JUDGMENT

1. In this batch of writ petitions, the members of the different services of the Tamil Nadu Water Supply and Drainage Board, hereinafter referred to as the Board through their respective associations, are the petitioners. They covet payment of bonus under the Payment of Bonus Act, 21 of 1965, hereinafter referred to as the Bonus Act. The uniform claim of the petitioners is that the Bonus Act would apply to their cases and hence, they are entitled to be paid bonus as per the provisions of the Bonus Act. I find that the Board filed a counter-affidavit in Writ Miscellaneous Petition No. 11468 of 1983 in Writ Petition No. 7511 of 1983, and the State filed a counter-affidavit in Writ Petition No. 7511 of 1983. No other written plea advancing answers of the claims of the members of the services of the Board have been put forth by the respondents in any other writ petition. I heard learned Advocate-General, appearing for the State and Sri P. Philips, learned counsel appearing for the Board, stating that the averments in the said counter-affidavits provide adequately the answers for the claims for bonus by the members of the services of the Board. Submissions were made on behalf of the respondents to repel the claim for bonus by the members of the services of the Board, advancing a case that the Board will come within the exemption under S. 32(v)(c) of the Bonus Act, which reads a follows:

“32. Nothing in this Act shall apply to—

(v) employees employed by—

(c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profits;”

In Para. 5 of the counter-affidavit filed on behalf of the State in Writ Petition No. 7511 of 1983, it is averred as follows:

“…Section 32(v)(c) of the Payment of Bonus Act lays down that the provisions of the Act will not apply to the institutions which are established not for the profit. The T.W.A.D Board is not an institution formed with a profit motive and it is, therefore, not liable to pay bonus. It is respectfully submitted that T.W.A.D Board is an establishment or the promotion of an object of public for general utility intended to provide the basic facility of drinking water and sewerage facilities to the general public.”

In the counter-affidavit of the second respondent in Writ Miscellaneous Petition No. 11468 of 1983 in Writ Petition No. 7511 of 1983, in Para. 6 it has been averred as follows:

“…Section 32(v)(c) of the Payment of Bonus Act lays down that the provisions of the Act will not apply to the institutions established not for the profit. The T.W.A.D Board is not an institution formed with a profit-motive and it is, therefore, not liable to pay bonus. It is respectfully submitted that T.W.A.D Board is an establishment for the promotion of an object of public or general utility intended to provide the basic facility of drinking water and sewerage facilities for the general public.”

There was a faint attempt on the part of the learned Advocate-General to advance a case that the Board would come within the exemption under S. 32(iv) of the Bonus Act also, which says that the said Act shall not apply to the employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a local authority. It has been found that no such plea has been taken on behalf of the respondents and this case was not advanced further and substantiated.

2. A plea has been taken in the counter-affidavits of the respondents, referred to above, that the Board is not an industry within the meaning of the Industrial Disputes Act, 1947, and hence Act would not apply. Even that plea, assuming that it could be upheld, could not be of any avail to the respondents, to provide an answer to the claim for bonus, because the. Industrial Disputes Act, 1947, does not confer any statutory right to bonus. As pointed out by the Supreme Court in Sanghvi Jeevraj v. Madras Chillies. Grains and Kirana Merchants Workers' Union, [A.I.R 1969 S.C 530], though the Industrial Disputes Act, 1947, confers substantive rights on workmen with regard to lay-off, retrenchment compensation, etc., it does not create or confer any such statutory right as to payment of bonus. Bonus, until the enactment of the Bonus Act, was the creature of industrial adjudication and was made payable by the employers under the machinery provided under the Industrial Disputes Act, 1947, and other corresponding Acts enacted for investigation and settlement of the disputes raised thereunder. By the enactment of the Bonus Act, the subject-matter of bonus has come to be dealt with comprehensively in all its aspects and workers in an establishment to which the Bonus Act does not apply cannot claim bonus de hors the Bonus Act. Section 22 of the Bonus Act itself speaks about reference of disputes contemplated therein as industrial disputes within the meaning of the Industrial Disputes Act, 1947, or of any corresponding law relating to investigation and settlement of industrial disputes, in force in the State. Hence by stating that the Board is not an industry and the Industrial Disputes Act, 1947, does not apply to the respondents, they cannot repel the claim for bonus, if it is otherwise to be countenanced.

3. I also find that the respondents have taken a specific plea that the Board would not come within the definition of “establishment” “in public sector” under S. 2(16) of the Bonus Act.

