JUDGMENT
G.C. Bharuka, Actg. C.J.
1. The appellant is a Co-operative Bank within the meaning of clause (b-1) of Section 2 of the Karnataka Co-operative Societies Act, 1959 (in short, “the Co-operative Act”). The power of the appellant to create the strength of its establishment, eligibility for appointments, the procedure to be followed for the same and the conditions of service of its officials and employees are governed by Rules 17 and 18 of the Karnataka Co-operative Societies Rules, 1960 (in short, “the Co-operative Rules”). It is not in serious dispute that the respondent-Smt. B. Shantha was given appointment by the appellant-Society on the post of Accounts Clerk in Violation of eligibility criteria pertaining to age limit and therefore as being required by the authorities under the Act, after giving due notice and sufficient time, her service came to be terminated by a memo dated 14-1-1988.
2. The respondent questioned the validity of the above termination before the Labour Court by filing an application under sub-section (4-A) of Section 10 of the Industrial Disputes Act, 1947 (in short, “the I.D. Act”) as inserted by the Karnataka Amendment Act 36 of 1964. The Tribunal, under its award dated 19-9-1994, took the view that since the termination was made without compliance of Section 25F of the I.D. Act and accordingly directed for reinstatement with full back wages. The appellant-Bank questioned the said award by filing a writ petition. The learned Single Judge under his impugned judgment agreed with the reasoning and award of the Labour Court but with slight modification by restricting the entitlement of back wages only to the extent of 75%.
3. On hearing the rival contentions raised by Sri N.S. Sanjaya Gowda, the learned Counsel for the appellant-Bank and Sri K. Sub-
barao, Senior Counsel, appearing for respondent, the following legal issues require our consideration:
(i) Whether on the facts of the present case, the termination of the respondent can be said to be “retrenchment” within the meaning of Section 2(oo) of the I.D. Act?
(ii) Whether the disputes arising between the Co-operative Societies and its employees can be subjected to the adjudicatory process under the I.D. Act?
4. The Facts.–It is not in dispute that the date of birth of the respondent is 11-2-1941. The appellant-Bank appointed her as Accounts Clerk on daily wages on 3-12-1983. At that time her age was 42 years. With effect from 1-8-1985 her salary was fixed on a consolidated sum of Rs. 550/- p.m., which was increased to Rs. 700/- p.m. with effect from 1-8-1986.
5. It has come on record through evidence that in the month of July 1988, the Deputy Registrar of Co-operative Societies wrote a letter to the appellant-Cooperative Bank that several illegal appointments have been made by it and if appropriate corrective measures are not taken its management may be superseded. The appellant-Bank had produced the letters issued to the said effect by the Assistant Registrar and the Deputy Registrar of Co-operative Societies, which were marked as Exs. M. 1 and M. 2.
6. On receiving the above letters, the appellant-Bank issued a memo dated 14-1-1988 to the respondent (Ex. WW 5) which reads as under;
"RCB-2848/87-88 14-1-1988 MEMO
Smt. B. Shantha is appointed as Accounts Clerk on consolidated remuneration of Rs. 700/- per month from 1-8-1987 to 31-7-1988. Before the expiry of this period you have to obtain permission from Registrar of Co-operative Societies for relaxation of your age, failing which your services will be terminated on expiry of the said period.
for Rajajinagar Co-operative Bank Limited,
Sd/-
Hon. Exe. Director”.
7. Admittedly, after receiving the above memo the respondent continued in service till 31-7-1988 but since she could not secure any order of relaxation in age, her service got terminated. It was under the above circumstances the respondent moved the Labour Court and obtained the order of reinstatement and back wages as already noticed above.
8. Re: Question No. (i).–Rule 18(a)(1) of the Co-operative Rules is material for the present case, which reads as under:
“18(a) Conditions of service of officers and employees of
Co-operative Societies. — (1) Age limit for entry into service, except with previous permission in writing of the Registrar, no per-
son who has attained the age of thirty-five years in case of scheduled castes and scheduled tribes and thirty-two years in case of others shall be appointed to any post in the service of a Co-operative Society”.
It is not in dispute that even at the time of very initial appointment of the respondent as daily wager on 3-12-1983, she had already crossed the maximum age limit prescribed for appointment. Admittedly managing committee of the Co-operative Society had no authority to relax the age limit. This could have been done only with the previous permission in writing of the Registrar which was, admittedly not taken, though man-datorily required under the above Co-operative Rules. Therefore her appointment on the post of Accounts Clerk was per se void and illegal. Moreover she was given appointment in violation of sub-rule (3) of Rule 17 of the Rules which mandatorily provided that no appointment by direct recruitment shall be made except by calling for application from eligible candidates by notifying the same. The rule does not permit giving of appointment on daily wages.
