M/s.Thiruvalluvar TransportCorporation EmployeesCo-operative Credit Society Ltd. v. The State Express TransportTamil Nadu Corporation Ltd.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 17-02-2009CORAM:THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIANW.P.Nos.30864 of 2008, 1547 and 2596 of 2009AndM.P.Nos.1 and 2 of 2008, 1, 1 and 2 of 2009W.P.No.30864/2008M/s.Thiruvalluvar TransportCorporation EmployeesCo-operative Credit Society Ltd.,Rep., by its Secretary,Mr.K.Jayasankar,10, 23rd Street, Jai Nagar,Arumbakkam,Chennai-600 106... PetitionerVs.The State Express TransportTamil Nadu Corporation Ltd.,Rep., by its Managing Director,Pallavan Salai,Chennai-600 002... Respondent Writ petition filed under Article 226 of the Constitutionpraying for the issue of a Writ of Certiorarified Mandamus, callingfor the records in letter No.079647/R8/SETC/CASH/2008 dated20.12.2008 issued by the respondent-Corporation and quash the sameand consequently direct the respondent-Corporation to continue todeduct every month from the salary of its employees such amount asspecified by the petitioner-Society in satisfaction of the debtowed by the employees to the petitioner-Society and pay the amountso deducted to the petitioner-Society within 14 days of suchdeduction as contemplated under Section 60 of the Multi State Co-operative Societies Act, 2002.W.P.No.1547 of 2009Tamil Nadu State Transport CorporationEmployees' Co-operative Thrift andCredit Society Limited, F.T.65Rep., by its President P.Balasundaram,Periyar Maaligai,Salamedu,Vazhudhareddy (Post),Villupuram – 605 602... Petitioner https://hcservices.ecourts.gov.in/hcservices/ Vs.Tamil Nadu State Transport Corporation(Villupuram) Limited,Rep., by Managing Director,Villupuram – 605 602... Respondent Writ petition filed under Article 226 of the Constitutionpraying for the issue of a Writ of Certiorari, calling for therecords in letter No.3/R2/TNSTC(VPM)/V-REGION/2008 dated 23.12.2008issued by the respondent herein and quash the same.W.P.No.2596 of 2009Tamil Nadu State Transport Corporation(Salem Division-I) Employee's Co-operativeThrift and Credit Society Ltd SS No.59, Rep., by its Secretary P.Periasamy,S/o.Periathambi Udiyar,No.117/5D, Raja Nagar,Johnsonpet,Salem – 636 007... PetitionerVs.The Managing Director,Tamil Nadu State TransportCorporation (Salem) Limited,No.12, Ramakrishna Road,Salem – 636 007... Respondent Writ petition filed under Article 226 of the Constitutionpraying for the issue of a Writ of Certiorarified Mandamus, callingfor the records in pursuant to the impugned orders passed by therespondent in proceeding Lr.No.A10/1559/Accts/TNSTC/2008-09 dated27.12.2008 and in Lr.No.A10/1559/Accts/TNSTC/2008-09 dated27.12.2008 and quash these orders and consequently direct therespondent to comply with the endorsement of the pay disbursingOfficers in respect of the recovery of dues to the petitioner-Society and further repay the amount already to the Society andfurther repay the amount already recovered with interest.For Petitioner in W.P.No.30864/2008 : Mrs.Nalini Chidambaram, Senior Counsel for Mrs.Uma.For Petitioner in W.P.Nos.1547of 2009 : Mr.T.DhanyakumarFor Petitioner inW.P.No.2596 of 2009 : Mr.S.M.SubramaniamFor Respondent in all WPs: Mr.Jayesh B.Dolia https://hcservices.ecourts.gov.in/hcservices/ COMMON ORDERThe Co-operative Societies of Employees of the Tamil NaduState Transport Corporations, have come up with these writpetitions challenging various orders passed by the Managements ofthe Transport Corporations, proposing to discontinue the practiceof effecting recovery of dues to the Co-operative Societies fromthe wages payable to the employees. 2. I have heard Mrs.Nalini Chidambaram, learned SeniorCounsel, Mr.T.Dhanyakumar and Mr.S.M.Subramaniam, learned counselfor the petitioners and Mr.Jayesh B. Dolia, learned counselappearing for the respondent-Corporations.3. The Thiruvalluvar Transport Corporation Employees' Co-operative Credit Society Ltd., which is the petitioner inW.P.No.30864 of 2008, was registered under the Multi State Co-operative Societies Act, 1984. The Tamil Nadu State TransportCorporation Employees' Co-operative Thrift and Credit Society Ltd.,which is the petitioner in W.P.No.1547 of 2009, was originallyregistered under the Tamil Nadu Co-operative Societies Act and waslater converted into a Multi State Co-operative Society, after itsoperations were extended beyond the State of Tamil Nadu. The TamilNadu State Transport Corporation (Salem Division- I) Employees' Co-operative Thrift and Credit Society Ltd., which is the petitionerin W.P.No.2596 of 2009, was registered under the Tamil Nadu Co-operative Societies Act, 1983. 