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Thursday, March 30, 2017

whether a dispute raised by the said employee for setting aside his removal from service on the ground that it was an act of victimization and for reinstatement in service with back wages was one ‘touching the management or business of the society’, within the contemplation of the Co-operative Societies Act. This Court held that the expression ‘any dispute’ referred to in section 96 of the Gujarat Co-operative Societies Act, 1961 did not cover a dispute of the kind raised by the respondent employee against the bank. As a result, this appeal is allowed, the order of the High Court is set aside and the Division Bench judgment, on which reliance is placed by the High Court in the impugned judgment, is overruled. As a consequence, it is held that the petition filed by the respondent before the Cooperative Court is not maintainable. It would, however, be open to the respondent to file a civil suit. Needless to mention, in such a civil suit filed by the respondent, he would be at liberty to file application under Section 14 of the Limitation Act, 1963 in order to save the limitation.


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 1488 OF 2017

|THE MAHARASHTRA STATE COOPERATIVE HOUSING      |                          |
|FINANCE CORPORATION LTD.                       |.....APPELLANT(S)         |
|VERSUS                                         |                          |
|PRABHAKAR SITARAM BHADANGE                     |.....RESPONDENT(S)        |

                               J U D G M E N T
            The appellant, Maharashtra  State  Cooperative  Housing  Finance
Corporation Limited (hereinafter referred to as  the  ‘Corporation’),  is  a
cooperative society registered under the Maharashtra  Cooperative  Societies
Act, 1960 (hereinafter referred  to  as  the  ‘Act’).   The  respondent  had
joined the services in the appellant Corporation in  the  year  1975  as  an
Inspector.  He was promoted to the post of Branch Manager (Class-I)  in  the
year 2000.  For certain  acts  of  misconduct  allegedly  committed  by  the
respondent, he was put under suspension vide orders  dated  July  11,  2003.
Thereafter, a charge-sheet was served upon him and the departmental  inquiry
conducted, which resulted in dismissal order dated April 28, 2006 passed  by
the Corporation, dismissing the respondent from service.   His  departmental
appeal having dismissed, the respondent approached the Cooperative Court  at
Aurangabad, which is set up under the Act, on  April  19,  2007  challenging
the orders of dismissal from service as well  as  the  order  rejecting  the
departmental appeal by filing Dispute No. 61  of  2007.   On  receiving  the
notice in the said dispute petition, the Corporation  filed  an  application
for rejection of the petition of the  respondent  on  the  ground  that  the
Cooperative Court set up under the Act did  not  have  the  jurisdiction  to
entertain and decide the  service  dispute  between  the  employer  and  the
employee, inasmuch as the  dispute  in  question  did  not  touch  upon  the
business of the society and was not covered by the provisions of Section  91
of the Act.  The Cooperative Court dismissed the  said  application  holding
that it had the requisite jurisdiction to decide the dispute.  Order of  the
Cooperative Court was challenged by the  appellant  before  the  Cooperative
Appellate Court in the  form  of  an  appeal.   This  appeal  was  dismissed
confirming the orders of the Cooperative Court.  Further challenge was  laid
by the appellant by  filing  a  writ  petition  before  the  High  Court  of
Judicature at Bombay, Aurangabad Bench.  This writ petition  has  also  been
dismissed vide judgment dated January 21, 2014.  Present appeal assails  the
said judgment of the High Court.

From the aforesaid, it becomes  clear  that  the  issue  that  needs  to  be
decided is as to whether the Cooperative Court  established  under  the  Act
has the  requisite  jurisdiction  to  decide  ‘service  dispute’  between  a
cooperative society established under the Act and its employees.

Section 91(1) of the Act, scope whereof is to be examined, reads as under:
“91. Disputes. – (1) Notwithstanding anything contained  in  any  other  law
for the  time  being  in  force,  any  dispute  touching  the  constitution,
elections  of  the  committee  or  its  officers  other  than  elections  of
committees of the specified societies  including  its  officer,  conduct  of
general meetings, management or business of a society shall be  referred  by
any of the parties to the dispute, or by a  federal  society  to  which  the
society is affiliated or by a creditor of the society,  to  the  Cooperative
Court if both the parties thereto are one or the other of the following –

(a)   a society, its committee, any past  committee,  any  past  or  present
officer, any past or present agent, any past or present servant or  nominee,
heir or legal representative of any  deceased  officer,  deceased  agent  or
deceased servant of the society, or the liquidator of  the  society  or  the
official assignee of a deregistered society;

