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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1488 OF 2017

THE MAHARASHTRA STATE COOPERATIVE HOUSING FINANCE CORPORATION LTD. .....APPELLANT(S)

VERSUS

PRABHAKAR SITARAM BHADANGE .....RESPONDENT(S)

J U D G M E N T

A.K. SIKRI, J.

The  appellant,  Maharashtra  State  Cooperative  Housing

Finance  Corporation  Limited  (hereinafter  referred  to  as  the

‘Corporation’),  is  a  cooperative  society  registered  under  the

Maharashtra  Cooperative  Societies  Act,  1960  (hereinafter

referred to as the ‘Act’).  The respondent had joined the services

in the appellant Corporation in the year 1975 as an Inspector.  He

was promoted to the post of Branch Manager (Class-I) in the year

2000.  For certain acts of misconduct allegedly committed by the

respondent, he was put under suspension vide orders dated July

11, 2003.  Thereafter, a charge-sheet was served upon him and

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the departmental inquiry conducted, which resulted in dismissal

order dated April 28, 2006 passed by the Corporation, dismissing

the respondent  from service.   His  departmental  appeal  having

dismissed, the respondent approached the Cooperative Court at

Aurangabad, which is set  up under  the Act,  on April  19,  2007

challenging the orders of dismissal from service as well as the

order rejecting the departmental appeal by filing Dispute No. 61 of

2007.  On receiving the notice in the said dispute petition, the

Corporation filed an application for rejection of the petition of the

respondent  on  the  ground  that  the  Cooperative  Court  set  up

under the Act did not have the jurisdiction to entertain and decide

the  service  dispute  between  the  employer  and  the  employee,

inasmuch  as  the  dispute  in  question  did  not  touch  upon  the

business of the society and was not covered by the provisions of

Section 91 of the Act.  The Cooperative Court dismissed the said

application holding that it had the requisite jurisdiction to decide

the dispute.  Order of the Cooperative Court was challenged by

the appellant before the Cooperative Appellate Court in the form

of an appeal.  This appeal was dismissed confirming the orders of

the  Cooperative  Court.   Further  challenge  was  laid  by  the

appellant  by  filing  a  writ  petition  before  the  High  Court  of

Judicature at Bombay, Aurangabad Bench.  This writ petition has

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also  been  dismissed  vide  judgment  dated  January  21,  2014.

Present appeal assails the said judgment of the High Court.

2) From the aforesaid, it becomes clear that the issue that needs to

be decided is as to whether the Cooperative Court established

under  the  Act  has  the  requisite  jurisdiction  to  decide  ‘service

dispute’ between a cooperative society established under the Act

and its employees.

3) Section 91(1) of the Act, scope whereof is to be examined, reads

as under:

“91.  Disputes.  –  (1)  Notwithstanding  anything contained in any other law for the time being in force, any dispute touching the constitution, elections of the committee  or  its  officers  other  than  elections  of committees  of  the  specified  societies  including  its officer, conduct of general meetings, management or business of a society shall be referred by any of the parties to the dispute, or by a federal society to which the society is affiliated or by a creditor of the society, to the Cooperative Court if  both the parties thereto are one or the other of the following –  

(a) a society, its committee, any past committee, any past or present officer, any past or present agent, any past  or  present  servant  or  nominee,  heir  or legal  representative  of  any  deceased  officer, deceased  agent  or  deceased  servant  of  the society,  or  the  liquidator  of  the  society  or  the official assignee of a deregistered society;

(b) a  member,  past  member  of  a  person  claiming through a member, past member of  a deceased member of society, or a society which is a member of  the  society  or  a  person  who  claims  to  be  a member of the society;

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(c) a person other than a member of the society, with whom the society, has any transactions in respect of which any restrictions or regulations have been imposed, made or prescribed under Section 43, 44 or  45,  and  any  person  claiming  through  such person;

(d) a surety of a member, past member or deceased member,  or  surety  of  a  person  other  than  a member  with  whom  the  society  has  any transaction  in  respect  of  which  restrictions  have been prescribed under Section 45, whether such surety  or  person  is  or  is  not  a  member  of  the society;

(e) any  other  society,  or  the  liquidator  of  such  a society  or  deregistered  society  or  the  official assignee of such a deregistered society.”

