IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17-02-2009 CORAM: THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN 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 W.P.No.30864/2008 M/s.Thiruvalluvar Transport Corporation Employees Co-operative Credit Society Ltd., Rep., by its Secretary, Mr.K.Jayasankar, 10, 23rd Street, Jai Nagar, Arumbakkam, Chennai-600 106. .. Petitioner Vs. The State Express Transport Tamil Nadu Corporation Ltd., Rep., by its Managing Director, Pallavan Salai, Chennai-600 002. .. Respondent Writ petition filed under Article 226 of the Constitution praying for the issue of a Writ of Certiorarified Mandamus, calling for the records in letter No.079647/R8/SETC/CASH/2008 dated 20.12.2008 issued by the respondent-Corporation and quash the same and consequently direct the respondent-Corporation to continue to deduct every month from the salary of its employees such amount as specified by the petitioner-Society in satisfaction of the debt owed by the employees to the petitioner-Society and pay the amount so deducted to the petitioner-Society within 14 days of such deduction as contemplated under Section 60 of the Multi State Co- operative Societies Act, 2002. W.P.No.1547 of 2009 Tamil Nadu State Transport Corporation Employees' Co-operative Thrift and Credit Society Limited, F.T.65 Rep., by its President P.Balasundaram, Periyar Maaligai, Salamedu, Vazhudhareddy (Post), Villupuram – 605 602. .. Petitioner https://hcservices.ecourts.gov.in/hcservices/ Vs. Tamil Nadu State Transport Corporation (Villupuram) Limited, Rep., by Managing Director, Villupuram – 605 602. .. Respondent Writ petition filed under Article 226 of the Constitution praying for the issue of a Writ of Certiorari, calling for the records in letter No.3/R2/TNSTC(VPM)/V-REGION/2008 dated 23.12.2008 issued by the respondent herein and quash the same. W.P.No.2596 of 2009 Tamil Nadu State Transport Corporation (Salem Division-I) Employee's Co-operative Thrift and Credit Society Ltd SS No.59, Rep., by its Secretary P.Periasamy, S/o.Periathambi Udiyar, No.117/5D, Raja Nagar, Johnsonpet, Salem – 636 007. .. Petitioner Vs. The Managing Director, Tamil Nadu State Transport Corporation (Salem) Limited, No.12, Ramakrishna Road, Salem – 636 007. .. Respondent Writ petition filed under Article 226 of the Constitution praying for the issue of a Writ of Certiorarified Mandamus, calling for the records in pursuant to the impugned orders passed by the respondent in proceeding Lr.No.A10/1559/Accts/TNSTC/2008-09 dated 27.12.2008 and in Lr.No.A10/1559/Accts/TNSTC/2008-09 dated 27.12.2008 and quash these orders and consequently direct the respondent to comply with the endorsement of the pay disbursing Officers in respect of the recovery of dues to the petitioner- Society and further repay the amount already to the Society and further repay the amount already recovered with interest. For Petitioner in W.P.No.30864/2008 : Mrs.Nalini Chidambaram, Senior Counsel for Mrs.Uma. For Petitioner in W.P.Nos.1547of 2009 : Mr.T.Dhanyakumar For Petitioner in W.P.No.2596 of 2009 : Mr.S.M.Subramaniam For Respondent in all WPs: Mr.Jayesh B.Dolia https://hcservices.ecourts.gov.in/hcservices/ 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 Co-operative 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, 23.12.2008 and 27.12.2008 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 https://hcservices.ecourts.gov.in/hcservices/ 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 Co-operative 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- Corporations had taken a policy decision to discontinue this facility and that therefore, the same is not only legal but also fully justified. 8. From the rival contentions, it is clear that the very nature of the obligation on the part of the respondent- Corporations, is in dispute. While the petitioners term the obligation as statutory in character, the respondents claim that it is only contractual in nature. Therefore it is essential to find out first, the nature of this obligation. This can be done by referring to the statutory provisions of both the Co-operative Societies Acts. 9. Section 60 of Multi State Co-Operative Societies Act, reads as follows:- "(1) Notwithstanding anything contained in any law for the time being in force, a member of Multi-State Co-Operative Society may execute an agreement in favour of that Society, providing that his employer disbursing his salary or wages shall be competent to deduct every month from the salary or wages payable to him, such amount as may be specified in the agreement and