(b)   a member, past member of a person  claiming  through  a  member,  past
member of a deceased member of society, or a society which is  a  member  of
the society or a person who claims to be a member of the society;

(c)   a person other than a member of the society, with  whom  the  society,
has any transactions in respect of which  any  restrictions  or  regulations
have been imposed, made or prescribed under Section 43, 44 or  45,  and  any
person claiming through such person;

(d)   a surety of a member, past member or deceased member, or surety  of  a
person other than a member with whom the  society  has  any  transaction  in
respect of  which  restrictions  have  been  prescribed  under  Section  45,
whether such surety or person is or is not a member of the society;

(e)    any  other  society,  or  the  liquidator  of  such  a   society   or
deregistered society  or  the  official  assignee  of  such  a  deregistered

As the plain language of  Section  91  suggests,  primarily  those  disputes
which  pertain  to  the  constitution  of  the  society  or  the  elections,
management  or  business  of  society,  etc.,  are  to  be  decided  by  the
Cooperative Court.  Such disputes are normally between the  members  of  the
society or between the society and its members.  However, this Section  also
uses the expression ‘it’s officers’ and on that basis, it is argued  by  the
respondent that disputes of employees/officers with the management  and  the
society can also  be  covered,  more  particularly,  the  dispute  regarding
termination of the officer, which is the  subject  matter  of  the  petition
filed by the respondent.  It is further argued that  in  any  case  disputes
pertaining to ‘management or business of  a  society’  are  wide  enough  to
cover the dispute between the society as an employer and its employees.

Before the High Court it was argued by the counsel for the  respondent  that
the respondent was not claiming reinstatement as he had attained the age  of
superannuation when the dispute was  filed.   Therefore,  while  challenging
the resolution of the respondent dismissing  his  services,  the  respondent
was seeking compensation for wrongful dismissal.  It was, thus, argued  that
since reinstatement was not claimed, the award of  compensation  was  within
the  jurisdiction  of  the  Cooperative  Court.   This  contention  of   the
respondent is accepted by the High Court relying upon its  earlier  Division
Bench judgment in the case of Pralhad Vithalrao Pawar v. Managing  Director,
Kannaded Sahakari Sakhar Karkhana Ltd. & Anr.[1]  The rationale behind  this
view taken in the aforesaid judgment by the High Court was that  the  remedy
under Section 91(1) of the Act is a substitute for the  remedy  which  could
have been available before the  Civil  Court  as  the  forum  created  under
Section 91 is a substitute for the Civil Court and created under  a  special
legislation.  Since the Civil Court has the jurisdiction to  award  damages,
the Cooperative Court would be vested with same powers  as  its  substitute.
The High Court also held that the  respondent  herein  was  working  as  the
Manager with the appellant Corporation and,  therefore,  was  not  ‘workman’
within the meaning of Section 2(s) of the  Industrial  Disputes  Act,  1947.
The submission of the learned counsel for the appellant was that,  no  doubt
the Cooperative Court was the substitute of the Civil  Court,  but,  at  the
same time, it was the creature of the statute and only limited  powers  were
conferred upon the Cooperative Court and not all the  powers  of  the  Civil
Court.  These  powers  pertained  to  the  nature  of  disputes  which  were
categorically delineated under Section 91 of  the  Act.   According  to  the
learned counsel, the Cooperative Court was vested with the  jurisdiction  to
decide only those disputes which touch upon the business of the society  and
since it was not a dispute pertaining to the business of the society or  the
election  of  committee  or  its  officers,  and  was  an  employer-employee
dispute, Section 91 did not give any  power  to  the  Cooperative  Court  to
decide such disputes which arise between the employer and the employee.

Learned counsel for the respondent, on the other hand,  adopted  the  afore-
noted reasons as given by the High Court.  His submission was that the  word
‘officer’ occurring  in  Section  91  would  include  disputes  between  the
management and its officers, i.e. employees.  He  also  submitted  that  the
disputes relating to ‘management’ of a society  should  be  read  widely  to
include service disputes as well.

