CROMPTON PARKINSON (WORKS) PRIVATELTD., BOMBAY vs ITS WORKMEN AND OTHERS

The Supreme Court held that the entire service fee paid by Crompton Parkinson (Works) Pvt. Ltd. to its parent company should be allowed as legitimate expenditure under the Industrial Disputes Act, as it was a genuine contractual obligation and not excessive or sham. The Tribunal's decision to reduce the allowable expenditure and to deduct bonus as a prior charge before recognized items was found to be erroneous. The Court emphasized that the Tribunal could not substitute its judgment for that of the company's directors regarding commercial necessity, thus upholding the principle that contractual obligations must be respected unless proven otherwise.