JAGANMOHAN REDDY, J. - (1.) THE Management of Sijua (Jherriah) Electric Supply Company Ltd. the respondents had initially offered only 4 per cent. bonus to all the employees of its establishment because the allocable surplus which was available was less than 4 per cent. Subsequently, having regard to the decision of the Madras High Court it revised the calculations of allocable surplus and offered to distribute to its employees under the Payment of Bonus Act, 1965 thereinafter termed 'the Bonus Act'). a sum of Rs. 34,492/-THE workmen (Appellants) refused to accept this amount as the management had failed to furnish the details or the basis of computing the amount which was being offered to them. A dispute was thus raised, and it was referred to conciliation. It appears that during these conciliation proceedings, both the parties agreed to the following terms of settlement: (1) THE Union agree to accept the present offer of the management purely on provisional basis without prejudice to their claim for higher bonus for the year 1964-65. THE management agree to distribute this amount as early an possible. (2) Both the parties agree to refer to the Industrial Tribunal for adjudication the following points of difference in respect of calculation of available surplus for the year 1964-65 to settle the issue of payment of bonus for that year. (a) Whether a sum of Rs. 18,086/provided for in the profit and loss account as provision for rebate to consumers in accordance with 6th Schedule of the Electricity Supply Act, 1948 should be added back to arrive at the gross profit for the said accounting year in accordance with the Payment of Bonus Act? If so, whether this amount should also be deducted from the gross profit to arrive at available surplus? (b) Whether deduction of following amounts from the gross profit is in accordance with the provisions of the Payment of Bonus Act. (i) Rs. 23,455/- on account of development rebate allowable under the Income-tax Act. (ii) Rs. 35.682/- on account of development reserve."
(2.) PURSUANT to the above agreement the Governor of Bihar referred for adjudication of the Industrial Tribunal the disputes referred to in subclauses (a), (b) (i) and (b) (ii) of cl. (2) of the said agreement. Before the Tribunal it was contended on behalf of the appellants that the amount in sub-clause (a) of the reference cannot be deducted from the gross profits because it is a rebate to consumers and is paid from out of profits. It cannot, therefore, be shown in the revenue accounts of the company as an item of expenditure and must be added back for the purpose of calculation of bonus. In respect of the amount in sub-cl. (b) (i) of the reference the contention is that it cannot be deducted as a rebate and if it has to be deducted, it has to be added hack also. It was lastly contended in respect of the amount in sub-clause (b) (ii) of the reference that the deduction is not contemplated by item of the Third Schedule to the Bonus Act. On January 16, 1967, the Tribunal gave the following award: (1) In respect of the sum of Rs. 18.086/- it held- (a) that although the aforesaid sum represented the amount of rebate payable to the consumers and not to be retained by the company, none-the-less it was a profit for the purpose of computation in order to arrive at the amount which the workers should get as bonus; (b) that the aforesaid amount of Rs. 18,086/- which has been retained by the management to be returned to the consumers later on, must be taken as a reserve within the meaning of Item 2 (e) of the Second Schedule of the Bonus Act, 1965, and has to be added back; and (c) that the sum of Rs. 18,086/which was deemed to be a reserve and had to be added back under item 2 (e) of the Second Schedule of the Bonus Act was not an amount to be deducted as a reserve under S. 6 (d) of the Bonus Act and, therefore. could not be deducted for the purposes of the computation of profits for payment of bonus. (2) That in regard to the amount of Rs. 23,455/- the Tribunal held that merely because the company has, for some reason or the other, omitted to mention the aforesaid amount in the profit and loss account that would not prevent the same being added back particularly when the same is being claimed as deduction under the provisions of the Bonus Act. Accordingly it came to the conclusion that the deduction of Rs. 23.455/- on account of the development rebate allowed under the Income-tax Act from the gross profits without adding back to it is not in accordance with the Bonus Act. (3) In so far as the sum of Rupees 35,682/- which has been both added and deducted, the Tribunal held that the amount has been rightly deducted under clause (d) of S. 6 of the Bonus Act for the purpose of arriving at the available surplus. By a writ petition the respondents challenged the validity of the award which was against them, and the workmen by a separate writ petition contested the validity of the award which was against them. The High Court which heard both these petitions together came to the conclusion that the decision of the Tribunal on item (1) (a) of the reference directing the respondents to add back Rs. 18,086/- for calculating the gross profits was wrong and it was accordingly quashed. The remaining portion of the award which disallowed the deduction of the said sum from the gross profits was maintained. As regards item (b) (i) of the reference relating to the sum of Rs. 23,455/- shown as development rebate, it held that the portion of the award which directed that it should be added back to the net profits to calculate the gross profits under clause (2) (d) of the Second Schedule of the Bonus Act was also wrong and it was accordingly quashed. In respect of the award on clause (b) (ii) of the reference it maintained the award of the Tribunal. In the result the respondents' petition was allowed and the appellants' petition dismissed.
(3.) AGAINST the aforesaid decision, these appeals are by certificate granted by the High Court. The dispute between the company and the workmen, as already stated, arose in respect of the permissible additions and deductions to be made to the profits for the purpose of ascertaining the bonus payable to the workmen under the provisions of the Bonus Act. The balance-sheet of the company for the year ending March 31, 1965, showing the profit and loss account was duly published and there was a controversy between the company and its workmen as regards three items mentioned in the profit and loss account which were also the subject-matter of the reference. The first item related to a sum of Rs. 18,086/- representing the rebate payable to the consumers under paragraph II (i) of the Sixth Schedule to the Electricity (Supply) Act, l948 - hereinafter called, the Electricity (Supply) Act; the second one related to a sum of Rupees 23.465/- on account of development rebate allowable under the Income-tax Act, 1961; and the third one related to a sum of Rupees 35,682/- in respect of development reserve.;