CRLRC/117/2008 of Peeta Venkateswarlu, Vs The Assistant Commissioner of Labour - I , on 31 December 2009

ORDER:

This Revision Case has been filed challenging the order, dated18-10-2007 in Crl.M.P.No.1324 of 2007 on the file of the II AdditionalMunsif Magistrate, Repalle, wherein and whereby the petition filed bythe petitioner herein was dismissed.

2. The brief facts of the case are as follows:

The petitioner herein is the Secretary of the second respondent-Nagaram Primary Agricultural Co-operative Society (hereinafterreferred to as ‘second respondent-society’). Initially he wasappointed as Secretary vide proceedings No.43(2)79/RHO/PS, dated18-07-1979 and was posted at Rajavolu PACS, Repalle, GunturDistrict. Later on, he was allotted to Primary Agricultural Co-operativeSociety, Dhulipudi (for short ‘Dhulipudi PACS’). His services wereregularized as a permanent employee. However, on some allegations,he was placed under suspension by the Dhulipudi PACS. The petitioner challenged his suspension order by filing W.P.No.16303 of1999 and subsequently, he had withdrawn the writ petition on17.04.2001 on the assurance given by the Divisional CooperativeOfficer to consider his case. The Divisional Cooperative Officerinstructed the person-in-charge of the then Dhulipudi PACS toreinstate the petitioner into service and accordingly the DhulipudiPACS passed a resolution on 26.05.2001 directing the petitioner tojoin into duty. The petitioner made a representation to the person-in-charge to pay subsistence allowance from the date of his suspensiontill his reinstatement into service i.e., from 01-05-1997 to 31-05-2001.The Dhulipudi PACS unanimously resolved on 31-05-2001 to payarrears of salary to the petitioner from the funds of Dhulipudi PACS forthe period of his suspension and the same was informed to the DistrictCooperative Central Bank, Guntur. As per the resolution, dated 31-05-2001, the petitioner is entitled to receive subsistence allowance for 49months @ Rs.6,080/- per month. The petitioner was paid Rs.20,000/-on 12-08-1999 and Rs.10,000/- and Rs.66,528/- on 06-06-2001 andthus received a total amount of Rs.96,528/- only and the DhulipudiPACS is still due to pay an amount of Rs.1,99,824/- to the petitionertowards balance of subsistence allowance. Since the said amountwas not paid to the petitioner, he filed W.P.No.18998 of 2003 seekinga direction to the said society to pay the balance of subsistenceallowance and the same was disposed of on 09.09.2004 giving libertyto the petitioner to file an application before the concerned authoritywithin a period of two weeks. Then the petitioner filed an applicationin S.A. Case No.1 of 2005 before the first respondent herein, which isthe authority under the Andhra Pradesh Shops & Establishments Act,1988 (for short ‘Act’). While the said application was pending, as perclauses (i) to (v) & (viii) of sub-section 3 of Section 15-A of the A.P.Cooperative Societies Act, 1964, the District Collector (Cooperation)passed orders merging Dhulipudi PACS with the second respondent-society. Since Dhulipudi PACS was merged with the second

respondent-society, the person-in-charge of the second respondent-society filed counter on 23.08.2005 in the said application admitting itsliability to pay the remaining subsistence allowance to the petitioner. The second respondent-society also addressed a letter to theDivisional Cooperative Officer, Tenali on 25.08.2005 admitting itsliability to pay the subsistence allowance to the petitioner. Thereafter,the first respondent passed orders on 20.10.2005 directing therespondent therein to pay the due amount to the petitioner. No appealhas been filed challenging the said order and therefore, the order,dated 20.10.2005 became final. However, in spite of above direction,the second respondent-society has not implemented the said order. The petitioner had sent applications to the first respondent on09.12.2006 and 29.03.2007 and the first respondent issued a showcause notice to the second respondent-society calling for itsexplanation as to why the order, dated 20.10.2005, was notimplemented till then. Then the first respondent herein filed anapplication under Section 54 (4) (b) of the Act, in Crl.M.P.No.1324 of2007 before the II Additional Munsif Magistrate, Repalle, requesting torecover the due amount as if it were fine imposed by him asMagistrate, but, the said application was dismissed on 18.10.2007 withan observation that the order, dated 20.10.2005 in S.A. Case No.1 of2005 is void ab initio. Challenging the same, the present Revision Case has beenfiled.

3. The learned counsel for the petitioner Sri Peeta Raman submittedthat for the recovery of claims for deductions from wages or delay inpayment of wages etc., the procedure prescribed under sub-clause (b)of Sub-section 4 of Section 51 of the Shops and Establishments Act,1988 envisages that the same have to be recovered as if fine underSection 421 Cr.P.C.