4. Hence, the only question that arises for consideration in this batch of writ petitions and in respect of which alone I heard detailed submissions from both the sides relates to the exemption under S. 32(v)(c) of the Bonus Act. The anxiety on the part of the petitioners is to demonstrate that the Board got constituted under the Tamil Nadu Water Supply and Drainage Board Act, 1970 (Tamil Nadu Act 4 of 1971) hereinafter referred to as the Act, and the scheme of the Act and the activities of the Board as enjoined by the Act, and its affairs make the Board a commercial institution and it cannot take umbrage under S. 32(v)(c) of the Bonus Act, on the ground that it is an institution established not for purposes of profit. The counter anxiety on the part of the respondents is to say that the Board is a service oriented organisation, intended to provide basic facilities of drinking water and sewerage to the public and it is not engaged in any commercial activity, it is not a profit-making organisation and it is functioning for public interest without any profit-motive; and its activities are intended for the benefit of the general public.

5. There are pronouncements of High Court including one of this Court with regard to the exemption claimed under S. 32(v)(c) of the Bonus Act. Each case has been dealt with, taking note of the object of the statute and the provisions under which the organisation got constituted, the function of the organisation and other relevant aspects, and it is not possible to scuttle down the mind of this Court to draw inspiration exclusively from one or the other of the pronouncements. Certainly, the principle discussed herein can be looked into, but they are not binding and conclusive to decide the question in the context of the Act.

6. In Uttar Pradesh Engineers' Association v. Uttar Pradesh State Electricity Board, [1973 — II L.L.N 60], a Bench of the High Court of Allahabad had occasion to consider as to whether the Uttar Pradesh State Electricity Board could fall within the exemption under S. 32(v)(c) of the Bonus Act. This section, by itself, sets out two aspects and the exemption would come into play only when the two aspects are satisfied. One aspect is that the employment must be in an institution, and the second is that it must be one established not for purposes of profit. The Bench of the High Court of Allahabad adverted to the first aspect in the context of dictionary meaning as well as S. 32(ix) of the Bonus Act, and held that the Uttar Pradesh State Electricity Board will be an institution within the meaning of S. 32(v)(c) of the Bonus Act. On the second aspect as to whether the said Board was established not for purposes of profit, the Bench analysed the provisions of the concerned statutes and held that the said Board cannot be presumed to be an institution established for purposes of profit and it falls within the exemption provided by Sub-cl. (c) of Cl. (v) of S. 32 of the Bonus Act.

7. In Shiv Gowda (A.C) v. Coffee Board, [1980 L. & I.C 417], a Bench of the High Court of Karnataka was obliged to go into the question as to whether the Coffee Board could fall within the exemption under S. 32(v)(c) of the Bonus Act. The relevant provisions of the Indian Coffee Act, 1942, were discussed and the opinion was expressed that having regard to the object of the Act and its provisions, the Coffee Board is established for a public purpose to protect and develop the coffee industry and it is not required to earn any profit to itself, which would mean that it could use such profit as it desires. The Bench of the High Court of Karnataka placed reliance on the decision of the Bench of the High Court of Allahabad cited above.

8. In Workmen of Tirumala Tirupati Devasthanams v. Tirumala Tirupati Devas-thanams, [1980 — II L.L.N 29], the main issue raised before the Supreme Court turned on a construction of S. 32(v)(c) of the Bonus Act, with regard to itg application to the Transport Department of the Thirumala Tirupathi Devasthanams. The Supreme Court found that the Industrial Tribunal had not correctly appreciated the import of the requirements under S. 32(v)(c), namely, that the transport department must be found to be an institution by itself and in this view, the Supreme Court was obliged to remit the matter back to the Industrial Tribunal for consideration and decision de novo. On the aspect as to whether the establishment is not for purposes of profit, the Supreme Court delineated the test to be kept in mind in the following terms in Para. 4, at page 30:

“Likewise, merely because it is an institution, the transport department does not cease to be one established ‘not for purposes of profit,’ that has got to be made out on its merits. The institution may be designed for profit although it may make or may not make profit. The institution's profits or earnings may be used for other charitable purposes. That also does not determine finally the character of the institution. Was the institution ‘not one for purposes of profit,’ motives apart? If it was one, definitely not for earning profit, but merely as an ancillary facility for pilgrims to reach and to return. S. 32(5) will exclude the institution; if we may tersely put it, the dominant purpose of the transport department will be the decisive factor.”

