Supreme Court clarifies jurisdiction in Co-operative Society Employee Disputes: Annamma vs. Cochin Co-operative Hospital Society (2018)

Introduction

Date of the Judgment: 12 January 2018
Citation: (2018) INSC 12
Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J. (authored the judgment)

When a worker employed by a co-operative society faces unfair dismissal, which law should they turn to for justice? The Supreme Court of India addressed this crucial question, clarifying whether such disputes fall under the purview of the Industrial Disputes Act, 1947, or the Kerala Co-operative Societies Act, 1969. This judgment settles a long-standing debate about the appropriate legal forum for resolving employment grievances in the co-operative sector. The Supreme Court bench comprising Justices R.K. Agrawal and Abhay Manohar Sapre, with Justice Sapre authoring the judgment, examined the conflict between these two acts.

Case Background

The appellant, Smt. K.A. Annamma, was an employee of the respondent, the Cochin Co-operative Hospital Society Ltd., a society registered under the Kerala Co-operative Societies Act, 1969. On 22 March 2005, the Society dismissed Smt. Annamma from her service. Aggrieved by this dismissal, Smt. Annamma filed a complaint with the State Government under the Industrial Disputes Act, 1947. The conciliation efforts failed, leading the government to refer the matter to the Labour Court, Ernakulam, under Section 10 of the Industrial Disputes Act to determine the legality of the dismissal.

Timeline

Course of Proceedings

The Labour Court, Ernakulam, on 23 September 2009, ruled in favor of Smt. Annamma, setting aside the dismissal order and granting her all monetary and service benefits. The Labour Court noted that Smt. Annamma had reached superannuation on 31 May 2007, during the pendency of the reference. The Society challenged this award by filing a writ petition in the High Court of Kerala. The High Court, prior to and during the pendency of the writ petition, had differing views on whether such disputes should be tried under the Industrial Disputes Act or the Kerala Co-operative Societies Act.

Initially, Full Benches of the High Court in K. Balachandran vs. The Dy. Registrar, Co-operative Societies & Ors., AIR 1978 Kerala 126 and Sherly M.U. vs. The President, Parappuram Milk Producers Co-op. Society Ltd. & Ors., 2007(1)KLT 809 held that such disputes could not be decided under Section 69 of the Kerala Co-operative Societies Act. However, a Single Judge in Board of Directors, Edava Service Co-operative Bank vs. The Co-operative Arbitration Court & Ors., 2008(3) KLT 780, and later a Division Bench in Thodupuzha Taluk General Marketing Co-operative Society vs. Michael Sebastian, 2010 (1) KLT 938, held that both Acts had concurrent jurisdiction. This led to a reference to a larger bench to resolve the conflict. A five-judge bench was constituted, which resulted in a split decision (3:2), with the majority holding that the Kerala Co-operative Societies Act alone had jurisdiction, thus excluding the jurisdiction of the Industrial Disputes Act. Based on this majority view, the High Court allowed the Society’s writ petition, setting aside the Labour Court’s award.

Legal Framework

The core legal issue revolves around the interpretation of Section 69 of the Kerala Co-operative Societies Act, 1969, and its interaction with the Industrial Disputes Act, 1947. The following sections of the Kerala Co-operative Societies Act, 1969, are relevant:

Section 2(i) defines “dispute” as:

“any matter touching the business, constitution, establishments or management of a society capable of being the subject of litigation and includes a claim in respect of any sum payable to or by a society, whether such claim be admitted or not”.

Un-amended Section 69 stated:

“69.Disputes to be referred to Registrar-(1) Notwithstanding anything contained in any law for the time being in force, if a dispute arises-
(a)among members, past members and persons claiming through members, past members and deceased members; or
(b)between a member, past members or person claiming through a member, a past member or deceased member and the society, its committee or any officer, agent or employee of the society; or
(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, heirs or legal representatives of any deceased officer, deceased agent or deceased employee of the society; or
(d)between the society and any other society; or
(e)between a society and the members of a society affiliated to it; or
(f)between the society and a person other than a member of the society, who has been granted a loan by the society or with whom the society has or had business transactions or any person claiming through such a person; or
(g)between the society and a surety of a member, past member, deceased member or employee or a person other than a member, who has been granted a loan by the society whether such a society is or is not a member of the society; or
(h)between the society and a creditor of the society, such dispute, shall be referred to the Registrar for decision, and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute .”

