M.B. Sharma, J.
1. This is a writ petition under Article 226 of the Constitution of India against the award dated 14-4-1981 in Industrial Reference No. 1 of 1979 of the Industrial Tribunal, Jodhpur (for short, 'the Tribunal' here in after).
2. The petitioner is a co-operative society registered under the Cooperative Societies Act (here in after referred to as 'the Act'). The respondent No. 2 Railway Employees Cooperative Banking Society, Karamchari Sangh (for short, 'Karamchari Sangh' here in after) raised some disputes with the petitioners for payment of bonus for the years 1966-67 to 1970-71 but their demands were not met and therefore, the Karmchari Sangh moved an application on September 28, 1973 before the Conciliation Officer, Jodhpur. The petitioner did not put in appearance before the Conciliation Officer and did not settle the matter. There upon, by notification No. F1(1) 223) L&E;/74 dated August 19, 1974, the State Government referred the following dispute to the Industrial Tribunal.
Whether it is just and legal for the Railway Employees Co-operative Banking Society Limited, Jodhpur, for not giving bonus to its workmen, who are represented by Railway Employees Co-operative Banking Society Karamchari Sangh, Jodhpur, at the rate of 20% for the years 1966-67 to 1970-71 and if so to what relief are the workmen entitled ?
A claim was filed by the Karamchari Sangh before the Tribunal where in the case was set up that it requested several times to the petitioner for the supply of copies of balance sheets for the years 1966-67 to 1970-71 but the copies of the balance-sheets were not supplied. Somehow, they managed to get them and on examination, it was revealed that the bonus was being paid at the minimum rate of 4% but the workmen were entitled to get bonus at the rate of 20% in view of the profits earned, the allocable surplus and the position of the allocable surplus and amount sit on and set off. As per the karam chari sangh, the position of the allocable surplus and amount set on are as under:
Year Allocable Available Surplus Amount set on1966-67 21,306.00 6956.001967-68 20,938.00 4258.001968-69 30,856.00 13611.001969-70 25,968.00 6588.001970-71 10,264.00 ...
3. Reply was filed by the petitioners before the Tribunal in which variouspleas were raised. It was stated that the members of the Karamchari Sangh are not enitled to get more than minimum bonus. After distributing the net profits as required under Section 62 of the Act and Rule 68 of the Rajasthan Co-operative Societies Rules, 1966 (for short, 'the Rules' here after), net profits become lesser and no allocable surplus remains. Balance sheets were not depecting the true picture of the matter. The claim made for bonus was belated. The provisions of the Societies Act would apply and not the provisions of the Payment of Bonus Act, 1965 ('the Bonus Act' hereafter for brevity sake). The Karamchari Sangh filed rejoinder to the reply of the petitioner where in it was stated that the provisions of the Bonus Act will apply and not of the Societies Act. The Tribunal framed the following points for consideration,:
(1) Whether the employees of the opposite party are entitled to get bonus according to the provisions of Payment of Bonus Act or according to Rajasthan Co-operative Societies Act, 1965 and the rules framed there under?
(2) Whether the employees are not entitled to get more bonus on account of great delay and laches ?
(3) At what rate the employees are entitled to get bonus ?
After taking the material on record, the Tribunal held that the provisions of the Bonus Act, will be applicable and not of the Societies Act. It was also held that there was no inconsistency in the provisions so far as those of the Societies Act and the Bonus Act are concerned and though the Rules provide payment of bonus of not exceeding two months but it being inconsistent with the provisions of the Bonus Act, the Bonus Act will prevail. The Tribunal, held that the claim made was not belated as the workmen all through were making claims for the payment of bonus at the rate of 20% and it was the petitioner who did not supply them the balance-sheets. Lastly, it was held by the Tribunal that the balance-sheets of the petitioner under Section 22 of the Act were conclusive and under the provisions of the Bonus Act, the petitioners were not entitled for the various deductions which they have claimed in their balance-sheets while coming to the allocable surplus. The Tribunal, therefore, held that the workmen were entitled for bonus at the rate of 20%, the maximum; and not 4%, the minimum, as paid.
