M. M. Gupta, J. - (1.) RESPONDENTS are Sardar Dalip Singh Majithia, Satya Jeet Singh Majithia and Works Manager, respectively of Saraya Engineering (Private) Limited, Gorakhpur. The accounting year of the Saraya Engineering Works ended on 31st October, 1968. Bonus was payable to the workers before 30th June, 1968, but bonus was not paid by the respondents. Saraya Engineering Works was inspected on 19th December, 1970 by the Labour Inspector. He found that bonus was not paid to the employees in accordance with the provisions of Section 10 of the Payment of Bonus Act. He, therefore, issued a notice to the respondents. RESPONDENTS claimed that bonus was not payable as Saraya Engineering Works had suffered losses. A complaint was, therefore, filed against respondents by the Deputy Secretary to the Government of Uttar Pradesh before the City Magistrate, Gorakhpur.
(2.) BEFORE the learned City Magistrate it was contended that Saraya Engineering Works had suffered losses, bonus was, therefore, not payable by the respondents. This plea did not find favour with him. He accordingly convicted the respondents. The learned Sessions Judge, however, accepted the contention of the respondents that in case of loss even minimum bonus was not payable. Respondents were accordingly acquitted. The State on being dissatisfied with the order of acquittal of the learned Sessions Judge came up in appeal and has challenged his findings. This appeal had come up for hearing on 19th March, 1979. The learned counsel for the respondents relied on 1969 LLJ page 809, Kumaon Mat or Owners Union Ltd. Kathgodam v. State of Uttar Pradesh in which the learned single Judge of our High Court had held that the words, "whether there are profits in the accounting year or not" in Sec. 10 of the Payment of Bonus Act cannot possibly be construed to cover alt the above mentioned three situations, though, of course, they arc wide enough to cover two situations, namely, one in which there has been profit and another in which there has been no profit. The said expression could not be construed to cover the case where the employer has suffered a positive loss in the year in question. The learned counsel further relied on the Supreme Court case, 1978 LLJ volume II page 350 Management of Central Coal Washery v. Workmen in which it was held while interpreting Section 16 of the Payment of Bonus Act, 1965 that in a case where the appellant followed the straight line method but explanation II to Section 16 (i) (a) says that the employer shall not be deemed to have derived profit unless he has made provisions for that year's depreciation to which he is entitled to under the Income Tax Act. This explanation embodies a clear legislative mandate that in determining, for the purpose of CI. (a) of sub-section (1) of Section 16, whether the employer has made profit from the establishment in any accounting year, depreciation should be provided in accordance with the provisions of the Income-Tax Act. Clearly, therefore, if depreciation is as prescribed in the Income Tax Act, there is no profit for the year in quest ion and there is no liability on the part of the employer to pay bonus under the Act. On the basis of this case cited (by the learned counsel I came to the conclusion that under Section 10 if the employer suffered loss as distinguished from the case of no profits he would not be liable to pay bonus to the labour. I had, therefore, dictated the judgement. However, on going through the judgment but before it could be signed or sealed I became doubtful about the correctness of the view taken. I, therefore, got the case listed for further arguments. It is in this context that further arguments have been heard in this appeal.
(3.) THE question depends upon the interpretation of Section 10 of the Payment of Bonus Act itself which runs as follows :- "10. Payment of minimum bonus- Subject to the provisions of Sections 8 and 13, every employer shall be bound to pay to every employee in an accounting year a minimum bonus which shall be four per cent of the salary or wage earned by the employee during the accounting year or forty rupees, which ever is higher, whether there are profits in the accounting year or not." The last words, whether there are profits in the accounting year or not have to be interpreted to mean if they include also cases of loss or not. It is no doubt true that the reported case of our High Court in 1969 LLJ page 809 (supra) supports the contention of the learned counsel for the respondents. However there is a subsequent decision of our High Court reported in 1974 Labour and Industrial Cases page 1040- Messrs Cooperative Co. Ltd. (Distillers) Nawabganj, Saharanpur v. State of U. P. decided by Hon'ble Satish Chandra, J. (as he then was), which on the first date of hearing was not brought to my notice, it was held that in view of the Supreme Court decision - AIR 1967 SC page 691- Jalan Trading Co. Pr. Ltd. v. The Mill Mazdoor Sabha, contrary to the decision of the learned single Judge of this court-1969 LLJ page 809 -Kumaon Moter Owners Union Ltd. v. State of U. P. and others cannot hold the field.;