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PETITIONER: THE MAHARASHTRA STATE ELECTRICITY BOARD.

       Vs.

RESPONDENT: MAHARASHTRA VEEJ MANDAL KAMGAR SANGH & ANR.

DATE OF JUDGMENT:       10/12/1998

BENCH: S.B. MAJMUDAR. AND U.C. BANERJEE.,

JUDGMENT:

--------

S.B. Majmudar, J. ----------------

       The  Maharashtra State Electricity Board by grant to special leave has brought in challenge the decision rendered by the Division Bench of Bombay High Court by which an order of remand was  passed  directing  the  Tribunal  functioning under   the  Industrial  Tribunal,  Maharashtra,  Bombay  to recompute the allocable surplus  for  deciding  whether  the workmen under the appellant-Board were entitled to more than minimum 4 per cent bonus for the years 1965-66 to 1969-70.

       In order to appreciate the grievance made by learned senior counsel for the appellant-Board against the  remanded proceedings   it   would  be  necessary  to  narrate  a  few introductory  facts,  The  appellant-Board  is  a  statutory undertaking  as  defined  in  Section  5  of the Electricity (Supply) Act, 1948. It is employing in connection  with  its statutory  functions  a  number  of  workmen.  It  is not in dispute that Payment of Bonus Act, 1965 (hereinafter  to  be referred to as the Act) applies to the appellant concern and its  workmen  Two trade unions i.e. Respondent Nos. 1 & 2 on behalf of workmen of  the  appellant  raised  an  industrial dispute  pertaining  to non-payment of appropriate statutory bonus to their members for the aforesaid relevant  years  as according  to  them,  allocable  surplus  with the Board for these years was sufficient to make available to the  workmen more than 4 per cent bonus. Their claim was based on Section 8  of  the  Act which lays down that every employee shall be entitled to be paid by his employer in an  accounting  year, bonus,  in  accordance  with  the  provisions  of  this Act, provided he has worked in the  establishment  for  not  less than thirty working days in that year.

       They  also  relied  on  Section  11 of the said Act. This dispute was referred for adjudication to the  Tribunal. The   Tribunal   after  hearing  the  parties  came  to  the conclusion  that  after  effecting  relevant  deductions  on various  items  which  the  appellant-Board  sought  to  get deducted from the gross profits for the relevant  years,  no allocable   surplus   for   the   relevant  years  resulted. Consequently, the workmen were not  entitled  to  any  bonus exceeding  4  per  cent  which  was  minimum statutory bonus payable under Section 10 as it  stood  during  the  relevant accounting  years,  irrespective  of  the  fact  whether any

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allocable surplus resulted for the relevant years or not and consequently  the  reference   was   decided   against   the respondents.   The  respondents carried the matter in a writ petition before the Bombay High Court.    A  learned  Single Judge  after  hearing  the parties confirmed the decision of the Tribunal and that in how  the  respondents  carried  the matter  under Letter Patent before the Division Bench of the High Court.  The Division  Bench  took  the  view  that  the disputed  items which were deducted by the Tribunal from the gross profits for the relevant years  were  not  deductible. Consequently,  the  Tribunal  was  required to recompute the allocable surplus for all these relevant years and hence the impugned remand order was passed.

       Learned senior counsel, Shri Dholakia appearing  for the  appellant-Board, vehemently contended that at least for three items the Division Bench of  the  High  Court  was  in error  when  it  held  them  to be not deductible from gross profits.   The  three  items  for  which  the  grievance  is canvassed are as follows:

       (i)   Development rebate deductible according to the appellant under section 6(b) of the Act.

       (ii) Interest on bonds; and

       (iii)  Interest on Government loans.

       We shall therefore, deal with these items  seriatim.

       So  far  as  the  first  item  is  concerned,  after mentioning the same and trying to pursue his contention  for some  time,  learned senior counsel Shri Dholakia ultimately did not press this item for deduction.  We therefore confirm the view of the High Court that  development  rebate  amount was not required to be deducted from gross profits earned by the appellant-Board  during the relevant years.  Now remains the last two items which we will consider together.

