2004 Supreme(AP) 922

Andhra Pradesh High Court
Judges : V.ESWARAIAH
A.Subramanyam Naidu - Appellant
Versus
Government Of A.P., Co-operation Dept. - Respondent
Decided On : 08-30-04

Headnote:A.P. Cooperative Societies Act, 1964 - Section 116-C(1) ; A.P. Cooperative Societies Rules, 1964 - Rules 28(4), 36-B and 72 - Fixation of Staffing pattern, pay scales - prior approval of Registrar of Cooperative Societies, mandatory - Appointment of petitioners being contrary to provisions of section 116, unless staffing pattern approved petitioners cannot complain about violations of welfare enactment.

       Held : Section 116-C (1) is mandatory in its nature. For violation of said provisions and for exceeding the expenditure as stipulated under Section 116-C (1) of the Act, there will be a charge on the members of Managing committee jointly and severally and also they are liable for penal action. If the employees are allowed to draw the salaries contrary to the provisions of Section 116-C, not only the paid secretaries and its employees are liable for disciplinary action to be taken against them, but also the Managing committee members/person in-charge are liable for the surcharge proceedings and penal action. Therefore, I am of the opinion that Section 116-C is mandatory and the petitioners are not entitled to draw salaries without reference to the provisions of section 116-C (1) and also contrary to the circulars and guidelines issued by the commissioner from time to time. To get the approval of the staffing pattern, pay scales and other allowances for its employees, the societies must follow the condition that the expenditure towards the pay and allowances shall not exceed 2% of the working capital or 30% of the gross profit, in terms of actuals in a year whichever is less.

       As long as the societies comply with the provisions of Section 116-C (1) of the Act and relevant Rules, bye-laws and special bye- laws and the directions issued by the government and Commissioner for time to time for implementation of Section 116-C (1), i am of the opinion that the petitioners are not entitled to spend money for their salaries exceeding 2% of the working capital or 30% of the gross profit, in terms of actuals in a year whichever is less. Any payment of such salaries will be contrary to Section 116-C, which is mandatory in nature and it has been upheld in more than two cases by different division Benches of this Court.

       The definition of workmen under Industrial disputes Act, 1947 undersection2 (s) means, the persons employed in a supervisory capacity drawing wages exceeding one thousand, six hundred rupees per month and the persons employed in a managerial or administrative capacity are excluded within the definition of the workmen. But, as per the definition of Section 2 (8) of A. P. Shops and establishments Act, every staff of Industrial establishment also comes within the purview of the employee. Therefore, even the paid secretaries who are the chief executives of the Primary Agricultural Co-operative societies comes within the meaning of employees as defined under the A. P. Shops and Establishments Act, 1988.

       Every employer shall register its establishment under Section 3 of the A. P. Shops and Establishments Act, 1988. Under section 47 of the A. P. Shops and establishments Act, the employer is entitled to terminate the services of its employee by giving a notice of one month in writing or by paying the wages of one month in lieu thereof and also by paying the compensation amounting to fifteen days average wages for each year of continuous employment. If any termination is made contrary to the provisions of Section 47 of the Act, the aggrieved employees are entitled to approach the authorities, questioning their termination of services under Section 48 of the Act. Therefore, if any termination is made without following the provisions of Section 47 of the a. P. Shops and Establishments Act and section 25-F of the Industrial Disputes Act as the case may be, they have appropriate remedies eitherunder the Industrial Disputes act or under the A. P. Shops and establishments Act and also for protection of wages under the Minimum Wages Act apart from having regular remedies by way of appeal or revision under Sections 76 and 77 of the A. P. Co-operative Societies Act and the bye-laws and special bye-laws of the concerned societies. Therefore, section 116-C (1) is mandatory on the part of every society for its compliance so as to enable the concerned societies to implement the relevant laws under the Payment of minimum Wages Act, the Industrial Disputes act and the A. P. Shops and Establishments act. Even before the provisions of section 116-C are implemented, it is not open for the petitioners to advance all these arguments contending that they are entitled for the wages without reference to the provisions of Section 116-C (1) of the Act on the one hand, and on the other hand that they are also entitled to payment of minimum wages and the protection given to them under the Industrial Disputes Act and the A. P. Shops and Establishments Act, 1988. The paid secretaries being the Chief Executives of the respective societies, they are bound to properly advise the Managing Committee and General Bodies to guide them properly for implementation of the provisions of section 116-C with regard to fixing of the staffing pattern, pay scales and to obtain the approval of the Registrar of Co-operative societies keeping in view of the stipulation that the total expenditure of the pay scales shall not exceed 2% of the working capital or 30% of the gross profit, in terms of actuals in a year whichever is less. Only after implementation of the said Section 116-C, the petitioners are entitled for the benefits under the aforesaid relevant Acts and if the society violates any of the said Acts, they have appropriate remedies. Therefore, I am of the view that the petitioners are not entitled for any relief in all these writ petitions.

