Allowed

The President, Syndicate Bank Employment Co-operative v. K. Seetharamaiah

Telangana HC27 Dec 2011WP/5608/2000

Case brief

AI extract

What is this about?

Writing for himself, Justice R.Kantha Rao quashed the orders of the Primary Authority and Appellate Authority under the A.P. Shops & Establishments Act, 1988. The court held that a cooperative society functioning solely for its members without profit motive does not qualify as an establishment under the Act, thereby lacking jurisdiction to initiate recovery proceedings.

What did the court decide?

Writ of Certiorari issued to quash the order dated 18.1.2000 in S.A.No. 33 of 1995 and order dated 19.1.1995 in APSE.No. 32 of 1994.

The President, Syndicate Bank Employment… — Pension and Retirement Benefits | Telangana HC (2011)

¶1

THE HON’BLE SRI JUSTICE R.KANTHA RAO

¶2

WRIT PETITION No. 5608 of 2000.

¶3

ORDER:

¶4

This writ petition is filed for issuance of a Writ of Certiorari calling for the records pertaining to the order dt. 18.1.2000 in S.A.No. 33 of 1995 of the Appellate Authority u/s 53 of the A.P. Shops & Establishments Act, 1988 read with order dt. 19.1.1995 in APSE.No. 32 of 1994 of the Authority u/s 50 of the said Act and to quash the same as illegal, arbitrary and also being in violations of the provisions of the said Act and consequently direct the 2^nd respondent herein not to initiate any recovery proceedings pursuant to the orders against the petitioner society. Brief facts of the case giving rise to the filing of this writ petition are as follows:

¶5

The 1^st respondent K.Seetharamaiah was working in the Syndicate Bank Employees’ Co-operative Credit Society, Tilak Road, Hyderabad and having found that he was more than 30 years of age at the time of his appointment and by suppressing the said fact, he joined as a Manager in the petitioner society, his services were terminated by the petitioner society. At the time of termination of the services of the petitioner, he was paid an amount of Rs. 7,542/- as an exgratia. Not being satisfied with the amount of exgratia, the 1^st respondent raised a claim before the Primary Authority under the Shops and Establishments Act, 1988 contending that he was not paid service compensation, encashment of E.Ls and C.Ls amounting to Rs. 30,594/-. The Primary Authority allowed the claim of the petitioner treating the petitioner society as an establishment and the 1^st respondent is an employee of the establishment. Aggrieved by the order of the Primary Authority, the petitioner society filed an appeal before the 1^st respondent and the Appellate Authority under Section 50 (3) of the A.P.S.E. Act confirmed the order passed by the Primary Authority. Questioning the legality of the order passed by the Appellate Authority, the present writ petition is filed seeking the relief adverted to

¶6

above.

¶7

The point that arises for consideration in this writ petition is whether the petitioner society is an establishment under the provisions of the A.P.S.E. Act, 1988.

¶8

As per Section 2 (21) of the A.P.S.E. Act ‘establishment’ means where any trade or business is carried on or where services are rendered to customers and includes a shop run by a Co-operative Society.

¶9

Relying on the definition of ‘establishment’ the learned Counsel for the petitioner contended that the essential element of establishment is carrying on of trade or business or rendering of services to customers i.e. it cannot be confined to its own members but must be available for any outsider to whom the goods or services must be available on payment of a stipulated price and that admittedly the petitioner society is meant purely for the members who are permanent employees of the Syndicate Bank and it is run without any profit motive and therefore the provisions of the A.P.S.E. Act do not apply to the petitioner and the 1^st respondent is not entitled for any exgratia.

¶10

In support of his contention, the learned Counsel relied on the

¶11

decision in V.Sasidharam v. M/s Peter and Karunaka r^[1] wherein the Supreme Court dealing with Kerala Shops and Commercial Establishments Act, 1960 (wherein the definition of ‘commercial establishment is analogous to the definition of ‘commercial establishment’ in the A.P. Shops and Establishments Act) held that the office of a lawyer or a firm of lawyers is not a ‘commercial establishment’. The Supreme Court further observed that it is trite that traditionally lawyers do not carry on a trade or business nor do they render services to customers and the context as well as the phraseology of the definition in Section 2 (15) is inapposite in the case of a lawyer’s office or the office of a firm of lawyers.