We may state at the outset that it was conceded  at  the  Bar  that  if  the
employee of a cooperative society is covered by the definition of  ‘workman’
within the meaning of the Industrial Disputes Act, 1947 and claims a  relief
of reinstatement,  in  that  event  the  Cooperative  Court  will  not  have
jurisdiction  to  entertain  such  a   claim,   inasmuch   as,   relief   of
reinstatement cannot be granted by the Cooperative  Court.   Such  a  relief
can only  be  granted  by  the  Labour  Court  or  the  Industrial  Tribunal
constituted under the Industrial Disputes Act  having  regard  to  the  fact
that special and complete machinery for this purpose is provided  under  the
provisions of the Industrial Disputes Act, the  jurisdiction  of  the  Civil
Court stands ousted.  This is so  held  by  this  Court  consistently  in  a
number of judgments[2].  These observations are made  on  the  premise  that
even if it is accepted that the Cooperative Court established under the  Act
is a substitute of a Civil Court, the jurisdiction of  the  Civil  Court  to
grant relief would not go beyond the jurisdiction which has been  vested  in
the  Civil  Court.   When  admittedly  the  Civil  Court   does   not   have
jurisdiction to grant any such relief and  its  jurisdiction  is  barred  in
view of the law laid down in the aforesaid judgment, as  a  fortiorari,  the
jurisdiction of the Cooperative Court shall also stand barred.  We may  also
clarify one more aspect.  Contract of personal services is  not  enforceable
under the common law.  Section 14, read with Section 41(e) of  the  Specific
Relief Act, 1963, specifically bars the enforcement of such a contract.   It
is for this reason the principle of law which is well  established  is  that
the  Civil  Court  does  not  have  the  jurisdiction  to  grant  relief  of
reinstatement as giving  of  such  relief  would  amount  to  enforcing  the
contract of personal services.  However, as laid down in the cases  referred
to above, and also in Executive Committee of Vaish Degree College, Shamli  &
Ors. v. Lakshmi  Narain  &  Ors.[3],  there  are  three  exceptions  to  the
aforesaid rule where the contract of personal services can be enforced:
(a)   in the case of a public servant who has been  dismissed  from  service
in contravention of Article 311 of the Constitution of India;
(b)   in the case of an employee who could be reinstated  in  an  industrial
adjudication by the Labour Court or an Industrial Tribunal; and
 (c)  in the case of a statutory body,  its  employee  could  be  reinstated
when it has acted in breach of the  mandatory  obligations  imposed  by  the

Even when the employees falling under any of the aforesaid three  categories
raise dispute qua their termination, the Civil Court  is  not  empowered  to
grant reinstatement and the remedy would be, in the  first  two  categories,
by way of writ petition  under  Article  226  of  the  Constitution  or  the
Administrative Tribunal Act, as the case may be, and in the third  category,
it would be under the Industrial Disputes Act.  An  employee  who  does  not
fall in any of the aforesaid exceptions  cannot  claim  reinstatement.   His
only remedy is to file a suit in the Civil Court  seeking  declaration  that
termination was wrongful and claim damages for such wrongful termination  of
services.  Admittedly, the appellant Corporation  is  not  a  ‘State’  under
Article 12 of the Constitution.  The respondent also cannot be treated as  a
Government/public servant  as  he  was  not  under  the  employment  of  any
Government.  He was also not ‘workman’ under the Industrial Disputes Act  as
he was working as Manager with the appellant Corporation.

In the aforesaid conspectus, we have to examine as  to  whether  this  power
which is available with the Civil Court to grant damages  is  now  given  to
the Cooperative Court under Section 91 of the Act.  We may also  mention  at
this stage that some of the States have statutes  which  contain  provisions
regarding management and  regulations  of  the  cooperative  society,  where
specific machinery under these State Cooperative Societies Acts is  provided
for resolution of employment  disputes  as  well,  between  the  cooperative
societies and its employees, that too  by  excluding  the  applicability  of
labour laws.  No doubt, in such cases, the disputes between the  cooperative
societies and it employees, including the workmen, would be  dealt  with  by
such machinery and the general Act, like the Industrial Disputes Act,  would
not be applicable (See Ghaziabad Zila Sahkari  Bank  Ltd.  v.  Addl.  Labour
Commissioner  &  Ors.[4]  and  Dharappa  v.  Bijapur  Coop.  Milk  Producers
Societies Union Ltd.[5]).  Pertinently, in  the  instant  case,  Section  91
specifically excludes  the  disputes  between  the  cooperative  society  as
employer and its  ‘workmen’.   Ultimately,  the  outcome  depends  upon  the
powers that are given to the Cooperative Court or  the  stipulated  tribunal
created under such Acts.  It is in this hue  we  have  to  find  out  as  to
whether Section 91 of the Act at hand empowers Cooperative Courts to  decide
such disputes.

