while reaching the finding of functional integrality and the finding is also based upon the evidence before it. Appreciation of evidence was within the jurisdiction of the Tribunal and we do not find any perversity in the appreciation of the evidence. It is settled principle of law that in exercise of writ jurisdiction under Article 226 or 227 of the Constitution of India, a finding of fact recorded by a subordinate court or a tribunal based on proper appreciation of evidence cannot be set aside on reappreciation of evidence by the High Court unless the finding is based on no evidence or an evidence which, in law, is not admissible or is otherwise perverse. Learned Single Judge did not notice any perversity in the finding of fact recorded by the Tribunal about functional financial integrality and nothing was pointed out to us to show that the finding was in any waythe insistence of the learned counsel for the appellant and in order to satisfy our conscience, we have gone through the balance sheets and profit and loss accounts, copies of which are at pages 153 onwards of the compilation. The Annual Report of the appellant for the yearcontains the figures of profit and loss for that year as well as the comparative figures of the previous year. Profit and loss statement discloses that the appellant company earned gross profit of Rs.42 lakhs in the previous year, i.e. in the year ending 31st March 1993 and gross profit of Rs.17.36 lakhs for the year ending 31st March 1994. The said gross profit was arrived at after deducting from the earnings, cost of raw materials, cost of storesconversion charges, central excise duty, expenses of powerfuel, and machinery hire charges as also wages and allowances including bonus. From this gross profit, further deduction was made for salaries and other expenses. We fail to see how salaries could be again deducted from the gross profit which was arrived at after deducting wages and allowances including bonus for arriving at net profit. In any event, the burden of proving that additional expenses were incurred for salaries other than wages was clearly on the appellant company which it had not discharged. Similarly, the profit and loss account for the year ending 31st March 1995 shows that the appellant company earned a gross profit Rs.10.86 lakhs. A loss of Rs.39.43 lakhs is shown to have been incurred in the profit and loss account for the year ending 31st March 1996. However, it may be noted that an amount of Rs.11.45 lakhs paid as retrenchment compensation to the workmen and a further sum of Rs.11.45 lakhs paid as expenses of voluntary retirement compensation paid to the workmen is deducted from the income for arriving at the amount of loss. Amount of voluntary retirement and retrenchment compensation paid to the workmen would reduce the expenditure which the appellant company would have incurred in future years had the services of the workmen not been severed under the VRS. The expenses of voluntary retirement compensation and retrenchment compensation paid to the workmen would, therefore, reduce the future stream of expenses which the appellant would have been required to incur over several years in future. Expenses of voluntary retirement and retrenchment compensation therefore are required to be amortized over a period of time or over the next few years to arrive at a true and correct financial position of a company. Loss shown on account of deduction of entire expenses of VRS in the year in which they were incurred cannot, in our opinion, be considered to represent the true financial position of the company. In any event, the appellant ought to have explained in its evidence the necessity of deducting all the expenses of VRS in the financial year in which the expenses were incurred if at all it wanted to deduct all the expenses in that financial year. This was not explained by the appellant. The appellant examined Shri Nayan ohanbhai Patel, Executive Director of the appellant company, but did not examine any person from its accounts department to prove the profit and loss account and various entries therein. When questions were sought to be put to Shri Patel regarding the entries in the balance sheet and profit and loss account, he could not explain the entries therein and pleaded lack of knowledge. Heis correct to say that I am unable to explain the queries asked regarding the balance sheet and profit and lossthe balance sheets and profit and loss statements were not legally proved and for three of the four years for which statements were produced, they showed that the appellant was making profits.We have referred to the profit and loss statements and the cross examination of Shri Patel regarding the balance sheet and profit and loss statements not with a view of reappreciation of evidence, but only for satisfying our conscience that the findings reached by the Tribunal are not in any way perverse and are possible findings based on appreciation of evidence.
### Instruction:
Decide if the appeal in the case proceeding is more likely to be successful (1) or unsuccessful (0), and then justify your decision by focusing on essential sentences in the document.

