The main legal point established in the judgment is that recovery of loan dues from the salary of employees by a Multi State Co-operative Society requires authorization from the Pay Disbursing Officer, and recovery without such authorization is not legal.

1. The issue to be decided in this writ petition, in nut shell is, whether a Multi State Co-operative Society is entitled to recover the loan dues from the salary of its Members, who are all the employees working under the office of the Accountant General of Tamil Nadu, in the absence of any agreement or authorisation from the Pay Disbursing Officer, office of the Accountant General of Tamil Nadu. The writ petitioner is a co-operative society registered under the Multi State Co-operative Societies Act 2002.

2. The grievances of the writ petitioner is that the Co-operative Society was registered for the welfare of its Members, but all the employees are working under the control of Accountant General of Tamil Nadu. The society is functioning based on the By-Laws approved by the General Body and by the Central Registrar of Co-operative Societies. The Society was registered under the Central Act and the over all controlling authority is the Central Registrar of Co-operative Societies under the Act. The Elected Board is administering the society and they are deciding the policy to be adopted for the welfare of its members.

3. One of the welfare policies adopted by the Society is providing loans to its members and accordingly, the writ petitioner society is sanctioning loans to its members. For the purpose of sanctioning the loan, the member has to fill up and sign the required application-cum-agreement.

4. The learned counsel appearing for the writ petitioner submitted a copy of the application and a copy of the agreement between with the Society and the member.

5. On perusal of the agreement with the Society, this Court is able to find out that the member of the Society alone is the Signatory in the agreement with the Society. Even, in the loan application form, there is no agreement with the employer, viz., the Accountant General of Tamil Nadu. The relationship between a Government employee and the Government is contractual in nature. Loan borrowed by a Government employee is to be properly authorised by the employer and only in such an event, it will be possible for an employer to recover from the salary of the employee and pay the same to the Societies concerned.

6. In the absence of any consent or authorisation by the Pay Disbursing Officer of such an employee, it may not be possible and it will not be legal on the part of the employer from recovering the loan dues and paying Suo Motu only at the request of the writ petitioner/ Co-operative Society.

7. Learned counsel appearing for the respondents contended that the relationship between the employee and the Government is contractual in nature and it is necessary that the Government servant, who borrowed the loan from any organisation has to inform and obtain an authorisation from the employer for recovery of the loan dues from his salary.

8. Learned counsel for the respondents further contended that the salary of an employee is a fundamental right and it is an earned wage by an employee and without his consent no recovery can be imposed in respect of the loan dues to be paid other than the Government. The Government dues and recovery are governed under the Government Rules and any other recovery to be made in respect of loans and other dues towards other agency, a specific undertaking or authorisation is required to be undertaken, by the Pay Disbursing Officer of the office of the Accountant General of Tamil Nadu /the employer concerned.

9. In the absence of executing such a specific undertaking it may not be possible for the Office of the Accountant General of Tamil Nadu Suo Motu to effect recovery only based on the demand made by the Co-operative Society and pay the money to the Society. In other words, the Accountant General cannot act as a recovering agency on behalf of the Co-operative Societies. More so, the Office of the Accountant General of Tamil Nadu is functioning based on the Act and Rules and the guidelines issued by the Government of India and they is no bounden