-t GHAZIABAD ZILA SAHAKARI BANK LTD. v. ADDL. LABOUR COMMISSIONER& ORS.

Regulation 42

75Copy pinpoint75. It is relevant to mention here that the Regulation 42 of the H

1050 SUPREME COURT REPORTS [2007] 1 S.C.R.

A Regulations, 1975, which is relevant for the purposes of the controversy +- involved in the present case is as under :

"42. Other Allowances (i) A cooperative society may, subject to the provisions of these regulations and general or special orders issued by the Registrar, gives any other allowances or pecuniary B concessions to its employees.

{ii) A cooperative society may also grant, with the permission of --(''

the Registrar, pecuniary incentive to an employee or class of employees for outstanding performance; c provided that the payment of travelling and daily allowance shall be governed by the provisions contained in Regulation 43 ".

76Copy pinpoint76. In view of the aforesaid provision, it is crystal clear that for giving pecuniary benefits or allowances to the employees governed by the aforesaid D Regulations, 1975, the Registrar's general or special order is necessary and if the particular Cooperative Society wants to grant the benefit, then it can ~ " be given only with the permission of the Registrar. Admittedly, in the present case, no permission was ever sought from the Registrar, rather on the contrary, action was taken contrary to the circulars issued by the E Registrar, Cooperative Societies, U.P. issued from time to time, prohibiting .payment of ex-gratia in this regard.

77Copy pinpoint77. In view of the aforesaid legal provisions and the reply furnished by the petitioner, the Respondent No.1 had no jurisdiction to adjudicate the matter of employees with regard to the payment of ex-gratia amount which runs contrary to the Regulation 42 of the Service Regulations, 1975 as well >- I . as the Circulars issued by the Registrar, Cooperative Societies, U.P. and the Additional Registrar (Banking), Cooperative Societies U.P. and the only forum for adjudication for sake of arguments and without admitting that the matter ought to have been referred to the Labour Court for adjudicating the aforesaid matter, and that too, if the Industrial Laws are made applicable to the provisions of U.P. Cooperative Societies Act, 1965.

78Copy pinpoint78. In our opinion, the impugned judgment suffers from complete non- 'f -'. application of mind on the merits of the case in as much as whole pleadings even before the Labour Commissioner or before the High Court was that the

GHAZIABAD ZILA SAHAKARI BANK LTD."· ADDL. LABOUR COMMR.[LAKSHMANAN, J.) 1051

-~ payment of ex-gratia to the employees are against the objects of the society and it is in contravention of Regulation 42 of the Service Regulations, 1975 and contrary to the provisions of the Act, 1965 and contrary to the provisions of the Rules 1968, Government orders/circulars of Ld. Registrar and other laws applicable, the Chairman of the bank suo motu, without there being any power or legal authority unilaterally entered into a private settlement with the employees of the bank on 23.1.2001. It is relevant to mention here that to avoid such a situation of illegal agreements by the • -y Chairman who is an elected representative and to protect misuse of public fund by the employees amongst themselves, the cooperative Act Rules and Regulations framed thereunder requires prior permission of the Registrar Co- operative Societies for grant of any pecuniary benefits because Regulation c 42 of the U.P. Cooperative Societies Employees Service Regulations 1975 provides that any allowance or pecuniary benefits to employees shall be given only by the special order of the Registrar Cooperative Societies, U.P. which order was missing throughout.

79Copy pinpoint79. The present dispute does not relate to said Act, 1947 but it is related to the provisions contained under the Societies Act, 1965 as well as where a circular issued by the Registrar of Cooperative Societies and more specifically Regulation 42 of Service Rules, 1975. Therefore, in our opinion, the private settlement made on 21.03.2001 does not fall under 6-H(I) of the U.P. Act, 1947. In other words, the payment of ex-gratia is an incentive for an employee for his good work. Therefore, it is governed by Regulation 42 (2) that any cooperative society may also grant pecuniary incentive only with the prior permission of the Registrar to any employee or a class of employees for outstanding performance. It clearly provides that for payment of ex-gratia, permission of the Registrar is must. Regulation 42 is itself very F -. clear and is not in conflict with any of the provisions of the U.P. Act, 1947. / The respondents themselves admitted in their counter affidavit that the settlement was not entered into during conciliation proceeding. Therefore, the said private settlement could not have been legally enforced being an invalid settlement. No private settlement can give a legal enforceable right. It is wrong to suggest that payment of ex-gratia amount to the employees G over and above their salary is the matter ofU.P. Act, 1947. It is very clear and there is special provision in Rule 42 to the Service Rules, 1975. The -1 cooperative society is a State Government subject and every State Government has right to make laws in their respective States and there are different cooperative societies acts in different States. H

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80Copy pinpoint80. It was argued by senior counsel for the respondents that ex-gratia 1- ,_ is being paid for several years and therefore the ex-gratia payment should be continued. Records placed before us reveal that ex-gratia payment was conditionally paid upto 1999-2000 and in every resolution, the Board of Directors has been clearly mentioning that ifthere is any objection from the Department, audit etc., the amount of ex-gratia will be recovered from the B employees. In the audit reports for several years, the auditors as well as the department have objected for such payments. We make it clear that the y- "' payments which have already been made even though there is audit objection need not be recovered from the employees. We make it clear that the employees will not be entitled for any ex-gratia payment from now c onwards.

