South Arcot Co-operative Motor Transport Society Ltd. vs Syed Batcha and Others

Venkatadri, J.—These writ appeals are preferred by the South Arcot Co-operative Motor Transport Society Ltd., for ex-servicemen,

Cuddalore, against the common order passed by Ramachandra Iyer J. (as he then was) dismissing their petitions to quash the order of the

Presiding Officer, Labour Court, Madras in C. P. Nos. 746, 747 and 748 of 1957.

The short facts that are necessary for the disposal of these appeals are the following. The appellant society is a society registered under the

Madras Co-operative Societies Act, 1932. It is engaged in running lorries and motor transport services in South Arcot Dt. The society is intended

solely for ex-servicemen, who alone are entitled to be admitted as members of the society. The first respondent in these appeals were employed

either as drivers or electricians in the transport service of the appellant society.

In 1957 the society decided to close down the lorry service and confine its activities to motor transport only. As a consequence thereof the society

had to discharge some of its personnel. Accordingly by proceedings dated 16-11-1957, the society dispensed with the services of five persons

including the first respondents in these appeals (Syed Batcha, Appadurai and Kannan). These three persons filed applications u/s 33-C(2) of the

Industrial Disputes Act, before the Labour Court, Madras, claiming retrenchment compensation and earned leave wages accumulated after the

date of discharge.

The society resisted these applications on various grounds, the main objections being that the labour court is not competent to take cognisance of

the dispute between the society and its servants and that the remedy of the discharged persons is only to apply u/s 51(l)(c) of the Madras Co-

operative Societies Act VI of 1932, to the Registrar of Co-operative Societies for settlement of the disputes. The presiding Officer, Labour Court,

field that he had jurisdiction to'' entertain the dispute in question and that Syed Batcha, Kannan and Appadurai, the first respondents in these

appeals, were entitled to retrenchment compensation and accordingly awarded retrenchment compensation according to the provisions of the Act.

When the appellant society filed writ petitions In this Court against the order of the Labour Court, Ramachandra Iyer J. agreed with the view

taken by the Labour court, that it had jurisdiction to decide the dispute and held that under the Co-operative Societies Act, the arbitrator cannot

adjudicate the claims of the workers which arise under the Industrial Disputes Act, namely, retrenchment compensation u/s 25-F of the Act, and

finally dismissed the writ petitions filed by the society.

It is against this order the society has preferred these appeals for determination of the crucial question, namely, whether the Labour court has got

jurisdiction to settle disputes between the society and its erstwhile employees.

In order to decide the question it is necessary for us to refer in detail to the constitution and composition of the society and its by-laws,

especially those relating to the service conditions of the employees of the society. The objects of the society are mainly to promote the economic

interests of the members of the society and to find suitable and profitable employment for them by running motor transport services and to give

training to its members in motor driving mechanism and tidy-building and other subsidiary occupations connected with the automobile industry. The

capital of the society is Rs. 2,50,000 made up of 5000 shares of Rs. 50 each. By-law 7 (a) provides that every member shall take at least one

share but no member shall take more than 100 shares. That by law also prescribes the number of 6hares to be taken by different classes of

employees, such as cleaners, peons, watchmen, drivers and fitters, accountants, clerks, mechanics, Assistant Managers etc. In effect that by-law

says that all the employees will have to be shareholders in the society. By-law 19 (a) relating to management says that the executive management of

the affairs of the society shall vest in a Board of directors, which shall consist of five persons of whom three shall be elected by the general body

from among the members of the society and two nominated by the Registrar. It is also provided that among the elected directors, not less than two

shall be workmen.

By-law 23(2) runs thus:

The method of recruitment, the conditions of service and the authority competent to fix, revise or regulate the scales of pay and allowances of paid

officers and servants of the society and the procedure to be followed in the disposal of disciplinary cases against them shall be governed by the

subsidiary rules framed by the society in this regard with the approval of the Registrar.

It is also provided in by-law 29 that it shall be competent to the Board of directors to frame subsidiary rules for the conduct of the business of the

society consistent with the Act, the rules under the Act and the by-laws and that such subsidiary rules shall be entered in the minute book of the

society and shall take effect only after the approval of the Registrar of Co-operative Societies. By-law 45 provides as to how the net profits of the

society so declared by the Registrar every year shall be disposed of. It contains a provision for payment of dividend and bonus to the members of

the society. In pursuance of the by-laws, special by-laws relating to the service conditions of the employees of the society have also been framed.