       Interest on Board & Government Loans:         ------------------------------------

       So far as these two items are  concerned,  the  High Court  in the impugned judgment has taken the view that none of the provisions of Section 8, would permit such deductions from the gross profit. Section 8 reads as under:

               " 6. Sums deductible  from  gross  profits:-         The  following sums shall be deducted from the gross         profits as prior charges, namely:-

               (a)   any  amount  by  way  of  depreciation         admissible  in  accordance  with  the  provisions of         sub-section(1) of Section 32 of the  Income-tax  Act         or   in   accordance  with  the  provisions  of  the         Agricultural Income-tax Act, as the case may be:

               Provided  that  where  an  employer has been         paying bonus to his employees under a settlement  or         an  award  or  agreement  made  before the 29th May,         1965, and subsisting on that  date  after  deducting         from the gross profits notional normal depreciation,         then,  the  amount  of  depreciation  to be deducted

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       under this clause shall,  at  the  opinion  of  such         employer  (such  option  to  be  exercised  once and         within one year from the date) to be  such  notional         normal depreciation:

               (b)  any amount by way of development rebate         or  investment  allowance  or  development allowance         which the employer is entitled to  deduct  from  his         income under the Income-tax Act;

               (c)    subject  to the provisions of Section         7, any direct tax which the employer  is  liable  to         pay  for  the  accounting  year  in  respect  of his         income, profits and gains during the year;

               (d) such further sums as  are  specified  in         respect of the employer in the Third Schedule."

       A mere look at Section 6 itself shows that these two items  do  not get covered by any of the clauses from (a) to (c).

       They are not included in the list of deductible sums as mentioned  in  the Third Schedule.  Hence clause (d) also does not apply to them.  Consequently, no fault can be found with the impugned decision of the High Court  when  it  took the  view  that  interest  paid  by  the  Board  on bonds or government loans for the relevant accounting years were  not items deductible  under section 6 of the Act.  However, this is not the end of the matter.

       Learned  senior counsel, Shri Dholakia placed before us a different contention which does not appear to have been placed before the Tribunal  or  before  the  learned  Single Judge  of  the High Court but was placed before the Division Bench and which was repelled by the Division Bench by saying that it was faintly submitted and was not  canvassed  before the Tribunal or before the learned Single Judge. However, as the   said   contention   has  a  direct  linkage  with  the computation  of  allocable  surplus  during   the   relevant accounting  years  for which the proceedings are remanded by the High Court, we deem it fit to consider  this  contention on merits.

       In order to appreciate this  contention  of  learned senior  counsel  appearing  for  the  appellant-Board,  Shri Dholakia we may have a look at Sections 11, 5  &  4  of  the Act.   Section 11 provides that if allocable surplus exceeds the amount of minimum bonus payable to  the  employees,  the employer  shall,  in lieu of such minimum bonus, be bound to pay bonus in proportion to the salary or wage earned by  the employee  during the accounting year subject to a maximum of twenty per cent of such salary  or  wage.    Section  2  (b) defines allocable  surplus.    It  is  this surplus which is relevant for computing payable bonus as per section 11.   It has in  its  turn linkage with available surplus.  Section 5 deals with  available  surplus.    It  provides   that   the available surplus in respect of any accounting year shall be the  gross  profits  for that year after deducting therefrom the sums referred to in Section 6, We have already seen that Section 6 does not cover the disputed two items of interest. However, it is  obvious  that  the  available  surplus  will consists of two ingredients i.e.  (1) gross profits and (ii) deduction  from  the  said  gross  profits  permitted  under

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section 6.

       Even if  the  deductions  are  not  permitted  under Section  6  of  the  Act  so  far  as  these  two  items are concerned, the further question would survive whether  these items  will  have  any  nexus  to  the  computation of gross profits. Computation of gross profits is provided by Section 4 of the Act which reads as under:

               " 4.  Computation  of  gross  profits:-  The         gross   profits  derived  by  an  employer  from  an         establishment in  respect  of  any  accounting  year         shall -

               (a) in the case of  a  banking  company,  be         calculated  in  the  manner  specified  in the First         Schedule;

               (b) in any other cas, be calculated  in  the         manner specified in the Second Schedule."