9. It is under the above circumstances that the above quoted memo dated 14-1-1988 came to be issued informing the respondent well in advance that if she fails to obtain permission of the Registrar regarding relaxation of her age, her service will stand ipso facto terminated with effect from 31-7-1988. Since the respondent failed to obtain the order from the Registrar of Co-operative Societies, therefore she ceased to be employee of the appellant-Bank. The appellant-Bank had no discretion of its own to retain the respondent in service. Moreover as in law no valid contract of service between the appellant and the respondent ever came into existence because it was not permissible for managing committee of the appellant to give appointment to the respondent unless the statutory conditions prescribed under the Co-operative Rules had been complied with.
10. It needs to be borne in mind that the regulating provisions contained in the Co-operative Act and the Rules framed thereunder relating to management and appointment of staff meant to safeguard the interest of the members of the Co-operative Societies and those are required to be scrupulously followed by managing committees. Decision taken by the managing committee in digression of statutory provisions cannot bind the Co-operative Society, which is a body corporate under Section 9 of the Act.
11. For the aforesaid reasons, we are constrained to hold that since in the facts of the present case, the respondent was never appointed in the eye of law, therefore, the question of her retrenchment under Section 2(oo) of the I.D. Act cannot at all arise.
12. Re: Question No. (ii).–For answering this question we have to refer to the material provisions contained in the Co-operative Societies Act as well as the I.D. Act.
13. Section 70 of the Co-operative Act makes provisions for resolution of disputes by the Registrar. It reads as under:
“70. Disputes which may be referred to Registrar for decision.–(1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a Co-operative Society arises,
(a)xxxx;
(b) xxxx;
(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) xxxxx;
such disputes shall be referred to the Registrar for decision and no Court shall have jurisdiction to entertain any suit or other proceedings in respect of such disputes.
(2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or the business of a Co-operative Society, namely.-
(a)…..;
(b)…..;
(c)…..;
(d) Any dispute between a Co-operative Society and its employees or past employees or heirs or legal representatives of a deceased employee, including a dispute regarding the terms of employment, working conditions and disciplinary action taken by a Co-operative Society”.
14. From a reading of clause (c) of sub-section (1) of Section 70 and clause (d) of sub-section (2) thereof, it is very much clear that any dispute between the Co-operative and its employees including the dispute pertaining to terms of employment, working conditions and disciplinary actions taken by a Co-operative Society against its employees can be effectively adjudicated by the Registrar by following the procedure provided under Section 71 of the Co-operative Act which provides for the manner in which such disputes are to be disposed of. It is not in serious dispute that the appellant-Cooperative Society and the respondent-employees are “industry” and “workmen” under the respective definitions contained in clauses (j) and (s) of the I.D. Act. The expression “industrial dispute” has been defined under clause (k) of Section 2 of the I.D. Act which reads as under:
“(k) “Industrial dispute” means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person”.
15. At this stage we may also reproduce Section 2 of the I.D. Act, which gives an extended meaning to the expression “industrial dispute” by providing that:
“2-A. Dismissal, etc., of an individual workman to he deemed to be an industrial dispute.–Where any employer discharges, dismisses, retrenches or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute”.
16. A reference under Section 10(1) of the I.D. Act can be made by the appropriate Government to the Industrial Tribunal or the Labour Court for adjudication only if the dispute between the parties is found to be an “industrial dispute”. Similarly, a workman can approach the Labour Court under sub-section (4-A) of Section 10 of the I.D. Act (inserted by the Karnataka amendment) if the dispute sought to be raised is an ‘industrial dispute’ within the meaning of Section 2A of the I.D. Act.
17. The legislative subject “industrial and labour disputes” is covered by Entry 22 of the Concurrent List contained in the Seventh Schedule to the Constitution of India. Therefore, the law on this subject can be made by the Parliament as well as the State Legislature, but it will be subject to the constraints and mandates contained in Article 254 of the Constitution, sub-clause (2) whereof reads as under:
“254(2) Where a law made by the Legislature of a State…..with respect to one of the matters enumerated in the Concurrent List contains any provisions repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State:
Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State”.
18. In the present case, the I.D. Act had come into force on 1-4-1947 whereas the Co-operative Act made by the State Legislature was brought into force on 1-6-1960. The State Co-operative Act was enforced after receiving the assent of the President on 11-8-1959. This being the factual situation, the State Co-operative Law having been made by the State Legislature subsequent to the law made by the Parliament and having received the assent of the President, to the extent of inconsistencies between the two laws, the State Law has to prevail within the State of Karnataka.