81Copy pinpoint81. Alongwith the appeal, some appointment orders have been filed as annexures~ The appointment order clearly says that the services were governed by the Service Regulations, 1975 and the bye-laws of the bank. It is relevant to mention here that the services of the employees of the Bank D are governed by service regulations 1975 framed under the Act of 1965, ... which provides complete machinery and adjudication. Moreover, the ~ provisions under Section 70 of the U.P. Cooperative Societies Act, 1965 is elaborate in this regard, which provides complete machinery that if there is • any dispute between the employers and the employees of the Cooperative E Society, the matter shall be referred to the Arbitrator as provided under Section 70 of the U.P. Cooperative Societies Act, 1965. Section 70 of the U.P. Cooperative Societies Act and Section 64 of the M.P. Cooperative Societies Act are pari materia and this Court in the matter of RC. Tewari v. MP. State Cooperative Marketing Federation Ltd., [1997] 5 SCC 125 held that Labour Court and Industrial Laws are not applicable where complete machinery has F been provided under the provisions of the Cooperative Societies Act and x in such view of the matter the Ld. Additional Labour Commissioner U.P. has no jurisdiction to pass orders in the nature it has been passed.

82Copy pinpoint82. The relevant legal provisions requiring consideration of this Court G are quoted below:

"Section 70. Disputes which may be referred to arbitration.- (1) Notwithstanding anything contained in any law for the time being in force: if any dispute relating to the constitution, management or the business of a co-operative society other than a dispute regarding disciplinary action taken against a paid servant of a society arises-

GHAZIABAD ZIT.A SAHAKARI BANK LTD.'" ADDL. LABOUR COMMR.[LAKSHMANAN, J.J 1053 -~ (a) among members, past members and person claiming through members, past members and deceased members; or

(b) between a member, past member or any person claiming through a member, past member or deceased member, and the society, its committee of management or any officer, agent or employee of the society, including any past officer, agent or employee; or B r -..,, (c) between the society or its committee and any past committee, any officer, agent or employee or any past officer, past agent or past employee or the nominee, heir or legal representative of any deceased officer, deceased agent, or deceased employee of the c society; or

[Provided that a dispute relating to an election under the provisions D t of this Act or rules made thereunder shall not be referred to the } Registrar until after the declaration of the result of such election.] 4.

(2) For the purpose of sub-section (I), the following shall be deemed to be included in dispute relating to the constitution, management or the business of a co-operative society, namely- E

(a) claims for amounts due when a demand for payment is made and is either refused or not complied with whether such claims are admitted or not by the opposite party; ·~,,. F (b) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any

- debt or demand due to it from the principal debtor as a result of the default of the principal debtor or whether such debt or demand is admitted or not; G (c) a claim by a society for any loss caused to it by a member, ~-, officer, agent, or employee including past or deceased member, officer, agent, or employee, whether individually or collectively and whether such loss be admitted or not; and H

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A (d) all matters relating to the objects of the society mentioned in the bye-laws as also those relating to the election of office-bearers.

(3) If any question arises whether a dispute referred to the Registrar under this section is a dispute relating to the constitution, managem(;!nt or the business of a co-operative society, the decision thereon of the :!.legistrar shall be final and shall not be called in question in any court.

Section 71. Reference of dispute to arbitration.- On receipt of a reference under sub-section (1) of Section 70, the Registrar may, c subject to the provisions of the rules, if any-

(a) decide the dispute himself, or

(b) refer it for decision to an arbitrator appointed by him, or D ( c) refer it, if the parties so request in writing, for decision to a ... board of arbitrators consisting of the three persons to be appointed ~ b in the prescribed manner.

(2) The Registrar may, for reasons to be recorded, withdraw any reference made under clause (b) or (c) of sub-section (1) and refer it to another arbitrator or board of arbitrators or decide it himself.

(3) The Registrar, the arbitrator or the board of arbitrators, to whom a dispute is referred for decision under this section may, pending the decision of the dispute make such interlocutory orders including ,Xy attachment of property as he or they may deem necessary in the interest of justice.

(4) The decision given by the Registrar, the arbitrator or the board of arbitrators under this section shall hereinafter be termed as award.

(5) The procedure to be followed by the Registrar, the arbitrator or the' board of arbitrators in deciding a dispute and making an award under this section shall be as may be prescribed." H

GHAZIABAD ZILA SAHAKARI BANK LTD. 1-. ADDL. LABOUR COMMR.[LAKSHMANAN, J.] 1055

83Copy pinpoint83. Since payment of ex-gratia amount of the employees of the bank is a policy matter, the State Government of U .P. has filed Special Leave Petition before this Court questioning the correctness of the orders passed by the High Court for the leave of this Court. The impugned judgment o\: the High Court suffers from the error of complete non-application of mind on the merits of the case in as much as whole pleadings either before the Commissioner and before the High Court was that the payment of ex-gratia to the employees are against the objects of the society and it is in contravention of the provisions of the U.P. Act, 1947, rules and regulations, we have no other option to set aside the same and allow both the appeals filed by the bank as. well as the State of U.P. as already indicated in the paragraphs above. The payments already made need not be recovered at c i this distance of time from the employees of the bank. However we make it clear that the employees are not entitled to ex-gratia payment from now onwards. In the facts and circumstances, we order no costs.

N.J. Appeals allowed.