### Input:
As regards the finding of the Tribunal that there was a functional integrality between different units, who were sister concerns of the appellant and running in the same compound, counsel for the appellant submitted that all the units were private limited companies and being so, each was a different person in the eye of law. Therefore, the Tribunal could not have held that there was functional and financial integrality and the finding was perverse. The Tribunal has in its judgment noted that different units were located in the same compound and services of workmen were transferable from the appellant company to other concerns and vice versa. Transferability from and to different units is an important ingredient which certainly can be taken into consideration while deciding whether there existed functional integrality between the different units. The Tribunal has not taken into consideration any irrelevant fact while reaching the finding of functional integrality and the finding is also based upon the evidence before it. Appreciation of evidence was within the jurisdiction of the Tribunal and we do not find any perversity in the appreciation of the evidence. It is settled principle of law that in exercise of writ jurisdiction under Article 226 or 227 of the Constitution of India, a finding of fact recorded by a subordinate court or a tribunal based on proper appreciation of evidence cannot be set aside on reappreciation of evidence by the High Court unless the finding is based on no evidence or an evidence which, in law, is not admissible or is otherwise perverse. Learned Single Judge did not notice any perversity in the finding of fact recorded by the Tribunal about functional financial integrality and nothing was pointed out to us to show that the finding was in any way perverse.6. However, at the insistence of the learned counsel for the appellant and in order to satisfy our conscience, we have gone through the balance sheets and profit and loss accounts, copies of which are at pages 153 onwards of the compilation. The Annual Report of the appellant for the year 1993-94 contains the figures of profit and loss for that year as well as the comparative figures of the previous year. Profit and loss statement discloses that the appellant company earned gross profit of Rs.42 lakhs in the previous year, i.e. in the year ending 31st March 1993 and gross profit of Rs.17.36 lakhs for the year ending 31st March 1994. The said gross profit was arrived at after deducting from the earnings, cost of raw materials, cost of stores & spares, processing & conversion charges, central excise duty, expenses of power & fuel, and machinery hire charges as also wages and allowances including bonus. From this gross profit, further deduction was made for salaries and other expenses. We fail to see how salaries could be again deducted from the gross profit which was arrived at after deducting wages and allowances including bonus for arriving at net profit. In any event, the burden of proving that additional expenses were incurred for salaries other than wages was clearly on the appellant company which it had not discharged. Similarly, the profit and loss account for the year ending 31st March 1995 shows that the appellant company earned a gross profit Rs.10.86 lakhs. A loss of Rs.39.43 lakhs is shown to have been incurred in the profit and loss account for the year ending 31st March 1996. However, it may be noted that an amount of Rs.11.45 lakhs paid as retrenchment compensation to the workmen and a further sum of Rs.11.45 lakhs paid as expenses of voluntary retirement compensation paid to the workmen is deducted from the income for arriving at the amount of loss. Amount of voluntary retirement and retrenchment compensation paid to the workmen would reduce the expenditure which the appellant company would have incurred in future years had the services of the workmen not been severed under the VRS. The expenses of voluntary retirement compensation and retrenchment compensation paid to the workmen would, therefore, reduce the future stream of expenses which the appellant would have been required to incur over several years in future. Expenses of voluntary retirement and retrenchment compensation therefore are required to be amortized over a period of time or over the next few years to arrive at a true and correct financial position of a company. Loss shown on account of deduction of entire expenses of VRS in the year in which they were incurred cannot, in our opinion, be considered to represent the true financial position of the company. In any event, the appellant ought to have explained in its evidence the necessity of deducting all the expenses of VRS in the financial year in which the expenses were incurred if at all it wanted to deduct all the expenses in that financial year. This was not explained by the appellant. The appellant examined Shri Nayan ohanbhai Patel, Executive Director of the appellant company, but did not examine any person from its accounts department to prove the profit and loss account and various entries therein. When questions were sought to be put to Shri Patel regarding the entries in the balance sheet and profit and loss account, he could not explain the entries therein and pleaded lack of knowledge. He stated: "It is correct to say that I am unable to explain the queries asked regarding the balance sheet and profit and loss account." Thus the balance sheets and profit and loss statements were not legally proved and for three of the four years for which statements were produced, they showed that the appellant was making profits. 7. We have referred to the profit and loss statements and the cross examination of Shri Patel regarding the balance sheet and profit and loss statements not with a view of reappreciation of evidence, but only for satisfying our conscience that the findings reached by the Tribunal are not in any way perverse and are possible findings based on appreciation of evidence.