to pay the amount so deducted to the Society in satisfaction of any debt or other demand the member owes to the Society. (2) On the execution of such agreement, the employer disbursing the salary or wages of the members shall, if so required by the Multi- State Co-operative Society, by a requisition in https://hcservices.ecourts.gov.in/hcservices/ writing and so long as the Society does not intimate that the whole of such debt or other demand has been paid, make the deduction in accordance with the agreement and pay the amount so deducted to the Society with a period of fourteen days on the date on which deduction has been made, as if it were a part of the salary or wages payable on the day as required under the Payment of Wages Act, 1936 (4 of 1936) and such payment shall be valid discharge of the employer for his liability to pay amount deducted. If after the receipt of a requisition made under sub-section (2), the employer disbursing the salary or wages of the member at any time fails to deduct the amount specified in the requisition from the salary or wages payable to the member concerned or makes default in remitting the amount deducted to the Multi-State Co-operative Society, the Society shall be entitled to recover any such amount from such employer as arrears of land revenue and the amount so due from such employer shall rank in priority in respect of the liability of such employer equal to that of the salary or wages in arrears." 10. The above Section 60 of the Multi State Co-operative Societies Act, 1984, is similar to Section 48 of The Tamil Nadu Co- operative Societies Act, 1983, which reads as follows:- "48. Deduction from salary, wages or gratuity. - (1) A member of a registered Society may execute an agreement in favour of that Society providing that - (a) his employer or the Officer disbursing his salary or wages shall be competent, on a requisition in writing from the Society to deduct every month from the salary or wages payable to him such amount as may be specified in the requisition towards the amount; and (b) If he ceases to be an employee, his employer shall be competent on a requisition in writing from the Society to deduct from the gratuity payable to such employee such amount as may be specified in the requisition towards the entire balance, due by him to the Society in respect of any debt or other demand owing by the member to the Society. https://hcservices.ecourts.gov.in/hcservices/ (2) (a) Where any such agreement as is referred to in sub-section (1) has been executed by a member of a registered Society, the employer or the Officer disbursing the salary or wages of such member shall, on receipt of a requisition from the Society, make the deduction from the salary or wages or the gratuity, as the case may be, payable to the member in accordance with the requisition, and pay, within such time as may be prescribed in respect of any Society or class of Societies, the amount so deducted to the Society. (b) Where the amount to be deducted in any month in accordance with the requisition made by a Society, or where a requisition has been made by two or more Societies in respect of the same person, the total amount to be deducted in accordance with all the requisitions exceeds one- half of his gross salary or wages for the month, the employer or the Officer disbursing the salary or wages shall deduct from the salary or wages of such person only a sum representing one-half of his gross salary or wages for the month. The amount deducted shall, where deductions have been made against requisitions received from two or more Societies, be paid by the employer or the Officer disbursing the salary or wages to all the Societies in proportion to the amounts to be deducted according to their requisitions: Provided that where any amount is due to such class of registered Societies as may be prescribed, the entire net salary or wages for the month or such portion thereof as may be prescribed in respect of any such class of Societies may be deducted and paid as aforesaid. (c) Where a requisition has been made by two or more Societies for deduction from the gratuity in respect of the same person, the amount deducted from the gratuity shall be paid by the employer to all the Societies in proportion to the amounts to be deducted according to their requisitions. (3) The employer or the Officer disbursing the salary or wages shall maintain such registers as may be prescribed. (4) The provisions of this Section shall apply to all such agreements of the nature referred to in sub-section (1) as are in force at the commencement of