Amended Section 69 (by Amending Act 1/2000 w.e.f. 02.01.2003) states:

“69. Disputes to be decided by Co-operative Arbitration Court and Registrar-
(1)Notwithstanding anything contained in any law for the time being in force, if a dispute arises-
(a)Among members, past members and persons claiming through members, past members and deceased members; or
(b)Between a member, past member or person claiming through a member, a past member or deceased member and the society, its committee or any officer, agent or employee of the society; or
(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, heirs or legal representatives of any deceased officer, deceased agent or deceased employee of the society; or
(d)Between the society and any other society; or
(e)Between a society and the members of a society affiliated to it; or
(f)Between the society and a person, other than a member of the society, who has been granted a loan by the society or with whom the society has or had business transactions or any person claiming through such a person; or
(g)Between the society and a surety of a member, past member, deceased member or employee or a person, other than a member, who has been granted a loan by the society, whether such a surety is or is not a member of the society; or
(h)Between the society and a creditor of the society, such dispute shall be referred to the Co-operative Arbitration Court constituted under Section 70A in the case of non-monetary disputes and to the Registrar, in the case of monetary disputes and the Arbitration Court, or the Registrar, as the case may be, shall decide such dispute; and no other Court or other authority shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute .
(2)For the purposes of sub-section (1), the following shall also be deemed to be disputes, namely:-
(a)a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not;
(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, whether such debt or demand is admitted or not;
(c)any dispute arising in connection with the election of the Board of Management or any officer of the society;
Explanation- A dispute arising at any stage of an election commencing from the convening of the general body meeting for the election, shall be deemed to be a dispute arising in connection with the election;
(d)Any dispute arising in connection with employment of officers and servants of the different classes of societies specified in sub-section(1) of S.80, including their promotion and inter se seniority.
(3)No dispute arising in connection with the election of the Board of Management or an officer of the society shall be entertained by the Co-operative Arbitration Court unless it is referred to it within one month from the date of the election.”

Unamended Section 70 dealt with the decision and award on disputes:

“70.Decision and award on disputes:-
(1)The Registrar may, on receipt of the reference of a dispute under Section 69:-
(a)elect to decide the dispute himself; or
(b)transfer it for disposal to any person who has been invested by the Government with powers in that behalf; or
(c)refer it for disposal to an arbitrator appointed by the Registrar.
Provided that a transfer under clause (b) or a reference under clause (c) shall not be made to a person equal or superior to him in rank.
(2)The Registrar may withdraw any reference transferred under clause (b) of sub-section (1) or referred under clause (c) of that sub-section and he may elect to decide the dispute himself or transfer it to any other person under clause (b) of sub-section (1) or refer it to any other arbitrator under clause (c) of that sub-section.
(3)The Registrar or such person shall decide the dispute, or the arbitrator shall pass an award, in accordance with the provisions of this Act and the rules and the bye-laws and such decision or award shall, subject to the provisions of S.82, be final. Pending decision or award, the Registrar, such person or arbitrator as the case may be, may make such interlocutory orders as he may deem necessary in the interest of justice.
(a)the nature of the allegations showing that the elections were vitiated.
(b)the existence of prima facie case which means whether respondents have a chance of success and
(c)whether the interest of justice require that an interlocutory order must be made.”

Amended Section 70 (by Amending Act 1/2000) states:

