HARYANA STATE COOPERATIVE LAND DEVELOPMENT BANK LTD versus HARYANA STATE COOPERATIVE LAND DEVELOPMENT BANKS EMPLOYEES UNION AND ANR.

Citation: [2003] SUPP. 6 S.C.R. 1039 · Decided: 18-12-2003 · Supreme Court of India · Bench: DORAISWAMY RAJU · Disposal: Appeal(s) allowed

Judgment (excerpt)

HARYANA STATE COOPERATIVE LAND 
DEVELOPMENT BANK LTD. 
v. 
HARYANA STATE COOPERATIVE LAND DEVELOPMENT 
. .... 
BANKS EMPLOYEES UNION AND ANR. 
DECEMBER 18, 2003 
[DORAISWAMY RAJU AND ARIJJT PASAYAT, JJ.] 
Service Law : 
Haryana Cooperative Society Act, 1984-Sections 3 proviso thereto, 
A 
B 
c 
10, 34 third proviso thereto-Rules fiwned under the Act-Rule 21-
Bonus-Payment of-To the employees of Primary Bank at parity with 
employees of Apex State Bank-Apex Bank transacted its business through 
PrimaTJJ Banks-Primary Banks maintaining their separate accounts-At D 
the relevant time concerned Primary Bank incurring a loss and had no 
allocable surplus-Held: Employees of Primary Bank not entitled to bonus 
at parity with employees of Apex Bank as Primary Banks have independent 
c01porate existence-Payment of Bonus Act, 1965. 
Statutory Law : 
Proviso to a Provision-Purpose of-Discussed. 
Apex State Bank, transacted its business though Primar:' Banks 
which are its members. Staff of the Primary Banks except class IV 
employees were drawn from Apex Bank. Primary Banks maintained 
E 
F 
their separate accounts and balance sheet. At the relevant time they 
were incurring loss and had no allocable surplus. Respondent No. 1-
Union, which had members of the appellant-Primary Bank, filed writ 
petition raising a demand that they were entitled to bonus at the rate 
applicable to employees of the Apex Bank. The claim was resisted by G 
Primary Bank on the ground that they were separate entities with 
separate balance sheet and profit and loss accounts and have distinct 
corporate identity under the Act. Single Judge of High Court, allowed 
the petition holding that employees of Prim.try Banks were entitled to 
bonus at the rate app•icable to employees of Apex Bank as Rule 21 has H 
1039 
1040 
SUPREME COURT REPORTS [2003) SUPP. 6 S.C.R. 
A overriding effect vis-a-vis Section 34 of Haryana Cooperative Society 
Act, 1984 in view of Section 34A of the Act. The view of Single Judge 
was confirmed by Division Bench in Letters Patent AppeaJ. 
In appeal to this Court appellant-Bank contended that according 
B to third proviso to Section 34, minimum bonus was only 8.33% of the 
wages, if the employer has no allocable surplus; that Rule 21 does not 
have overriding effect vis-a-vis Section 34; and that merely because 
members 9fthe staff were drawn from the Apex Bank, it does not mean 
that they continued to be employees of the Apex Bank. 
C 
Respondent-Union, in order to support its case.relied on letter of 
previous years relating to payment of bonus. 
Allowing the appeal, the Court 
HELD : 1.1. The payment of minimum bonus is provided in 
D Section 10 of Haryana Cooperative Society Act, 1984 and is fixed at 
8.33 percentage of the salary or wages earned by the employees. The 
entitlement of higher bonus comes in case the allocable surplus permits 
payment of higher ,bonus in terms of the applicable formula. The view 
of High Court that Rule 21 had overriding effect vis-a-vis Section 34, 
E by referring to Section 34-A of the Act, is untenable. Rule 2lwas 
interpreted to mean as if all other provisions of the Act had to give way 
to Rule 21. It is really not so. Sections 34 and 34-A make the position 
clear. The Primary Banks have independent corporate existence and 
were undisputedly maintaining separate Balance Sheet and Profit and 
F Loss account. Therefore proviso to Section 3 of the Act has full 
application. High Court did not take into account the effect of the 
proviso to Section 3, and third proviso to Section 34. (1048-B-E) 
1.2. Where in a company having number of undertakings sepa-
G rate accounts 11re kept for each sep2rate undertaking though it is not 
a requirement of the Companies Act, 1956, they shall be treated as 
different undertakings for the purpose of the Act. These aspects do not 
appear to have been considered by the High Court which erroneously 
proceeded to hold about Rule 21 having overriding effect over Section 
34. Rules are framed under Section 32 of the Act. Therefore, question 
H of Rules have overriding effect does not arise. 11048-F-H] 
HARYANA COOP., LAND DEVELOPMENT BANK LTD. v. HARYANA STATE COOP. LAND 
} 041 
DEVELOPMENT BANKS EMPLOYEES UNION 
Mis. Alloy Steel Projectv. The Workmen, (1971] 1sec536 and The A 
K. C.P. Employees' Association, Madras v. The Management of K. C.P. Ltd. 
Madras and Others, (I 978) 2 SCC 42, relied on. 
2.1. The normal function of a proviso is to except something out 
of t

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