4) As the plain  language of  Section 91 suggests,  primarily  those

disputes which pertain to the constitution of  the society or  the

elections,  management  or  business  of  society, etc.,  are  to  be

decided by the Cooperative Court.  Such disputes are normally

between the members of the society or between the society and

its members.  However, this Section also uses the expression ‘it’s

officers’ and on that  basis, it  is argued by the respondent that

disputes  of  employees/officers  with  the  management  and  the

society  can  also  be  covered,  more  particularly,  the  dispute

regarding termination of the officer, which is the subject matter of

the petition filed by the respondent.  It is further argued that in any

case  disputes  pertaining  to  ‘management  or  business  of  a

society’ are wide enough to cover the dispute between the society

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as an employer and its employees.

5) Before  the  High  Court  it  was  argued  by  the  counsel  for  the

respondent that the respondent was not claiming reinstatement

as he had attained the age of superannuation when the dispute

was  filed.   Therefore,  while  challenging  the  resolution  of  the

respondent dismissing his services, the respondent was seeking

compensation for wrongful dismissal.  It  was, thus, argued that

since reinstatement was not claimed, the award of compensation

was  within  the  jurisdiction  of  the  Cooperative  Court.   This

contention  of  the  respondent  is  accepted  by  the  High  Court

relying upon its earlier Division Bench judgment in the case of

Pralhad  Vithalrao  Pawar  v.  Managing  Director,  Kannaded

Sahakari Sakhar Karkhana Ltd. & Anr.1  The rationale behind

this view taken in the aforesaid judgment by the High Court was

that the remedy under Section 91(1) of the Act is a substitute for

the  remedy  which  could  have  been  available  before  the  Civil

Court as the forum created under Section 91 is a substitute for

the Civil Court and created under a special legislation.  Since the

Civil  Court  has  the  jurisdiction  to  award  damages,  the

Cooperative  Court  would  be  vested  with  same  powers  as  its

substitute.  The High Court also held that the respondent herein 1

1998 (3) Mh.L.J. 214

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was working as the Manager with the appellant Corporation and,

therefore, was not  ‘workman’ within the meaning of Section 2(s)

of  the  Industrial  Disputes  Act,  1947.   The  submission  of  the

learned  counsel  for  the  appellant  was  that,  no  doubt  the

Cooperative Court was the substitute of the Civil Court, but, at the

same time,  it  was the creature  of  the statute  and only  limited

powers were conferred upon the Cooperative Court and not all

the powers of  the Civil  Court.   These powers pertained to the

nature  of  disputes  which  were  categorically  delineated  under

Section  91  of  the  Act.   According  to  the  learned counsel,  the

Cooperative Court was vested with the jurisdiction to decide only

those disputes which touch upon the business of the society and

since it was not a dispute pertaining to the business of the society

or  the  election  of  committee  or  its  officers,  and  was  an

employer-employee dispute, Section 91 did not give any power to

the  Cooperative  Court  to  decide  such  disputes  which  arise

between the employer and the employee.

6) Learned counsel for the respondent, on the other hand, adopted

the  afore-noted  reasons  as  given  by  the  High  Court.   His

submission  was that  the word  ‘officer’  occurring  in  Section  91

would include disputes between the management and its officers,

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i.e. employees.  He also submitted that the disputes relating to

‘management’  of  a  society  should  be  read  widely  to  include

service disputes as well.

7) We may state at the outset that it was conceded at the Bar that if

the employee of a cooperative society is covered by the definition

of  ‘workman’  within the meaning of the Industrial  Disputes Act,

1947  and  claims  a  relief  of  reinstatement,  in  that  event  the

Cooperative Court  will  not have jurisdiction to entertain such a

claim, inasmuch as, relief of reinstatement cannot be granted by

the Cooperative Court.  Such a relief can only be granted by the

Labour  Court  or  the  Industrial  Tribunal  constituted  under  the

Industrial Disputes Act having regard to the fact that special and

complete  machinery  for  this  purpose  is  provided  under  the

provisions of  the Industrial  Disputes Act,  the jurisdiction of  the

Civil  Court  stands  ousted.   This  is  so  held  by  this  Court

consistently in a number of judgments2.  These observations are

made  on  the  premise  that  even  if  it  is  accepted  that  the

Cooperative Court established under the Act is a substitute of a

Civil Court, the jurisdiction of the Civil Court to grant relief would

not go beyond the jurisdiction which has been vested in the Civil

Court.  When admittedly the Civil Court does not have jurisdiction 2    Uttar Pradesh Warehousing Corporation Ltd. v. Chandra Kiran Tyage, 1970 1 LLJ 32; Dr. S.B.

Dutta v. University of Delhi, 1959 SCR 1236 and S.R. Tewari v. District Board, Agra 1964 1 LLJ 1

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to grant any such relief and its jurisdiction is barred in view of the

law  laid  down  in  the  aforesaid  judgment,  as  a  fortiorari,  the

jurisdiction of the Cooperative Court shall also stand barred.  We

may also clarify one more aspect.  Contract of personal services

is not enforceable under the common law.  Section 14, read with

Section 41(e) of the Specific Relief Act, 1963, specifically bars the

enforcement of such a contract.  It is for this reason the principle

of law which is well established is that the Civil Court does not

have the jurisdiction to grant relief of reinstatement as giving of

such relief  would amount to enforcing the contract  of  personal

services.  However, as laid down in the cases referred to above,

and also in  Executive Committee of  Vaish Degree College,

Shamli  &  Ors.  v.  Lakshmi  Narain  &  Ors.3,  there  are  three

exceptions to the aforesaid rule where the contract of personal

services can be enforced:

(a) in  the case of  a public  servant  who has been dismissed

from  service  in  contravention  of  Article  311  of  the

Constitution of India;  

(b) in the case of an employee who could be reinstated in an

industrial adjudication by the Labour Court or an Industrial

Tribunal; and  

3 (1976) 2 SCC 58

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(c) in  the  case  of  a  statutory  body,  its  employee  could  be

reinstated when it  has acted in  breach of  the mandatory

obligations imposed by the statute.   

8) Even when the employees falling under any of the aforesaid three

categories raise dispute  qua  their termination, the Civil Court is

not empowered to grant reinstatement and the remedy would be,

in the first two categories, by way of writ petition under Article 226

of the Constitution or the Administrative Tribunal Act, as the case

may be, and in the third category, it would be under the Industrial

Disputes  Act.   An  employee  who  does  not  fall  in  any  of  the

aforesaid  exceptions  cannot  claim  reinstatement.   His  only

remedy is to file a suit in the Civil Court seeking declaration that

termination was wrongful and claim damages for such wrongful

termination of services.  Admittedly, the appellant Corporation is

not a ‘State’ under Article 12 of the Constitution.  The respondent

also cannot be treated as a Government/public servant as he was

not under the employment of any Government.  He was also not

‘workman’ under the Industrial Disputes Act as he was working as

Manager with the appellant Corporation.

9) In the aforesaid conspectus, we have to examine as to whether

this  power  which  is  available  with  the  Civil  Court  to  grant

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damages is now given to the Cooperative Court under Section 91

of the Act.  We may also mention at this stage that some of the

States  have  statutes  which  contain  provisions  regarding

management and regulations of  the cooperative society, where

specific machinery under these State Cooperative Societies Acts

is  provided  for  resolution  of  employment  disputes  as  well,

between the cooperative societies and its employees, that too by

excluding  the  applicability  of  labour  laws.   No  doubt,  in  such

cases,  the  disputes  between  the  cooperative  societies  and  it

employees, including the workmen, would be dealt with by such

machinery and the general Act, like the Industrial Disputes Act,

would not be applicable (See Ghaziabad Zila Sahkari Bank Ltd.

v.  Addl.  Labour  Commissioner  &  Ors.4 and  Dharappa  v.

Bijapur  Coop.  Milk  Producers  Societies  Union  Ltd.5).

Pertinently, in the instant case, Section 91 specifically excludes

the disputes between the cooperative society as employer and its

‘workmen’.   Ultimately, the outcome depends upon the powers

that are given to the Cooperative Court or the stipulated tribunal

created under such Acts.  It is in this hue we have to find out as to

whether  Section 91 of  the Act  at  hand empowers Cooperative

Courts to decide such disputes.

4   (2007) 11 SCC 756 5    (2007) 9 SCC 109

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10) A reading of the provisions of Section 91 would show that there

are  two  essential  requirements  for  conferment  of  exclusive

jurisdiction on the Cooperative Court which need to be satisfied:

(i) the first  requirement  is  that  disputes should  be  ‘disputes

touching’  the  constitution  of  the  society  or  elections  or

committee or its officers or conduct of general meetings or

management of society, or business of the society; and

(ii) the  second  requirement  is  that  such  a  dispute  is  to  be

referred to the Cooperative Court by ‘enumerated persons’

as specified under sub-section (1) of Section 91.

11) When we read the provision in the aforesaid manner, we arrive at

a firm conclusion that service dispute between the employees of

such cooperative society and the management of the society are

not covered by the aforesaid provision.  The context in which the

word  ‘officers’  is used is altogether different, namely, election of

the  committee  or  its  officers.   Thus,  the  word  ‘officers’  has

reference to elections.  It is in the same hue expression ‘officer’

occurs second time as well.   

12) It  was,  however,  argued  by  the  learned  counsel  for  the

respondent that disputes touching the ‘management or business

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of a society’ would include the dispute between the management

of the society and its employees.   

13) There are plethora of  judgments of  this  Court  holding that  the

expression  ‘business of the society’  would not cover the service

matters  of  employer  and  employee.   In  Deccan  Merchants

Coop.  Bank  Ltd.  v.  Dalichand  Jugraj  Jain6, this  Court

interpreted somewhat similar clause and held that it covered five

kinds of disputes.  It becomes clear from the following discussion:

“Five kinds of disputes are mentioned in sub-section: first, disputes touching the constitution of a society; secondly, disputes  touching  election  of  the  office-bearers  of  a society; thirdly, disputes touching the conduct of general meetings  of  a  society;  fourthly,  disputes  touching  the management  of  a  society;  and fifthly  disputes touching the  business  of  a  society.  It  is  clear  that  the  word ‘business’  in  this  context  does  not  mean  affairs  of  a society  because  election  of  office-bearers,  conduct  of general meetings and management of a society would be treated as affairs of a society. In this sub-section the word ‘business’  has  been  used  in  a  narrower  sense  and  it means the actual trading or commercial or other similar business  activity  of  the  society  which  the  society  is authorised to enter into under the Act and the Rules and its bye-laws.”

Likewise, in  Coop. Central Bank Ltd.  v.  Addl. Industrial

Tribunal7,  the  Court  held  that  the  expression  ‘touching  the

business of the society’ would not cover the disputes pertaining to

alteration of conditions of service of workman.  

6 (1969) 1 SCR 887 7 (1969) 2 SCC 43

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These  judgments  were  taken  note  of  in  Morinda Coop.

Sugar  Mills  Ltd.  v.  Morinda  Coop.  Sugar  Mills  Workers’

Union8,  where scope of  Section 55 of  the Punjab Cooperative

Societies  Act,  1961  came  up  for  consideration.   That  section

provided  for  reference  of  dispute  to  arbitration  ‘if  any  dispute

touching  the  constitution,  management  or  the  business  of  a

cooperative society arises’.  Following the aforesaid judgments,

the Court gave limited meaning to the aforesaid expression and

held that the suit filed by the Workers’ Union of the cooperative

society  claiming  dearness  allowance  on  the  wages  plus  fixed

allowance in accordance with the Third Wage Board Report was

maintainable  in  the  Civil  Court,  and  such  a  dispute  was  not

covered  by  the  provisions  of  Section  55  of  the  Punjab

Cooperative Societies Act, 1961.

The reading of the aforesaid judgments make it crystal clear

that  dispute  of  this  nature  does not  come within  the scope of

‘business of the society’.   

14) We now advert to the question as to whether such a dispute can

be treated as dispute relating to ‘management of the society’.  On

this  aspect  as well,  there is  a direct  judgment of  this  Court  in

Gujarat  State  Cooperative  Land  Development  Bank  Ltd.  v.

8 (2006) 6 SCC 80

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P.R. Mankad & Ors.9 wherein the expression ‘management of the

society’ was assigned the following meaning:

“35.  We will  now focus  attention  on  the  expression “management of the Society” used in Section 96(1) of the Act of  1961. Grammatically, one meaning of  the term ‘management’ is: “the Board of Directors' or “the apex  body”  or  “Executive  Committee  at  the  helm which  guides,  regulates,  supervises,  directs  and controls the affairs of the Society”. In this sense it may not  include  the  individuals  who  under  the  overall control of that governing body or Committee, run the day-to-day business of  the Society, (see Words and Phrases,  by  West  Publishing  Co.,  Permanent  Edn., Vol.  26,  p.  357,  citing Warner  and  Swasey Co. v. Rusterholz  D.C.  Minn [41  F  Supp 398,  505]  . Another meaning of the term “management”, may be: ‘the act or acts of managing or governing by direction, guidance, superintendence, regulation and control, the affairs of a Society’.