9. In Maharashtra State Electricity Board v. M.C Chitaley, [1983-II L.L.N 398] a Bench of the High Court of Bombay went into the question as to whether the Maharashtra State Electricity Board could claim exemption under S. 32(v)(c) of the Bonus Act. The attention of the Bench of the High Court of Bombay was drawn to the decision of the Bench of the High Court of Allahabad in Uttar Pradesh Engineers, Association v. Uttar Pradesh State Electricity Board, [1973 — II L.L.N 60] (vide supra). But the learned Judges of the High Court of Bombay expressed inability to endorse the line of reasoning adopted by the Bench of the High Court of Allahabad. The learned Judges of the High Court of Bombay applied the rule of ejusdem generis to hold that particular typos of institutions such as hospitals, social welfare institutions, chambers of commerce alone are intended to be covered under S. 32(v)(c) of the Bonus Act and not every type of institution, including statutory corporations like the Maharashtra State Electricity Board, carrying on semi-commercial activities. There is a discussion about the structure of the Maharashtra State Electricity Board with reference to the Electricity (Supply) Act, 1948, and the learned Judges opined that the activities of the Maharashtra State Electricity Board are required to be run on a commercial basis and profit-making is contemplated and the features discussed by them would go a long way to demonstrate that the Maharashtra State Electricity Board must have been established for purposes of profit.

10. Mohan, J. in Sabanayagam (K.) v. Secretary to Government of Tamil Nadu (Housing Department), [1984 — I L.L.N 140], had occasion to consider the question as to whether the Tamil Nadu Housing Board will come within the purview of the exemption under S. 32(v)(c) of the Bonus Act and the learned Judge placed reliance on the pronouncement of the High Court of Bombay in Maharashtra State Electricity Board v. M.C Chitale, [1983 — II L.L.N 398] (vide supra) and came to the conclusion that the Tamil Nadu Housing Board cannot fall under the exemption provided under S. 32(v)(c) of the Bonus Act.

11. To attract the exemption under S. 32(v)(c) of the Bonus Act, the concern must be first held to be “institution” and secondly it must be found that it was established not for purposes of profit. Even though the concern may be an institution, yet, it may be one established for purposes of profit, when it will go out of the exemption. Hence, only if the concern is an institution established not for purposes of profit, the exemption under S. 32(v)(c) of the Bonus Act would be attracted. On the question as to whether the Board could fall within the broad conception of institution taking into consideration the general meaning annexed to that expression there will not be any difficulty in holding the Board to be an institution.

12. “Institution” is a general term. Within its ambit, it can take in very many categories of concerns. In Shorter Oxford English Dictionary, 3rd Edn., one of the meanings attached to the expression “institution” runs as follows:

“An establishment, organisation, or association, instituted for the promotion of some object, esp. one of public utility, religious, charitable educational, etc.”

In Manchester Corporation v. Mc. Adam, [(1896) A.C 500], Lord Macnaghteh observed as follows:

“It is a little difficult to define the meaning of the term “institution” in the modern acceptation of the word. It means, I suppose, an undertaking formed to promote some defined purposes having in view generally the instruction or education of the public. It is the body (so to speak) called into existence to translate the purpose as conceived in the minds of the founders into a living and active principle … A public library may, I think, be properly called an “institution” in that sense.”

In Ramanatha Iyer's Law Lexicon, the following passage with regard to the term “institution” is worth noting:

“The word ‘institution’ both in legal and colloquial use, admits of application to physical things. One of its meaning, as defined in Webster's Dictionary is ‘an establishment, especially of public character, or affecting a community’. The term ‘institution’ is sometimes used as descriptive of an establishment or place where the business or operations of a society or association is carried on. At other times it is used to designate the organised body.”

In K.V Krishna Rao v. Sub-Collector, Ongole, [A I.R 1969 S.C 563], it has been observed as follows:

“According to the dictionary meaning the term ‘institution’ means ‘a body or organisation or an association brought into being for the purpose of achieving some object.’ Oxford Dictionary defines an ‘institution’ as an establishment, organisation or association instituted for the promotion of some object especially one of public or general utility, religious, charitable, educational, etc. Other dictionaries define the same word as ‘organised society established either by law or the authority of individuals, for promoting any object, public or social.”

In Minister of National Revenue v. Trusts and Guarantee Company, Ltd., [1940 A.C 138, the Privy Council observed:

“It is by no means easy to give a definition of the word ‘institution’ that will cover every use of it. Its meaning must always depend upon the context in which it is found.”

