Madras High Court directs Govt to pay Gratuity & other benefits to Employees of Co-operative Societies

A single-judge bench of Justice M.S Ramesh of the Madras High Court recently stepped in to rescue employees of Co-operative societies and directed the cand the Registrar of Co-operative Societies, Government of Puducherry to pass orders, for disbursement of their unpaid salaries, earned leave encashment, EPF Contributions, ESI benefits, and other admissible entailments, due to them for their respective services.

Court further directed that “the dues be paid within three months from the date of receipt of a copy of this order.”

Court was dealing with the petition by the employees of three Co-operative societies- a) Puducherry Public Servants Co-operative Stores P-456; b) Ariyankuppam Public Servants Stores P-455; and c) Bharathi Co-operative Consumer Stores Lt., P-564 and were employed as Salesman, Assistant Clerk, Supervisors respectively. Each of them was employed for 20-25 years of service.

As per the bye-laws of these Societies, the employee who has put in more than five years of continuous service in the stores shall be entitled to gratuity, apart from other service benefits including earned leave encashment, and EPF contributions, ESI benefits, and other admissible entailments.

The petitioners' case was that, since 2011, these Co-operative Stores were running on loss, which prompted the Government of Puducherry to constitute a Rehabilitation Committee for improving the functioning of the Stores and to provide alternate employment to their staff.

Later, by March and April 2007, the salaries payable to the petitioners were stopped, and ultimately on January 22, 2013, the Government had ordered for winding up of all these stores.

Consequently, the affairs of these Stores were handed over to the Liquidator. Thereafter, the government had initiated efforts to accommodate the employees of the Stores including the petitioners in other Stores and Societies, which proved futile.

Therefore the petitioners filed for disbursement of their unpaid salaries, gratuity, earned leave encashment, EPF Contributions, ESI benefits, and other admissible entailments along with interest.

The petitioners contended that since these stores were fully owned by the government, and since it could not rehabilitate or provide alternate employment for the petitioner, it was bound to settle the dues. Accordingly, the statutory dues of gratuity cannot be avoided or averted, they alleged.

On the other hand, the respondent argued that the petition was not maintainable against co-operative societies and placed reliance on the decision of a five-judge bench of this Court in K.Marappan Vs. The Deputy Registrar of Co-operative Societies and Another, which held that a society cannot be characterized as a 'State', the service conditions of its employees governed by its bye-laws, cannot be enforced through a Writ Petition.

It was further argued that government would not be liable for the payment of salary and other dues of these Co-operative Societies, which are not State-owned Societies.

To which, Court observed that “K.Marappan's case (supra) may not be of much assistance to the respondents, since it is also held therein that even if a Society cannot be characterized as a State within the meaning of Article 12 of the Constitution of India, a writ would lie against it to enforce a statutory public duty cast upon the Society.”

“As already held, the duty cast on the Government in the present case, is a public duty and therefore the present Writ Petitions seeking to enforce such a public duty, would be maintainable against a Co-operative Society, given K.Marappan's case (supra),” added the court.

Court relied on an Apex Court judgment in Parimal Chandra Raha and Others V. Life Insurance Corporation of India and Others (1995) and the State of Jharkhand and Another V. Harihar Yadhav & Others (2014) and held, “I have no hesitation to hold that there is a responsibility, as well as a liability cast upon the Government of Puducherry, which is a public duty, to pay the dues of these petitioners herein, in connection with their services in their respective Stores.”

Case Title: K Ravichandran and others v. The Chief Secretary and others