this Act and also to agreements of the said nature executed by the https://hcservices.ecourts.gov.in/hcservices/ members of any society registered or deemed to be registered in any other State having reciprocal arrangements with the State of Tamil Nadu. (5) The requisition in writing from any Society registered or deemed to be registered in any other State having reciprocal arrangements with the State of Tamil Nadu in respect of a member of that Society who for the time being is employer in the State of Tamil Nadu, received by his employer or the Officer disbursing the salary or wages of such member, shall be acted upon as if such requisition had been made by a Society registered in the State of Tamil Nadu and provisions of sub-section (2) in so far as it applies to a requisition made under sub-section (1) shall apply to requisition made under this sub-section. (6) If any employer or the Officer disbursing the salary or wages of any such member as is referred to in sub-section (1) or sub- section (5) fails to comply with any of the provisions of this Section, he shall be punishable with fine which may extend to five hundred rupees and in the case of a continuing offence, with further fine of fifty rupees for each day on which the offence is continued after conviction therefor. (7) The provisions of this Section shall apply notwithstanding any law to the contrary for the time being in force. (8) Without prejudice to any other mode of recovery which is being taken or may be taken under this Act or any other law for the time being in force, any sum deducted under sub-section (2) or sub-section (5) but not paid to the Society within the prescribed time may be recovered together with interest at such rate as may be prescribed from the date of such deduction and the cost involved in such recovery as if it were an arrear of land revenue and for the purposes of such recovery, the Registrar shall have the powers of a Collector under the Tamil Nadu Revenue Recovery Act, 1864 (Tamil Nadu Act II of 1864). (9) Nothing contained in this Section shall apply to establishments under a railway administration operating any railway as defined in Clause (20) of Article 366 of the Constitution. https://hcservices.ecourts.gov.in/hcservices/ Explanation – For the purpose of this Section and the Explanation under Clause (a) of Section 143 "State having reciprocal arrangements with the State of Tamil Nadu" means such State having reciprocal arrangements as the Government may, by notification, specify in this behalf." 11. A comparison of the provisions of both the enactments make clear, the following:- (a) Section 60 (1) of the Central Act, begins with a non obstante clause. Similarly, Section 48 (7) of the State Act, also declares that the provisions of the Section shall apply notwithstanding any law to the contrary, for the time being in force. (b) Section 60 (1) of the Central Act, as well as Section 48 (1) of the State Act, enables a member of the Multi State Co- operative Society or a Co-operative Society, as the case may be, to execute an agreement in favour of the Society, of which he is a member. Interestingly, there is no indication in these provisions, that such an agreement would be a tripartite agreement. Section 60 (1) of the Central Act, as well as Section 48(1) of the State Act, use the same phrase viz., "a member of ..... Society may execute an agreement in favour of that Society". Therefore it is clear that these provisions do not contemplate such agreements to be tripartite in nature. They are only bipartite agreements between the member and the Society. (c) Sub Sections (2) of both these provisions viz., Section 60 of the Central Act and Section 48 of the State Act, are also similarly worded in the sense that 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. The provisions of both these enactments do not appear to confer any discretion upon the employer, as sub sections (2) of both these provisions use the same expression "the employer ........ shall" (d) Sub sections (2) of both these provisions do not even stipulate a requisition in writing from the employee concerned. They only envisage a requisition in writing from the Society concerned. Thus the obligation imposed under these provisions comes into effect, the moment an agreement is executed by a member with the Co-operative Society and the Society in turn, makes a request in writing to the employer. (e) Section 48 (6) of the State Act, makes the employer or the Officer disbursing the salary, vulnerable for penal action, if they fail to comply with the provisions of the Section. The failure contemplated by this provision, is not a mere failure to remit the https://hcservices.ecourts.gov.in/hcservices/ money deducted from the salary of the employee. It includes a failure even to effect recovery from the salary. (f) Under Section 48 (8) of the State Act, the Registrar of Co-operative Societies, is conferred with the power of a Collector under the Tamil Nadu Revenue Recovery Act, 1864, for the purpose of recovering any amount deducted by the employer from the salary of the employee, but not remitted to the Society. 