4. It is further submitted that the lower Court seems to be under themistaken impression that it was dealing with an execution petition under Section 47 C.P.C., and had ignored that it was exercising thepowers of a Magistrate under Section 421 of Cr.P.C. It is vehementlyargued that the lower Court ought to have followed the procedureprescribed under Section 421 of Cr.P.C., and that when no specificprocedure has been prescribed in any special Act, the procedureprescribed under Cr.P.C. has to be followed.

5. It is further argued that admittedly no appeal has been filedchallenging the order, dated 20.10.2005 and that the learnedMagistrate passed order as if an appellate authority. It is alsosubmitted that since the petitioner is an effected party he filed therevision. It is also submitted that after merger, the second respondentis liable to pay all the dues that were to be paid by the DhulipudiPACS. It is further submitted that the learned Magistrate has lost sightof the fact that after the Dhulipudi PACS has been merged with thesecond respondent–society, the second respondent-society had filedcounter admitting its liability to pay the subsistence allowance. It isfurther submitted that the claim of the petitioner was rejected only onthe ground that he was in a position of Manager having control overthe affairs of the society. It is further submitted that as per Section31(1)(a) of the A.P. Co-operative Societies Act, 1964 to entrust themanagement of the affairs of the Society, the general body of thesociety shall constitute a committee and it is clear that in no way thepetitioner is in the position of management of the society. It is alsosubmitted that the lower Court lost sight of the fact that true meaning ofthe employee in a position of manager having control over the affairs ofthe establishment has wider connotation and therefore Section 73(1)(a) of the Shops and Establishments Act has no application to the factsof this case. It is also argued that all the employees even if drawingmore than Rs.1600/- per month cannot be treated as the employees ina position of Manager having control over the affairs of theestablishment. It is also submitted that there is no pleading orevidence on behalf of the respondent in this regard.

6. The learned counsel for the second respondent-society submitsthat the second respondent-society has not filed any counter admittingits liability and that the counter is also not in the prescribed proformaand the person-in-charge nowhere stated that he filed counter. It isfurther submitted that the order passed by the authority is void ab initiosince it was passed in the absence of the second respondent-society.It is further submitted that the merger took place on 25.07.2005 and theAward was passed on 20.10.2005 and that the second respondentwas not impleaded as party in S.A. Case No.1 of 2005. It is furthersubmitted that the petitioner is entitled to the subsistence allowance till26.05.2001, but he claimed till 31.05.2001. It is also argued that thepetitioner was drawing more than Rs.1600/- per month, hence he canbe treated as an employee having control and management over thesecond respondent society.

7. The learned counsel for the petitioner, in reply, submitted that thepetitioner, in fact, joined the duty on 31-05-2001 and therefore, he isentitled to claim subsistence allowance till 31-05-2001. It is furthersubmitted that the second respondent-society never denied the factumof filing of the counter and that merely because the counter is not in theprescribed proforma, it cannot be said that the second respondent-society has not filed any counter. It is further submitted that the mergertook place on 25.07.2005 and by the moment the merger has takenplace, it is deemed that the second respondent-society stepped intothe shoes of Dhulipudi PACS and since then, the second respondent-society is liable to pay all the dues of the Dhulipudi PACS. Therefore,merely because the order has been passed on 20.10.2005, the secondrespondent cannot escape its liability. It is also submitted that merelybecause an employee is drawing more than Rs.1000/- per month, hecannot be treated as an employee having control over themanagement of the society.

8. The points that arise for consideration are;

1. Whether Dhulipudi PACS stands merged with the second respondent society and whether it becomes non-existing dead entity?.2. Whether in the facts and circumstances, the procedureprescribed for recovery of fine is applicable or whether the procedureprescribed under CPC is applicable?

3. Whether the petition filed by the petitioner is not maintainablesince the second respondent society is not being represented by itsSecretary?

9. POINT No.1:

The learned Magistrate appears to have lost sight of the fact thatas per the provisions of the Section 15-A (2)(iv) of the A.P. CooperativeSocieties Act, the second respondent-society in which the thenDhulipudi PACS has been merged filed the counter in S.A. Case No.1of 2005 on 23.08.2005 admitting its liability to pay subsistenceallowance to the petitioner. Immediately after filing its counter, thechair person of the second respondent-society had sent a letter to theDivisional Co-operative society, Tenali on 25-08-2005 with a requesteither to allow him to pay subsistence allowance to the petitioner andsought necessary direction. The operative portion of the letter, dated25.08.2005 as follows:

“The authority u/s. 48 of A.P.S.E. Act, 1988 orally instructed theChairperson of Nagaram PACS that it is the mandatory to pay thesubsistence allowance to the secretary for suspension period and if itnot paid as per the provision of Sec.48 of A.P.S.E. Act, 1988 theChairperson will be responsible to pay the higher amount as directedby the Court with penalty. Further, I submitted that the case wascame to final stage and the learned authority u/s. 48 of the A.P.S.E.Act, 1988 may be given judgment accordingly. Therefore I requestthe Divl. Co.op. Officer, Tenali to accord permission to pay thesubsistence allowance the secretary of erstwhile Dhulipudi PACSnow merged with Nagaram PACSor I may be issued suitableDirection in this regard.”

