JALGAON DISTRICT CENTRAL CO-OPERATIVE BANK v. PUNDALIKRAO LAXMANRAO SURYAWANSHI & Ors.
Case at a glance
Provisions considered
- Constitution of India art. 227
- Bombay Co-operative Societies Act s. 41
Key paragraphs
- Para 1616. The Board oi Directors shall have powers, sub ject to the approval of the Registrar Co-operative Societies Bombay State, Poona, to alter, add to, or re peal these rules from time to time, provided however that no such alteration, addition or repeal shall have…
Judgment
HELD : (i) The argument that r. 6 not having been a!'proved there was no rule unC·~r which the obligatinn to p.'.l.v gr:ltuitv arose ignored the expre~s lan~ni:1.ec of r. 7 which. in unequivocal terms. rcq11ires ·{!ratuitv to be granted in case of rctirl'.'n1ent. resi.gnation or tcrn1in:->tion of service!! according to the rate ~nccified therein. Clau.;;e (a) of thi" rule contains :ii provio:.ior. ~imiJar in effect to wh:it the l:ist srntencc of r. 6 direct<:., Rule 9 :ilc;o imoos~ an in1ner:ttive ohligation for the pavmc!lt of grafuitv undt'.'r these n1les \\·ithin on~ n1onth frOm the rctirerr.cni-. resiCJnation, death or termination of serv'.ce of the emplorec concerned. 1195 D--Fl (ii) Tht> non~~1nproval of r. 10 hv the Ref.istn.1r al~o cnt1ld not make the other rules ineffective and could not absolYc the B:ink of the ohlieation irnoosrd on it by rr. 7. 8 and 9. Onct~ the Gr;.Huitv Fund Rules imposin~ an ob1iiiation on the Bank to PBV watuitv to its erunlovees ore approved by the R.e~istrar. then thii obli'tQtion C'8nnot he rendered nu&atory merely is no 5ep:i.rate Gr~tuitv "f'und. ft 95 F-H1 because there H JALGAON CO-OP. l!ANK v. PUNDALIKRAO (Dua J.) 193 A ttn) It was conceded that the new rules could not detract from 01 prejudicially affect the vested rights crLated under the old rules. Old Rule 16 expressly prohibits the retrospeclive operation of the new rules with the object of protecting the interests of the employees. The effect of old r. 16 cannot be negatived by describing the process as mere withdrawal of the approval of the old rules and enforcement of the nev. ones. [196 B-DI B CIVIL APPELLATE JURISDICTION : Civil Appeal No. 944 of
1966. Appeal by sp~cial leave from the judgment and order, dated March 30, 1965 of the Bombay High Court in Special Civil Appli cation No. 5 of 1964. C M. C. Chagla and I. N. Shroff, for the appellant. Ganpat Rai and R. Mahalingier, for respondent No. I. The Judgment of the Court was delivered by D E F G H Dua, J. Pundalikrao Laxmanrao Suryawanshi plaintiff (res pondent No. I in this Court) instituted arbitration proceedings the Court of the Registrar's Nomine.e against the Jalgaon District Central Co-operative Bank Ltd., Court) for the recovery of a sum of Rs. 7,605/- as the balance of gratuity with interest at 6 per cent due from 18-8-1962. The claim having been resisted, the same was disallowed on May 16, 1963. An appeal presented to the Maharashtra State Co-operative s~ction 97 of the Maharashtra Co-operative Tribunal under Societies Act against the award of the Registrar's Nominee was dismissed and the said award was confirmed.
(appellant Jalgaon The Bombay High Court was thereupon approached by respondent No. 1 under Article 227 of the Constitution and the High Court allowing the application on July 17, 1965 set aside the orders made by the Co-operative Tribunal and by the Regis trar's Nominee :c.nd directed the appellant-Bank to pay to respon dent No. 1 Rs. 7,605/- together with interest at 4 per cent per annum from June 19, 1963 up-to-date. The present appeal by special leave is directed against the order of the Bombay Hi,~h Court. Shri M. C. Chagla, the learned counsel for the appellant, concentrated his challenge to the impugned order on the ground that on July 19, 1962, when respondent No. 1 retired from service of the appellant-Bank, there were no vali't rules in force entitling him to th.~ amount of gratuity claimed by him. It was not dispu ted before m that respondent No. l had retired on July 19, 1962 after 32 vears of service.
On retirement. he wa~ paid a sum of Rs. 5,070/- by way of gratuity, but his claim in the present pro ceedings is for a further sum of Rs. 1,605/-. 194 SUPREME COURT REPORTS (1970] 2 S.C.R. Gratuity Fund Rules were sanctioned by the Board of Directors of the appellant-Bank on August 17, 1957. They were framed under the Bank's bye-laws. These rules (thereafter called old rules) were forwarded to the Registrar of Co-operative Societies for approval and they were approved with some modifications except Rules 6, 10 and 15 which were kept under consideration. The principal argument pressed before us by Shri Chagla was that Rul.es 6 and 10 having not been approved by the Registrar, ·all the old rules must be deemed to have inoperative because these two rules form the real substratum of the scheme embodied in those rules. Without these two rules, the remaining rules, according to the argument, cannot effectively operate.