       For non- implementing the provisions of Sec. 116-C (1), there is not only a charge on the members of managing Committee, but also penal action is contemplated against all the concerned and therefore, Section 116-C is mandatory in nature.

       No doubt, the employees are entitled to minimum wages and the employer who cannot pay the minimum wages has no right to engage them and there cannot be any justification to run the industry. Therefore, to pay the minimum wages, it is the duty of the society to implement the provisions of section 116-C (1) of the Act. Before implementing the said provision, it is not open for its employees to have the grievance of non-payment of minimum wages. They are appointed contrary to the provisions of section 116-C (1) and therefore, unless their services are regularized in the manner as contemplated under Section 116-C (1), they cannot have any grievance to complain against the implementation of minimum wages.

       As the appointments of the petitioners are contrary to the provision of Section 116-C (1) and unless the staffing pattern and pay scales are approved fulfilling the conditions laid down therein, the petitioners cannot complain about the violations of other welfare enactments.

       The petitioners are not entitled for any relief in these writ petitions, as such, the repeated contentions advanced by them in various cases have been rejected in the aforesaid decisions. Section 116-C (1) is mandatory in nature and all the societies are bound to fix the staffing pattern, qualifications, pay scales and other allowances for its employees and get the approval of the registrar of Co-operative Societies, showing the expenditure towards the pay and allowances not exceeding 2% of the working capital or 30% of the gross profit, in terms of the actuals in a year whichever is less.

       The state Government in exercise of its powers for the smooth implementation of section 116-C (1), issued certain orders in g. O. Ms. No. 308, Agriculture and co-operation (Co-op-VI) Department, dated 19-11 -2003 and G. O. Ms. No. 94, Agricultural and Co-operation (Co-op. VI) Department dated 28-2-2004 and G. O. Ms. No. 1104, agricultural and Co-operation (Co-op. VI), dated 4-12-2003. The validity of the said government Orders was also questioned by the A. P. , Co-operative Societies Secretaries and Employees Union and my learned Brother justice Goda Raghuram dismissed the said writ Petition 25318 of 2003 on 6-8-2004 and all such similar contentions have been rejected by the learned Judge in the said order.

       The sum and substance and the effect of the aforesaid Judgments is only to implement the mandatory provisions of section 116-C of the Act so as to enable the societies to fix the staffing pattern, qualifications, pay scales and other allowances for its employees with prior approval of the Registrar of Co-operative societies subject to the condition that the expenditure towards the pay and allowances of the employees shall not exceed 2% of the working capital or 30% of the gross profit in terms of actuals in a year whichever is less. It is mandatory on the part of the respective primary Agricultural Co-operative Societies to fix the staffing pattern, pay and allowances and the expenditure towards the pay and allowances shall not exceed the aforesaid criteria. As long as the provisions of section 116-C (1) are not implemented and as long as the said mandatory provision is violated, the members of Managing committee are not only liable for the surcharge proceedings and also penal action is contemplated apart from implementing the minimum Wages Act. As such, it is mandatory on the part of the societies to implement the said provisions. Therefore, the Commissioner and Registrar of Co-operative Societies has issued guidelines and circulars from time to time guiding the Primary Agricultural co-operative Societies to implement the said provision. Therefore, I do not see any illegality either in the guidelines or in the circulars issued from time to time. To implement the said mandatory provision, the concerned societies have to necessarily take appropriate action for fixing the staffing pattern, pay and allowances and in that process, it is open for them to retrench/remove the surplus employees who are working contrary to the provisions of Section 116-C (1) of the Act. If any employee is retrenched or terminated contrary to the provisions of 25f of the industrial Disputes Act or 47 of the A. P. Shops and Establishments Act as the case may be, it is open for them to seek appropriate reliefs provided under the said Acts.