10. As seen from the contents of the order of the learned Magistrate,the learned Magistrate observed that Dhulipudi PACS has been nomore in existence and it is a dead legal personality as on the date oforder passed by the Assistant Commissioner of labour-I, Guntur on 20.10.2005 and therefore the order passed by the AssistantCommissioner of Labour-I, Guntur is null and void.

11. It is not in dispute that by virtue of the orders passed by theCollector (Cooperation), Guntur District, dated 25.07.2005 DhulipudiPACS stands merged with Nagaram PACS with effect from25.07.2005. As seen from the counter filed by the second respondentbefore the first respondent, the second respondent itself mentionedthat Dhulipudi PACS stands merged with Nagaram PACS on25.07.2005 and all the staff of the Dhulipudi society came under thecontrol of Chair Person Nagaram PACS from 25.07.2005 and the onlypoint raised by the second respondent in its counter is that there was arestriction on the expenditure to be incurred towards salaries whichcannot be more than 30% of the gross profit or 2% of the workingcapital of the society and that there are accumulated losses ofRs.70.00 lakhs to the society and due to the financial constraints it isnot possible to pay the subsistence allowance to the petitioner hereinwithout prior approval of the District Cooperative Officer, Guntur. Theorder passed by the first respondent authority shows that after filing ofthe counter the second respondent failed to attend before the saidauthority and therefore it was set ex parte on 13.09.2005. Therefore, itis not correct to say that the first respondent passed the order in theabsence of the second respondent society or behind its back. Therefore, the second respondent cannot say that it did not file counterbefore the first respondent authority. A copy of the letter dated25.08.2005 addressed by the second respondent to the DivisionalCooperative Society, Tenali, also shows that the second respondentsought permission of the authorities to pay the arrears to the petitioner. Thus, it has to be seen that the second respondent never claimedbefore the first respondent that Dhulipudi PACS became a dead legalentity or that it is no more in existence and therefore the secondrespondent is not liable to pay the arrears to the petitioner. When thesecond respondent itself had not taken such a plea before the first respondent authority, the learned Magistrate is not justified in dealingwith an issue which was not raised before the first respondentauthority. It is settled law that new plea cannot be allowed to be raisedfor the first time in execution proceedings, even in civil proceedings. 12. Coming to the effect of merger, the relevant provisions of the A.P. Cooperative Societies Act are as follows.

15-A(2) The Registrar may, after having consideredthe matter in the light of any suggestions or objections whichmay be received by him within the period specified in sub-section (1) and after making if necessary, such modification inthe proposal as he may deem fit, make an order and publish itin the prescribed manner;

(iii) the area added to the area of operation of thesociety shall be deemed to have been transferred to suchsociety to which it is added;

(iv) the assets of such amalgamated or divided societyshall stand transferred to and its liabilities shall devolve on, thesociety with which it is amalgamated and all immovableproperties located in the area transferred shall be deemed tobe transferred to the society to which the area is transferred;

(vii) it shall be competent for the Registrar to allot, byorder, employees of such societies which are amalgamated ordivided to any society or societies; and

(viii) notwithdtanding anything in this Act or in any otherlaw, or in any contract, award or any other instrument for thetime being in force, the provisions of the order of the Registrarunder sub-sections (2) and (3) shall be binding on all societiesand their members, depositors, creditors, employees andother persons having any rights, assets or liabilities in relationto all or any of the concerned societies.

15-A(7) Notwithstanding anything in the Transfer ofProperty Act, 1882 (Central Act 4 of 1882) or the RegistrationAct, 1908 (Central Act 16 of 1908) an order issued under thissection shall be sufficient conveyance to transfer the assetsand liabilities of the society or societies covered by any orderpassed under sub-section (2) of this section.