4. The employees of the respondent-Corporations are membersof these Co-operative Societies. The members of the petitioner-Societies have availed loans from the Societies and by virtue of anagreement that these members have had with the Co-operativeSocieties, the loans are repaid in monthly instalments. Theseinstalments are deducted from the wages payable to the employees,by the respondent-Corporations and remitted by the Corporations tothe Societies. 5. Now by the orders impugned in these writ petitions,dated 20.12.2008, 23.12.2008 and 27.12.2008 respectively, therespondent-Corporations have informed the Societies of theirintention to discontinue the recovery of dues from the salaries ofthe employees. Aggrieved by the said orders, the petitioners havecome up with the present writ petitions.6. Mrs.Nalini Chidambaram, learned Senior Counsel appearingfor the petitioner in W.P.No.30864 of 2008 and Mr.T.Dhanyakumar andMr.S.M.Subramaniam, learned counsel appearing for the petitionersin the other two writ petitions, assailed the impugned orders onthe ground that the respondent has a statutory obligation underSection 60 of the Multi State Co-operative Societies Act, 1984 andSection 48 of the Tamil Nadu Co-operative Societies Act, 1983 and https://hcservices.ecourts.gov.in/hcservices/ that the respondents cannot unilaterally withdraw the serviceprovided by them for such a long time, even without a notice.Mrs.Nalini Chidambaram, learned Senior Counsel also relied upon anunreported decision of Justice S.S.Subramani on the issue. 7. In response, Mr.Jayesh B. Dolia, learned counsel for therespondent-Corporations, contended that the obligation of therespondents to effect recovery of dues to Co-operative Societies,from the salaries of the employees, is not statutory but onlycontractual in nature. Therefore, the learned counsel contendedthat the respondents had a right to terminate the contracts andthat such termination of a contractual obligation, is beyond thepale of judicial review, in a writ petition under Article 226.Moreover, it is the contention of the learned counsel for therespondents that there have been several instances ofmisappropriation of funds, by the employees, resulting in the Co-operative Societies, seeking a direction from this Court to therespondents to remit the money already deducted but not paid. Suchdirections in favour of Co-operative Societies have actuallyimposed an additional burden upon the respondent-Corporations, topay interest, running to Rs.53 crores. Therefore, the learnedcounsel submitted that the Managements of the respondent-Corporations had taken a policy decision to discontinue thisfacility and that therefore, the same is not only legal but alsofully justified. 8. From the rival contentions, it is clear that the verynature of the obligation on the part of the respondent-Corporations, is in dispute. While the petitioners term theobligation as statutory in character, the respondents claim that itis only contractual in nature. Therefore it is essential to findout first, the nature of this obligation. This can be done byreferring to the statutory provisions of both the Co-operativeSocieties Acts.9. Section 60 of Multi State Co-Operative Societies Act,reads as follows:-"(1) Notwithstanding anything containedin any law for the time being in force, a memberof Multi-State Co-Operative Society may executean agreement in favour of that Society,providing that his employer disbursing hissalary or wages shall be competent to deductevery month from the salary or wages payable tohim, such amount as may be specified in theagreement and to pay the amount so deducted tothe Society in satisfaction of any debt or otherdemand the member owes to the Society.(2) On the execution of such agreement,the employer disbursing the salary or wages ofthe members shall, if so required by the Multi-State Co-operative Society, by a requisition in https://hcservices.ecourts.gov.in/hcservices/ writing and so long as the Society does notintimate that the whole of such debt or otherdemand has been paid, make the deduction inaccordance with the agreement and pay the amountso deducted to the Society with a period offourteen days on the date on which deduction hasbeen made, as if it were a part of the salary orwages payable on the day as required under thePayment of Wages Act, 1936 (4 of 1936) and suchpayment shall be valid discharge of the employerfor his liability to pay amount deducted.If after the receipt of a requisitionmade under sub-section (2), the employerdisbursing the salary or wages of the member atany time fails to deduct the amount specified inthe requisition from the salary or wages payableto the