19. A bare look at the provisions contained in the State Law and the Industrial Law, it is crystal-clear there is an apparent repugnancy in
relation to the forum and the manner in which the disputes between the employees and Co-operative Societies relating to their employment has to be resolved. Under the I.D. Act the reference for resolution of the said dispute has to be made to either the Industrial Tribunal or the Labour Court, whereas under the Co-operative Law it has to be made to the Registrar. But keeping in view the mandate contained in Article 254(2) of the Constitution, it is the Co-operative Law which has to prevail and therefore the reference of the disputes of the nature involved herein, can be referred to the Registrar only, since such disputes stand excluded from the very definition of the ‘industrial disputes’ as defined under clause (k) of Section 2 read with Section 2A of the I.D. Act.
20. The view taken by us is clearly supported by the 3 Judges Bench decision of the Supreme Court in the case of Co-operative Central Bank Limited v Additional Industrial Tribunal, Andhra Pradesh, Hyderabad and Others. In para 2 whereof it has been held that:
“It is no doubt true that the Act is an enactment passed by State Legislature which received the assent of the President, so that, if any provision of a Central Act, including the Industrial Disputes Act, is repugnant to any provision of the Act, the provision of the Act will prevail and not the provision of the Central Industrial Disputes Act. The general proposition urged that the jurisdiction of the Industrial Tribunal under the Industrial Disputes Act will be barred if the disputes in question can be competently decided by the Registrar under Section 61 of the Act is, therefore, correct and has to be accepted”.
(emphasis supplied)
21. Learned Counsel appearing for the appellant-Cooperative Society has placed reliance on a Division Bench judgment of this Court in Veerashaiva Co-operative Bank Limited, Bangalore v Presiding Officer, Labour Court, Bangalore and Others, wherein it has been held that when a comprehensive procedural remedy is available under the Co-operative Societies Act, the jurisdiction of the Labour Court is excluded. Sri Subba Rao, learned Counsel appearing for the respondent-workman, has submitted that the correctness of this Division Bench judgment has been doubted by a learned Single Judge of this Court and moreover in view of the recent judgment of the Supreme Court in the case of Agra District Co-operative Bank Limited v Prescribed Authority, Labour Court, Uttar Pradesh and Others, the above Division Bench judgment of this Court requires to be referred to a larger Bench.
22. So far as the recent Supreme Court judgment in the case of Agra District Co-operative Bank Limited, supra, which is of a two Judges Bench, is concerned, para 7 thereof is relevant, which reads as under:
“Apart from that this Court in Co-operative Central Bank Limited, supra, considered the identical provisions arising under the Andhra Pradesh Co-operative Societies Act and held that Labour Court has jurisdiction in such matters. The position is that when a question of employment arises, certainly it cannot be said that the doors of the Labour Court are shut. It is possible that in certain cases Section 70 of the Uttar Pradesh Co-operative Societies Act may be attracted. If parties avail of a remedy in one of the jurisdictions, that proceeding must be pursued to its logical end and should not be given up in the middle and start another proceeding under another enactment. That would be a wholesome rule to be followed rather than to state that one or the other Tribunal has no jurisdiction”.
23. So far as the earlier judgment in Co-operative Central Bank Limited’s case, supra, is concerned the issue in respect of which the Supreme Court was called upon to decide the jurisdictional aspect related to service conditions of the employees of the Co-operative Societies. The Supreme Court on close examination of the respective provisions contained under the Andhra Pradesh Co-operative Societies Act, found that the Registrar could not have granted any relief in respect of the service conditions of the employees and therefore the reference under the I.D. Act was held to be maintainable. But this is not the situation in the case at hand.
24. Further, observation of the Supreme Court made in the case of Agra District Co-operative Bank Limited, supra, has to be understood in the context those have been made and cannot be taken as an absolute proposition of constitutional law, dehors the constitutional and legislative schemes.
25. In the case of Commissioner of Income-tax v. Sun Engineering Works (Private) Limited, it has been held that:
“It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete ‘law’ declared by the Supreme Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Supreme Court”.
26. For the aforesaid reasons we hold that so far as the State of Karnataka is concerned, all the disputes arising between Co-operative Societies and its employees including those concerning the terms of employment, working conditions and disciplinary actions can be referred for decision only to the ‘Registrar’ under the Co-operative Act and no dispute in relation to such matters can be raised, referred to and decided under the provisions of the I.D. Act. For these reasons, we find it difficult to sustain the award of the Labour Court as also the judgment of
the learned Single Judge. The same are accordingly set aside. The appeal is allowed. Parties to hear their own costs.