13. I am only referring to the normal and general meanings of the expression “institution” to find out as to whether the Board could first of all fall within that general conception and I am conscious that this by itself would not solve the question and a further element has got to be satisfied that the Board is an institution established not for purposes of profit, so as to attract S. 32(v)(c) of the Bonus Act. Hence, finding that the Board falls within the general conception of “institution” by itself may not be a complete answer. The expression “institution” has not been defined in the Bonus Act. But for the limited purpose of finding out as to whether the Board falls within the general conception of “institution” the plain and ordinary meaning therefor has to be found, and one need not necessarily fall back upon and have reference to the context in which the expression is used. Such a process may be necessary to find out as to whether the norms for claiming exemption, do stand satisfied. In Maxwell's Interpretation of Statutes, 12th Edn., Chap. 2(1), dealing with the Primary Rule; Literal Construction, it has been stated:

“The first and most elementary rule of construction is that it is to be assumed that the swords and phrases of technical legislation are used in their technical meaning if they have acquired one, and otherwise in their ordinary meaning, and the second is that the phrases and sentences are to be construed according to the rules of grammar.”

In the light of the above discussion, I have to hold that the Board falls within the general conception of an “institution”. As to when an institution will get qualified for the exemption, the very provision forms an I gives the guidelines. The qualification is it must be an “institution” established not for purposes of profit. The language of the provision is simple and plain. That there are other institutions which could also fall within other classes granting similar exemptions need not necessarily provide a guideline to construe Cl. (c) of Sub-sec. (v) of S. 32 of the Bonus Act. Each clause is independent, and a concern, if it wants exemption under one or the other of the clauses, must satisfy them. Where an exemption is conferred by a statute by an exemption clause, the general rule must be construed with the exempting rule, which must be regarded as paramount. But before an exemption can be recognised the person or entity concerned must clearly come within the language apparently granting the exemption Clause (c) of Sub-sec. (v) of S. 32 of the Bonus Act speaks about institutions established not for purposes of profit. So far as this clause is concerned, such types of institutions stand exempted. The other classes of exemption may be generous and may take in institutions which may make profits. We cannot say that all the clauses in S. 32 must be intended to cover only institutions or entities more or less having alligned or similar objectives in their functioning. Clause (c) enumerates as examples, hospitals, chambers of commerce, and social welfare institutions. Obviously they must also be non-profit motivated institutions and their dominant purpose should not and could not be earning profits. If proved to be otherwise, or, in other words, if they are in fact established with the dominant purpose of earning profit, then by their bare nomenclatures or descriptions, they cannot go out of the mischief of the Bonus Act. Even the enumerated institutions must be those established not for purposes of profit. But to state that Cl. (c) will only govern and apply to institutions designated as or bearing the names of hospitals chambers of commerce and social welfare institutions will practically negate the general intendment of the exemption provision. The general intendment is that institution established not for the purposes of profit should go out of the purview of the Bonus Act. It will be defeating the said intendment if a restrictive definition is to be put on the clause. The decision of the Supreme Court in Workmen of Tirunala Tirupati Devasthanams v. Tirumala Tirupati Devasthmans, [1980-II L.L.N 29] (vide supra), has laid down the norm that the dominant purpose should be the decisive factor. If the dominant purpose is profit-making, the institution will come within go out exemption, and if the dominant purpose not profit-making, the institution will come within the exemption. The nomenclature are the designation, the institution bears is not decisive.

14. In my view, the Court should not lose sight of the tests laid down by the Supreme Court, in this regard in Workmen of Tirumala Tirupati Devasthanans v. Tirumala Triupati Devasthanams, [1980 — II L.L.N 29] vide supra). The institution could have been designed the established for profit and yet, it may not make any profit. On the simple ground that there has been no earning of profit, such an institution cannot try to come within the exemption. Equally so, utilisation of the profits by the institution designedly established for making-profits would not be a criterion with regard to the application of S. 32(v)(c) of the Bonus Act. The profits of the institution may be used for other charitable purposes. As pointed out by the Supreme Court that would not determine finally the character of the institution. The question to be posed is:

“Is the institution one established not for purposes of profit?”

Adopting the language of the Supreme Court, the terse test to be applied is to find out the dominant purpose of the institution. That alone will be the decisive factor. If the institution is one established with the dominant purpose of earning profits, it will not come within the exemption. If, on the other hand, that element is lacking, the institution can be fitted in under S. 32 (v)(c) of the Bonus Act.