12. All the above salient features of Section 48 of the State Act and Section 60 of the Central Act, establish beyond any shadow of doubt 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. But if so read, the same would become part and parcel of the terms and conditions of service of workmen, which cannot be altered without notice, in view of Section 9-A of the Industrial Disputes Act, 1947. 13. Moreover, 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. 14. Moreover, the provisions of the Payment of Wages Act, also recognises this obligation on the part of the employer. Section 7 (2) of the Payment of Wages Act, reads as follows:- "(2) Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act, and may be of the following kinds only namely - (j) deductions, for payments to co- operative societies approved by the State Government or any Officer specified by it in this behalf or to a scheme of insurance maintained by the Indian Post Office." 15. Therefore, the contention of Mr.Jayesh B. Dolia, learned counsel for the respondent-Corporations that the obligation of the respondents is only contractual in nature and that the contract is liable for termination, cannot be accepted. As a matter https://hcservices.ecourts.gov.in/hcservices/ of fact, Justice S.S.Subramani, has taken a similar view in an unreported decision in UCO Bank Employees' Co-op. Thrift & Credit Society Ltd Vs. UCO Bank and Others {W.P.No.14510 of 1998 dated 7.12.1998} where it has been held as follows:- "Under the Multi State Co-operative Societies Act also, when such authorisation is given, the employer is legally bound to deduct from the wages and pay the same to the Society. This established practice cannot be withdrawn, at any rate without notice to the petitioner." 16. 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. Therefore the orders impugned in the writ petitions are violative of statutory provisions and are liable to be set aside. 17. As a matter of fact, the impugned orders may not really serve the purpose for which the respondents have issued the same, in view of certain other statutory provisions. For instance, Section 90 (1) of the Tamil Nadu Co-operative Societies Act, 1983, provides for the settlement of disputes between a member and the Society, through arbitration. Sub section (6) of Section 90 enables the Registrar, while adjudicating a dispute, to pass such interlocutory orders, as he may deem fit in the interest of justice. Section 167 (2) of the Act, empowers the Registrar to order conditional attachment of a property. Therefore, even if the respondents make an attempt to avoid effecting recoveries as a matter of routine, they will be duty bound to comply with the orders passed under Section 90 (2) or 167 (2). Therefore, the respondents have no gate way, out of this obligation, except to set their house in order. 18. In view of the above, all the writ petitions are allowed and the orders impugned therein are set aside. The respondents are directed to continue to effect recovery of dues to the Co-operative Societies, from the salaries of those employees, who have an agreement with the Co-operative Societies and in respect of whom a requisition in writing has been made by the respective Societies. No costs. Consequently connected miscellaneous petitions are closed. Svn Sd/- Assistant Registrar / True Copy / Sub. Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.The Managing Director, State Express Transport Tamil Nadu Corporation Ltd., Pallavan Salai, Chennai-600 002. 2.The Managing Director, Tamil Nadu State Transport Corporation (Villupuram) Limited, Villupuram – 605 602. 3.The Managing Director, Tamil Nadu State Transport Corporation (Salem) Limited, No.12, Ramakrishna Road, Salem – 636 007. 3 ccs to M/s.Jayesh B.Dolia, Advocate, SR.Nos.6618, 6620 & 6621 1 cc to M/s.C.Uma, Advocate, SR.6489 1 cc to M/s.T.Dhanyakumar, Advocate, SR.6512 1 cc to M/s.S.M.Subramaniam, Advocate, SR.6616 mg (co) dv/27.2. Common Order in WPs 30864/2008, 1547 and 2596/2009 https://hcservices.ecourts.gov.in/hcservices/