We are unable to accept this submission. remained It would be useful at this stage to reproduce old Rules 6,7, 9,10,15 and 16 which alone are suggested on behalf of the appel· Jani to be relevant. "6. These Rules shall be deemed to have come into force (i.e. in respect of an employee retiring, resigning and/or having terminated his services) from the !st July, 1953. Every employee who has completed at least five years service shall be granted gratuity at the rate specified herein. A B c D
In case of retirement, resignation or termination E of services gratuity shall be granted : (a) After five years but before completion of 10 years services :-half month's salary for each completed year of service. (b) After 10 years but before completion of 16 years service :-'three fourth of a month's salary for each completed year of service. ( c) After 15 years service three fourth of a month's salary for each completed year of service, sub ji:ct to the minimum of fifteen salaries.
8.,
Payment of the claims on account of the Gra tuity payable under these Rules, shall be made within one month from the retirement, resignation, death or the termination of service.
The Bank shall contribute on 30th June, every year, or as soon as possible thereafter, but not F G H JALGAON CO-OP. BANK v. PUNDALIKRAO (Dua J.) 195 A R c than 30th September of the year, an amount not less than the amount contributed by the Bank as contribu tion to the Provident Fund. lltol4.
The provisions under sec. 41 of the Bombay Co-operative Societies Act (Bombay Act VII of 1925) as am.ended upto date shail be applicable to the admi nistration of the 'Gratuity Fund' created under Rules.
The Board oi Directors shall have powers, sub ject to the approval of the Registrar Co-operative Societies Bombay State, Poona, to alter, add to, or re peal these rules from time to time, provided however that no such alteration, addition or repeal shall have any retrosp.~ctive effect against the interest of the em ployee, in the employment of the Bank on that date. " D E f According to the appellant's learned counsel, the Registrar hav ing withheld approval of Rule 6, the last sentence of which pro vides that every employee who has completed at least 5 years' service, shall be granted gratuity at the rate specified in the rules, there is no rule which imposes an obligation on the appellant- Bank to pay gratuity. This argument, in our opinion, ignores the expre'5 language of Rule 7 which, in unequivocal terms, requires gratuity to be granted in case of retirement, resignation or termi- nation of service according to the rat.~ specified therein.
Clause (a) of this rule contains a provision similar in effect to what the last sentence of Rule 6 directs. Rule 9 also imposes an impera tive obligation for the payment of gratuity under within one month from the retirement, resignation, death or termi nation of service of the employee concerned. Rule 10, which provides for contribution of the Bank towards the Gratuity Fund, was no doubt also kept under consideration and not approved by the Joint Registrar, but this too, in our view, <lees not render the remaining rules ineffective; nor does this fact by itself absolve the Bank of the obligation impo'.~d on it by Rules 7, 8 and 9. The Cr· contention that without there being a Gratuity Fund, the Bank cannot lawfully pay gratuity assumes that the Bank has no other resources out of which its liabilities under the Rules in question can be discharged-an assumption which is not easy to upheld. Once the Gratuity Fund Rules imposing an obligation or. the Banic to pay gratuity to its employees ar.~ approved by the Regist rar, then this obligation, in our opinion, cannot be rendered nuga tory merely because there is no separate Gratuity Fund.
Rule 15 which provides f?r .the applicability of section 41 of the Bombay Co-operative Soc1eUes Act VII of 1925 to the "administration of II ( 196 SUPREME COURT REPORTS (1970) 2 s.C.lL the Gratuity Fund" created under the rules in question, does not touch the question of the enforcement of these rules, and indeed even on behalf of the appellant, no attempt has been made to rely on Rule 15 for this purpose. The appellant's counsel next relied on the new rules which were approved by the Joint Registrar of Co-operative Societies and were made retrospective in their operation so as to be enforce able with effect from July I, 1953. It was, however, conceded by 5hri Chagla and, in our opinion, rightly, that the new rules could not detract from or prejudicially affect the vested rights created under the old rules. Indeed old Rule 16, it may be re· called, prohibits the retrospective op.~ration of the new rules with the object of protecting the interests of the employees.
The sub· mission that the old rules have neither been repealed, nor altered, as contemplated by Rule 16, and that the Registrar has merely withdrawn his approval to th.~ old rules and enforced the new ones, does not advance the appellant's case. The effect of old rule 16, in our opinion, cannot be negatived by describing process as mere withdrawal of the approval of the old rules and enforcement.of the new ones, for in real substance the process seems to us to be covered by Rule 16. The appeal accordingly fails with no order as to costs. A D c D G.C. Appeal dismissed.
Precedent status how later indexed judgments have treated this case
No known negative treatment found in the Courts & Cases corpus.
This is a result about the indexed corpus, not a finding that the judgment remains good law. Coverage may be incomplete.