15. To find out as to with what dominant purpose or in other words to find out as to whether with the dominant purpose of earning profits, the Board got constituted or established, it will be pertinent to advert to the provisions of the Act itself. The Supreme Court in Sanghvi Jeevraj case, [A.I.R 1969 S C. 530], has countenanced that the Statement of Objects and Reasons can be legitimately used for ascertaining the object which the Legislature had in mind, though not for construing the Act. On the side of the respondents, a true extract of the Statement of Objects and Reasons for enacting the Act has been furnished to this Court, and it runs as follows:

“The importance of providing for protected drinking water and adequate drainage facilities to urban and rural areas alike has been engaging the attention of the Government for quite sometime past. At present, matters connected with drinking water supply and drainage scheme are being dealt with by several departments. The Government considered that for effective planning and execution of drinking water and drainage schemes, it was essential that these were brought under the purview and control of a single agency for purposes of investigating, preparing and executing water supply and drainage schemes. Accordingly, the Government constituted the Tamil Nadu Water Supply and Drainage Board to achieve the above object. Government are of the view that if the Board could be set up as an autonomous body on a statutory footing, it will conduce to speedier planning, investigation and execution of schemes and also enable it to raise substantial resources from financing institutions and in the open market, with a view to providing drinking water and drainage facilities to urban and rural areas in the State of Tamil Nadu within the shortest possible time. The Bill provides for the constitution of an autonomus Tamil Nadu Water Supply Drainage Board, to be entrusted with powers and functions to investigate, prepare and execute water supply and drainage schemes throughout the State and matters connected therewith.”

The long title of the Act runs as follows:

“An Act to provide for the establishment of Water Supply and Drainage Board and the regulation and development of drinking water and drainage in the State of Tamil Nadu, except the Madras Metropolitan area.”

Chapter I of the Act is Preliminary and contains S. 1 giving the short title and commencement, and S. 2 setting forth the definitions. Chapter II deals with the constitution of the Board and takes in Ss. 3 to 8. Chapter III deals with officers and members of the staff or the Board and contains Ss. 9 to 11. Chapter IV contains Ss. 12 to 15 with regard to conduct and business of the Board. For the purpose of the question arising before this Court, Chaps. II to IV may not be germane. Chapter V relates to powers and functions of the Board and it has Ss. 16 and 17. These sections may be relevant and they stand extracted as follows:

“16. Functions of the Board.—The Board shall perform all or any of the following functions, namely—

(a) at the instance of the Government or a local authority—

(i) investigating the nature and type of scheme that can be implemented in the area of any local authority for the provision of drinking water and drainage facilities;

(ii) planning and preparing of schemes including schemes covering areas falling within the jurisdiction of more than one local authority for the purpose of providing the supply of drinking water or drainage facilities;

(iii) executing such schemes under a phased programme for the provision of drinking water and drainage facilities within the areas of local authorities to which such schemes relate;

(b) providing technical assistance or giving advice to local authorities in the execution and maintenance of water supply and drainage works;

(c) establishing and maintaining schemes incidental to water supply and drainage such as testing of water, designing of plant for purification of water, conducting research relating to water supply and maintaining farm schemes;

(d) any other matter which is supplemental, incidental or consequential to any of the above functions; and

(e) such other functions as may be prescribed.

17. General powers of the Board.— The Board shall for the purposes of carrying out its functions under this Act, have the following powers, namely,—

(i) to acquire and hold such movable and immovable property as it deems necessary and to lease, sell or otherwise transfer any such property subject to such conditions as may be prescribed;

(ii) to acquire under the Land Acquisition Act, 1894 (Central Act 1 of 1894), any land or any interest then in required by the Board for implementing any scheme;

(iii) to incur expenditure and undertake any work in any area in the State for the preparation and execution of such schemes as it may consider necessary for the purpose of carrying out the provisions of this Act, or as the case may be, the functions entrusted to it by the Government;

(iv) to enter into any contract; and

(v) to do all things necessary for the purposes of carrying out the provisions of this Act.”