A reading of the provisions of Section 91 would  show  that  there  are  two
essential requirements for  conferment  of  exclusive  jurisdiction  on  the
Cooperative Court which need to be satisfied:
(i)   the first requirement is that disputes should be  ‘disputes  touching’
the constitution of the society or elections or committee  or  its  officers
or conduct of general meetings or management of society, or business of  the
society; and
(ii)  the second requirement is that such a dispute is  to  be  referred  to
the Cooperative Court  by  ‘enumerated  persons’  as  specified  under  sub-
section (1) of Section 91.

When we read the provision in the aforesaid manner,  we  arrive  at  a  firm
conclusion that service dispute between the employees  of  such  cooperative
society and the management of the society are not covered by  the  aforesaid
provision.  The context in which the word ‘officers’ is used  is  altogether
different, namely, election of the committee or  its  officers.   Thus,  the
word ‘officers’  has  reference  to  elections.   It  is  in  the  same  hue
expression ‘officer’ occurs second time as well.

It was, however, argued by the  learned  counsel  for  the  respondent  that
disputes touching the ‘management or business of a  society’  would  include
the dispute between the management of the society and its employees.

There are plethora of judgments of this Court holding  that  the  expression
‘business of the society’ would not cover the service  matters  of  employer
and employee.  In Deccan Merchants  Coop.  Bank  Ltd.  v.  Dalichand  Jugraj
Jain[6], this Court interpreted somewhat similar clause  and  held  that  it
covered five kinds  of  disputes.   It  becomes  clear  from  the  following
“Five kinds of  disputes  are  mentioned  in  sub-section:  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 meetings of a society; fourthly,  disputes  touching  the
management of a society; and fifthly disputes touching  the  business  of  a
society. It is clear that the word ‘business’ in this context does not  mean
affairs 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 it means  the  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.”

      Likewise, in Coop. Central Bank Ltd. v. Addl. Industrial  Tribunal[7],
the Court held that the expression ‘touching the business  of  the  society’
would not cover the disputes  pertaining  to  alteration  of  conditions  of
service of workman.
      These judgments were taken note of in Morinda Coop. Sugar  Mills  Ltd.
v. Morinda Coop. Sugar Mills Workers’ Union[8], where scope  of  Section  55
of the Punjab Cooperative Societies Act, 1961  came  up  for  consideration.
That section provided for  reference  of  dispute  to  arbitration  ‘if  any
dispute  touching  the  constitution,  management  or  the  business  of   a
cooperative society arises’.  Following the aforesaid judgments,  the  Court
gave limited meaning to the aforesaid expression  and  held  that  the  suit
filed by the Workers’ Union of the  cooperative  society  claiming  dearness
allowance on the wages plus fixed allowance in  accordance  with  the  Third
Wage Board Report was maintainable in the Civil Court, and  such  a  dispute
was not covered by the provisions of Section 55 of  the  Punjab  Cooperative
Societies Act, 1961.
      The reading of the aforesaid judgments  make  it  crystal  clear  that
dispute of this nature does not come within the scope of  ‘business  of  the

We now advert to the question as to whether such a dispute  can  be  treated
as dispute relating to ‘management of  the  society’.   On  this  aspect  as
well, there is a direct judgment of this Court in Gujarat State  Cooperative
Land Development Bank Ltd. v. P.R. Mankad & Ors.[9] wherein  the  expression
‘management of the society’ was assigned the following meaning:
“35. We will now focus  attention  on  the  expression  “management  of  the
Society” used in Section 96(1)  of  the  Act  of  1961.  Grammatically,  one
meaning of the term ‘management’ is: “the Board of Directors' or  “the  apex
body”  or  “Executive  Committee  at  the  helm  which  guides,   regulates,
supervises, directs and controls the affairs of the Society”. In this  sense
it may not include the individuals who under the  overall  control  of  that
governing body or Committee, run the day-to-day  business  of  the  Society,
(see Words and Phrases, by West Publishing Co., Permanent Edn., Vol. 26,  p.
357, citing Warner and Swasey Co. v. Rusterholz D.C. Minn [41  F  Supp  398,
505] . Another meaning of the term “management”, may be: ‘the  act  or  acts
of  managing  or  governing   by   direction,   guidance,   superintendence,
regulation and control, the affairs of a Society’.

36.  A still wider meaning of the  term  which  will  encompass  the  entire
staff of servants and workmen of the Society, has been canvassed for  by  Mr
Dholakia. The use of the term “management” in such a wide sense  in  Section
96(1) appears to us, to be very doubtful.”

      It, thus, clearly follows that the dispute raised  by  the  respondent
is not covered within the meaning of Section 91 of the Act  and,  therefore,
the Cooperative Court does not have the jurisdiction to entertain the  claim
filed by the respondent.

The learned counsel for the respondent referred  to  the  judgment  of  this
Court in the case  of  R.C.  Tiwari  v.  M.P.  State  Cooperative  Marketing
Federation Ltd. & Ors.[10].  However, a close scrutiny of the said  judgment
would reveal that the power of the Registrar to deal  with  the  dispute  of
dismissal from service of the  employee  was  recognised  having  regard  to
Section 55 of the M.P. Cooperative Societies Act, 1960 which  gave  specific
power to the Registrar to determine conditions of employment  in  societies,
including deciding the  disputes  regarding  terms  of  employment,  working
conditions and disciplinary actions taken by  the  society  arising  between
the society and its employees.  Therefore, that  judgment  would  be  of  no
help to the respondent.

It may be noted that the High Court, in the impugned  judgment,  has  itself
proceeded on the basis that if the dispute  relates  to  reinstatement,  the
Cooperative Court will not have  any  jurisdiction.   The  main  reason  for
conferring jurisdiction upon the Cooperative Court in the  instant  case  is
that the Cooperative Court has replaced  the  Civil  Court  and,  therefore,
powers of the Civil Court are given to the Cooperative Court.  However,  the
High Court erred in not further analysing the provisions of  Section  91  of
the Act which  spells  out  the  specific  powers  that  are  given  to  the
Cooperative Court and those powers are of  limited  nature.   Our  aforesaid
analysis leads to the conclusion that the disputes between  the  cooperative
society and its employees are not covered by the  said  provision.   We  may
hasten to add that if the provision is couched  in  a  language  to  include
such disputes (and we find such  provisions  in  the  Cooperative  Societies
Acts of certain States) and it is found that  the  Cooperative  Society  Act
provides  for  complete  machinery  of  redressal  of  grievances   of   the
employees, then even  the  jurisdiction  of  the  Labour  Court/  Industrial
Tribunal under the Industrial Disputes Act shall be barred having regard  to
the provisions of such a special statute vis-a-vis general statute like  the
Industrial Disputes Act {See – Ghaziabad Zila Sahkari Bank Ltd.[11]}.

In Gujarat State Co-operative Land Development Bank Ltd. v.  P.R.  Mankad  &
Ors.[12], an employee working as  Additional  Supervisor  was  removed  from
service by giving one  month’s  pay  in  lieu  of  Notice  under  the  Staff
Regulations.  He had issued a notice under the Bombay  Industrial  Relations
Act, 1946, as he was an employee as defined under section 2(13) of the  said
Act.  One of the questions that was considered by this Court was  whether  a
dispute raised by the said employee  for  setting  aside  his  removal  from
service on  the  ground  that  it  was  an  act  of  victimization  and  for
reinstatement in service with back wages was one  ‘touching  the  management
or business of the society’, within the contemplation  of  the  Co-operative
Societies Act.  This Court held that the expression ‘any  dispute’  referred
to in section 96 of the Gujarat Co-operative Societies  Act,  1961  did  not
cover a dispute of the kind raised by the respondent  employee  against  the

As a result, this appeal is allowed, the order of  the  High  Court  is  set
aside and the Division Bench judgment, on which reliance is  placed  by  the
High Court in the impugned judgment, is overruled.  As a consequence, it  is
held that the petition filed by the respondent before the Cooperative  Court
is not maintainable.  It would, however, be open to the respondent  to  file
a civil suit.  Needless to mention, in  such  a  civil  suit  filed  by  the
respondent, he would be at liberty to file application under Section  14  of
the Limitation Act, 1963 in order to save the limitation.
      No costs.
                                                                (A.K. SIKRI)

                                                              (R.K. AGRAWAL)
MARCH 30, 2017.
      1998 (3) Mh.L.J. 214
[2]      Uttar Pradesh Warehousing Corporation Ltd. v. Chandra Kiran  Tyage,
1970 1 LLJ 32; Dr. S.B. Dutta v. University of  Delhi,  1959  SCR  1236  and
S.R. Tewari v. District Board, Agra 1964 1 LLJ 1
[3]   (1976) 2 SCC 58
[4]     (2007) 11 SCC 756
[5]      (2007) 9 SCC 109
[6]   (1969) 1 SCR 887
[7]   (1969) 2 SCC 43
[8]   (2006) 6 SCC 80
[9]   (1979) 3 SCC 123
[10]  (1997) 5 SCC 125
[11]      Refer Footnote 4
[12]  (1979) 3 SCC 123

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