Punjab-Haryana High Court
Morinda Co-Operative Sugar Mills ... vs The Morinda Co-Op. Sugar Mills Workers ... on 14 August, 2003
Equivalent citations: (2004)137PLR133
JUDGMENT
1. This is defendant's appeal filed under Section 100 of the Code of Civil Procedure, 1908 (for brevity, 'the Code') impugning she judgment and decree dated 8.4.1999 passed by the learned Additional District Judge, Ropar holding that issuance of statutory notice under Section 79 of the Punjab Cooperative Societies Act, 1961 (for brevity, 'the Act') is not required because the subject matter of the suit claiming dearness allowance on the wages plus fixed allowance in accordance with para 317(ii) of the Third Wage Board report cannot be said to be a dispute touching the business of the society. The judgment and decree dated 30.1.1996 passed by the trial Court dismissing the suit of the plaintiff-respondent has been reversed whereby the Civil Judge has dismissed the suit for want of service of notice under Section 79 of the Act.
2. Plaintiff-respondent filed Civil Suit No.43 of 22.2.1995 seeking declaration to the effect that members of the plaintiff-respondent union were entitled to the benefit of Variable Dearness Allowance (for brevity, VDA') of basic wages plus fixed allowance in accordance with paragraph 317(ii) of the Third Wage Board report with a consequential relief of permanent injunction restraining the defendant-appellant from withdrawing the payment of VDA on the interim fixed amount of Rs. 150/- being paid to the members of the plaintiff-respondent union. It has been claimed that the plaintiff-respondent is a registered union and is competent to sue and be sued as it has a legal identity. Shri Gurmit Singh has been authorised to file the suit and do all necessary acts for that purpose. It is further claimed that Punjab State Confederation of Co-operative Sugar Mills limited vide letter dated 1.11.1993 has accorded sanction for extending the benefit of interim relief. The defendant-appellant has paid VDA to the members of the plaintiff-respondent union on the interim relief i.e. fixed allowance of Rs. 150/- per month in accordance with paragraph 317 sub-para 4(ii) of the Third Wage Board recommendations. The defendant-appellant vide its letter dated 8.2.1995 has clarified that members of the plaintiff-respondent union were not entitled to VDA on the fixed allowance of Rs. 150/-and they would not be allowed VDA in future. The plaintiff-respondent union represented on 30.1.1995 claiming the aforementioned benefit. It was further clarified that the members of the plaintiff-respondent union were ready to accept the policy on the same pattern as is followed by the Government of Uttar Pradesh where they have raised the value of one point rise in index from Rs. 1.65 to Rs. 2/-. A further plea was set up that before withdrawing the benefit of Rs. 150/-, opportunity of hearing was required to be given to the plaintiff-respondent and the recommendations of the Third Wage Board were binding.
3. Defendants-appellant opposed the suit controverting assertions made in the plaint and has raised preliminary objection asserting that the suit was not maintainable and the plaintiff-respondent has no locus standi to file such a suit. It was further asserted that no notice under Section 79 of the Act has been issued before filing of the suit. A replication was also filed by the plaintiff-respondent reiterating the claim made in the plaint. The trial court on the basis of pleadings of the parties framed the following issues;-
1. Whether the plaintiff is entitled to the declaration as prayed for? OPP
2. Whether the plaintiff is entitled to the declaration as prayed for? OPP
3. Whether the suit is not maintainable in the present form? OPD
4. Whether the plaintiff has no locus standi to file the present suit? OPD
5. Whether the suit is liable to be dismissed on the ground of non-service of notice under the Punjab Co-operative Societies Act? OPD
6. Relief.
On issues Nos. 1 and 2, the trial Court held that the defendant-appellant has no right to withdraw the 'VDA' in accordance with the recommendations of Third Wage Board. It further held that the defendant-appellant has no right to withdraw the VDA and if any clarification with regard to payment of VDA was required, then it should have been obtained by the defendant-appellant from the Third Wage Board. Under issue No. 3, the suit was held to be maintainable as no defect in the form of the suit was pointed out.
4. On issue No. 5 concerning service of notice under Section 79 of the Act, the trial Court held that service of notice upon the defendant-appellant is mandatory. It is on account of finding given under issue No. 5 that the suit was dismissed for want of service of notice under Section 79 of the Act by the trial Court.