A reading of S. 16 conveys to the mind of this Court that the dominant purpose behind the functioning of the Board is to provide drinking water supply and drainage facilities. Section 17 confers general powers of acquisition, holding, dealing, spending and undertaking for the purpose of carrying out its functions under the Act. Chapter VI relates to investigation, preparation and execution of schemes by the Board and it contains Ss. 18 to 27-A arrayed as follows:

18. Cost of investigation of schemes.

19. Preparation of draft schemes by the Board.

20. Approval of the scheme by the Government.

21. Publication of approval of the draft scheme in the Tamil Nadu Government Gazette.

22. Execution of approved scheme by the Board.

23. Recovery of the cost of the scheme.

24. Power of Government to direct the Board to prepare and execute any scheme.

25. Power of the Board to agree or refuse to prepare and execute the scheme.

26. Local authority to provide adequate facilities to the Board.

27. Power of the local authority to undertake schemes.

27-A. Exclusion of schemes for Madras Metropolitan area.”

Of these provisions, S. 23(4) was very much relied on by the petitioners to take the Board out of the exemption clause and it is better that S. 23(4) stands extracted as follows:

“The Board may include in the cost of investigation, preparation and execution of any scheme or any other work undertaken by it, the supervision and centage charges at such rates as may be prescribed.”

Chapter VII speaks about transfer of assets and liabilities of the Public Health Engineering and Municipal Works Department to the Board. The provisions contained in this chapter are Ss. 28 to 33, and they make out the transfer of not only the assets and liabilities, but also the officers and staff of the Public Health Engineering and Municipal Works Department to the Board. Chapter VIII contains Ss. 34 to 48 relating to finance, accounts and audit. Section 34(3) reads as follows:

“All moneys received by or on behalf of the Board by virtue of this Act, all proceeds of land or any other kind of property sold by the Board, all charges, all interests, profits and other moneys accruing to the Board shall constitute the fund of the Board.”

Section 36 enables the Board to borrow and lend, subject to the conditions contemplated therein. Section 39 enjoins the Chairman of the Board to lay before the Board in the month of February in each year for the consideration of the Board the estimate of the income and expenditure of the Board for the next ensuing year. Section 42 speaks about repayment of loans by the Board. Section 43 contemplates establishment and maintenance of sinking and other funds. These all could be incidents of running even a social welfare oriented institution. Section 45 speaks about accounts and audit and S. 47 speaks about accounts and audit report to be forwarded to the Government and placed before the State Legislature. Chapter IX relates to penalties and procedures, taking in Ss. 49 to 54 and they are not relevant for our purpose. Chanter X is miscellaneous and it contains Ss. 55 to 71. Of them S. 65 speaks about mode of recovery of amounts due to the Board and without prejudice to any other remedy provided by law, recovery of such amount as arrears of land revenue is also enabled. Section 70 states that officers and servants of the Board shall be deemed to be public servants within the meaning of S. 21 of the Penal Code. Section 71 states that the Board shall be deemed to be a local authority for the purpose of the Land Acquisition Act and the Local Authorities Loans Act. The last chapter is Chap. XI containing Ss. 72 and 73. Section 72 deals with the power to make rules and S. 73 deals with power to make regulations. My attention was also drawn to the Tamil Nadu Water Supply and Drainage Board Service Regulations, 1972, formulated in exercise of the powers conferred by Sub-secs. (1) and (2) of S. 73 of the Act, and regulation 58 lays down that with regard to pay, allowances, leave salary, pension and other conditions of service, the Fundamental Rules, the Madras Leave Rules and the Manual of Special Pay and Allowances and the Pension Code as amended from time to time in so far as they may be applicable and except to the extent expressly provided in the regulations shall mutatis mutandis apply to the members of the Board's service.

