Back
2019 Supreme(Cal) 278
IN THE HIGH COURT OF CALCUTTA
RAJASEKHAR MANTHA, J.
Sudhin Chakrabarti & Ors - Appellant
Vs.
State Of West Bengal & Ors - Respondent
Writ Petition No. 20898 of 2018
Decided on : 15-01-2019
Advocate Appeared:
Ajeya Mitra, Adv., Kamal Krishna Chakraborti, Adv., Abhrotosh Majumder, Adv., Raja Saha, Adv., Amit Kumar Ghosh, Adv., S.M. Obaidullah, Adv., N.K. Roy, Adv.
The main legal point established in the judgment is that employees of a cooperative society, under the control of the State, are entitled to the benefit of conversion from CPF to GPF, similar to regular State Government employees.
Headnote:
Conversion - Provident Fund - West Bengal Co-operative Societies Act, 2006, Section 83, Rule 106(10)(e), Rule 122 - The court held that the employees of the cooperative society, under full control of the State, are entitled to the benefit of conversion from CPF to GPF, similar to regular State Government employees. The court applied the principle of lifting of corporate veil to establish the control of the State over the cooperative society and quashed the impugned order, directing the conversion from CPF to GPF for the petitioners.
Fact of the Case:
The petitioners, employees of a cooperative spinning mill, sought conversion of their terminal benefits from CPF to GPF. The State Government, despite having control over the mill, rejected the conversion. The petitioners filed a writ petition challenging the rejection.
Finding of the Court:
The court found that the State's refusal to allow the conversion from CPF to GPF, despite no additional financial burden on the State, was unfair and unacceptable. The court quashed the impugned order and directed the conversion for the petitioners.
Issues: The main issue was whether the employees of the cooperative spinning mill, under the control of the State, were entitled to the benefit of conversion from CPF to GPF similar to regular State Government employees.
Ratio Decidendi: The court applied the principle of lifting of corporate veil to establish the control of the State over the cooperative society and held that the employees were entitled to the benefit of conversion from CPF to GPF. The court also emphasized the principle that persons similarly placed must be afforded similar benefits.
Final Decision: The impugned order was quashed, and the writ petitioners were afforded the benefit of conversion from CPF to GPF. The management of the cooperative spinning mill was directed to allow the conversion within a month from the date of the order.
Key Points: - Employees of a cooperative society under full State control are entitled to conversion from CPF to GPF, similar to State Government employees (!) (!) (!) (!) . - The court applied the principle of lifting the corporate veil to establish State control over the cooperative society (!) . - Persons similarly placed must be afforded similar benefits, and denying conversion despite no additional financial burden is unfair and arbitrary (!) (!) (!) . - The society's management and bye-laws require State approval, reinforcing State control (!) (!) . - The State had no additional financial burden, and refusal was deemed unacceptable and mala fide (!) (!) . - The impugned order was quashed, directing conversion within one month (!) (!) .
What are the rights of employees of a cooperative society under full State control regarding conversion from Contributory Provident Fund to General Provident Fund?
How does the court apply the principle of lifting the corporate veil in determining State control over a cooperative society?
What is the principle regarding similarly placed persons in the context of retirement benefits for cooperative society employees?
RAJASEKHAR MANTHA, J.
1. There are as many as twenty-five petitioners in this application under Article 226 of the Constitution of India who are all employees of one Tamralipta Cooperative Spinning Mills Limited. They had applied for conversion of their terminal benefits in the nature of Contributory Provident Fund (CPF) to that of General Provident Fund (GPF).
2. Upon refusal and/or failure of the State Government to consider the petitioners’ prayer, despite the fact that the mill itself had in writing communicated to the State that they will be no additional financial burden on the State, WP No.15458(W) of 2015 was filed by the petitioners. By an order dated July 17, 2018 passed by a single Bench of this court, the State was directed to consider the petitioners’ prayer for conversion from CPF to GPF facilities. The State in compliance with the aforesaid order took up the case and rejected the claim of such conversion by its order dated September 4, 2018. Aggrieved, the petitioners have filed this instant writ petition.
3. The petitioners would contend before me that 99.99% of the shareholding of the mill-society is held by the State Government. The managing director is a nominee of the State Government and he is appointed by State itself, although the State submits that the managing director is an employee of the MS&MET department and is sent on deputation.
4. The petitioners would further contend that employees of the Khadi & Village Industries Board and the employees of Cottage & Small Scale Industries have been given the benefits of conversion from CPF to GPF, and that all State Government employees also have the benefit of such conversion. According to them, the rejection of their prayer by the Additional Secretary, albeit awaiting formal policy decision from the State Government for the purpose of such conversion, is untenable, unfair and discriminatory apart from being a dilatory tactic.
5. Per contra, learned Additional Advocate-General refuting the submission of the petitioners would submit that the West Bengal Khadi & Village Industries Board is an authority constituted under a special statute and hence its employees are differently circumstanced. The next submission is that the employees of the Khadi Board, under the Directorate of Cottage & Small Scale Industries, and the employees of the Cottage & Small Scale Industries department are holding civil posts within the meaning of Article 309 of the Constitution of India. Hence, according to him, the West Bengal Khadi & Village Board employees and the employees of the Directorate of Cottage & Small Scale Industries Department do not come within the same category of employees as that of the petitioners.
6. This court is of the view that this is a fit case for applying the classical principle of lifting of corporate veil settled and accepted in Company Law to find that if the State Government holds 99.99% of the shareholding of the society and its managing director is appointed by the State Government. The State thus has full and complete control over the employer, the Tamralipta Cooperative and Spinning Mills Ltd., albeit a cooperative society and body corporate within the meaning of the provisions of the West Bengal Co-operative Societies Act, 2006. The society is entitled to receive funds and grants from the State. Every aspect of the administrative control and management must be deemed to be under the State through the managing director.
7. The benefit of conversion from CPF to GPF, which is available to other employees both statutory and the direct employees of the State Government therefore cannot be denied to the petitioners. The petitioners by reason of a legal fiction of a cooperative society, albeit under full control of the State, cannot be treated differently from a regular State Government employees. The umbrella of protection under which, the State Government seeks to deny the right of conversion from CPF to GPF already available to statutory bodies an
