P. Govindan Nair, J.
1. This petition by the employer seeking to set aside an award, Ext. P-4 of the Industrial Tribunal, Calicut awarding 4% bonus for the years 1966-67 and 1967-68, each of the years ending on 30th of June, has come up before us on a reference order which states that the inter-relationship between Sections 10 and 16 of the Payment of Bonus Act, 1965 (hereinafter referred to as the Act) arises for consideration in the case.
2. Section 10 of the Act is in these terms:
10. Payment of minimum bonus.- Subject to the provisions of Sections 8 and 13, every employer shall be bound to pay to every employee in an accounting year a minimum bonus which shall be four per cent of the salary or wage earned by the employee during the accounting year or forty rupees, whichever is higher, whether there are profits in the accounting year or not:Provided that where such employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effect in relation to such employee as if for the words 'forty rupees', the words 'twenty-five rupees' were substituted.
And Section 16(1)(a) & (b), leaving out the proviso and the explanations thereto, which are the only relevant provisions in Section 16 arising for consideration, runs thus:
16. Special provisions with respect to certain establishment.-(I) Where an establishment is newly set up, whether before or after the commencement of this Act, the employees of such establishment shall be entitled to be paid bonus under this Act only-
(a) from the accounting year In which the employer derives profit from such establishment; or
(b) from the sixth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, whichever is earlier:
It is not disputed before us that Section 16(1)(b) has any application, for the 6th accounting year following the accounting year in which the employer started selling goods produced or manufactured by him had not been reached in 1966-67 or 1967-68. The only contention is that Section 16(1)(a) is applicable because for the accounting years concerned, the employer had derived profit from the establishment. The finding of the Tribunal is also to this effect. It is stated in Ext. P-4:
On this basis I find that this management has not incurred any loss during these years and they have made sufficient profits for payment of bonus.
The basis is that the depreciation charged in the balance sheet of the company which has been duly audited, and interest debited for the loss sustained by the company should not have been deducted from the total profits of the two years because it was contended by the workmen that the depreciation is excessive and interest need not have been paid. In accepting this contention without any material, the Tribunal omitted to notice Section 23 of the Act. We shall read Section 23:
23. Presumption about accuracy of balance sheet and profit and loss account of corporations and companies. -(1) Where, during the course of proceedings before any arbitrator or Tribunal under the Industrial Disputes Act, 1947 (14 of 1947), or under any corresponding law relating to investigation and settlement of industrial disputes in force in a State (hereinafter in this section and in Sections 24 and 25 referred to as the 'said authority') to which any dispute of the nature specified in Section 22 has been referred, the balance sheet and the profit and loss account of an employer, being a corporation or a company (other than a banking company), duly audited by the Comptroller and Auditor-General of India or by auditors duly qualified to act as auditors of companies under Sub-section (1) of Section 226 of the Companies Act, 1956 (1 of 1956), are produced before it, then, the said authority may presume the statements and particulars contained in such balance sheet and profit and loss account to be accurate and it shall not be necessary for the corporation or the company to prove the accuracy of such statements and particulars by the filing of an affidavit or by any other mode:
Provided that where the said authority is satisfied that the statements and particulars contained in the balance sheet or the profit and loss account of the corporation or the company are not accurate, it may take such steps as it thinks necessary to find out the accuracy of such statements and particulars.(2) When an application is made to the said authority by any trade union being a party to the dispute or where there is no trade union, by the employees being a party to the dispute requiring any clarification relating to any item in the balance sheet or the profit and loss account, it may, after satisfying itself that such clarification is necessary, by order, direct the corporation or, as the case may be, the company, to furnish to the trade union or the employees such clarification within such time as may be specified in the direction and the corporation or, as the case may be, the company, shall comply with such direction.
The section enables the Tribunal to presume that the statements and particulars contained in the balance sheet and profit and loss account are accurate. It is only when the Tribunal is satisfied that the statements and particulars contained in the balance sheet and profit and loss account are not accurate that it may take such steps as it thinks fit to find out the accuracy of such statements. Apart from the contentions raised by the union of workmen there was no material available on which the authority could state that it was satisfied that the statements and particulars contained in the balance sheet and the profit and loss account of the company were not accurate. We, therefore, think that the Tribunal should have proceeded on the basis of the presumption which was available to the Tribunal under Section 23(1) of the Act. The balance sheet of the company for the two years indicated that the company had net loss of Rs. 2,395.63 and Rs. 1,055.18 for the years 66-67 and 67-68, respectively. Therefore, Section 16(1)(a) is also not attracted.
3. The only question remaining is whether a Tribunal can award minimum bonus enjoined by Section 10 in cases where Section 16 is not satisfied. We understand Section 16 as a proviso or as an exception or as a qualification to Section 10. Both sections have to be given their due effect which can only be done by understanding Section 10 as applicable only when the conditions mentioned in Section 16 are satisfied. In other words, the minimum bonus will be payable under Section 10 only when either there was profit made by the company or only from the 6th accounting year following the accounting year in which the employer sells the goods produced. Neither of these conditions had been satisfied in this case. The award Ext. P-4, therefore, cannot be sustained.
4. We set aside Ext. P-4 award and allow this writ application. We direct the parties to bear their respective costs.