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Judgment
Petition under Article 226 of the Constitution of India, praying that in the circumstances stated in the affidavit filed therewith the High Court will
be pleased to issue a writ of mandamus, directing the Secretary to Government of Tamil Nadu, Labour Department, Madras-9 to reconsider the
question of making a reference regarding the dispute between the Management of Salem Co-operative Motor Transport Society for Ex.
Servicemen Ltd., Salem and its Workmen the following two issues-(1) Non-employment of Thiru S. A. Deenadayalu; (2) Demotion of drivers R.
Subramanian, K.V. Krishnaswamy, P.. Chinna Gounder and A. Elumalai to the posts of cleaners.
This writ petition coming on for hearing on Friday 16-6-1972 and 23-6-1972 before the Hon''ble Mr. Justice Palaniswamy upon perusing the
petition and the affidavit filed in support thereof the order of the High Court, dated 14-10-1970 and made herein, and the counter-affidavit filed
herein and the relevant records comprised in the return of the 1st respondent to the writ made by the High Court, and upon hearing the arguments
of Mr. S. Ramiswamy, advocate for the petitioner, and of Mr. S. Ramalingam, Assistant Government Pleader on behalf of the first respondent, the
Hon''ble Mr. Justice Palaniswamy, passed the following order on 23-6-1972.
This writ petition raises an important question as to whether a dispute between member-employees of a co-operative society relating to
retrenchment, non-employment and demotion can be the subject-matter of reference by the State Government u/s 10 of the Industrial Disputes
Act, 1947, or whether such a dispute falls exclusively within the jurisdiction of the Registrar of Co-operative Societies under the Tamil Nadu Co-
operative Societies Act, 1961. The petitioner is the workman of Salem Co-operative Motor Society, which is a society registered under the
Madras Co-operative Societies Act, 1961. With regard to retrenchment of an inspector, non-employment of a conductor and demotion of three
drivers as cleaners disputes arose. The Labour Officer submitted a report to the Government pointing out the contention of the society that the
employees being shareholders, the matter has got to be adjudicated only under the Co-operative Societies Act. The Government accepted that
report and declined to make a reference. This writ petition is filed for the issue of writ of mandamus directing the State Government to re-consider
the matter. The question of retrenchment of a member-employee of a co-operative society arose for consideration before Ramachandra Iyer, J., as
he then was. The learned Judge held that such a dispute is one which could not be disposed of by the Registrar under the Cooperative Societies
Act, but is one that could be validly referred to the industrial Court. That decision is reported in South Arcot Co-operative Motor Transport
Society v. S. Batcha 1960 L.L.J. 693. But in appeal, a Bench of this Court took a different view and held that being member-employees the
aggrieved members should get their claims adjudicated only under the relevant provisions of the Co-operative Societies Act. That decision of the
Bench is reported in South Arcot Co-operative Motor Transport Society v. Syed Batcha 1964 L.L.J. 280. A single Judge of this Court,
Kailasam, J., has taken the view in Kasturbanagar Co-op. House Consts. Society. v. K. Soundararajan 1967 L.L.J. 126, that the case of
retrenchment by the society and termination of services of an employee of a society are not matters which could be decided by the Registrar, but
are mutters which could be the subject-matter of a reference under the Industrial Disputes Act,
In Co-operative Central Bank v. Additional Industrial Tribunal, Andhra Pradesh 1969 L.L.J. 698, the question arose before the Supreme Court
whether certain disputes between a cooperative society and its member-employees could validly form the subject-matter of reference under the
Industrial Disputes Act or are matters which could be decided only by the Registrar. The points in controversy related to a member of service
conditions, such as salary, dearness allowance, special allowance, conveyance charges, etc. In that case, the Industrial Tribunal held that the
reference was competent. That view was confirmed by the Andhra Pradesh High Court. It was contended in appeal before the Supreme Court
that the Andhra Pradesh Co-operative Societies Act contained relevant provisions under which it was competent for the Registrar to settle the
disputes and that, therefore, the reference was incompetent. The Supreme Court negatived this contention and held that the matters which were in
controversy were not such as could be properly adjudicated upon by the Registrar and that, therefore, the reference was competent. The Supreme
Court has referred to certain authorities cited before it, and one of the cases noted was South Arcot Co-operative Motor Transport Society, Ltd.
v. Syed Batcha (supra). The relevant observation of the learned Judge in that case has been extracted obviously by way of approval. But it does
not appear from the report that the decision of the Bench, which reversed the decision of the learned single Judge, was cited before the Supreme
Court. Mr. Ramaswami, appearing for the petitioner, contended that inasmuch as the Supreme Court has quoted with approval the observation of
the learned single Judge, the view of the learned single Judge should be taken as having been approved as correct and that, therefore, in the instant
case the matters are not such which could be validly disposed of by the Registrar and that the State Government was, therefore, not right in
declining to make a reference. Inasmuch as this point is likely to arise frequently, it is better that the matter is decided by a Bench. In these
circumstances, the papers may be placed before my Lord the Chief Justice for orders as to the posting of the case before a Bench.
