Profit making legitimate, profiteering is not: Madras High Court
CHENNAI: What is the difference between ‘profit making’ and ‘profiteering’?
According to the Madras High Court, the former is accepted to be a legitimate exercise, necessary for the sustenance of all institutions. But ‘profiteering’ means taking advantage of unusual or exceptional circumstances to make excessive profits, which is to be frowned upon.
Justice Anita Sumanth made the definition while allowing a writ petition from the management of Sathyabama University at Semmenchery, challenging the orders dated March 24, 2017 of the Industrial Tribunal here, which held that the university was liable to pay bonus to members of Pudhiya Jananayaga Vagana Ottunargal Mattrum Techniciangal Union at Kodambakkam, under the Payment of Bonus Act.
The case of the union, comprising drivers and technical personnel, is that they are entitled for bonus under the provisions of the Bonus Act. The management runs buses for transportation of its students, teaching and non-teaching staff to the university, both morning and evening and collects substantial fees from the students and the employees using the facility, in addition to the tuition fees collected from students. As such, it is entitled to share the profits from such transport fee with the staff, the union argued.
However, management senior counsel S Ravindran submitted that the Bonus Act will not apply in the light of the exemption given in Sec. 32(v)(b) of the Act. The legislature was conscious of profit earning apparatus and had made a specific differentiation between the two clauses, deciding, in its wisdom, to purposely omit reference to ‘profits’ in clause (v)(b) of Sec. 32.
India is a knowledge capital and the activity of dissemination of education has necessarily to generate some profit for the sustenance of the institution itself and for the improvement of the standards and quality of the institution, the education imparted and the facilities and infrastructure offered.
The mere fact that the institution is profitable is not relevant, as profitability is not a criteria to be taken into account for grant of exemption under clause (v)(b). There is nothing untoward in the fees and charges levied by the university as the former were in line with the fee regulations and the latter were structured bearing in mind the costs incurred in maintaining and running the buses. Accepting his arguments, the judge set aside the order of the tribunal and allowed the petition.