Employer Can’t Issue A Circular That Has Effect Of Rendering S. 34 Of Karnataka Cooperative Societies Act Otiose For A Class Of Society: Karnataka HC
The Karnataka High Court held that the employer cannot issue a circular that has the effect of rendering Section 34 of the Karnataka Co-operative Societies Act, 1959 otiose for a class of cooperative society.
The Court held thus in a writ petition filed by a Cooperative Bank established by the employees of the Accountant General’s Office and registered under the 1959 Act.
A Single Bench of Justice Anant Ramanath Hegde observed, “This benefit conferred under the Statute viz., Section 34 of the Act of 1959 cannot be taken away in the manner provided under impugned clause No.v of Annexure - E. The employer cannot issue a circular that has the effect of rendering Section 34 of the Act of 1959 otiose for a class of a Co-operative Society. The third respondent has no jurisdiction to take away the statutory facility provided under the Statute.”
The Bench noted that sub-section (3) of Section 34 of the Act of 1959 excludes the operation of Section 34 on the persons employed in Railways as defined in Article 366 of the Constitution and Mines and Oil Fields.
Senior Advocate PP Hegde represented the petitioner while CGC BM Kushalappa represented the respondents.
Brief Facts -
The petitioner, the Cooperative Bank assailed clause No. v of Annexure E, the Circular issued by the Comptroller and Auditor General of India (CAG) and the orders marked at Annexure-F, Annexure-G, Annexure-H and Annexure-J which were issued pursuant to impugned clause No. v referred to above. The said clause prohibited the salary drawing and disbursing officers from deducting the amount due to the cooperative Bank from the salary of the employee even if the employee is consenting for such deduction.
The petitioner Bank claimed that it was advancing the loan to its members. Some of the members, were the employees of the Accountant General's office and other members of the Bank were not necessarily employees of the Accountant General's Office. It was urged that the impugned clause No. v in Annexure-E, curtails the right of the petitioner Bank to enter into an agreement with the borrower to recover its debt, in the manner provided under Section 34(1) of the Act of 1959.
The High Court after hearing the contentions of the counsel said, “… the contention that Section 34 of the Act of 1959 applies only if the employee of the State government is incorrect. … The exclusion of certain classes of employees named in sub-section (3) of Section 34 of the Act of 1959 leads to the conclusion that the agreement referred to in sub-section (1) of Section 34 of the Act of 1959 binds all employers other than the employers excluded in sub-section (3) of Section 34 of Act of 1959.”
The Court further observed that the employer has the discretion to either approve or reject the proposal of the employee seeking concurrence to enter into an agreement contemplated under Section 34 of the Act of 1959 and once such concurrence is provided, then the agreement binds the employer and the employer cannot shirk the statutory obligation by issuing executive fiat contrary to law.
“The impugned clause No.v altogether excludes the members of the petitioner-Bank from availing the facility provided under Section 34 of the Act of 1959 and prevents the petitioner-Bank from invoking the said provision to recover the debt or such amount due from the member in the manner provided under Section 34 of the Act of 1959. … Under the said definition, a co-operative Bank is also a Co-operative Society doing business in banking. Hence, the petitioner Bank is also a Co-operative Society and entitled to avail the benefit of the recovery mechanism provided in Section 34 of the Act of 1959”, it also noted.
The Court held that the right conferred under the Statute can be taken away only in the manner known to law and not by any executive decision taken by any authority which has no authority to meddle with the statutory rights.
“… this Court is of the view that impugned Clause No.v in Annexure-E dated 18.10.2019 is unsustainable. Since, the said Clause is unsustainable, the further consequential orders impugned in the writ petition marked at Annexures-F, G, H and J are also unsustainable”, it concluded.
Accordingly, the High Court quashed the impugned clause.
Cause Title- The Accountant General’s Office Employees Co-operative Bank Ltd. v. Union of India & Ors.
Appearance:
Petitioner: Senior Advocate PP Hegde and Advocate Sharadi S Shetty.
Respondents: CGC BM Kushalappa, AGA BJ Eswarappa, and Advocate S Prakash Shetty.