It is sufficient for our purpose to refer only to special by-law 6, which runs as follows:

A person employed permanently in the society is not entitled to one month''s notice or a month''s pay In lieu of notice in the event of termination of

his employment either for want of a vacancy or for other reasons.

The first respondent in these appeals are admittedly members of the society and share-holders. Where the society decided to close down the

transport service, naturally it had to dispense with the services of some of its employees for want of work in the transport service. When the

discharged employees preferred petitions before the Labour Court, the directors of the appellant society passed a resolution on 22-5-1958 to the

effect that the petitioners (first respondents herein) are all members of the society whose conditions of service are clearly stipulated in the special

by-laws relating to the service conditions of the employees of Co-operative Motor Transport society for ex-servicemen Ltd., and In the by-laws

and in the standing orders adopted by the society and that the service conditions do not provide for. any retrenchment compensation and their

services were terminated only on complete close down of the lorry business in the society. The resolution further stated that any dispute between

the society and its members who are also share-holders regarding any claim shall only be referred to the Registrar for decision u/s 51 (1) (c) of the

Co-operative Societies Act VI of 1932.

On these given facts we have to consider whether the relationship between the appellant and the first respondent in these appeals is that of

master and servants or employer and employees and whether the first respondents can be called ""workmen"" as defined in the Industrial Disputes

Act.

In ""Law of Service in India"" by Barwell and Kar, Vol. I, the learned authors state at page 37:

The role of master in a contract of service may be assumed by any ''person'' not incapacitated from making a contract by any law to which he is a

subject, and may be filled by a statutory body - indeed by any corporation or association of people whether, as an association if be

unincorporated, registered, or unregistered; by a partnership firm registered or unregistered, and by executors or trustees. In each instance it is a

mixed question of law and fact which has to be faced when the problem posed is to whom is the service to be rendered and by whom are the

duties of a master to his servant to be rendered and by whom are the duties of a master to his servant to be performed.

In the footnote at page 38, it is stated;-

The creation of associations capable of being employers of labour has led to one rather entertaining situation whereby a man may become, in

contemplation of law, his own servant. For, unless a company''s Articles or the rules of an Association framed for similar purposes, forbid it, a

servant may become a share-holder in the company which employs him or a subscriber to the Association, in both of which cases he becomes one

of the owners of the concern.

The law on the subject has been stated thus in Corpus Juris Secundum Vol. 56 at page 29 :

Although the authorities have frequently enumerated various elements the presence of which tend to indicate that a given relationship Is that of

master and servant, it has been pointed out that no one fact or circumstance is necessarily conclusive. Hence, whether an individual Is a servant or

employee or occupies some other relationship ordinarily is a question of fact, to be determined from all the facts and circumstances of the case

.................The relationship between parties may be that of employer and employee for one purpose, arid some other relationship for other

purposes.

Again at page 40 it is stated:

..............mere rendition of services by one, person to another does not of itself establish the master and servant relationship between them.

However, the fact that the agreement of an employee requires other labour than his own for its performance does not prevent him from being an

employee where the contract includes his personal services to the full extent thereof. It is not essential that one who has entered into a personal

contract of employment with another and given the latter the right to regard him as the actual employer should intend to receive or should have

received the benefit of the services of such an employee; the relation of master may be assumed by one who employs another, even though he is an

agent merely for the purpose of supervising the work. A person may be held to be in the employ of another, even though while performing certain

services for the employer, he also performs services for himself, thus occupying a dual role.

Bearing these principles in mind, we have to consider the nature of the relationship between the appellant and the first respondent. The society

exists only for ex-service men. All the members of the society must be share-holders and almost all the share-holders are employed in the transport

services in one capacity or another. The object of the society among others is to carry on the business of running for hire, goods and passenger

transport services. All the share-holders are interested in running the above services. They are members of the society and owners of the concern.

On the facts of the instant case, we find it difficult to. visualise any industrial dispute between the members of the society under the Industrial

Disputes Act or to regard; the respondents as workmen as defined in the Act. There can be industrial dispute only where there is a controversy

between workmen and employer. For an industrial dispute two conditions are necessary. Any dispute which is connected with the employment or

non-employment or the terms of the employment or with the conditions of labour is an industrial controversy. It is not enough merely to raise a

controversy, but there should be a dispute. The dispute as contemplated by Section 2(k) is a controversy in which the workmen are directly and

substantially interested. It must be also a grievance felt by the work-men which the employer is, in a position to remedy. Both these conditions must

be present. The employer must be in a position to remedy or set right the grievance.