4. Mr. Mridul, learned Counsel for respondent No. 2, filed caveat and contested the admission of the case. I, therefore, heard both the learned Counsel at length.
5. Mr. Deedwania, learned Counsel for the petitioner has raised a three fold contention before me.
1. That the claim of bonus made was belated and should have been thrown out on this ground;
2. That Rule 68 of the Rules being in force, the petitioners cannot be asked to pay bonus for more than two months; and
3. That the computation of the allocable surplus is not in accordance with the provisions of the Act.
6. I will take the above points in the order in which they have been urged.
7. The Tribunal has held, on the evidence before it, that the balance-sheet of the year 1966-67 was published on April 29, 1970. It has also held that the balance-sheets of the year 1966-67 and 1967-68 contained a letter of March 26, 1970 and it means that this booklet must have been printed after that date. It has further been obsereved by the Tribunal that the balance sheets of the years 1968-69 and 1969-70 contained a letter of September 4, 1971 and obviously, this must have been printed after that date. Taking the matter into consideration that a charter of demand dated September 9, 1967 (Anx. 1 to the reply) that bonus should be paid as per the Bonus Act was made by the Karamchari Sargh, the Tribunal observed that there was no delay in making the claim. The Tribunal has discussed in detail the entire material before it including the statement of Shri Vishva Dev, General Secretary of the petitioner that the meeting of the General Body of the Society took place on 29-4-70 for annual report and disbursement of profit and loss relating to the years 1966-67 and 1967-68 and held that the claim was not belated. Besides what has been stated by the learned Tribunal, it may also be observed that in the Bonus Act, there is no limitation prescribed for preferring a claim. The learned advocate has placed reliance on National Engineering Industries v. Its Workmen and vice Versa AIR 1968 SC 538 in support of his contention that a claim for bonus, if belated, should not be entertained. That was a case before the Bonus Act came into force and in that case, the Tribunal had disallowed the claim for 1955-56 on the ground that it was belated having been filed after 18 months. The Court, therefore, did not like to interfere with the discretion of the Tribunal. In the instant case, the Tribunal has discussed the entire material on record and has held that the claim was not belated in the facts and circumstances of the case. The approach of the Tribunal cannot be said to be arbitrary and in writ jurisdiction, unless it is so, this Court does not generally interfere. I do not find any case for interference in the order of the Tribunal that the claim for bonus for the five years was not belated.
8. Section 34A of the Bonus Act clearly provides that subject to the provisions of Section 31A and 34, the provisions of this Act shall have effect not with standing anything inconsistent there with contained in any other law for time being in force or in terms of any award, agreement, settlement or contract of service. Under Article 246(2) of the Constitution of India, Parliament has powers to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule which is referred to as the 'Concurrent List'. Entries 23 and 24 of the aforesaid List are relevant and the Bonus Act was passed under Article 246 read with entries 23 and 24 of the Concurrent List. In case there is any inconsistency in laws made by the Parliament and made by the Legislature of the State, then the laws made by the Parliament shall prevail. The learned Tribunal has discussed in detail this aspect of the matter and has held that the provisions of the Bonus Act will prevail over the Act for calculation and payment of bonus I am also of the opinion that the Bonus Act being a self contained Act so far as calculation of payment of bonus is concerned, will prevail over the provisions contained in the Act and the Rules.
9. The contention of the learned advocate for the petitioners is that the interest which accrued and actually not received during a particular year, could not have been taken into consideration for computation, of allocable surplus. According to him, the balance sheets show book profits and not actual profits. It is further contended that the Act and the Rules provided for certain reservations and the petitioner was entitled for deduction of all the amounts set apart for the reservations: The question, therefore, is as to whether the Tribunal has erred in not allowing deductions in the various funds set apart by the petitioner.