16. An analysis of the provisions of the Act as shown above does not bring conviction to my mind that the Board was established with the dominant purpose of earning profit, which is the true test to be applied to find out as to whether the exemption could be availed of or not. Anterior to the enactment of the Act, matters connected with the drinking water supply and drainage scheme were dealt with by the several departments of the State Government. A need was felt that these matters should be brought under the purview and control of a single agency and that prompted the constitution of the Board and to give the Board an autonomy, a statutory fitting therefor was found by enacting the Act. Neither the Statement of Objects and Reasons nor the long title of the Act nor any of the provisions of the Act contemplate the Board getting established with the dominant purpose of earning profit. The purpose was only to provide for water supply and drainage facilities in the State of Tamil Nadu except the Madras Metropolitan area. If in the working of such an institution, there is going to be a surplus of income over expenditure, it is not possible on that ground to bring the institution as one established for purpose of profit. On the other hand, it will still be an institution established not for purposes of profit and an institution established for carrying out social welfare schemes to serve the cause of the citizens of the State. The dominant purpose of establishment of the Board is to provide protected drinking water supply and drainage facilities to the public by executing schemes therefor. These schemes are obviously intended for giving basic amenities to the citizens of the State and to prevent health hazard to public. In the working of any institution, even if it is social welfare oriented there is likelihood of income exceeding the expenditure. But that was not obviously contemplated as the decisive test by the Supreme Court in Workmen of Tirumula Tirupati Devastanams v. Tirumala Tirupati Devasthanams, [1980 — II L.L.N 29] (vide supra). Equally so, if the dominant purpose of establishing the institution was to earn profits, the fact that during a particular period profits were not earned, will not take the institution, out of the purview of the Bonus Act. It is only in this context, Ss. 23(4) and 34(3) have got to be considered. The bare levying of supervision and centage charges under S. 23(4) does not lead to the presumption that the intention was to earn profits. I am told that such charges are being levied as per the public works department formulae. Even in hospitals and other social welfare institutions, there will be utilisation of professional acumen and expertise for carrying out the schemes undertaken, and not always they are obtained and services rendered without remuneration and recompense may be exceeding the actual labour involved. These are not conclusive. Equally so, to constitute the Board's funds, profits if made amongst other resources can also go in and this will not make the Board a profit motivated institution. The activities of the Board may have the colour of commercial or semi-commercial activity. This may be inevitable even in the case of any social welfare organisation in its multifaceted activities. Profits may accrue or may not accrue in the working of such institutions. But if the institution is one established or constituted and is also worked predominently with profit motive, certainly it cannot avail of the exemption. Paragraph 17.19 of the Report and Recommendation of the Bonus Commission reads as follows:

“…The bonus formula should obviously not apply to employees of institutions such as chambers of commerce, Redcross associations, universities, school, colleges, hospitals and social welfare institutions, etc. Such institutions are not established with a view to make profits, though they may have a surplus of income over expenditure. It is not necessary to go into the question as to which of these are industries within the meaning of the Industrial Disputes Act. We recommend that the bonus formula should not apply to such institutions.

Our colleague, Sri Dange, however, thinks that bonus formula should be applicable to those institutions which are within the meaning of the Industrial Disputes Act.”

17. If the institutions are not established with a view to make profits, though they may have a surplus of income over expenditure, the bonus formula should not apply to such institutions. The enumerated institutions are only examples, but are not exhaustive. Even the enumerated institutions may have the colour of commercial or semi-commercial ones including surplus of income over expenditure, but still if the dominant purpose of their establishment or constitution was not profit-making, they can come within the exemption. At the risk of repetition, I must state that the decisive test is as to whether the institution is one established with the dominant purpose of earning profits or not. If the dominant purpose of its establishment is not for earning profits, then it can easily come within the exemption. Apart from the principles that an argument from the authority of the highest Court in the land is most powerful in law — Argumentum ab auctoritate est fortessmum in lege, the words used in the provision are portent and clear. Section 32(v)(c) of the Bonus Act speaks about “established” not for purpose of profit. If the institution is “established” with dominant profit-motive, it cannot escape the Bonus Act. One should not lose sight of the word used, namely, “established”. That is why, the dominant purpose of the very “establishing” becomes germane. Legislature is deemed not to waste its words or to say anything in vain. The presumption is always against superfluity in a statute. The statute should be construed as to avoid redundancy or surplusage. If the words of the statute are by themselves precise and unambigaous, then no more can be necessary than to expound those words in their natural and ordinary sense. The word “established” is not supposed to have been used by the Legislature without an intendment. The intention is obvious, and that is to exclude institution “established” with no dominant purpose of earning profits. If it is otherwise, the Legislature could have used the expression “institution, not earning profits”. This may come into conflict with the other substantive provisions of the Bonus Act, which do contemplate payment of minimum bonus, whether profits are earned or not. “Established” in the context means getting constituted or organised or getting fixed or evolved. We should not lose sight of the fact that the Board is not constituted by shareholders for whose benefit profits could be said to have been earned and to whom profits could ultimately reach. The Board obviously could not be one established for such purpose.

18. Learned counsel for the petitioner were at pains to bring to the notice of the Court, certain materials to show that the accounts of the Board are being maintained on commercial line, and there has been surplus of income over expenditure in the relevant years. They are as follows:

A copy of Income and Expenditure Account of the Board for the year ending 31 March, 1982;

Audit reports for the Board for the years 1978–79 and 1980–81.