member concerned or makes default inremitting the amount deducted to the Multi-StateCo-operative Society, the Society shall beentitled to recover any such amount from suchemployer as arrears of land revenue and theamount so due from such employer shall rank inpriority in respect of the liability of suchemployer equal to that of the salary or wages inarrears."10. The above Section 60 of the Multi State Co-operativeSocieties Act, 1984, is similar to Section 48 of The Tamil Nadu Co-operative Societies Act, 1983, which reads as follows:-"48. Deduction from salary, wages orgratuity. - (1) A member of a registered Societymay execute an agreement in favour of that Societyproviding that -(a) his employer or the Officer disbursinghis salary or wages shall be competent, on arequisition in writing from the Society to deductevery month from the salary or wages payable tohim such amount as may be specified in therequisition towards the amount; and(b) If he ceases to be an employee, hisemployer shall be competent on a requisition inwriting from the Society to deduct from thegratuity payable to such employee such amount asmay be specified in the requisition towards theentire balance, due by him to the Society inrespect of any debt or other demand owing by themember to the Society. https://hcservices.ecourts.gov.in/hcservices/ (2) (a) Where any such agreement as isreferred to in sub-section (1) has been executedby a member of a registered Society, the employeror the Officer disbursing the salary or wages ofsuch member shall, on receipt of a requisitionfrom the Society, make the deduction from thesalary or wages or the gratuity, as the case maybe, payable to the member in accordance with therequisition, and pay, within such time as may beprescribed in respect of any Society or class ofSocieties, the amount so deducted to the Society.(b) Where the amount to be deducted in anymonth in accordance with the requisition made by aSociety, or where a requisition has been made bytwo or more Societies in respect of the sameperson, the total amount to be deducted inaccordance with all the requisitions exceeds one-half of his gross salary or wages for the month,the employer or the Officer disbursing the salaryor wages shall deduct from the salary or wages ofsuch person only a sum representing one-half ofhis gross salary or wages for the month. Theamount deducted shall, where deductions have beenmade against requisitions received from two ormore Societies, be paid by the employer or theOfficer disbursing the salary or wages to all theSocieties in proportion to the amounts to bededucted according to their requisitions:Provided that where any amount is due tosuch class of registered Societies as may beprescribed, the entire net salary or wages for themonth or such portion thereof as may be prescribedin respect of any such class of Societies may bededucted and paid as aforesaid.(c) Where a requisition has been made bytwo or more Societies for deduction from thegratuity in respect of the same person, the amountdeducted from the gratuity shall be paid by theemployer to all the Societies in proportion to theamounts to be deducted according to theirrequisitions.(3) The employer or the Officer disbursingthe salary or wages shall maintain such registersas may be prescribed.(4) The provisions of this Section shallapply to all such agreements of the naturereferred to in sub-section (1) as are in force atthe commencement of this Act and also toagreements of the said nature executed by the https://hcservices.ecourts.gov.in/hcservices/ members of any society registered or deemed to beregistered in any other State having reciprocalarrangements with the State of Tamil Nadu.(5) The requisition in writing from anySociety registered or deemed to be registered inany other State having reciprocal arrangementswith the State of Tamil Nadu in respect of amember of that Society who for the time being isemployer in the State of Tamil Nadu, received byhis employer or the Officer disbursing the salaryor wages of such member, shall be acted upon as ifsuch requisition had been made by a Societyregistered in the State of Tamil Nadu andprovisions of sub-section (2) in so far as itapplies to a requisition made under sub-section(1) shall apply to requisition made under thissub-section.(6) If any employer or the Officerdisbursing the salary or wages of any such memberas is referred to in sub-section (1) or sub-section (5) fails to comply with any of theprovisions of this Section, he shall be punishablewith fine which may extend to five hundred rupeesand in the case of a continuing offence, withfurther fine of fifty rupees for each day on whichthe offence is continued after convictiontherefor.