Vellore Central Co-Operative Bank Ltd. vs Industrial Tribunal, Madras and Others

Though the actual dispute that arises for consideration in this writ petition lies in a very narrow compass, learned counsel for both sides

advanced elaborate arguments.

The issue that arises for decision is, whether the petitioner-bank is to be treated as a ""banking company"" and/or as a ""co-operative society,"" for

the purposes of the Payment of Bonus Act, 1965 (hereinafter referred to as the Bonus Act). To put it in a nutshell, the argument of Sri M. R.

Narayanaswami, learned counsel for the petitioner, is that the petitioner-bank has to be treated both as a ""banking company"" and as a ""co-

operative society"" for the purposes of Section 6(d) read with Third Schedule of the Bonus Act. Alternatively, it is his contention that it should be

treated as a co-operative society falling under Item (4) of the Third Schedule to the Bonus Act.

On the other hand, the contention of the learned counsel for the second respondent-union, Sri Somayaji, is that the petitioner-bank has to be

treated for the purpose of Section 6(d) read with Third Schedule of the Bonus Act only as a banking company coming under item (2) of the Third

Schedule to the Bonus Act and the petitioner-bank cannot be considered as one falling under item (4) or both under items (2) and (4) of the Third

Schedule to the Bonus Act.

With this backdrop, the circumstances leading to the filing of the above writ petition may now be noted. The petitioner-bank paid the minimum

bonus of 8.33 per cent. while the workmen demanded the maximum bonus of 20 per cent. disputing the deductions made by the petitioner u/s 6(d)

read with Schedule III of the Bonus Act in arriving at the available surplus. The Government referred that dispute for adjudication and for fixation

of quantum of bonus for the accounting years 1977-78 to 1980-81 u/s 10(1)(d) of the Industrial Disputes Act, 1947, and the same was taken on

file by Industrial Tribunal, Madras, as I.D. No. 26 of 1983.

The Tribunal by its award, dated October 5, 1984, rejected the contention advanced on behalf of the bank that it will fall under both the

categories of banking company and co-operative society for the purposes of the Bonus Act and in particular, for the purposes of deduction u/s

6(d) read with Third Schedule of the Bonus Act.

The Tribunal on the other hand accepted the contention advanced on behalf of the workmen that the petitioner-bank for the purposes of Bonus

Act will fall only under the category of banking company as categorised under item (2) of the Third Schedule to the Bonus Act. Based on that

conclusion, the Tribunal fixed the quantum of bonus for the accounting years 1977-78 to 1980-81. It may at once be stated that in the event of this

Court accepting the view taken by the Tribunal that the petitioner-bank will fall only under item (2) of the Third Schedule to the Bonus Act, the

quantum determined by the Tribunal on the basis of the worksheets produced before it dies not call for any interference.

Therefore, the point for determination is, whether the Tribunal was right in its view in holding that the petitioner-bank will fall only under item (2)

of the Third Schedule to the Bonus Act.

Sri M. R. Narayanaswami, learned Counsel appearing for the petitioner-bank, placing reliance on certain provisions of the Banking Regulations

Act, 1949, and also Section 62 of the Tamil Nadu Co-operative Societies Act, 1961 contended that the petitioner-bank must be treated both as a

banking company as well as a co-operative society, for the purposes of the Bonus Act. According to the learned counsel, Section 2 of the Banking

Regulations Act in express terms states that the provisions of the Banking Regulations Act shall be taken as in addition to and not except therein as

expressly provided in derogation of any other law for the time being in force. Therefore, the learned counsel contended that in addition to the

provisions of the Banking Regulations Act, the provisions of the Tamil Nadu Co-operative Societies Act, would also be applicable for all the

purposes including the purposes of the Bonus Act. The petitioner-bank having been registered under the Co-operative Societies Act the provisions

of Part V of the Banking Regulations Act would be applicable. Sri M. R. Narayanswami contended that it is true that a perusal of Section 56(i) in

Part V of the Banking Regulations Act would show that Sections 12, 12(a), 13 and 15 to 17 of that Act are made inapplicable in respect of co-

operative banks. However, if the reason behind the same is looked into, it will come to light that inasmuch as there were similar provisions already

in Section 62 of the Co-operative Societies Act, 1961, the Legislature considered it unnecessary to apply Section 17 of the Banking Regulations

Act in respect of co-operative banks. Therefore, the fact that Section 17 has been omitted in Part V of the Banking Regulations Act will not lead

to the conclusion that the petitioner-bank will not come under item (4) of the Third Schedule to the Bonus Act. Again, placing reliance on a

decision of the Kerala High Court in G. Gopinathan Nair and Others Vs. State of Kerala and Others, ., Sri M. R. Narayanaswami contended that

the provisions of the Co-operative Societies Act in addition to the provisions of the Banking Regulations Act will apply to the petitioner-bank for

the purposes of Bonus Act. According to the learned counsel, the very fact that the President''s assent was given to the Payment of Bonus Act,

1965, on 28th May, 1965, on the same day when the President''s assent was given to Banking Laws (Application to Co-operative Societies) Act,

1965 (Central Act 23 of 1965), has some significance. Though under the Bonus Act, ""banking company"" as defined u/s 2(8) includes a

cooperative bank, as defined in Clause (b)(ii) of Section 2 of the Reserve Bank of India Act, 1934, the same definition need not always be

imported without regard being had to the context. According to the learned counsel the opening words of the definition section themselves will

indicate that the definition need not be applied if the context requires otherwise. On the basis of these arguments, learned counsel for the petitioner

submitted that the view taken by the Tribunal that the petitioner-bank cannot be treated as coming under Items (2) and (4) of the Third Schedule to

the Bonus Act for the purposes of deductions u/s 6(d) read with Schedule III to the Bonus Act is not sustainable. In any event, according to the

learned counsel, the petitioner bank having been registered under the Co-operative Societies Act, must be treated as one coming under Item (4) of

Third Schedule to the Bonus Act and not as one coming under Item (2).