A review of public sector enterprises in Tamil Nadu in 1978–79 reflecting at page 397.

The Financial Data of the Board for the years 1976–77, 1977–78 and 1978–79.

All these materials do show that there has been excess of income over expenditure. But they are not decisive on the essential aspect, namely, the dominant purpose of the establishing. If the Bonus Act applies it would apply irrespective of whether, profits are earned or not.

19. On behalf of the petitioners, reliance was placed on the pronouncement of the Bench of the High Court of Bombay in Maharashtra State Electricity Board v. M.C Chitale, [1983 -II L.L.N 398] (vide supra). There the Bench pointed out that the Maharashtra State Electricity Board got constituted to work and operate projects, which were previously worked and operated by private sectors on commercial basis predominantly with profit motive, and the Maharashtra State Electricity Board succeeded the several licensees, who were in the open field. Such is not the case here. Matters connected with drinking of water supply and drainage schemes were earlier dealt with by the several departments of the State Government as set out in the Statement of Objects and Reasons. The Bench of the High Court of Bombay accepted the contention as a right one that an undertaking cannot be said to have been established for the purposes of profits merely because of the incidental turn out of such profits. Yet, the Bench formulated the test as follows:

“The test of ascertaining whether the Board is established for the purposes of profits to our mind, lies in its being run avowedly on commercial basis, even though dominant purposes happen to be to achieve the benefits to the community.”

This cannot be strictly the appropriate test in view of the pronouncement of the Supreme Court in Workmen of Tirumala Tirupati Devastanams v. Tirumala Tirupati Devastatnams, [1980 — II L.L.N 29] (vide supra). The dominant purpose test is the other way about, namely, whether the institution was established with the dominant purposes of earning profit. The pronouncement of the Supreme Court was rendered on 30 November, 1979, anterior to the pronouncement of the Bench of the High Court of Bombay, which was made on 14 July, 1980. Most likely for want of reporting, the pronouncement of the Supreme Court was not brought to the notice of the Bench of the High Court of Bombay. I go by the rule argumentum ab auctoritate est for-ressmum in in lege view of Art. 141 of the Constitution of India. There is the other pronouncement of a Single Judge of this Court in Sabanayagam (K.) v. Secretary to Government of Tamil Nadu (Housing Department) [1984 — I L.L.N 140] (vide supra), Mohan, J., in that judgment chose to place reliance on the decision of the Bench of the Bombay High Court in Maharashtra State Electricity Board v. Chitale, [1983 — II L.L.N 398] (vide supra). Here again, the attention of the learned Judge was not drawn to the pronouncement of the Supreme Court. The learned Judge observed as follows:

“Though the Tamil Nadu Housing Board which is a statutory body, is being run on ‘no profit and no loss basis,’ it cannot be stated that the Board does not make a profit at all in its transactions, on the development of plots and construction of houses….

The Housing Board may also derive income in the near future and there may not be any difficulty in meeting this expenditure in this regard from its available funds. Besides, the Housing Board with its assets and liabilities is earning more and more every year. The income derived by way of rental, leasing of shops and stalls, etc., will undoubtedly go towards profit to certain extent.”

I am told that decision of the learned Single Judge is the subject-matter of appeal before this Court. Even otherwise, I am bound to follow the pronouncement of the Supreme Court, which has countenanced the dominant purpose test and not the actual earning profits test.

20. For the reasons expressed above. I have to hold that the Board is an institution established not for purposes of profit within the meaning of S. 32(v)(c) of the Bonus Act. The dominant purpose of its getting established is not profit earning. It got constituted to execute schemes for providing protected water supply and adequate drainage facilities to urban and rural areas in the State of Tamil Nadu. It is service and social welfare oriented with no dominant purposes of earning profit. In this view, it can claim the exemption under S. 32(v)(c) of the Bonus Act. Hence, these writ petitions are dismissed. I make no order as to costs.

21. After judgment was reserved in these writ petitions, my attention was drawn that by Order B.P Rt. No. 479, dated 19 October, 1984, the Board with the concurrence of the State Government paid as a special concession one month's pay and dearness allowance, subject to the maximum of Rs. 750 to all its employees, whose pay and dearness allowance do not exceed Rs. 1,600 is on 20 October, 1984, taking into account the financial position. 1 his is not a factor to be taken into account for deciding the issue that has arisen in these writ petitions. Further, I find that the order was not made conceding the claims of the employees of the Board, but only without prejudice to the decision of this Court in the writ petitions.