5. On appeal, the Appellate Court held that service of notice under Section 79 of the Act was not mandatory as the subject matter of the dispute raised in the suit did not touch upon the business of the society. Therefore, it was not condition precedent to issue notice under Section 79 of the Act before filing of the suit. The view of the learned Additional District Judge in this regard reads as under:
"In the present case, the plaintiff had filed a suit that it was entitled to variably dearness allowance on the basic wages plus fixed allowance in accordance with para 317(2) of the Third Wage Board. Thus, the dispute, in the present case, cannot be said to be dispute touching the business of the society. Hence the judgment relied upon by the ld. counsel for the respondent is not applicable to the facts of the present case. The finding of the trial Court on issue No. 5 is reversed."
As the findings recorded by the trial Court on other issues were in favour of the plaintiff-respondent the suit was decreed.
6. Mr. Vinod Sharma, learned counsel for the defendant-appellant has argued that suit of the plaintiff-respondent was not maintainable because there is mandatory bar created by Section 79 of the Act obliging the plaintiff-respondent to issue 2 months notice on the defendant-appellant before instituting the suit. According to the learned counsel, the expression "business of the society" used in Section 79 of the Act would necessarily include the financial matters concerning payment of salary and allowances to the plaintiff-respondent According to the learned counsel a wider interpretation of Section 79 of the Act would be necessary because otherwise the basic public policy underlying the provisions for issuance of notice before filing the suit would be defeated. In support of his submissions the learned counsel has placed reliance on a judgment of this Court in the case of Rajpal Grover v. The Guru Nanak Joint Coop. Farming Society Ltd. situated at village Gumthala Garhu, 1982 P.L.J. 289. Learned counsel has further contended that those disputes which touch upon the constitution, management of business of a cooperative society under Section 55(1)(2) of the Act are liable to be referred to arbitration. According to the learned counsel, the dispute raised in the suit by the plaintiff-respondent with regard to payment of VDA on the basis of recommendations of Third Wage Board would be covered as it touches the management or business of the society.
7. Mr. Ashwani Prashar, learned counsel for the plaintiff-respondent has argued that disputes concerning service matters are not covered by the provisions of Section 55 of the Act because such disputes do not concern the constitution, management or business of the Society. No reference is required to be made nor any notice is required to be issued under Sections 55 and 79 of the Act. In support of his submission the learned counsel has placed reliance on two judgments of the Supreme Court in the cases of Cooperative Central Bank Ltd. and Ors. v. Additional Industrial Tribunal, Andhra Pradesh, Hyderbad and Ors., A.I.R. 1970 S.C. 245 and U.P. Co-operative Cane Union Federation Ltd. and Anr. v. Liladhar and Ors., A.I.R. 1981 S.C. 152. Learned counsel has also placed reliance on three judgments of this Court in the cases of Dharam Pal Singh Panwar v. B.S. Ojha, 1972 P.L.J. 74; Nawanshaher Central Co-op. Bank Ltd. v. Sohan Lal and Sons, 1982 All India land Laws Reporter 515 and Tehliwala Jattan Cooperative Agriculture Service Society, Tehliwala Jattan v. Commissioner (Appeals) Jalandhar Division, 1992(1) Service Cases Today 616 learned counsel has also referred to the Bye-Laws of the Morinda Cooperative Sugar Mills Limited for the purposes of showing the objects of the Mills. According to the learned counsel the constitution, management and the business of the society must be examined in the light of objects given in the Bye-Laws and on that basis it cannot be concluded that the payment of allowances to the employees or the payment of salary to them would in any manner either effect the constitution, management or the business of the society within the meaning of Sections 55 and 79 of the Act. Relying on paragraphs 6 to 11 of the judgment of the Supreme Court in Co-operative Central Bank Ltd.'s case (supra), the learned counsel has augured that a dispute touching the business of the society would not cover the alterations of conditions of service.
8. After hearing learned counsel for the parties and perusing the judgments of both the Courts below, I am of the considered opinion that the appeal is without any merit and is, thus, liable to be dismissed. It would be necessary to make a reference to Sections 55 and 79 of the Act, which read as under:
"55. Disputes which may be referred to arbitration.-
(1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a cooperative society arises -
(a) among members, past members and persons claiming through a members, past members or
(b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society or liquidator, past or present; or
(c) between the society or its committee and past committee, any officer, agent or employee, or any past officer, agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the society; or
(d) between the society and any other co-operatively society, between a society and liquidator of another society or between the liquidator of one society and the liquidator of another society;
such disputes shall be referred to the Registrar for decision and no Court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute.
