LexJACKSON CO-OPERATIVE CREDIT SOCIETY LIMITED versus CO-OPERATIVE BANKS & SOCIETIES EMPLOYEES FEDERATION & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
JACKSON CO-OPERATIVE CREDIT SOCIETY LIMITED
J_
A
v.
CO-OPERATIVE BANKS & SOCIETIES EMPLOYEES'
FEDERATION & ORS.
MARCH 31, 1989
[MURARI MOHON DUTT AND T.K. THOMMEN, JJ.I
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>
Payment of Bonus Act, 1965---Section 6( d) and Third Schedule
Item No. 4-For rate of Bonus-Sums deductible from gross profits-
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What are-In respect of a Co-operative Society.
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The appellant-Co-operative Society has filed this appeal by special
)
leave against the High Court's order passed in a writ petition filed by it
whereby the High Court set aside the award of the Industriai Tribunal.
The High Court in the impugned order held that the appellant Is liable
to pay to its employees bonus at the rate of 20 per cent of its total annual
p earnings for the years 1975-76, 1976-77 and 1977-78.
The appellant contends that the High Court went wrong in direct-
ing the appellant to pay bonus with regard to various amounts invested
by it as permitted by the relevant provisions of the Maharashtra Co-
-.+-_
operative Societies Act 1960, and the amounts carried forward to its
E reserve fund. According to tbe appellant, the High Court neither read
the provisions of Sec. 6(d) of the Bonus Act 1965 correctly nor was it
justified in relying on the Explanation to the 3rd Schedule to the Bonus
Act.
Dismissing the appeal subject to the modification indicated in the r-
F judgment bereinbelow, this Court,
HELD: The expression "capital" is not defined under the Bonus
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...,
Act. It must therefore be understood in the sense in which that expres-
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sion is generally understood. That means all amounts which are clas-
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sified 11s capital in contrast to revenue must qualify for deduction sub-
G ject to the limit of 8.5 per cent, provided such capital is invested by the
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Society in Its establishment as evidenced by its books of accounts at the
commencement of the accounting year. Any such capital upto 8.5 per
cent is thus deductible. Furthermore, all sums which have been carried
forward in respect of the relevant accounting year to a reserve fund as
required under any law applicable to Co-operative Societies for the time
H being in force are also deductible from gross profits. [2698-D I
266
CREDIT SOCIETY v. EMPLOYEES' FEDERATION ITHOMMEN, J.]
267
)._
Accordingly all such amounts held by the Society as reserve fund
in terms of Sec. 66 of the Co-operative Societies Act must qualify
A
for deduction. [2690)
If larger amounts are carried forward fo the reserve fund in tetms
of Sec. 66, all such amounts will come within the ambit of item (4) of the
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3rd Schedule to the Bonus Act and qualify for deduction. [270A-B)
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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4042
of 1988.
From the Judgment and Order dated 17.12.1987 of the Bombay
High Court in W.P. No. 1048 of 1982.
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S.C. Gupta and M.N. Shroff for the Appellant.
Anil Dev Singh, Ms. Nayana Buch, M.J. Paul, Kailash Vasdev,
Ms. Subhashini and Mrs. Kitty Kumarmangalam for the Respondents.
D
The Judgment of the Court was delivered by
THOMMEN, J .. This civil appeal by special leave is directed
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against judgment dated 17 .12.1987 of the High Court of Bombay in
Writ Petition No. 1048 of 1982 instituted by the appellant, which is a
Co-operative Credit Society. The 1st respondent is a Federation repre-
E
senting the employees of the appellant amongst others.
Setting aside the award of the Industrial Tribunal, the High
Court held that the appellant was liable to pay its employees bonus at
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the rate of 20 per cent of its total annual earnings for the years 1975-76,
1976-77 and 1977-78.
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The principal contention urged at the Bar against the impugned
judgment is that the High Court went wrong in directing the appellant
to pay bonus without regard to various amounts invested by it as
permitted under the relevant provisions of the Maharashtra Co-
)(
operative Societies Act, 1960 (the "Co-operative Societies Act") and
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other amounts carried forward to _its reserve fund. The appellant's
counsel contends that the High Court did not correctly read the provi-
sions of Section 6( d) of the Payment of Bonus Act, 1965 (The "Bonus
Act") and item (4) ·of the Third Schedule to the said Act. Counsel
further contends that the High Court was not justified in. placing
reliance on the Explanation to the Third Schedule to the Bonus Act as
H
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A
268
SUPREME COURT REPORTS
[1989) 2 S.C.R.
it has no relevance to co-operative societies. The ExplExcerpt shown. Read the full judgment & AI analysis in Lexace.