13. A reading of the above provisions makes it clear that the assetsand liabilities of the society shall stand transferred to the society withwhich it is amalgamated. Thus, all the liabilities shall be deemed to have been transferred to the society with which the society is merged. Admittedly, all the employees of Dhulipudi PACS have become theemployees of Nagaram PACS. Clause (viii) of sub-section (3) ofSection 15-A of the A.P. Co-operative Societies Act also makes it clearthat the award passed against the society as on the date of mergershall be binding on the society with which it is merged. Sub-section(7) of Section 15-A also makes it clear that all the assets and liabilitiesof the society covered by an order passed under sub-section 2 ofSection 15-A shall stand transferred to the society with which it ismerged. Therefore, merely because the cause title of the secondrespondent is not amended after the merger of the Dhulipudi PACSwith Nagaram PACS, the order would not become void. In the light ofthe above provisions, the observation of the learned Magistrate thatDhulipudi PACS became non-existent or dead entity is nothing butagainst the above referred legal provisions and therefore improper and illegal.

14. ISSUE NO.3:

The learned Magistrate next observed that it is the Secretary whohad to represent the Society under byelaw 24-A of the PrimaryAgricultural Co-operative Societies bylaws and since the proceedingsare not initiated against the Secretary, PACS, such proceedings areirregular. Byelaw 24-A of the Primary Agricultural Cooperative Societygives an authority to the Paid Secretary to institute the suits on behalfof the Primary Agricultural Co-operative Society and he is alsoauthorized to represent the society in any suit filed against suchsociety. First of all no such plea was taken by the second respondentsociety before the first respondent authority. It has to be seen that herethe petitioner is no other than the Secretary of the society. When thepetitioner himself is filing a petition, I think there is no other way for thepetitioner to file a petition against the second respondent societyexcept through its chair person, more over when no such plea wastaken before the first respondent authority and I think no such plea can be taken at the stage of enforcing the order passed by the firstrespondent.

15. ISSUE NO.2:

It appears that the first respondent has passed orders underSection 51 of the A.P. Shops and Establishments Act, 1988. Anappeal shall lie against such order to the appellate authority underSection 53 of the A.P. Shops and Establishments Act. Admittedly, nosuch appeal has been filed. Therefore, the order passed by the firstrespondent became final. The first respondent filed an applicationunder Section 51(4)(b) of the A.P. Shops and Establishments Act forrecovery of the amount which was directed to be paid under Section51(2) of the Act. Thus, the Magistrate was exercising powers underClause (b) of sub-section (4) of Section 51 of the Act. Accordingly, thesaid petition was registered as Crl.M.P. No.1324 of 2007. The learnedMagistrate was not dealing with the execution petition under Section47 CPC. He was exercising powers of a Magistrate to recover the saidamount as if it were a fine imposed by such Magistrate. Section 51(4)

(b) of the Act is as follows.

“51. Claims arising out of deductions from wages or delay inpayment of wages etc., and penalty for malicious or vexatiousclaims:--

(4) Any amount directed to be paid under this section may berecovered—recovered—

(a) if the authority is a Magistrate, by the authority as if it were a fineimposed by him as Magistrate; andimposed by him as Magistrate; and (b)if the authority is not a Magistrate, by any Magistrate to whomthe authority makes an application in this behalf, as if it were afine imposed by such Magistrate.”the authority makes an application in this behalf, as if it were afine imposed by such Magistrate.”

16. Section 421 Cr.P.C. is as follows.

S.421. Warrant for levy of fine-(1) When an offenderhas been sentenced to pay a fine, the Court passing thesentence may take action for the recovery of the fine in eitheror both of the following ways, that is to say, it may-

a) issue a warrant for the levy of the amount byattachment and sale of any movable property belonging to the offender;

b) issue a warrant to the Collector of the district,authorizing him to realize the amount as arrears of landrevenue from the movable or immovable property, or both, ofthe defaulter:

provided that, if the sentence directs that in default ofpayment of the fine, the offender shall be imprisoned, and ifsuch offender has undergone the whole of such imprisonmentin default, no Court shall issue such warrant unless, forspecial reasons to be recorded in writing, it considers itnecessary so to do, or unless it has made an order for thepayment of expenses or compensation out of the fine underSection 357.