(2) For the purposes of Sub-section (1), the following be deemed to be disputes touching the constitution, management or the business of co-operative society, namely-
a) a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not.
b) a claim by a society against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to if from the principal debtor as a result of the default of the principal debtor whether such debt or demand is admitted or not;
(c) any dispute arising in connection with the election of any Officer of the society.
(3) If any question arises whether a dispute referred to the Registrar under this section is or not a dispute touching the constitution, management or the business of a co-operative society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court.
79. Notice necessary in suits.- No suit shall be instituted against a cooperative society or any of its officers in respect of any act touching the business of the society until the expiration of three months next after notice in writing has been delivered to the Registrar or left at this office stating the cause of action the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been delivered or left."
A perusal of Section 55 of the Act make it evident that any dispute touching the constitution, management or business of a co-operative society arising between specified category of members has to be referred to the arbitration. Similarly, no co-operative society or its officers could be dragged in a litigation before the civil court in respect of any act touching the business of such a society unless three months notice in writing has been issued to the Registrar of the society. The basic object of both the provisions appears to be to avoid litigation and settle the dispute outside the court which is laudable. The true interpretation of these two previsions has to be examined by referring to the business of the society in which it is involved. For the aforementioned purpose it would be appropriate to notice the object of the society as given in Bye-Law No. 5 of the Bye-Laws of the Mill which reads as under:
5. OBJECTS The objects of the Mills shall be to promote the economic interest of its members and for this purpose to carry on the manufacture of sugar products and other ancillary products and to make arrangements for their sale and also to take necessary steps and measures for the development of sugarcane and sugar beet. For the purpose of attaining the aforesaid objects, it shall be competent for the Mills.
a) To acquire, purchase or take on lease any land to erect or construct on such land, buildings, houses and sheds and other constructions necessary and suitable for the working of the Mills.
b) To acquire by purchase or otherwise, plant & machinery and equipments requisite or efficient working of the Mills and its other ancillary activities.
c) To construct labour quarters, hospitals, schools recreation centres, canteen etc. for the welfare of its employees and their families so as to meet any statutory requirements in this regard.
d) To purchase sugarcane of sugar beet preferably (sic ?) from grower members and others and to sell the finished products so manufactured.
e) To raise funds in such a manner as is prescribed in these by-laws.
f) To purchase, either on cash or on credit such other raw materials as may be required by the Mills.
g) To make, accept, endorse and execute promissory notes, bills of exchange and other negotiable instruments.
h) To construct and take on rent godowns at the places of manufacture as well as other places for storage of raw materials and the finished products.
i) To enter into contract with co-operative societies, Government owned companies/corporations or individuals or others for purchase and sale of raw materials and finished products of the Mills and to appoint agents on payment of salary or commission for such purchase and sale and to open depots for such sale, if necessary, j) To install plant & machinery for utilisation of anciliary/bye-products and buy raw materials for the same and sell finished products in the course of the utilising and marketing of the ancillary/bye-products.
(k) To sell or otherwise dispose of the whole or any part of its assets factory building plant & machinery and land as are not required and not in the benefit of the Mills with prior approval of the Registrar.
(l) To undertake research and such other development activities for development of sugarcane, sugar beet and ancillary products of sugar.
(m) To undertake subsidiary and allied industries which are conducive to the development and benefit of the Mills and for its members.
(n) To seek affiliation with the Punjab State Co-operative Sugar Mills Federation Ltd. (Sugarfed) to get professional know-how and also to appoint key-personnel on their advice.
(o) To raise loans from the financial institutions against the mortgage affixed assets or otherwise creating prior charge on such assets and to execute documents in favour of the State Government in respect of guarantees to be furnished to such institutions on behalf of the Mills.
(p) To do such other things as are incidental or conducive to the attainment of ail or any of the above objects."
