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2026 Supreme(Mad) 1630

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
B. PUGALENDHI, J.
Muthulakshmi K. - Petitioner
Versus 
The Assistant Commissioner Of Labour Authority Under Tamil Nadu Industrial Establishment – Respondent 
WP(MD) Nos.8192, 8201, 8209 & 8213 of 2021, 11639 to 11642 of 2024, WMP(MD) Nos.4947, 4949,4951,10369, 10370, 10372, 10371, 10373, 10374, 10377, 10378, 10379, 10380, 10381, 10382, 4954 of 2024 and 23624 of 2025
Decided On : 30-04-2026

Advocates Appeared:
For the Petitioner: Mr.D.Shanmugaraja Sethupathi
For the Respondent:Mr.Veera Kathiravan, Additional Advocate General Assisted by Mr.C.Venkatesh Kumar, Special Govt. Pleader, Mr.Mohammed Imran

Illegal appointments made without following statutory recruitment rules and approved by-laws of co-operative societies cannot be regularised under the Permanent Status Act.

Headnote:(A) Tamil Nadu Co-operative Societies Act, 1983 - Sections 73, 74, 136-D - Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workman) Act, 1981 - Section 3(1) - Tamil Nadu Co-operative Societies Rules, 1988 - Rules 149, 150, 151 - Recruitment of paid officers and servants of co-operative societies - Autonomy of societies - Permanent status - Co-operative societies shall appoint paid officers and servants subject to the Act and the Rules - Appointments must follow procedure of District Recruitment Bureaus by advertisement and selection - Special by-laws framing cadre strength and method of recruitment must be approved by Registrar - Autonomy under Section 136-D(2) does not permit appointments in violation of Chapter VIII and approved by-laws - Permanent Status Act applies only to establishments with more than 20 workmen and cannot validate illegal appointments.

(B) Regularisation - Backdoor appointments - Principle of natural justice - Regularisation is not a mode of recruitment - Illegal appointees have no right to claim permanency - Courts cannot direct regularisation of backdoor entrants ignoring statutory requirements.

(C) Fraud and collusion - Exercise of writ jurisdiction - Writ of mandamus for implementation of illegal orders - Approving consent orders without impleading statutory authorities - Improper exercise of jurisdiction under Article 226.

Facts of the case:
Employees were engaged as jewel appraisers by various co-operative societies on consolidated pay without following recruitment procedure under the Act and by-laws. They approached the Authority under the Permanent Status Act seeking permanency after 480 days. The Authority allowed claims and directed societies to regularise services retrospectively. Societies initially conceded implementation but later challenged orders alleging fraud and collusion. Deputy and Joint Registrars intervened showing absence of jurisdiction and illegal appointment. Employee writ petitions for implementation and society writ petitions for quashing were heard together.

Findings of Court:
Appointments were made without advertisement, reservation, approved by-laws, and cadre strength verification. Sanctioned posts in one society limited to three employees. Societies did not have more than 20 employees. ACL failed to verify jurisdiction. Consent orders were passed at admission stage without opportunity to authorities. Fraud played by elected presidents and officials. Division Bench earlier set aside consent order. Impugned orders of ACL are without jurisdiction.

Issues: Whether employees appointed without following statutory recruitment procedure under Co-operative Societies Act and approved by-laws are entitled to permanency under Permanent Status Act? Whether ACL had jurisdiction when establishments had fewer than 20 employees? Whether autonomy provision under Section 136-D overrides recruitment rules?

Ratio Decidendi: Illegal appointments at entry stage cannot be regularised under Permanent Status Act or Industrial Disputes Act. Appointments must strictly follow approved by-laws, cadre strength, qualifications and recruitment procedure. Autonomy does not mean unfettered freedom to bypass statutory requirements. School of thought that compassion or long service legitimises illegality is impermissible. Orders passed without verifying jurisdiction are nullity. Fraud vitiates consent and subsequent actions.

Result: Writ petitions filed by employees dismissed. Writ petitions filed by Deputy and Joint Registrars allowed. Impugned orders of Assistant Commissioner of Labour dated 27.01.2021 set aside. Resolutions implementing those orders also set aside.

Table of Content
1. dispute over permanent status orders and collateral writ petitions. (Para 1 , 2 , 3 , 4 , 5 , 6)
2. employees argue lawful appointments despite bypassing recruitment rules. (Para 7 , 8 , 9 , 10)
3. backdoor entry invalidates permanent status claims; procedural compliance mandatory. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19)
4. autonomy does not excuse bypassing statutory recruitment procedures. (Para 20 , 21 , 22 , 23)
5. fraud and collusion in appointments endanger co-operative institutions. (Para 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31)
6. orders of acl set aside; employees’ petitions dismissed. (Para 32)

ORDER :

B. PUGALENDHI, J.

1.All these writ petitions are arising out of the orders dated 27.01.2021 passed by the 1st respondent / the Assistant commissioner of Labour (Enforcement), Dindigul / the Authority under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, granting permanent status to the employees of the co-operative societies / writ petitioners in WP(MD)Nos.8192, 8201, 8209 and 8213 of 2021 (hereafter referred to as “employees”).

2.The employees, who were engaged by different co-operative societies have approached the Assistant Commissioner of Labour (Enforcement), Dindigul (in short “ACL”)/ the Authority under the Tamil Nadu Industrial Establishment (Conferment of Permanent Status to Workmen) Act, 1981, seeking conferment of permanent status with attendant benefits that they had been engaged for more than 480 days continuously in the respective societies and the ACL by the impugned orders dated 27.01.2021 has issued a direction to the respective societies to regularise their services on completion of 480 days from their appointment within a period of 30 days from the date of receipt of the order.

3.Subsequently, the employees with a grievance that the above orders of the ACL, dated 27.01.2021 have not been implemented by the respective societies, have filed writ petitions before this court in WP(MD)Nos.8192, 8201, 8209 and 8213 of 2021 seeking a writ of mandamus to the societies to implement the orders dated 27.01.2021. On 22.04.2021, the learned Additional Government Pleader, who appeared for the respective Presidents of the Societies, has stated before the court that the respective Presidents of the Societies / 2nd respondents have provided written instructions that the orders of the ACL dated 27.01.2021 would be implemented within a period of two weeks. A copy of the same was also produced before the court and based on the stand taken by the Presidents of the co-operative societies, this court by common order dated 22.04.2021 disposed the writ petitions filed by the employees with a direction to the respective Presidents of the Societies to implement the orders of the ACL and regularise their services within a period of eight weeks from the date of receipt of a copy of the order. This common order was implemented in letter and spirit by the respective Presidents of the Societies by passing resolutions uniformly on 07.05.2021.

4.Strangely, the very same Presidents of the respective societies have filed writ appeals as against the common order dated 22.04.2021 before the Division Bench of this court in WA(MD)Nos.1614 to 1617 of 2021 on the following grounds:

(i)The writ petitions were disposed at the admission stage itself without providing an opportunity to the respondent societies to file counter. Hence, there was violation of principles of natural justice.

(ii)The employees concerned were not appointed as per the procedure in force and were not sponsored by the employment exchange. Therefore, it is an illegal appointment and the employees are not entitled to permanency.

5.The Deputy Registrar of Co-Operative Societies, Palani circle, Dindigul district and the Joint Registrar of Co-Operative Societies, Dindigul region have filed applications in the above writ appeals to implead them as respondents and the same were allowed by order dated 25.01.2023. The Dep

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