IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 20/11/2004
CORAM
THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA
Writ Petition No.6356 of 2000
The Management of
Tamil Nadu State Apex Co-op. Bank
233, N.S.C.Bose Road
Chennai 600 001. ... Petitioner
-Vs-
1. The Workmen
rep. by its Secretary
The Tamil Nadu State Co-op. Bank
Employees Union,
233, N.S.C.Bose Road
Chennai 600 001.
2.The Presiding Officer
Industrial Tribunal
2nd Floor, City Civil Court Buildings
High Court, Chennai 600 104. ... Respondents
Prayer: Petition filed under Article 226 of the Constitution of
India, praying to issue a writ of Mandamus, to call for the records from the
second respondent relating to the Award dated 26.02.1999 in I.D. No.65/90
published in the Tamil Nadu Government Gazette Part II Sec.2 supplement dated
28.07.1999 and quash the same.
!For Petitioner : Mr.C.K.Chandrasekaran
for M/s Row and Reddy
For Respondents : Mr.Venkataraman
for M/s.Aiyar and Dolia for R1.
:ORDER
The petitioner which is the Tamil Nadu State Apex Cooperative Bank is
aggrieved against the award of the second respondent/ Industrial Tribunal
dated 26.02.1999 made in I.D.No.65 of 1990. In the said dispute, the issue
which was referred for adjudication was to prescribe the manner of creation of
reserve fund under Clause-(v) of Item No.2 of iii-schedule appended to Payment
of Bonus Act, 1965 in respect of Tamil Nadu State Apex Cooperative Bank
Limited and accordingly to determine the allocable surplus for the accounting
years 1984-85 to 1987-8 8 and to fix the quantum of bonus payable to the
employees of the above said bank for the above said years.
2. The brief facts which lead to the culmination of the above said
dispute can be stated as under:
The petitioner Bank is admittedly a Cooperative Society registered
under the provisions of the Tamil Nadu Cooperative Societies Act. It is also
not in dispute that the petitioner Bank is governed by the provisions of the
Payment of Bonus Act, 1965 and falls within the definition of Banking Company
as defined under Section 2(8) of the Payment of Bonus Act. For the accounting
years 1984-85 to 1987-88, the workmen were paid the minimum bonus of 8.33% as
according to the petitioner, after providing for the necessary deductions as
per the Payment of Bonus Act and also based on the directives of the Reserve
Bank of India, the calculations made under the Payment of Bonus Act enabling
the petitioner only to declare the minimum bonus of 8.33%.
3. The petitioner relied upon Exs.M3 and M.4 which are the Reserve
Bank direction and the clarification letter respectively, as regards certain
deductions to be made as per Section 6(d) of the Payment of Bonus Act.
4. In the above stated background, the question that was posed for
consideration before the Tribunal was whether by virtue of the application of
Section 6(d) read along with Item No.2 of the (iii)-schedule, the petitioner
bank was entitled to claim that the deduction made to an extend of 40% to
create Reserve Fund from the net profit for the purpose of calculation of
bonus was justified.
5. The Tribunal before carrying out the above said exercise, relied
upon the decision of this Court reported in Vellore Central Cooperative Bank
vs. I.T.Madras and others (1989(2) LLJ 453), held that by virtue of the said
decision, the petitioner though a cooperative society registered under the
Tamil Nadu Cooperative Societies Act, would still be a banking institution
falling under Section 2(8) of the Act and therefore it would be entitled only
to go by what is provided under Item No.2 of the (iii)-schedule read along
with Section 6(d) of the Act. Thereafter, the Tribunal held that even going
by the said Item No.2 Clause (iv) (a) and (b), the petitioner could have made
a deduction under either of the above said sub-clause (a) or (b) and not of
both. As stated earlier, the deduction made by the petitioner to create
Reserve Fund in the relevant accounting years was 40% of the sum from the net
profit. The Tribunal was of the view that of the 40% so provided, while 25%
would be the sum which was available to the petitioner to be deducted by
virtue of Section 17(1) of the Banking Regulation Act viz., the sum which
could be deducted for the purpose of creating a reserve fund, the additional
sum of 15% which was deducted in addition to the said 25% was contrary to
section 6(d) read along with Item No.2(iv) (a) and (b) of (iii)-schedule of
the Payment of Bonus Act.
6. In this context, when a reference is made to Exs.M.3 and M.4 which
are the directives issued by the Reserve Bank of India in accordance with
Section 6(d) and Item No.2(iv) of (iii)-schedule of the Payment of Bonus Act
as well as Section 17(1) of the Banking Regulation Act, I find that in Ex.M.3
dated 11.10.l965, the Reserve Bank of India directed all Cooperative Banks to
contribute a maximum of 15% of the net profit towards agricultural credit
stabilization fund along with its regular contribution to the statutory
reserve fund which would be 25% of the net profit. In all it provided for 40%
of the net profit in so far as the cooperative banks were concerned. In
Ex.M.3 it was also suggested that in the State where the Cooperative Societies
Act provided for contribution to the statutory reserve fund at a rate
exceeding 25% of the net profit suitable amendments in the said Act should be
made. Subsequently, by way of clarification, Ex.M.4 came to be issued on
30.09.1966 which made it clear that whatever direction given in Ex.M.3 to the
Cooperative Banks to make deductions to the maximum level of 40% would fall
within Item No.2(iv)(b) of the (iii)schedule of the Payment of Bonus Act.
Thus the Reserve Bank of India made it crystal clear under Ex.M.4 as to the
purport and intent of its earlier directions made in Ex.M.3.
7. A combined reading of Exs.M.3 and M.4 therefore was clear enough
to state that the petitioner/bank was well within its limits when it made a
deduction to create Reserve Fund to the extent of 40% in its net profit during
the relevant years viz., 4-85 to 1987-88 and such a deduction of 40% having
fallen under Item 2(iv)(b) of (iii)schedule of the Payment of Bonus Act and
the said sum being higher than what was otherwise provided by way of normal
deduction under 17(1) towards reserve fund which can only be to an extent of
25%, the petitioner could have made a calculation for the purpose of arriving
at the bonus payable to its employees by giving credit to the said 40%
deduction so made. Therefore, there was no scope to find fault with the
allocable surplus arrived at by the petitioner by taking into account the 40%
deduction in the net profit when it declared a minimum bonus of 8.33 to its
employees.
8. The conclusion to the contrary made by the Tribunal under the
impugned award cannot therefore be sustained. The award is liable to be set
aside and accordingly set aside.
9. In the result, the writ petition is allowed. No costs.
Index:yes/
Internet:yes
ksr
To
1. The Secretary,
The Tamil Nadu State Co-op. Bank
Employees Union,
233, N.S.C.Bose Road
Chennai 600 001.
2.The Presiding Officer
Industrial Tribunal
2nd Floor, City Civil Court Buildings
High Court, Chennai 600 104.