36.   A  still  wider  meaning  of  the  term  which  will encompass the entire staff of servants and workmen of  the  Society,  has  been  canvassed  for  by  Mr Dholakia. The use of the term “management” in such a wide sense in Section 96(1) appears to us, to be very doubtful.”   

It,  thus,  clearly  follows  that  the  dispute  raised  by  the

respondent is not covered within the meaning of Section 91 of the

Act  and,  therefore,  the  Cooperative  Court  does  not  have  the

jurisdiction to entertain the claim filed by the respondent.  

15) The learned counsel for the respondent referred to the judgment

of this Court in the case of R.C. Tiwari v. M.P. State Cooperative

Marketing Federation Ltd. & Ors.10.  However, a close scrutiny

9 (1979) 3 SCC 123 10 (1997) 5 SCC 125

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of the said judgment would reveal that the power of the Registrar

to deal with the dispute of dismissal from service of the employee

was  recognised  having  regard  to  Section  55  of  the  M.P.

Cooperative Societies Act, 1960 which gave specific power to the

Registrar  to  determine  conditions  of  employment  in  societies,

including deciding the disputes regarding terms of employment,

working conditions and disciplinary actions taken by the society

arising between the society and its employees.  Therefore, that

judgment would be of no help to the respondent.

16) It may be noted that the High Court, in the impugned judgment,

has itself  proceeded on the basis that  if  the dispute relates to

reinstatement,  the  Cooperative  Court  will  not  have  any

jurisdiction.  The main reason for conferring jurisdiction upon the

Cooperative  Court  in  the  instant  case  is  that  the  Cooperative

Court has replaced the Civil Court and, therefore, powers of the

Civil  Court  are  given to  the Cooperative  Court.   However, the

High Court erred in not further analysing the provisions of Section

91 of the Act which spells out the specific powers that are given to

the Cooperative Court  and those powers are of  limited nature.

Our aforesaid analysis leads to the conclusion that the disputes

between  the  cooperative  society  and  its  employees  are  not

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covered by the said provision.  We may hasten to add that if the

provision is couched in a language to include such disputes (and

we  find  such  provisions  in  the  Cooperative  Societies  Acts  of

certain States) and it is found that the Cooperative Society Act

provides for complete machinery of redressal of grievances of the

employees,  then  even  the  jurisdiction  of  the  Labour  Court/

Industrial  Tribunal  under  the  Industrial  Disputes  Act  shall  be

barred having regard to the provisions of such a special statute

vis-a-vis  general  statute like the Industrial  Disputes Act  {See –

Ghaziabad Zila Sahkari Bank Ltd.11}.

17) In Gujarat State Co-operative Land Development Bank Ltd. v.

P.R.  Mankad  &  Ors.12,  an  employee  working  as  Additional

Supervisor was removed from service by giving one month’s pay

in lieu of Notice under the Staff Regulations.  He had issued a

notice under the Bombay Industrial  Relations Act,  1946, as he

was an employee as defined under section 2(13) of the said Act.

One  of  the  questions  that  was  considered  by  this  Court  was

whether a dispute raised by the said employee for setting aside

his  removal  from service  on  the  ground that  it  was  an  act  of

victimization and for  reinstatement  in  service with  back wages

was one  ‘touching the management or business of the society’, 11     Refer Footnote 4 12 (1979) 3 SCC 123

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within the contemplation of the Co-operative Societies Act.  This

Court held that the expression ‘any dispute’ referred to in section

96 of the Gujarat Co-operative Societies Act, 1961 did not cover a

dispute of the kind raised by the respondent employee against

the bank.

18) As a result, this appeal is allowed, the order of the High Court is

set aside and the Division Bench judgment, on which reliance is

placed by the High Court in the impugned judgment, is overruled.

As  a  consequence,  it  is  held  that  the  petition  filed  by  the

respondent before the Cooperative Court is not maintainable.  It

would,  however, be open to  the respondent  to  file  a civil  suit.

Needless to mention, in such a civil suit filed by the respondent,

he would be at liberty to file application under Section 14 of the

Limitation Act, 1963 in order to save the limitation.

No costs.

.............................................J. (A.K. SIKRI)

.............................................J. (R.K. AGRAWAL)

NEW DELHI; MARCH 30, 2017.

Civil Appeal No.1488 of 2017 Page 17 of 17