It has also to be noted that the definition of ''industrial dispute'' as given in the Act does not include ''any controversy regarding terms concerning an

association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment,

regardless of whether or not the disputants stand in an approximate relation of an employer and employee."" Under the American Law Labour

dispute includes the above said controversy. (See Labour Disputes and Collective Bargaining page 600 Section 209).

In the present case the management of the society is vested with the Board of directors among whom two are representatives of the workmen

themselves. The respondents themselves have got a voice in the management and they can agitate their rights with regard to settling terms and

conditions of service, because by-law 32 provides that ""the ultimate authority in all matters relating: to the administration of the society shall be the

general body of the members who shall meet from time to time and at least once a year to conduct the work of the society. The general body shall

consist of the members of the society and of the Board of directors of the society................."".

Further the method of recruitment, conditions of service, and other matters connected with the service are governed by the rules framed by the

Society with the approval of the Registrar. The special by-laws relating to service conditions of the employees of the society have been framed

with the approval of the Registrar. One of the special by-laws relating to the service conditions is that ""A person employed permanently in the

society is not entitled to one month''s notice or a month''s pay in lieu of notice in the event of termination of his employment either for want of a

vacancy or for other reasons."" Thus the service conditions of the employees are regulated by the rules and by-laws of the society. Under by-law

51, the society has framed its own machinery to settle any dispute among the members of the society.

It is also very doubtful whether the Industrial Disputes Act itself will apply when there is the Madras Cooperative Societies Act VI of 1932 (State

Act), which provides a machinery for the settlement or adjudication of disputes, because Section 31 of the Industrial Disputes (Amendment and

Miscellaneous Provisions) Act, XXXVI of 1956, says:

If, immediately before the commencement of this Act, there is in force in any State any provincial Act, or State Act relating to the settlement or

adjudication of disputes, the operation of such an Act in that State in relation to matters covered by that Act shall not be affected by the Industrial

Disputes Act, 1947, as amended by this Act.

There is no direct authority for the proposition that the employees of the society can be called workmen so as to attract the provisions of the

industrial Disputes Act. The learned counsel for the respondents however cited the decision in Co-operative Milk Societies Union Ltd. Vs. State

of West Bengal and Others, . In that case admittedly the employees were all workmen. But it is not clear from the facts of that case whether they

were also share-holders in the Society or whether there were by-laws and rules regulating their service conditions. All the employees of the said

society formed themselves into a Union called Co-operative Milk Employees and Workers Union, which is a registered trade union under the

Indian Trade Unions Act, 1926. In a dispute between the Union and the Co-operative Society the Government constituted an Industrial Tribunal

and referred the dispute to the Tribunal for adjudication. The dispute so referred to related to wage, wage scale and clearness allowance. The

Union raised an objection that the Tribunal had no jurisdiction to try a dispute between a co-operative society registered under the Co-operative

Societies Act and its workmen. Mukherji J. overruled that objection and held that the Tribunal has got jurisdiction to adjudicate the matters

referred to by the State, as the dispute does not touch the business of the co-operative society, as provided u/s S3 of the Bengal Co-operative

Societies Act.

As stated already, the facts of the case are not clear and we do not know whether the workmen were share-holders of the society. This decision

will not therefore apply to the facts of this case.

We are of opinion that the first respondents in these appeals are not workmen; but they are share-holders of the society and any claim in

regard to their service conditions would be a matter touching the business of the co-operative society. As pointed out by a Full Bench of our High

Court in M.S. Madhava Rao and Others Vs. D.V.K. Surya Rao, Member of the Pithapuram Co-operative Bank, Pithapuram and Others, .

Every activity of a co-operative society within the ambit of the sections of the Co-operative Societies Act. the rules and by-laws of the Society,

would be a matter touching the business of the Society:

The discharged persons in the instant case, not being workmen, are not entitled to prefer claim petitions under the Industrial Disputes Act and the

tribunal has no jurisdiction to adjudicate their claims under the Industrial Disputes Act. Being shareholders of the society, they have to get their

claims adjudicated only u/s 51 of the Madras Co-operative Societies Act.

The appeals are therefore allowed but in the circumstances without costs.