10. Section 2 of the Bonus Act is a defining Section Sub- Section (4) defines 'allocable surplus'. In case of the petitioners, Under Sub-Section (b) of Section 4 of the Bonus Act, it means 60% of such available surplus. 'Available surplus' has been defined in Section 4(6) and means the 'available surplus' computed Under Section 5. The 'gross profits' under Section 4 of the Bonus Act, in case of a Banking Company are to be calculated in the manner specified in the First Schedule. Banking Company has been defined in Section 2(8) of the Act and also means any Co-operative Bank as defined in Clause (b)(i) of Section 2 of the Reserve Bank of India, Act 1934. Even in cases where one is not a Banking Company, gross profits are derived by an employer on the establishment in respect of an accounting year calculated in the manner specified in Second Schedule. The method of computation of 'available surplus' is given in Section 5 of the Bonus Act. In respect of any accounting year, its gross-profits for that year are counted after deducting there from the sums referred to in Section 6. We are, presently, concerned with Section 6(d) of the Bonus Act, under which such sums, as are specified in respect of the employer in the Third Schedule of the Bonus Act are to be deducted. The relevant item in case of the Co-operative Societies is item 4 of the Third Schedule. There is no dispute between the parties so far as item 4(1) of the Act is concerned. The dispute is with regard to item 4(ii) of the Third Schedule. The case of the petitioners is that 'reserve fund' as contained there in, means not only reserve fund as given in Section 62(1)(a) of the Act. His contention is that it also includes the various funds set apart by the petitioners under the provisions of the Act, the rules made there under and the by-laws. The contention of Mr. Mridul, learned Counsel for respondent No. 2, on the other hand, is that item 4(ii) of the Third Schedule to the Bonus Act only refers to reserve fund and no other amount can be deducted. Section 62 of the Act is to the following effect.
62. Disposal of net profits.--(1) A co-operative society shall, out of its net profits in any year-
(a) transfer such percentage of its profits as may be prescribed to the reserve funds; and
(b) credit such portion of the profits, as may be prescribed, to the Co-operative Education Fund constituted under the rules.
(2) The balance of the net profits may be utilised for all or any of the following purposes, namely:
(a) payment of dividend to members on their paid up share capital at a rate not exceeding the prescribed limit;
(b) payment of bonus to members on the amount or volume of business done by them with the society, to the extent and in the manner specified in the bye-laws,
(c) constitution of, or contribution to, such special fund as may be specified in the bye-laws;
(d) donations of amounts not exceeding ten percent of the net profits for any charitable purpose as defined in Section 2 of the Charitable Endowments Act, 1890 (Central Act 6 of 1890); and
(e) payment of bonus to employees of the society, to the extent and the manner specified in the bye-law.
A look at the above extracted Sub-section (1) of Section 62 of the Act. will show that while Sub-section (1) is mandatory, Sub-section (2) is not so and it is not obligatory on the society to utilise the balance of the net profits for the purposes contained in Sub-section (2) of Section 62 of the Act There is clear distinction in Sub-section (I) and Sub-section (2) Section 62 of the Act. While in Sub-section (1), the word 'shall' has been used, in Sub-section (2), the word 'may' has been used. While Sub-section (1) provides that a co-operative society shall, out of its net profits from any year, transfer such percentage of its profits as may be prescribed to the reserve funds and credit such portion of the funds as may be prescribed for the Co-operative Education Fund constituted under the Rules Sub-section (2) provides that the balance of the net profits may be utilised (emphasis added). Under bye-law 35 of the bye-laws of the society, it is provided as to how the application of the profits of the society is to be done. Thus, so far as the reserve fund of the co-operative society is concerned, to my mind, it cannot be said that the amount set apart for any other fund, which is only optional, is also to be deducted. The question is as to whether along with reserve fund, under item 4 (2) of the Third Schedule of the Bonus Act, the petitioner society is also entitled for deduction of the amount set apart for co-operative education fund There cannot be any dispute that if a co-operative education fund as constituted under the Rules is not a reserve fund within the meaning of item 4 (ii) of the Third Schedule, then, under the Bonus Act, this amount cannot be deducted. It is also said earlier that for the purposes of bonus, the provisions of the Bonus Act will apply in preference to the provisions of the Act. A