Case: Jalgaon District Central Co-Operative Bankltd Vs. Pundalikrao Laxmanrao Suryawanshi &amp; Ors

1. Pundalikrao Laxmanrao Suryawanshi plaintiff (respondent No. 1 in this Court) instituted arbitration proceedings in the Court of the Registrars Nominee against the Jalgaon District Central Co-operative Bank Ltd., Jalgaon (appellant in this Court) for the recovery of a sum of Rs. 7,605 as the balance of gratuity with interest at 6 per cent due from 18th August, 1962. The claim having been resisted, the same was disallowed on May 16, 1963. An appeal presented to the Maharashtra State Co-operative Tribunal under S.97 of the Maharashtra Co-operative Societies Act against the award of the Registrars Nominee was dismissed and the said award was confirmed.2. The Bombay High Court was thereupon approached by respondent No. 1 under Article 227 of the Constitution and the High Court allowing the application on July 17, 1965 set aside the orders made by the Co-operative Tribunal and by the Registrars Nominee and directed the appellant-Bank to pay to respondent No. 1 Rs. 7,605 together with interest at 4 per cent per annum from June 19, 1963 up-to-date.

Reasoning:
We are unable to accept thisargument, in our opinion, ignores the express language of Rule 7 which, in unequivocal terms, requires gratuity to be granted in case of retirement, resignation or termination of service according to the rate specifiedcontention that without there being a Gratuity Fund, the Bank cannot lawfully pay gratuity assumes that the Bank has no other resources out of which its liabilities under the Rules in question can be discharged - an assumption which is not easy to uphold.Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar, then this obligation, in our opinion, cannot be rendered nugatory merely because there is no separate Gratuity Fund.Rule 15 which provides for the applicability of Section 41 of the Bombay Co-operative Societies Act VII of 1925 to the "administration of the Gratuity Fund" created under the rules in question, does not touch the question of the enforcement of these rules, and indeed even on behalf of the appellant, no attempt has been made to rely on Rule 15 for thisold Rule 16, it may be recalled, prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees. The submission that the old rules have neither been repealed, nor altered, as contemplated by Rule 16, and that the Registrar has merely withdrawn his approval to the old rules and enforced the new ones, does not advance the appellants case. The effect of old rule 16, in our opinion, cannot be negatived by describing the process as mere Withdrawal of the approval of the old rules and enforcement of the new ones,for in real substance the process seems to us to be covered by Rule, in our opinion, ignores the express language of Rule 7 which, in unequivocal terms, requires gratuity to be granted in case of retirement, resignation or termination of service according to the rate specifiedtherein. Clause (a) of this rule contains a provision similar in effect to what the last sentence of Rule 6 directs. Rule 9 also imposes an imperative obligation for the payment of gratuity under these rules within one month from the retirement, resignation, death or termination of service of the employee concerned. Rule 10, which provides for contribution of the Bank towards the Gratuity Fund, was no doubt also kept under consideration and not approved by the Joint Registrar, but this too, in our view, does not render the remaining rules ineffective; nor does this fact by itself absolve the Bank of the obligation imposed on it by Rules 7, 8 and 9. Thecontention that without there being a Gratuity Fund, the Bank cannot lawfully pay gratuity assumes that the Bank has no other resources out of which its liabilities under the Rules in question can be dischargedan assumption which is not easy to uphold.Once the Gratuity Fund Rules imposing an obligation on the Bank to pay gratuity to its employees are approved by the Registrar, then this obligation, in our opinion, cannot be rendered nugatory merely because there is no separate Gratuity Fund.Rule 15 which provides for the applicability of Section 41 of the BombaySocieties Act VII of 1925 to the "administration of the Gratuity Fund" created under the rules in question, does not touch the question of the enforcement of these rules, and indeed even on behalf of the appellant, no attempt has been made to rely on Rule 15 for thiswas, however, conceded by Shri Chagla and, in our opinion, rightly, that the new rules could not detract from or prejudicially affect the vested rights created under the oldd Rule 16, it may be recalled, prohibits the retrospective operation of the new rules with the object of protecting the interests of the employees. The submission that the old rules have neither been repealed, nor altered, as contemplated by Rule 16, and that the Registrar has merely withdrawn his approval to the old rules and enforced the new ones, does not advance the appellants case. The effect of old rule 16, in our opinion, cannot be negatived by describing the process as mere Withdrawal of the approval of the old rules and enforcement of the new ones,for in real substance the process seems to us to be covered by Rule