A perusal of above referred Bye-Law No. 5 would make it evident that the dispute raised by the plaintiff-respondent in the suit with regard to payment of VDA or its withdrawal does not touch upon the business of the society as reflected in its objects. The business of the society as reflected in its Bye-Laws is to promote the economic interest of the members of the society and for that purpose to carry out the manufacture of sugar, sugar products and other ancillary products. It is further provided that for the aforementioned purpose to make arrangement for the sale and also to take necessary steps for the development of sugarcane and sugar beet. In none of the Clauses (a) to (p) the dispute concerning the pay of its employees has been mentioned. Therefore, it cannot be concluded that the claim with regard to payment of VDA or its withdrawal would touch the business of the society.
9. The test to determine as to whether a dispute touches the business of the society by referring to its objects has been laid down by the Supreme Court in the case of O.N. Bhatnagar v. Smt. Rukibai Narsindas and Ors., A.I.R. 1982 S.C. 1097. The observations of their Lordships in this regard read as under:
"In the present case, the society is a tenant co-partnership type housing society formed with the object of providing residential, accommodation to its co-partner tenant members. Now, the nature of business which a society carries on has necessarily to be ascertained from the object for which the society constituted, and it logically follows that whatever the society does in the normal course of its activities such as by initiation proceedings for removing an act of trespass by a stranger, from a flat allotted to one of its members, cannot but be part of its business. It is as such the concern of the society formed with the object of providing residential, accommodation to its members, when normally is its business, to ensure that the flats are in occupation of its members, in accordance with the bye-laws framed by it, rather than of a person in an unauthorized occupation, as it is the concern of the member, who let it out to another under an agreement of leave and license and wants to secure possession of the premises for his own use after the termination of the license, It must, therefore, follows that a claim by the society together with such member for ejectment of a person who was permitted to occupy having become a nominal member thereof, upon revocation of license, is a dispute falling with the purview of Section 91(1) of the Act."
10. The expression "touching the business of the society" came up for interpretation before the Supreme Court while deciding an appeal under the Andhra Pradesh Co-operative Societies Act, 1964 in the case of Co-operative Central Bank Ltd. 's case (supra). In that case, the jurisdiction of the Industrial Tribunal was challenged on the ground that requirement of issuing notice to the society was necessary because the change of condition of service amounted to "touching the business of the society". The Supreme Court referred to the observations made in the case of Deccan Merchants Co-operative Bank Ltd. v. Dalichand Jugraj Jain A.I.R. 1969 S.C. 1320 which read as under :
"One of the questions which the Court formulated as requiring an answer was that is the meaning of the expression "touching the business of the society" In order to decide this question, the Court analysed the provisions of Section 391(1) and held.
"Five kinds of disputes are mentioned in Sub-section (1) : first, disputes touching the constitution of a society, secondly, disputes touching election of the office-bearers of a society; thirdly, disputes touching the conduct of general meeting of a society, fourthly, disputes touching the management of a society, and fifthly disputes touching the business of a society because election of office-bearers, conduct of general meetings and management of a society would be treated as affairs of a society. In this sub-section the word "business" has been used in a narrower sense and its means actual trading or commercial or other similar business activity of the society which the society is authorised to enter into under the Act and the Rules and its bye-laws."
In that case, the Court was concerned with the question whether a dispute touching the assets of a society was a dispute touching the business of the society, and it was in that context that the interpretation mentioned above was given by this Court. In considering the full scope of Section 91(1) of the Maharashtra Act, 32 of 1961, the Court further proceeded to hold:
"While we agree that the nature of business which a society does can be ascertained from the objects of the society, it is difficult to subscribe to the proposition that whatever the society does or is necessarily required to do for the purpose of carrying out its object can be said to be part of its business. We, however, agree that the word "touching" is very wide and would include any matter which relates to or concerns the business of a society, but we are doubtful whether the word "affects" should also be used in defining the scope of the word "touching". This comment was made when taking notice of the decision of the Full Bench of the Bombay High Court in 1962-I Lab.LJ. 51 (supra). The Court also held :-
"One other limitation on the word "dispute" may also be placed and that is the word "dispute" covers only those disputes which are capable of being resolved by the Registrar or his nominee......."
