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2026 Supreme(Mad) 1533

IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. DHANDAPANI, J.
Korattur Milk Consumers Co-operative Society, Rep by its President – Petitioner 
Versus
The Joint Commissioner of Labour (Minimum Wages), Chennai-6 – Respondent
W.P. Nos.19119 and 19205 of 2024 and W.M.P. Nos.21064, 20966, 41436 and 42076 of 2024
Decided On : 06-04-2026

Advocates Appeared:
For the Petitioner: Ms. V. Yamuna Devi
For the Respondents: Mr. M. Rajendiran, Addl. Govt. Pleader, Mr. S.T. Varadharajulu.

A co-operative society functions as a commercial establishment. Appellate authorities reviewing disciplinary terminations must evaluate gainful employment before awarding back wages, which are not automatic. Imposing separate penalties for the same misconduct violates the principle against double punishment.

Headnote:(A) Shops and Establishments Act - Section 2(6) - Definition of commercial establishment - Scope of inclusion for co-operative societies - Jurisdiction of appellate authority to adjudicate service disputes.

(B) Labour Law - Disciplinary proceedings - Domestic enquiry - Standard of judicial review - Principles of natural justice - Appellate interference with findings based on re-appreciation of evidence.

(C) Service Law - Back wages - Discretion of labour authorities - Grant of full back wages is not automatic - Requirement to consider gainful employment during the period of non-employment (Para 11).

(D) Service Law - Double jeopardy - Application of multiple punishments for identical acts of misconduct - Bar against conversion of administrative transfer into punitive measures followed by dismissal.

Facts of the case:
Employees were terminated following a domestic enquiry for financial irregularities and absenteeism. Appeals were preferred under the governing shops and establishments act, resulting in an order for reinstatement with full back wages. The establishment challenged these orders, asserting that the appellate authority lacked jurisdiction, that the society was not a commercial establishment, and that the employees failed to exhaust alternative statutory remedies. It was further argued that the enquiry followed due process and that evidence was sufficient to warrant termination.

Findings of Court:
Evidence confirmed the society engaged in commercial activities, falling within the statutory definition of a commercial establishment. The court found that while termination was based on proven charges, the imposition of a prior disciplinary transfer for the same allegations rendered subsequent dismissal an instance of double jeopardy. Furthermore, the court held that the award of full back wages was erroneous solely due to the failure to verify the employees' gainful employment during their period of unemployment.

Issues: Whether the establishment constitutes a commercial entity per governing statutes; whether the appellate authority correctly exercised jurisdiction; whether the doctrine of double jeopardy applies to the challenged disciplinary action; and whether the award of back wages requires evidence of non-employment.

Ratio Decidendi: A society engaged in trade constitutes a commercial establishment under the statute. While appellate bodies are permitted to examine disciplinary proceedings, the award of financial compensation for back pay necessitates an enquiry into the employee's gainful employment status. Engaging in separate punitive actions for the same set of allegations constitutes double punishment, which is legally impermissible.

Result: Partially allowed. The orders were modified to grant 30% back wages and ensure continuity of service, with terminal benefits provided to the superannuated employee.

Table of Content
1. factual background of employee misappropriation and termination. (Para 1 , 2)
2. arguments concerning jurisdiction and forum selection. (Para 3 , 4 , 5 , 6 , 7 , 8)
3. legal reasoning on establishment jurisdiction and back wages. (Para 9 , 10 , 11)
4. final orders modifying reinstatement and back wages. (Para 12 , 13)

COMMON ORDER :

M. DHANDAPANI, J.

These writ petitions are filed challenging the respective orders passed by the 1st respondent, in T.N.S.E. II/01/2016 and T.N.S.E. II/03/2016, whereby the 1st respondent directed reinstatement of the respective private respondents with full back wages and attendant benefits.

2. Brief facts :-

a) The petitioner is the Administrator of MD-520, Korattur Milk Consumers Co-operative Society, Chennai, a society registered under the provisions of the Tamil Nadu Co-operative Societies Act and Rules. Upon expiry of the tenure of the elected Board, the petitioner was appointed as Administrator to manage the affairs of the Society.

b) The 2nd respondent in W.P. No.19119 of 2024, Tmt. M. Anandha, was employed as an Assistant in the petitioner Society. During the course of her employment, serious financial irregularities came to light. It was found that she had failed to deposit the milk card sale collections amounting to Rs.25,301/- into the bank and had misappropriated the said amount. Further, she had unauthorisedly paid a sum of Rs.63,927/- to one Thiru S. Sekar, Depot Keeper, without any valid reason or supporting vouchers, thereby causing financial loss to the Society. Apart from the financial misconduct, the 2nd respondent was also irregular in attendance, frequently absenting herself from duty without prior intimation and without submitting leave applications.

c) In view of the above misconduct, the 2nd respondent in W.P. No.19119 of 2024 was placed under temporary suspension and a charge memo was issued to her. A domestic enquiry was conducted by affording her sufficient opportunity to defend herself. Upon completion of the enquiry, the Disciplinary Authority found all the charges proved and, accordingly, imposed the punishment of termination from service.

d) Likewise, the 2nd respondent in W.P. No.19205 of 2024, Thiru S. Sekar, was employed in the petitioner Society and had, at one point of time, worked as an Assistant in the head office. During the course of his employment, serious financial irregularities and misconduct came to light. It was found that he had misappropriated a sum of Rs.31,316/- received from wholesale dealers towards the Society. Further, he had received an amount of Rs.70,297/- from Tmt. M.Anandha, representing public milk card sales collections, and failed to remit the same to the Society, thereby embezzling the said amount.

e) Apart from the financial misconduct, the 2nd respondent was irregular in attending duties, frequently absented himself without prior intimation, and failed to submit proper leave applications. In view of these grave irregularities, he was placed under temporary suspension. A charge memo was issued by the Board of the Society, and a domestic enquiry was instituted after affording him sufficient opportunity to defend himself.

f) The Enquiry Officer, upon a detailed examination of the materials and evidence placed on record, submitted a report holding that the charges levelled against the 2nd respondent were proved. Based on the findings of the domestic enquiry, a show cause notice was issued, followed by a notice proposing termination. Thereafter, the Disciplinary Authority, being satisfied that the charges were established, passed an order terminating the services of the 2nd respondent / private respondents.

g) Aggrieved by the order of termination, the 2nd respondent in both W.P.s preferred an appeal before the 1st respondent, under Section 41(2) of the Tamil Nadu Shops and Establishments Act, 1947, in T.N.S.E. II/03/2016 and T.N.S.E. II/01/2016, contending that they have not been afforded sufficient opportunity during the enquiry pr

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