Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(Mad) 573

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN
M/s. Thiruvalluvar Transport Corporation Employees Co-operative Credit Society Ltd. & Others
Versus
The State Express Transport Tamil Nadu Corporation Ltd. & Others
W.P.Nos.30864 of 2008, 1547 and 2596 of 2009 and M.P.Nos.1 and 2 of 2008, 1, 1 and 2 of 2009
Decided on: 17-02-2009

Advocates Appeared:
For the Petitioners:Mrs. Nalini Chidambaram, Senior Counsel for Mrs.Uma, T. Dhanyakumar, S.M. Subramaniam, Advocates.
For the Respondents:Jayesh B. Dolia, Advocate.

Ratios:
a. An employer is duty bound to deduct the dues of its employee to the Multi State Co-op. society if the due is on an agreement between the society and its member and said deduction is requested by the society.
b. Obligation of an employer to deduct loan arrears of the employees to the Multi-State Co-op. society is statutory in nature and not contractual.
c. When penal consequences are provided for failure to perform an act, the obligation is statutory and not contractual.

Headnote:(A) Constitution of India-Art.226-The Multi State Co-operative Societies Act, 2002 (39 of 2002)-Sec.60-Co-operative societies-Service-Recovery of loan-Deduction from wages-Employees got loan from Multi state Co-op. society and agreed for its recovery from their wages-Employer deducted loan instalments for some time and later refused-Co-operative society filed writ petition to compel the employer to deduct the loan and remit it-Employer contended it as only contractual obligation-Held- Sec.60 of the Multi State Co-operative Societies Act mandates the employer to deduct the loan amount of the employees from the society from the wages of employees, at the request of the society-Penal consequences provided for failure to deduct and pay-Revenue Recovery Act could be invoked to collect arrears from the employer-Payment of wages Act also provides for such deduction-Hence, such deduction is not contractual but statutory-Writ petition allowed and employer directed to comply with the requisition of the society.
        (B) The Multi State Co-operative Societies Act, 2002 (39 of 2002)-Sec.60- Co-operative societies-Service-Recovery of loan-Conditions necessary-Agreement between society and its member and requisition of such society to the employer are the two conditions necessary to obligate the employer to make deduction from the salary of the employees.
        The employer is made obligated to make deductions from the salaries, if two conditions are satisfied. The first condition to be satisfied is that an agreement as per sub section (1) should have been executed between the member and the Society. The second condition is that there must be a "requisition in writing from the Society". If both these conditions are satisfied, the employer becomes obligated. Para 11
        (C) The Multi State Co-operative Societies Act, 2002 (39 of 2002)-Sec.60- Co-operative societies-Service-Recovery of loan-Nature of obligation-Obligation is not contractual but statutory in nature.
        All the salient features of Section 48 of the State Act and Section 60 of the Central Act, establish that the obligation in question, is not contractual but statutory in character. First of all, the provisions of these Acts, do not contemplate a contract, to which the employer is required to be made a party. The agreement referred to in these provisions, 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, the obligation to effect recovery from the salary of the employees, can be read into the contract of employment. Para 12
        (D) The Multi State Co-operative Societies Act, 2002 (39 of 2002)-Sec.60- Co-operative societies-Service-Recovery of loan-Nature of obligation-Penal consequences provided for failure-Revenue Recovery Act can be invoked-So, obligation is statutory in nature.
        A mere contractual obligation, cannot result in prosecution and penal consequences, in case of breach. The very fact that even the failure to effect recovery from the salary is made a punishable offence, is indicative of the fact that the obligation is statutory in character. The fact that the provisions of the Revenue Recovery Act, can be invoked against the employer, in case of failure to remit the amount already deducted, lends support to the view that the obligation is statutory.
       Para 13
        Once it is found that the obligation to make deductions from the salaries of employees, for payment of the dues to Co-operative Societies, is statutory in character, it follows as a corollary that the employer has no right to wriggle out of the same at his choice, however justified the employer’s grievance may be. Para 16

Judgment :-

Common Order:

The Co-operative Societies of Employees of the Tamil Nadu State Transport Corporations, have come up with these writ petitions challenging various orders passed by the Managements of the Transport Corporations, proposing to discontinue the practice of effecting recovery of dues to the Co-operative Societies from the wages payable to the employees.

2. I have heard Mrs.Nalini Chidambaram, learned Senior Counsel, Mr. T. Dhanyakumar and Mr. S.M. Subramaniam, learned counsel for the petitioners and Mr.Jayesh B. Dolia, learned counsel appearing for the respondent-Corporations.

3. The Thiruvalluvar Transport Corporation Employees Co-operative Credit Society Ltd., which is the petitioner in W.P.No.30864 of 2008, was registered under the Multi State Co-operative Societies Act, 1984. The Tamil Nadu State Transport Corporation Employees Co-operative Thrift and Credit Society Ltd., which is the petitioner in W.P.No.1547 of 2009, was originally registered under the Tamil Nadu Co-operative Societies Act and was later converted into a Multi State Co-operative Society, after its operations were extended beyond the State of Tamil Nadu. The Tamil Nadu State Transport Corporation (Salem Division- I) Employees Co-operative Thrift and Credit Society Ltd., which is the petitioner in 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 members of these Co-operative Societies. The members of the petitioner-Societies have availed loans from the Societies and by virtue of an agreement that these members have had with the Cooperative Societies, the loans are repaid in monthly instalments. These instalments are deducted from the wages payable to the employees, by the respondent-Corporations and remitted by the Corporations to the Societies.

5. Now by the orders impugned in these writ petitions, dated 20.12.2008, 212. 2008 and 212. 2008 respectively, the respondent-Corporations have informed the Societies of their intention to discontinue the recovery of dues from the salaries of the employees. Aggrieved by the said orders, the petitioners have come up with the present writ petitions.

6. Mrs.Nalini Chidambaram, learned Senior Counsel appearing for the petitioner in W.P.No.30864 of 2008 and Mr. T. Dhanyakumar and Mr. S.M. Subramaniam, learned counsel appearing for the petitioners in the other two writ petitions, assailed the impugned orders on the ground that the respondent has a statutory obligation under Section 60 of the Multi State Co-operative Societies Act, 1984 and Section 48 of the Tamil Nadu Co-operative Societies Act, 1983 and that the respondents cannot unilaterally withdraw the service provided by them for such a long time, even without a notice. Mrs.Nalini Chidambaram, learned Senior Counsel also relied upon an unreported decision of Justice S.S. Subramani on the issue.

7. In response, Mr.Jayesh B. Dolia, learned counsel for the respondent-Corporations, contended that the obligation of the respondents to effect recovery of dues to Cooperative Societies, from the salaries of the employees, is not statutory but only contractual in nature. Therefore, the learned counsel contended that the respondents had a right to terminate the contracts and that such termination of a contractual obligation, is beyond the pale of judicial review, in a writ petition under Article 226. Moreover, it is the contention of the learned counsel for the respondents that there have been several instances of misappropriation of funds, by the employees, resulting in the Co-operative Societies, seeking a direction from this Court to the respondents to remit the money already deducted but not paid. Such directions in favour of Co-operative Societies have actually imposed an additional burden upon the respondent-Corporations, to pay interest, running to Rs.53 crores. Therefore, the learned counsel submitted that the Managements of the respondent-Corporatio

Click Here to Read the rest of this document

Judicial Analysis

SupremeToday