The aforementioned test was applied by their Lordships in Co-operative Central Bank Ltd.'s case (supra) that alterations of conditions of service of a workman would not be covered by the expression "touching the business of the society" and held as under :
"Applying these tests, we have no doubt at all that the dispute covered by the first issue referred to the industrial Tribunal in the present cases could not possibly be referred for decision to the Registrar under Section 61 of the Act! The dispute related to alterations of a number of conditions of service of the workman which relief could only be granted by an Industrial Tribunal dealing with an industrial dispute. The Registrar, it is clear from the provisions of the Act, could not possibly have granted the reliefs claimed under this issue because of the limitations placed on his powers in the Act itself. It is true that Section 61 by itself does not contain any clear indication that the Registrar cannot entertain a dispute relating to alteration of conditions of service of the employees of a registered society", in our. opinion, makes it very doubtful whether a dispute in respect of alteration of conditions of service cannot be held to be covered by the expression. Since the word "business" is equated with the actual trading or commercial or other similar business activity of the society, and since it has been held that it would be difficult to subscribe to the proposition that whatever the society does or is necessarily required to do for the purpose of carrying out its objects, such as laying down the conditions of service of its employees, can be said to be a part of its business, it would appear that a dispute relating to conditions of service of the workmen employed by the society cannot be held to be a dispute touching the business of the society. Further, the position is clarified by the provisions of Sub-section (4) of the Section 62 of the Act which limit the power to be exercised by the Registrar, when dealing with a dispute referred to him under Section 61, by a mandate that he shall decide the dispute in accordance with the provisions of the Act and the Rules and bye-laws. On the face of it, the provisions of the Act, the rules and the bye-laws could not possibly permit the Registrar to change conditions of service of the workmen employed by the society. For the purpose of brining facts to our notice in the present appeals, the Rules framed by the Andhra Pradesh Government under the Act, and the bye-laws of one of the appellant Banks have been placed on the Paper-books of the appeals before us. It appears from them that the conditions of service of the employees of the Bank have all been laid down by framing special bye-laws. Most of the conditions of service, which the workman want to be altered to their benefit, have thus been laid down by the bye-laws, so that any alteration in those conditions of service will necessarily require a change in the bye-laws. Such a change could not possibly be directed by the Registrar when, under Section 62(4) of the Act, he is specifically required to decide the dispute referred to him in accordance with the provisions of the bye-laws. It may also be noticed that a dispute referred to the Registrar under Section 61 of the Act can even be transferred for disposal to a person who may have been invested by the Government with powers in that behalf, or may be referred for disposal to an arbitrator by the Registrar. Such person or arbitrator, when deciding the dispute, will also be governed by the mandate in Section 62(4) of the Act, so that he will also be bound to reject the claim of the workmen which is nothing else than a request for alteration of conditions of service contained in the bye-laws. It is thus clear that, in respect of the dispute relating to alteration of various conditions of service, the Registrar or other person dealing with it under Section 62 of the Act is not competent to grant the relief claimed by the workmen at all. On the principle laid down by this Court in the case of the Deccan Merchants Co-operative Bank Ltd., Civil Appeal No. 358 of 1967, D/29.8.1968 (supra) therefore, it must be held that this dispute is not a dispute covered by the provisions of Section 61 of the Act. Such dispute is not contemplated to be dealt with under Section 62 of the Act and must, therefore, be held to be outside the scope of Section 61."
11. The aforementioned view has been consistently followed by this Court in the cases of Dhram Pal Singh Panwar (supra); Nawanshaher Central Co-op, Tahliwala Jattan (supra). The view of the Supreme Court in O.N. Bhatnagar case (supra) has been followed in Smt. Krishna Rajpal Bhatia and Ors. v. Miss Leela H. Advani and Ors., A.I.R. 1989 S.C. 122. Therefore, it cannot be concluded that the dispute raised by the plaintiff-respondent in the civil suit was either referable under Section 55 of the Act to arbitration or under Section 79 of the Act as the dispute raised by the plaintiff-respondent could be construed to be covered by the expression "touching the business of the society". The appeal is, therefore, without any merit and is liable to be dismissed.
12. The judgment of this Court is Rajpal Graver's case (supra) relied upon by the learned counsel for the defendant-appellant is absolutely in applicable because there it was found as a fact that the dispute raised by the plaintiff-respondent has filed a suit to pre-empt the sale made on behalf of his father in favour of the society. Moreover, no argument was raised as to how the subject matter of the suit did not touch upon the business of the society. Therefore, no reliance could be placed on the judgment in Rajpal Graver's case (supra).
For the reasons stated above, this appeal fails and the same is dismissed.