“70. Award on disputes:- (1) the Co-operative Arbitration Court, on receipt of reference of a dispute under sub-section (1) of Sec. 69, shall pass an award within one year in accordance with the provisions of this Act and the rules and the bye-laws made thereunder and such award shall, subject to the provisions of Sec. 82, be final.
(2)The Co-operative Arbitration Court may, pending award of a dispute referred to it under Section 69, make such interlocutory orders as it may deem necessary in the interests of justice.
(3)The Co-operative Arbitration Court shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (Central Act 5 of 1908), while trying a suit in respect of the following matters, namely:-
(i) the summoning and enforcing the attendance of any defendant or witness and examining the witness on oath;
(ii) the discovery and production of any document or other material object producible as evidence;
(iii) the reception of evidence on affidavits;
(iv) issuing of any commission for the examination of any witness; and
(v) any other matter which may be prescribed.
(4) The Registrar may, on receipt of the reference of a dispute under sub-section(1) of Sec. 69-
(a) elect to decide the dispute himself; or
(b) transfer it for disposal to any person who has been invested by the Government with powers in that behalf; or
(c) refer it for disposal to an arbitrator appointed by the Registrar:
Provided that a transfer under clause (b) or a reference under clause (c) shall not be made to a person equal or superior to him in rank.
(5) The Registrar may withdraw any reference transferred under clause (b) of sub-section (4) or referred under clause (c) of that sub-section and he may elect to decide the dispute himself or transfer it to any other person under clause (b) of sub-section (4) or refer it to any other arbitrator under clause (c) of that sub-section.
(6) The Registrar or the person invested with powers in this behalf shall, decide the dispute or the arbitrator shall pass an award in accordance with the provisions of this Act and the rules and the bye-laws and such decision or award shall, subject to the provisions of Sec. 82, be final. Pending decision or award, the Registrar, such person or the Arbitrator, as the case may be, may make such interlocutory orders as he may deem necessary in the interests of justice.”

Section 100 of the Kerala Co-operative Societies Act, 1969, bars the jurisdiction of civil or revenue courts in matters for which provision is made in the Act.

The key question is whether these provisions, particularly Section 69, exclude the jurisdiction of the Industrial Disputes Act, 1947, in resolving service disputes of co-operative society employees.

Arguments

Appellant’s Arguments (Employee):

• The appellant argued that the minority view of the Kerala High Court was correct and in line with the Supreme Court’s decision in Dharappa vs. Bijapur Coop. Milk Producers Societies Union Ltd. (2007) 9 SCC 109.
• The appellant contended that both the Kerala Co-operative Societies Act, 1969, and the Industrial Disputes Act, 1947, have concurrent jurisdiction over service disputes between a co-operative society and its employees.
• The appellant submitted that the Labour Court’s award should be upheld and the case remanded to the High Court for a decision on merits.
• The appellant emphasized that the language of Section 69 of the Kerala Co-operative Societies Act is similar to Section 70 of the Karnataka Co-operative Societies Act, which was interpreted in Dharappa.

Respondent’s Arguments (Employer):

• The respondent contended that the majority view of the Kerala High Court was correct and in accordance with the law.
• The respondent argued that the Kerala Co-operative Societies Act, 1969, has an overriding effect on the Industrial Disputes Act, 1947, concerning service disputes of co-operative society employees.
• The respondent asserted that the Labour Court lacked jurisdiction to decide the dispute, and the High Court’s decision should be upheld.
• The respondent also relied on the provisions of the Kerala Co-operative Societies Act and the Karnataka Co-operative Societies Act to support their argument.

Innovativeness of the argument: The appellant innovatively argued that the language of Section 69 of the Kerala Co-operative Societies Act is similar to Section 70 of the Karnataka Co-operative Societies Act, which was interpreted in Dharappa, thereby extending the ratio of Dharappa to the present case. This argument was crucial in establishing the concurrent jurisdiction of both Acts.

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue for consideration:

1. Whether the jurisdiction of the Labour Court under the Industrial Disputes Act, 1947, for deciding a service dispute arising between a Co-operative Society’s employee and his/her employer is barred by virtue of Section 69 of the Kerala Co-operative Societies Act, 1969.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issue:

Authorities

The Supreme Court considered the following authorities:

Cases:

• K. Balachandran vs. The Dy. Registrar, Co-operative Societies & Ors., AIR 1978 Kerala 126 – Full Bench of the Kerala High Court.
• Sherly M.U. vs. The President, Parappuram Milk Producers Co-op. Society Ltd. & Ors., 2007(1)KLT 809 – Full Bench of the Kerala High Court.
• Board of Directors, Edava Service Co-operative Bank vs. The Co-operative Arbitration Court & Ors., 2008(3) KLT 780 – Single Judge of the Kerala High Court.
• Thodupuzha Taluk General Marketing Co-operative Society vs. Michael Sebastian, 2010 (1) KLT 938 – Division Bench of the Kerala High Court.
• Chirayinkeezhu Service Co-operative Bank Ltd. No.115 vs. K. Santosh & Anr. – Single Bench of the Kerala High Court.
• Chirayinkeezhu Services Cooperative Bank Ltd. vs. Santosh, 2015(4) KLT 163(LB) – Five-Judge Bench of the Kerala High Court.
• Dharappa vs. Bijapur Coop. Milk Producers Societies Union Ltd. (2007) 9 SCC 109 – Supreme Court of India.
• Veerashaiva Co-op. Bank Ltd. vs. Presiding Officer, Labour Court, (2001) 3 Kar.LJ 519 – Division Bench of the Karnataka High Court.
• Karnataka Sugar Workers Federation vs. State of Karnataka, (AIR 2003 Kar HCR 1802) – Full Bench of the Karnataka High Court.