Sri Somayaji, learned counsel appearing for the second respondent, submitted that the Payment of Bonus Act is a complete code in itself and,

therefore, there is no need or necessity to refer to the provisions of the other enactments to interpret or to understand and to give effect to the

provisions of the Bonus Act. For the purpose of calculation of bonus, the Bonus Act clearly makes a distinction between a ""banking company"" and

a ""co-operative society."" Therefore, it is futile to contend that the petitioner-bank will fall under Item (4) or both under Items (2) and (4) of the

Third Schedule to the Bonus Act. On the other hand, in view of the clear definition given in Section 2(8) of the Bonus Act, the petitioner-bank will

come only under Item (2) of the Third Schedule to the Bonus Act. According to the learned counsel, a similar question came up for consideration

before the Bombay High Court and a learned Judge of the Bombay High Court in Air Corporation Employees'' Cooperative Bank Ltd. Vs.

Cooperative Bank Employees'' Union and others, , has taken the view that a co-operative bank will fall in the special category of banking

company and the same will not fall in the general category of co-operative society. The learned counsel further submitted that if the contention of

the learned counsel for the petitioner is to be accepted, the employees of a co-operative bank will be worse off by suffering the deductions both

under the Banking Regulations Act as well as under the Co-operative Societies Act, and that cannot be the intention of the Legislature. The learned

counsel, by pointing out Item (6) in the Third Schedule, submits that if the intention of the Legislature was to permit the deductions contemplated in

the Co-operative Societies Act, they could have done so as in the case of other categories mentioned in Item (6) of the Third Schedule. Lastly, Sri

Somayaji contended that Payment of Bonus Act being a special law relating to payment of bonus, the provisions of that Act will prevail over the

provisions of Co-operative Societies Act or the Banking Regulations Act.

On a consideration of the rival submissions mentioned above, I am inclined to agree with the submissions made by the learned counsel for the

second respondent Sri Somayaji. The references made by the learned counsel for the petitioner to various provisions in the Banking Regulations

Act and the Tamil Nadu Co-operative Societies Act are, in my view, not quite relevant as the provisions of the Payment of Bonus Act are clear

and unambiguous and there is no need or necessity to call in aid the provisions of other enactments either for understanding or for applying the

provisions of the Bonus Act. Therefore, I consider it unnecessary to go into the provisions of the Banking Regulations Act or the Co-operative

Societies Act. In Air Corporation Employees'' Co-operative Bank, Ltd. v. Co-operative Bank Employees'' Union and others (supra) Bharucha J.,

has observed as follows in Para 10, at page 209 :

Section 2(8) of the Act defines a banking company as including any co-operative bank. Item (2) of Schedule III applied to an employer which is a

banking company. Item (4) applied to an employer which is a co-operative society. In my view, to the bank the category of banking company is

more specifically applicable than the more general category of co-operative society. As such, the bank is entitled to a deduction only of 7.5 per

cent. of the capital invested and the Tribunal was right in so holding"".

I am in respectful agreement with the above view expressed by the learned Judge. The reference to the Kerala High Court judgment made by

the learned counsel for the petitioner is not apposite to the facts of the present case. It is seen from Section 2(8) of the Bonus Act that banking

company will include in its ambit any co-operative bank as defined in clause (b)(ii) of Section 2 of the Reserve Bank of India Act, 1934 and any

other banking institution which may be notified in this behalf by the Central Government. It appears that the Government of India have notified on

June 16, 1966 that every co-operative bank as defined in clause (b)(ii) of Section 2 of the Reserve Bank of India Act will be a ""banking company

for the purpose of Section 2(8) of the Act. Section 2(10) defines ""co-operative society"" separately. From this, it is clear that for the purpose of

Bonus Act, ""co-operative bank"" is distinct and different from ""co-operative society"" even though a co-operative bank might have been registered

under the Co-operative Societies Act. If so, for the purposes of deduction u/s 6(d) which refers to the Third Schedule, the petitioner-bank has to

be treated as one falling under Item (2) only and not under Item (4) or both under Items (2) and (4) as contended by the learned counsel for the

petitioner. Reliance placed by the learned counsel for the petitioner on Section 2 of the Banking Regulations Act is of no avail in view of the fact

that the Bonus Act is a self-contained Code and there is no doubt or ambiguity warranting any reference to the other provisions of the enactment.

In the result, I hold that the award of the Industrial Tribunal, Madras, in Industrial Dispute 26 of 1983, dated October 5, 1984, does not call

for any interference in this writ petition. According, the writ petition fails and consequently it is dismissed. However, I make no order as to costs.