17. Admittedly, no specific procedure has been prescribed for therecovery of amount in the A.P. Shops and Establishments Act, 1988. When no specific procedure has been prescribed in any Act,Regulation, Rule or Byelaw under which any sentence or penalty offine may be imposed Section 25 of the General Clauses Act willapply. In case the special Act, Regulation, Rule or bye-law althoughprovided for penalty of a fine, but does not contain a provision inrelation to imprisonment in default, or to the issue or execution of thewarrants for the levy of fines imposed thereunder, the provisions ofSection 25 of the General Clauses Act along with the provisions of theCode of Criminal Procedure for the time being in force in relation to theissue and the execution of warrants of fines, shall apply. Therefore,the defaulter may be deemed to be an offender for the purpose ofSection 25 of the General Clauses Act. Therefore, the lower Courtought to have dealt with the procedure prescribed under Section 421of Cr.P.C., and not under Section 47 CPC. It has to be seen thatbyelaw 24-A of the Primary Agricultural Cooperative Societies alsorefers the institution of suit by the society or representing any suit filedagainst the society. It does not refer to the proceedings of recovery ofarrears as if fine under Section 51 (4)(b) of the A.P. Shops andEstablishments Act read with Section 421 Cr.P.C. Therefore, it cannotbe said that 24-A of the above referred bye-law apply to the given situation. Since it does not appear to be a proceeding under Section47 of CPC the lower Court cannot claim that it can decide all the pointsthat can be raised in execution proceedings as if it were E.P.proceedings. The lower Court did not consider that it was strictlyenforcing an order under Section 421 Cr.P.C for recovery of amount asif it were fine. Therefore, the approach of lower Court appears to bewrong and improper and also illegal. The very purpose of treating theclaims under Section 51 of the Act as fine and contemplating torecover the same as if fine under Section 421 Cr.P.C shows theintention of the legislature that the said amounts have to be recoveredurgently as if fine and the complication of execution procedure underCPC is avoided. The learned Magistrate failed to understand the verysaid purpose.

18. The third point that arises for consideration is whether thepetitioner is an officer of the society and whether he could not haveinitiated any proceedings before the Assistant Commissioner ofLabour. First of all this point was also not raised by the secondrespondent society before the first respondent authority. It is true thatSection 73 of the A.P. Shops and Establishments Act envisages thatnothing in the said Act shall apply to employees in any establishmentwho is in a position of management and having control over the affairsof the establishment, whose average monthly wages exceed Rs.1600/-. Now it has to be seen whether the petitioner is in a position ofmanagement and having control over the affairs of the secondrespondent society. Section 31 of the A.P. Cooperative Societies Actrefers to the constitution of committees. Section 31(1)(a) is as follows.

“31(1)(a) The general body of a society shall constitute acommittee in accordance with the bye-laws and entrust themanagement of the affairs of the society to such committee.”

19. It is not the case of the second respondent that any suchcommittee as contemplated in Section 31(1)(a) referred above hasbeen constituted in which the petitioner is a member. Of course the definition of officer under Section 2(k) of the A.P. CooperativeSocieties Act includes the secretary. But, by that itself, it cannot bepresumed that the petitioner has been in a position of managementand having control over the affairs of the establishment. Moreover, ithas to be seen that the petitioner himself is claiming due amount fromthe society. When he himself is a victim and claiming wages that toopartly unpaid wages it cannot be said that the petitioner is in a positionof management and control over the affairs of the society. If at all hewas in a position of management he need not file an application fornon-payment of due amount from the second respondent society. Itappears that Section 73(1)(a) of the A.P. Shops and EstablishmentsAct strictly confines to the persons who are in actual management andcontrol over the affairs of the society and not to all the employees whomay be drawing salary more than Rs.1600/- per month. Moreover, nosuch evidence was adduced before the first respondent authority toshow that the petitioner was in a position of management and controlover the affairs of the society. The learned Magistrate seems to havetraversed beyond the limited scope of Section 51(4)(b) of the A.P.Shops and Establishments Act and unnecessarily dealt with the pleaswhich were not taken by the second respondent before the firstrespondent authority. The learned Magistrate seems to have failed todraw distinction between the powers of executing Court in executing adecree passed by the competent civil Court and powers of aMagistrate while exercising powers under Section 421 Cr.P.C readwith Section 51(4)(b) of the A.P. Shops and Establishments Act. Inview of the above discussion, I hold that the impugned order is liable tobe set aside.

20. Accordingly, the impugned order is set aside. The learnedMagistrate is directed to recover the amount as if a fine under Section421 of Cr.P.C. and pay the same to the petitioner herein and in view ofthe delay in proceedings, such exercise may be completed within 90

days from the date of receipt of a copy of this order. Learned counselfor the petitioner submitted that in view of the delay in making payment,the petitioner may be awarded reasonable interest. Though the sameappears to be reasonable, it is for the second respondent society topay usual and reasonable interest and if not paid, the petitioner mayapproach the first respondent or the appellate authority for passingappropriate orders on the issue of awarding interest.

21. Subject to the above observation, the Criminal Revision Caseis allowed.

Date: 31-12-2009

YCR

__________________

B.CHANDRA KUMAR, J

Note:LR Copy to be marked.