Legal Provisions:

• Section 2(i), Section 69, Section 70, and Section 100 of the Kerala Co-operative Societies Act, 1969.
• Section 10 of the Industrial Disputes Act, 1947.
• Section 70 of the Karnataka Co-operative Societies Act, 1959.
• Article 254 of the Constitution of India.

Judgment

The Supreme Court, after analyzing the arguments and authorities, held that the minority view of the Kerala High Court was correct and in line with the law laid down in Dharappa. The Court concluded that both the Kerala Co-operative Societies Act, 1969, and the Industrial Disputes Act, 1947, possess concurrent jurisdiction over service disputes arising between a co-operative society and its employees.

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court followed the ratio of Dharappa vs. Bijapur Coop. Milk Producers Societies Union Ltd. (2007) 9 SCC 109* and held that the provisions of the Kerala Co-operative Societies Act, 1969, did not expressly exclude the jurisdiction of the Labour Court under the Industrial Disputes Act, 1947.
• The Court overruled all the cases that had taken a contrary view, including the majority view of the Kerala High Court in Chirayinkeezhu Services Cooperative Bank Ltd. vs. Santosh, 2015(4) KLT 163(LB).

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure that the rights of employees of co-operative societies are adequately protected. The Court emphasized the following points:

• Interpretation of Statutes: The Court focused on the literal interpretation of Section 69 of the Kerala Co-operative Societies Act, 1969, and held that it did not expressly exclude the jurisdiction of the Labour Court under the Industrial Disputes Act, 1947.
• Precedent: The Court placed significant reliance on the ratio of Dharappa vs. Bijapur Coop. Milk Producers Societies Union Ltd. (2007) 9 SCC 109, which had interpreted similar provisions in the Karnataka Co-operative Societies Act, 1959.
• Concurrent Jurisdiction: The Court recognized that both the Industrial Disputes Act, 1947, and the Kerala Co-operative Societies Act, 1969, can operate concurrently in resolving service disputes of co-operative society employees. This ensures that employees have access to a forum for redressal of their grievances.
• Employee Welfare: The Court’s decision reflects a pro-employee stance, ensuring that the employees of co-operative societies are not deprived of the benefits of labour laws.

Ratio of Fact to Law:

The judgment has a strong ratio of law, with the Court primarily focusing on the interpretation of the relevant legal provisions and the application of established legal principles. The facts of the case, specifically the dismissal of Smt. Annamma, served as the backdrop for the legal analysis, but the Court’s reasoning was primarily driven by the need to clarify the legal position on the jurisdiction of different forums in service disputes.

Final Decision

In conclusion, the Supreme Court allowed the appeal, set aside the judgment of the High Court, and upheld the award of the Labour Court. The Court held that the Labour Court had the jurisdiction to decide the service dispute under the Industrial Disputes Act, 1947. The Court also clarified that the Kerala Co-operative Societies Act, 1969, did not expressly bar the jurisdiction of the Labour Court in such matters.

Implications for Future Cases:

• This judgment clarifies that employees of co-operative societies in Kerala have the option to approach either the Labour Court under the Industrial Disputes Act, 1947, or the authorities under the Kerala Co-operative Societies Act, 1969, for resolution of their service disputes.
• The judgment sets a precedent for other states with similar provisions in their co-operative societies acts, emphasizing that the jurisdiction of labour courts is not barred unless explicitly stated in the relevant statute.
• The ruling ensures that the employees of co-operative societies are not deprived of the benefits of labour laws and have access to a forum for redressal of their grievances.

Flowchart of Jurisdiction