### Response:
1

### Explanation:
The Tribunal has in its judgment noted that different units were located in the same compound and services of workmen were transferable from the appellant company to other concerns and vice versa. Transferability from and to different units is an important ingredient which certainly can be taken into consideration while deciding whether there existed functional integrality between the different units. The Tribunal has not taken into consideration any irrelevant fact while reaching the finding of functional integrality and the finding is also based upon the evidence before it. Appreciation of evidence was within the jurisdiction of the Tribunal and we do not find any perversity in the appreciation of the evidence. It is settled principle of law that in exercise of writ jurisdiction under Article 226 or 227 of the Constitution of India, a finding of fact recorded by a subordinate court or a tribunal based on proper appreciation of evidence cannot be set aside on reappreciation of evidence by the High Court unless the finding is based on no evidence or an evidence which, in law, is not admissible or is otherwise perverse. Learned Single Judge did not notice any perversity in the finding of fact recorded by the Tribunal about functional financial integrality and nothing was pointed out to us to show that the finding was in any waythe insistence of the learned counsel for the appellant and in order to satisfy our conscience, we have gone through the balance sheets and profit and loss accounts, copies of which are at pages 153 onwards of the compilation. The Annual Report of the appellant for the yearcontains the figures of profit and loss for that year as well as the comparative figures of the previous year. Profit and loss statement discloses that the appellant company earned gross profit of Rs.42 lakhs in the previous year, i.e. in the year ending 31st March 1993 and gross profit of Rs.17.36 lakhs for the year ending 31st March 1994. The said gross profit was arrived at after deducting from the earnings, cost of raw materials, cost of storesconversion charges, central excise duty, expenses of powerfuel, and machinery hire charges as also wages and allowances including bonus. From this gross profit, further deduction was made for salaries and other expenses. We fail to see how salaries could be again deducted from the gross profit which was arrived at after deducting wages and allowances including bonus for arriving at net profit. In any event, the burden of proving that additional expenses were incurred for salaries other than wages was clearly on the appellant company which it had not discharged. Similarly, the profit and loss account for the year ending 31st March 1995 shows that the appellant company earned a gross profit Rs.10.86 lakhs. A loss of Rs.39.43 lakhs is shown to have been incurred in the profit and loss account for the year ending 31st March 1996. However, it may be noted that an amount of Rs.11.45 lakhs paid as retrenchment compensation to the workmen and a further sum of Rs.11.45 lakhs paid as expenses of voluntary retirement compensation paid to the workmen is deducted from the income for arriving at the amount of loss. Amount of voluntary retirement and retrenchment compensation paid to the workmen would reduce the expenditure which the appellant company would have incurred in future years had the services of the workmen not been severed under the VRS. The expenses of voluntary retirement compensation and retrenchment compensation paid to the workmen would, therefore, reduce the future stream of expenses which the appellant would have been required to incur over several years in future. Expenses of voluntary retirement and retrenchment compensation therefore are required to be amortized over a period of time or over the next few years to arrive at a true and correct financial position of a company. Loss shown on account of deduction of entire expenses of VRS in the year in which they were incurred cannot, in our opinion, be considered to represent the true financial position of the company. In any event, the appellant ought to have explained in its evidence the necessity of deducting all the expenses of VRS in the financial year in which the expenses were incurred if at all it wanted to deduct all the expenses in that financial year. This was not explained by the appellant. The appellant examined Shri Nayan ohanbhai Patel, Executive Director of the appellant company, but did not examine any person from its accounts department to prove the profit and loss account and various entries therein. When questions were sought to be put to Shri Patel regarding the entries in the balance sheet and profit and loss account, he could not explain the entries therein and pleaded lack of knowledge. Heis correct to say that I am unable to explain the queries asked regarding the balance sheet and profit and lossthe balance sheets and profit and loss statements were not legally proved and for three of the four years for which statements were produced, they showed that the appellant was making profits.We have referred to the profit and loss statements and the cross examination of Shri Patel regarding the balance sheet and profit and loss statements not with a view of reappreciation of evidence, but only for satisfying our conscience that the findings reached by the Tribunal are not in any way perverse and are possible findings based on appreciation of evidence.