look at the various relevant provisions of the Act and the Rules will show that reserve fund of a society is different than other funds. In Section 62(1)(a), out of its net profits in any year, a co-operative society is bound to transfer such percentage of its profit as may be prescribed for the reserve funds and has also to credit such portion of profits as may be prescribed for the education fund under the Rules. Thus, reserve fund and co-operative education fund are not the same and are different. Rule 55 of the Rules, which deals with the object and intentment of reserve funds, clearly provides that a reserve fund maintained by a co-operative society shall belong to the co-operative society and is intended to meet unforseen losses. It shall be indivisible and no member shall have any claim to a share in it. Then, Sub-Rule (2) of Rule 55 provides as to how the reserve fund is to be invested or deposited. Under Rule 56 of the Rules also, it is provided that on the winding up of a co-operative society, the reserve fund together with other funds constituted by the Society in accordance with its bye-laws, shall be applied by the liquidator to the discharge of such liabilities of the society as may remain undischarged out of the assets of the society in the order contained there under. Thus, reserve fund and education fund are not similar and are different. Though, under the Act, some amount out of the net profits in any year is also to be credited to the co-operative education fund under the Rules, but as already stated earlier, the Bonus Act does not provide for any such fund and it only provides for carrying forward in respect of the accounting year to a reserve fund under any law relating to co-operative societies under takings in force. Thus, only such of the reserve fund relating to co-operative society which is permissible under the law can be carried forward. The gross profits for the purposes of bonus, either under Schedule I or Schedule II are item No. 5 minus item No. 6 contained there in. Item No. 5 contains the net profit and the various amounts which are to be added back. Item No. 6 contains as to what is to be deducted. Therefore, I am of the opinion that co-operative education fund is not such a fund that any amount set apart for it is also to be deducted. A look at the statement of allocations of profit for any of the relevant years will show that the amount of staff benefit fund, bad and doubtful debts, welfare fund, dividend equilisation fund, retirement benefit fund of shareholders etc. have been deducted. As already stated earlier, these amounts could not be deducted as they do not amount to reserve fund.
11. The question now remains as to whether the deduction of interest accrued in any accounting year is permissible. For the purpose of illustration, let us take statement of accounts for the year 1967-68. It appears that in the aforesaid statement of allocation of profits for the year 1966-67, an amount of Rs. 81, 388 03 p. has been deducted from the profits on the ground that it was the interest accrued but was overdue. Once having shown a particular profit in a particular year, which already included the interest which though accrued was overdue although had not been received, it was not permissible to the co-operative society to deduct this amount out of the net profits. The account-books were being kept on mercantile basis. The interest which had accrued was shown as profit. The petitioner society could not have postponed it to the future year and should have included this amount for the purpose of payment of bonus. In Commissioner of Income-tax, Karnataka v. Kabbur Brothers : 128ITR43(KAR) , it has been held that when the accounting is no mercantile system, crediting refund of sales has on actual receipt would not change date of accrual for the purpose of assessment. In the aforesaid case, reliance was placed on Laxmipat Singhania v. CIT : 72ITR291(SC) and the observations at page 294 to the following effect.
It is not open to the Income-tax Officer, if income has accrued to the assessee, and is liable to be included in the total income of a particular year, to ignore the accrual and there after to tax it as income of another year, on the basis of receipt.
Thus, the accounts were being maintained on mercantile system and the interest was taken as income on the mercantile basis, that is, on accrual basis, it was not permissible for the society to have deducted this amount.
12. It may be stated here that the Tribunal is not bound by the profits shown by a concern which is liable to pay bonus and it can, for reasons to be recorded, say as to whether any particular amount should have been deducted or not. The Tribunal, in this case, has taken pains to deal with all the points and I do not find any case for interference in the award of the Tribunal which, to me, appears to be reasonable.
13. I do not find any force in this writ petition and it is hereby dismissed without any order as to costs.