(7) The provisions of this Section shallapply notwithstanding any law to the contrary forthe time being in force.(8) Without prejudice to any other mode ofrecovery which is being taken or may be takenunder this Act or any other law for the time beingin force, any sum deducted under sub-section (2)or sub-section (5) but not paid to the Societywithin the prescribed time may be recoveredtogether with interest at such rate as may beprescribed from the date of such deduction and thecost involved in such recovery as if it were anarrear of land revenue and for the purposes ofsuch recovery, the Registrar shall have the powersof a Collector under the Tamil Nadu RevenueRecovery Act, 1864 (Tamil Nadu Act II of 1864).(9) Nothing contained in this Sectionshall apply to establishments under a railwayadministration operating any railway as defined inClause (20) of Article 366 of the Constitution. https://hcservices.ecourts.gov.in/hcservices/ Explanation – For the purpose of thisSection and the Explanation under Clause (a) ofSection 143 "State having reciprocal arrangementswith the State of Tamil Nadu" means such Statehaving reciprocal arrangements as the Governmentmay, by notification, specify in this behalf."11. A comparison of the provisions of both the enactmentsmake clear, the following:-(a) Section 60 (1) of the Central Act, begins with a nonobstante clause. Similarly, Section 48 (7) of the State Act, alsodeclares that the provisions of the Section shall applynotwithstanding any law to the contrary, for the time being inforce.(b) Section 60 (1) of the Central Act, as well as Section48 (1) of the State Act, enables a member of the Multi State Co-operative Society or a Co-operative Society, as the case may be, toexecute an agreement in favour of the Society, of which he is amember. Interestingly, there is no indication in these provisions,that such an agreement would be a tripartite agreement. Section 60(1) of the Central Act, as well as Section 48(1) of the State Act,use the same phrase viz., "a member of ..... Society may execute anagreement in favour of that Society". Therefore it is clear thatthese provisions do not contemplate such agreements to betripartite in nature. They are only bipartite agreements betweenthe member and the Society. (c) Sub Sections (2) of both these provisions viz., Section60 of the Central Act and Section 48 of the State Act, are alsosimilarly worded in the sense that the employer is made obligatedto make deductions from the salaries, if two conditions aresatisfied. The first condition to be satisfied is that an agreementas per sub section (1) should have been executed between the memberand the Society. The second condition is that there must be a"requisition in writing from the Society". If both these conditionsare satisfied, the employer becomes obligated. The provisions ofboth these enactments do not appear to confer any discretion uponthe employer, as sub sections (2) of both these provisions use thesame expression "the employer ........ shall"(d) Sub sections (2) of both these provisions do not evenstipulate a requisition in writing from the employee concerned.They only envisage a requisition in writing from the Societyconcerned. Thus the obligation imposed under these provisions comesinto effect, the moment an agreement is executed by a member withthe Co-operative Society and the Society in turn, makes a requestin writing to the employer. (e) Section 48 (6) of the State Act, makes the employer orthe Officer disbursing the salary, vulnerable for penal action, ifthey fail to comply with the provisions of the Section. The failurecontemplated by this provision, is not a mere failure to remit the https://hcservices.ecourts.gov.in/hcservices/ money deducted from the salary of the employee. It includes afailure even to effect recovery from the salary. (f) Under Section 48 (8) of the State Act, the Registrar ofCo-operative Societies, is conferred with the power of a Collectorunder the Tamil Nadu Revenue Recovery Act, 1864, for the purpose ofrecovering any amount deducted by the employer from the salary ofthe employee, but not remitted to the Society. 12. All the above salient features of Section 48 of theState Act and Section 60 of the Central Act, establish beyond anyshadow of doubt that the obligation in question, is not contractualbut statutory in character. First of all, the provisions of theseActs, do not contemplate a contract, to which the employer isrequired to be made a party. The agreement referred to in theseprovisions, is to be only between the member and the Society.Therefore there is no contract, to which the employer is a party,in so far as the deductions are concerned. At the most, theobligation to effect recovery from the salary of the employees, canbe read into the contract of employment. But if so read, the samewould become part and parcel of the terms and conditions of serviceof workmen, which cannot be altered without notice, in view ofSection 9-A of the Industrial Disputes Act, 1947. 