JACKSON CO OPERATIVE CREDIT SOCIETY LIMITED Vs. CO OPERATIVE BANKS AND SOCIETIES EMPLOYEES FEDERATION

JUDGEMENT

(1.) THIS civil appeal by special leave is directed against judgment dated 17-12-1987 of the High Court of Bombay in Writ Petition No. 1048 of 1982 (reported in 1988(l) Bom CR 386) instituted by the appellant, which is a Co-operative Credit Society. The Ist respondent is a Federation representing the employees of the appellant amongst others.

(2.) SETTING aside the award of the Industrial Tribunal, the High Court held that the appellant was liable to pay its employees bonus at the rate of 20 per cent of its total annual earning for the years 1975-76, 1976-77 and 1977-78.

(3.) IN column (3) of item (4), two types of amounts are deductible from the gross profits, as prior charges. Firstly, 8.5 per cent of the capital invested by a co-opetative society in its establishment is deductible. Secondly, amounts carried forward to a Reserve Fund in compliance with any provisions of law relating to co-operative societies are also deductible. The expression 'capital' is not defined under the Bonus Act. It must, therefore, be understood in the sense in which that expression is generally understood. That means all amounts which are classified as capital in contrast to revenue must qualify for deduction subject to the limit of 8.5 per cent, provided such capital is invested by the society in its establishment as evidenced by its books of accounts at the commencement of the accounting year. Any such capital up to 8.5 per cent is thus deductible. Further more all sum 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 being in force are also deductible from gross profits. This means that Reserve Fund created in terms of S. 66 of the Co-operative Societies Act is deductible under item (4) of the Third Schedule to the Bonus Act. S. 66 reads: