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Judgment
K. Vinod Chandran, J.—The petitioners, an Employees Association and four employees of the 3rd respondent Bank, challenge the order of the Government confirming the order of the Registrar initiating recovery proceedings as also surcharge proceedings for refund of excess bonus allegedly paid to the employees.
The background facts are that, the Registrar under the Kerala Co-operative Societies Act, 1969, issued a Circular dated 23.08.2001, produced as Ext. P1, wherein inter alia it was directed that the Co-operative Societies should not pay bonus to its employees exceeding the limit that is prescribed under the Payment of Bonus Act, (for short ''the Bonus Act'') being 8.33% of the monthly remuneration, taking the monthly remuneration as Rs. 2500/-.
Based on the Circular, a notice was issued as per Ext. P2 against the 3rd respondent Bank, alleging that the 3rd respondent had been paying bonus in excess of the limit prescribed under the Bonus Act as also that stipulated in Ext. P1. The 3rd respondent Bank in Ext. P4 reply, contended that what they paid the employees is not bonus but an ex-gratia payment as festival allowance. It was also contended that from 1963-64, this has been done after a valid resolution taken by the Managing Committee. The explanation being found to be not satisfactory, Ext. P5 order was passed directing recovery of such amounts from the employees and also threatening surcharge proceedings under Section 68 of the Kerala Co-operative Societies Act, 1969. It was also directed that the General Manager who had effected disbursement should be proceeded against.
The respondent Bank was before this Court, with an Original Petition, O.P. 5422/2002, which was disposed of by Ext. P7. In Ext. P7 this Court taking note of the submissions made by the learned Government Pleader, directed the Bank to approach the Government with an appeal as was done by similar Societies against whom such orders were passed, and also directed to keep in abeyance the order, till a decision is taken. Pursuant to the judgment, the Government took a decision as per Ext. P8 confirming the order of the Registrar which is impugned herein.
A reading of Ext. P8 would indicate that there is absolutely no consideration made but for noticing the contentions of either parties. The action taken by the Joint Registrar of Co-operative Societies was confirmed without any application of mind. Normally this Court would have remanded the matter for fresh consideration. However, considering the fact that the writ petition has been pending before this Court for the last five years, as also the significant factor of there being no allegation of the Bank having violated Ext. P1 Circular, after its issuance, this Court is inclined to dispose of the writ petition on merits.
It is to be noticed that specific contention of the respondent Bank was that, right from the year 1963-64 Bank had been making ex-gratia payments to the employees after a valid resolution taken by the Managing Committee. A reading of Ext. P8 indicates that the senior Co-operative Inspector who appeared for the Assistant Registrar, had noticed bye-law 44 of the Bank wherein profit distribution was specifically referred to and had taken a contention that the distribution of profit cannot be based on the decision of the Board of Directors. That however, is not an issue governed by the Circular, Ext. P1. The Bank had also not taken a contention that the ex-gratia payments amounted to profit distribution made by the Bank as per the bye-laws. The payment of ex-gratia by the employer Bank to its employees, in connection with festivals, cannot be said to have the effect of profit distribution to its employees. In any event, it is very significant that there is no allegation that, prospective to Ext. P1, there was any payment made in violation of Ext. P1. Ext. P2 being immediately after the issuance of Ext. P1 Circular, definitely the ex-gratia payments referred to therein were relating to the prior periods, i.e., prior to Ext. P1 notification.
For all the above reasons, this Court is of the definite view that no recovery can be effected from the petitioners nor can surcharge proceedings be continued against the Managing Committee members as threatened in Ext. P5. The disciplinary proceedings directed against the General Manager also has no legs to stand, since the proceedings of the Bank had specifically indicated that the payments were made in pursuance of a valid resolution passed by the Managing Committee and was unconnected with the surplus generated by the Bank or the profit as indicated in the balance sheet.
In the result, Ext. P5 is set aside so is Ext. P8, which confirmed Ext. P5. The writ petition stands allowed, leaving the parties to suffer their respective costs.