       As  the  appellant-Board is not a banking company it would be covered by section 4(b).  That will take us to  the Second Schedule.    Second  Schedule lays down the procedure for computing gross  profits  for  the  accounting  year  in question.   The very first item of the Second Schedule shows that for the accounting year in question, thee net profit as per the profit and loss account of the concern will have  to be  first  ascertained  and  after that figure is arrived at certain items are to be added back as mentioned in item Nos. 2,3 and 4 of the Schedule and that is how  item  No.5  would consist of the sum total of item Nos.  1,2,3 & 4.  So far as the  deductions  permitted from this total figure arrived at item No.5 are concerned, they  are  mentioned  at  item  No. 6(a) to  (g).   It is not the contention of either side that these two disputed items could be deducted under any of  the sub-clauses of  item No.6.  The short question with which we are  concerned   and   which   was   highlighted   for   our consideration  by  learned senior counsel for the appellant, Shri Dholakia was as to what  was  the  correct  net  profit figure for  each  of  the  accounting year in question.  His submission was that net profits for the accounting  year  as per  the  accounting practice would entitle the appellant to get deducted  from  the  gross  profits  the  two  items  of interest  which  are  disputed  in the present case and then only the net profit as per the accounting practice would  be worked out.    Not  only  that but according to him, the net profit  figures  were  submitted  to  the  Tribunal  as  per Exhibit-C-19.   The  High Court in the impugned judgment has noted that the Tribunal has already computed the net profits for all the accounting years in the light of Exhibit-C-19 as found in paragraphs 16 to 25  of  the  Tribunal’s  judgment. However,  Shri  Dholakia,  learned  senior counsel submitted that the figures of net profit mentioned by the Tribunal for the relevant accounting years are  not  correctly  mentioned and  in  his  submission  Exhibit-C-19  is  misread  by  the Tribunal while mentioning the figures of net profits for all these years.  When it was pointed out to  him  that  such  a contention  was  never  canvassed  before the learned single Judge  in  that  form  or  before  the  Division  Bench,  he submitted  that  before  the learned Single Judge it was not canvassed but as the final decision of  the  learned  Single Judge  was in favour of the appellant-Board the said mistake

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did not assume importance and that  the  Division  Bench  in appeal  relying  on  these  figures was persuaded to pass an order against the appellant.  According  to  learned  senior counsel for the appellant, Shri Dholakia once the High Court in  the  impugned  judgment has reversed the decision of the learned Single Judge and the Tribunal  it  became  necessary for  the  appellant  to  move  the  High  Court  in a review petition in this connection and review  petition  was  moved but  unfortunately it was dismissed and it is therefore that the said contention is again canvassed  for  reconsideration in this  appeal.  The submission of Shri Dholakia was to the effect that Exhibit-C-19, a copy of which was  furnished  to us  in  this proceeding, mentioned in the first item for all the relevant years surplus brought forward  to  net  revenue account,  while  below  that  after  mentioning the relevant items for deduction from the surplus figure the net  profits were  worked  out for all these relevant years to be covered by item No.  1 being net profits as per Second Schedule.  It was therefore contended that Tribunal in wrongly  mentioning as net profits the figures which are really shown as surplus brought  forward  to  net  revenue  account  for  all  these relevant years.  Now, it must be noted that this  contention though  raised in the review petition was not raised earlier before the learned Single Judge or in this very form  before the Division Bench.  But as we find that the proceedings are already  remanded by the High Court by the impugned judgment by disallowing the deductions on these two  items  from  the gross   profit   under  Section  6  of  the  Act  and  which disallowance is being upheld by us, in our view, interest of justice will be served  if  we  maintain  the  remand  order subject   to   the  modification  that  the  Tribunal  while considering the allocable surplus  for  all  these  relevant five  years in question, may also address itself to the moot question as to  what  was  the  net  profit  as  per  Second Schedule  as  available to the appellant-Board for all these relevant years.   This  question  may  be  examined  by  the Tribunal   after  hearing  the  parties  concerned  and  the Tribunal may thereafter take a final decision in  the  light of the  evidence  on  record.    It  will  be  open  to  the respondents to place relevant  materials  to  justify  their claim about  correct  net  profits  for all these years.  We make it clear that we express no opinion on  the  merits  of the controversies  between  the  parties.    The  appeal  is disposed off accordingly with no order as to costs.  As  the proceedings  are pending since long we deem it fit to direct the Tribunal to dispose of this remanded  proceeding  within six months   from   today.     The  Tribunal  shall  proceed accordingly after issuing notice to the parties  and  fixing an early  date  of  hearing.   A copy of this order shall be sent by the office to the Tribunal concerned for information and necessary action.