13. Moreover, a mere contractual obligation, cannot resultin prosecution and penal consequences, in case of breach. The veryfact that even the failure to effect recovery from the salary ismade a punishable offence, is indicative of the fact that theobligation is statutory in character. The fact that the provisionsof the Revenue Recovery Act, can be invoked against the employer,in case of failure to remit the amount already deducted, lendssupport to the view that the obligation is statutory. 14. Moreover, the provisions of the Payment of Wages Act,also recognises this obligation on the part of the employer.Section 7 (2) of the Payment of Wages Act, reads as follows:-"(2) Deductions from the wages of anemployed person shall be made only inaccordance with the provisions of this Act, andmay be of the following kinds only namely -(j) deductions, for payments to co-operative societies approved by the StateGovernment or any Officer specified by it inthis behalf or to a scheme of insurancemaintained by the Indian Post Office."15. Therefore, the contention of Mr.Jayesh B. Dolia,learned counsel for the respondent-Corporations that the obligationof the respondents is only contractual in nature and that thecontract is liable for termination, cannot be accepted. As a matter https://hcservices.ecourts.gov.in/hcservices/ of fact, Justice S.S.Subramani, has taken a similar view in anunreported decision in UCO Bank Employees' Co-op. Thrift & CreditSociety Ltd Vs. UCO Bank and Others {W.P.No.14510 of 1998 dated7.12.1998} where it has been held as follows:-"Under the Multi State Co-operativeSocieties Act also, when such authorisation isgiven, the employer is legally bound to deductfrom the wages and pay the same to the Society.This established practice cannot be withdrawn,at any rate without notice to the petitioner."16. Once it is found that the obligation to make deductionsfrom the salaries of employees, for payment of the dues to Co-operative Societies, is statutory in character, it follows as acorollary that the employer has no right to wriggle out of the sameat his choice, however justified the employer's grievance may be.Therefore the orders impugned in the writ petitions are violativeof statutory provisions and are liable to be set aside. 17. As a matter of fact, the impugned orders may not reallyserve the purpose for which the respondents have issued the same,in view of certain other statutory provisions. For instance,Section 90 (1) of the Tamil Nadu Co-operative Societies Act, 1983,provides for the settlement of disputes between a member and theSociety, through arbitration. Sub section (6) of Section 90 enablesthe Registrar, while adjudicating a dispute, to pass suchinterlocutory orders, as he may deem fit in the interest ofjustice. Section 167 (2) of the Act, empowers the Registrar toorder conditional attachment of a property. Therefore, even if therespondents make an attempt to avoid effecting recoveries as amatter of routine, they will be duty bound to comply with theorders passed under Section 90 (2) or 167 (2). Therefore, therespondents have no gate way, out of this obligation, except to settheir house in order.18. In view of the above, all the writ petitions areallowed and the orders impugned therein are set aside. Therespondents are directed to continue to effect recovery of dues tothe Co-operative Societies, from the salaries of those employees,who have an agreement with the Co-operative Societies and inrespect of whom a requisition in writing has been made by therespective Societies. No costs. Consequently connectedmiscellaneous petitions are closed.Svn Sd/- Assistant Registrar / True Copy / Sub. Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ To1.The Managing Director, State Express Transport Tamil Nadu Corporation Ltd., Pallavan Salai, Chennai-600 002.2.The Managing Director, Tamil Nadu State Transport Corporation (Villupuram) Limited, Villupuram – 605 602.3.The Managing Director, Tamil Nadu State Transport Corporation (Salem) Limited, No.12, Ramakrishna Road, Salem – 636 007.3 ccs to M/s.Jayesh B.Dolia, Advocate, SR.Nos.6618, 6620 & 66211 cc to M/s.C.Uma, Advocate, SR.64891 cc to M/s.T.Dhanyakumar, Advocate, SR.65121 cc to M/s.S.M.Subramaniam, Advocate, SR.6616mg (co)dv/27.2. Common Order in WPs 30864/2008, 1547 and 2596/2009