¶12

The learned Counsel for the petitioner also relied on a decision of this Court in Kugler Hospital, Guntur vs. the Assistant Commissioner of Labour, Guntu r^[2] wherein a Division Bench of this Court held as

¶13

under:

¶14

“By reading the definitions of ‘Commercial Establishment’ and ‘Shop’, it is clear that where the service is rendered in the course of commercial activity of trade or business or sale or purchase of goods, then the said service comes within the definition of ‘Shop’. Where the service is rendered in a charitable or professional establishment the, the said premises where such service is rendered will not come within the purview of definition of ‘Commercial Establishment’ or ‘Shop’. In the present case, it is not disputed that the petitionerinstitution is a hospital running for treating the patients. Therefore it will not come within the definition of either ‘Commercial Establishment’ or ‘Shop’. Hence, the proceedings in question are without jurisdiction. When once the premises is not a commercial establishment, the Act has no application. Therefore, it cannot be said that the petitioner has violated the provisions of the Act. Further, Article 20 of the Constitution of India provides that no person shall be convicted of any offence except for violation of law in force at the time of commission of the act charged as an offence. Thus, it is clear that where the act is not in violation of any law by the time of commission of such an act, it is not an offence. Therefore, when the petitioner premises does not come within the purview of establishment or shop, there is no necessity to register the institution or comply with the provisions of the A.P. Shops and Establishments Act. Hence, prosecuting the petitioner for violation of the provisions of the said Act is without jurisdiction. Therefore the proceedings in Crl.M.P.No. 2913 of 1987 are quashed.”

¶15

However, the learned Appellate Authority referring to the definition of ‘commercial establishment’ provided under sub-section (5) of Section 2 of the A.P. Shops and Establishments Act held that as per the said provision, the commercial establishment includes an establishment under the management and control of a co-operative society, the petitioner society is also an establishment as defined under Section 2(10) of the Act.

¶16

Section 2(10) of the Act lays down that ‘establishment’ means a shop, restaurant, eating-house, residential hotel, lodging, theatre or any place of public amusement or entertainment and includes a

¶17

commercial establishment and such other establishment as the Government may, by Notification declare to be an establishment for the purposes of this Act.

¶18

Even though Sub-section (5) of Section 2 of the Act lays down that a commercial establishment includes an establishment under the management and control of a co-operative society, the crux of the issue is as to whether the petitioner society is an establishment at all within the meaning of the Act. It is submitted by the learned Counsel for the petitioner that the essential element of an establishment is carrying on of trade or business or rendering of services to customers i.e. it cannot be confined to its own members but must be available for any outsider to whom the goods or services must be available on payment of a stipulated price and that admittedly as the petitioner society is meant purely for the members who are permanent employees of the Syndicate Bank and it is run without any profit motive, the provisions of the A.P.S.E. Act do not apply to the petitioner and the 1^st respondent is not entitled for any exgratia.

¶19

In view of the decisions (supra) of the Apex Court as well as this Court, as the activity of the petitioner society is not commercial and its services are meant only to its members without any profit motive, it cannot be considered as an establishment as defined under Section 2(10) of the Act. Therefore, this Court is of the view that both the authorities under the Act took an erroneous view and held that the petitioner society is an establishment.

¶20

For the foregoing reasons, the order dt. 18.1.2000 in S.A.No. 33 of 1995 passed by the Appellate Authority confirming the order dt. 19.1.1995 in A.P.S.E.No. 32 of 1994 of the Primary Authority is quashed. The writ petition is allowed. There shall be no order as to costs.

¶21

________________________ R.KANTHA RAO, J

¶22

27.12.2011. KRB.

¶23

THE HON’BLE SRI JUSTICE R.KANTHA RAO

¶24

WRIT PETITION No. 5608 of 2000.

¶25

ORDER:

¶26

Dt. 27.12.2011.