This writ petition coming on for hearing on Thursday 5-7-1973 and on this day (Monday 9-7-1973) pursuant to the order of reference
aforesaid upon perusing the petition, the affidavit filed in support thereof, the affidavit of 2nd respondent, the counter-affidavit and relevant records
and upon hearing the arguments of Mr. S. Ramaswami, advocate for the petitioner of Mr. V. Manivannan, advocate for the 2nd respondent and of
the Government Pleader on behalf of the first respondent the Court made the following order on 9-7-1973.
(The order of the Court was pronounced by the Hon''ble the Chief Justice).
The petition is for a direction to the State Government to reconsider the question of making a reference u/s 10 of the Industrial Disputes Act. By an
order dated April 24, 1970, the State Government, after having considered the conciliation report, directed that there was no authorisation for the
union to raise a dispute in respect of the non-employment of one S. Selvappan, and that in so far as the non-employment of S.A. Deenadayalu and
four other drivers was concerned, since they were shareholders of the society, they could not be regarded as workmen and, therefore, there was
no industrial dispute which called for a reference. The petition has been placed before a Division Bench in that, The South Arcot Co-operative
Motor Transport Society Limited v. Syed Batcha and Ors. 1964 L.LJ. 280, supports the view in the impugned order.
The South Arcot Co-operative Motor Transport Society Limited v. Syed Batcha and Ors. (supra) was also a case of a society formed by ex-
servicemen.
Ananthanarayanan, J., as he then was, and Venkatadri, J., expressed the view that since the employees concerned were members of the
society, the relationship between the parties could not be considered to be that of master and servant. They considered, therefore, that they were
not workmen and so there could be no industrial dispute. Since we do not share this view, we would have referred the matter to a fuller Bench.
There is, however, one consideration which makes it unnecessary to have resort to that source. In that case, some of the provisions of the Tamil
Nadu Co-operative Societies Act, which have an important bearing upon the question, were not noticed. It is possible, therefore, to consider the
judgment in that case as per in curium. Section 15(1)(c) is to the effect that no persons shall be eligible for admission as a member of a society if he
is paid employee of the society. On becoming an employes of the society, a member shall cease to be as such u/s 18(2)(c). But this provision will
not apply, however, as seen from Section 18(3), to a person seeking admission to, or to a member as its principal object the provision of
employment to a society, which has as its members. That means that notwithstanding the fact that a person is a member of a society, when
employed in the society, the relationship of master and servant will come into existence in such a society. This provision was not noticed by the two
learned Judges. Apparently, their attention was not directed to it. Quite apart from Section 18(3)(3), a registered society is a body corporate. That
is what Section 31 of the Act says. As such, it has a separate personality, with a perpetual succession and a common seal as well as the powers to
hold property, to enter into contracts, institute and defend suits and other legal proceedings and do all things necessary for the purposes for which
it was constituted. It follows, therefore, that a member of a society can well be its employee. It cannot be said that in such a case, the question of
an employer being also an employee arises. Catherine Lee v. Lee''s Air Farming Ltd. (1961) A.C. 121, is directly in point. The Judical Committee
held that in such a case the employee can well be regarded as a workman of the society. The view we have taken receives support from Kerala
State Handloom Weavers'' Co-operative Society v. The State of Kerala 1964 L.L.J. 559, Kailasan, J., in The Kasturbanagur Co-operative
House Construction Society Ltd. Madras-20, by its Secretary, v. K. Sonndararajan and Anr. (1967) M.L.J. 348, took much the same view,
though the decision in that case was rendered in the context of the particular reliefs asked for.
That means, the view taken by the Government in the impugned order as regards S. A. Deenadayalu and four other drivers who were demoted
cannot be sustained. Notwithstanding the fact that they were members of the society, they were also workmen of the society and the dispute raised
by them or on their behalf was an industrial dispute within the meaning of the Industrial Disputes Act. Although the order of the Government is
erroneous in that respect, we feel we are not called upon to direct the Government to make a difference. This is because the record shows that
Sub ramanayan, Krishnaswami, Chinna Goundar and Elumalai were given the option to work as cleaners and they accepted the post, of cleaners.
They could, therefore, hardly ask for a compulsory arbitration in respect of their demotion from the post of drivers to that of cleaners. As for
Selvappan the counsel for the petitioner himself stated that he is not within the scope of the writ petition at all. As for deenadayalu checking
inspector, his was a case of retrenchment and the relief he has prayed for is not entirely within the scope of the authority of the Registrar of Co-
operative Societies. We are, therefore, of opinion that the Government; will have to reconsider whether the industrial dispute concerning his
retrenchment does not call for a reference. While there will be no direction for reconsideration of the case of Subramanayan, Krishnaswarai,
Chinna Goundar and Elumalai, a direction will go to the Government to reconsider the case of Deenadayalu, the checking inspector.
To this limited extent the petition is allowed and in other respects it is dismissed. No costs.