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Case Number

Writ Petitions Nos. 6736 and 6905 of 1984 and 6145 to 6147 of 1983

Attorney(S)

s in Writ Petitions Nos. 6736 and 6905 of 1984.— Sri A.L Somayaji.
s in Writ Petitions Nos. 6143 to 6147 of 1985 and for second respondent in Writ Petitions Nos. 6736 and 6905 of 1984.— Sri P. Jagadeesan.
For First Respondent in Writ Petitions Nos. 6736 and 6905 of 1984 and for the second respondent in Writ Petitions Nos. 6145 to 6147 of 1985.— Sri T. Chandrasekaran.

Judges

S. Nainar Sundaram, J.

Acts

TAMIL NADU PAYMENT OF SUBSISTENCE ALLOWANCE ACT
S. 73 of the Tamil Nadu Co-operative Societies Act

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Smart Summary

Structured Summary of the Court Opinion

Factual and Procedural Background

The matters concern a group of employees (supervisors grade II) who were deputed as paid secretaries to various co‑operative societies affiliated with the Vellore Central Co‑operative Bank (the employer). The employees were placed under suspension pending disciplinary action and were paid subsistence allowance according to the employer's special bye‑laws. The employees sought the difference between that allowance and the subsistence allowance payable under the Tamil Nadu Payment of Subsistence Allowance Act, 43 of 1981 (the Act).

The Deputy Commissioner of Labour, Salem, heard applications by the employees. For the petitioners in Writ Petitions Nos. 6736 and 6905 of 1984 he held that the persons were not "employees" within the meaning of the Act and dismissed their applications. For the three employees who are the first respondents in Writ Petitions Nos. 6145 to 6147 of 1985, the Deputy Commissioner reached the opposite conclusion and allowed their applications. The employer and the employees filed writ petitions in this Court challenging the differing decisions of the Deputy Commissioner.

The employer placed heavy reliance on an annexed document marked Exhibit M1, describing the duties and responsibilities of supervisors deputed as paid secretaries. The cases relied on the same body of evidence and the Court treated the evidentiary material as common to all petitions.

Legal Issues Presented

Whether the persons deputed as supervisors/paid secretaries fall within the definition of "employee" under S. 2(a) of the Tamil Nadu Payment of Subsistence Allowance Act, 43 of 1981, or are excluded because they are employed mainly in a managerial or administrative capacity.
Whether, alternatively, they are excluded from the definition because they are employed in a supervisory capacity drawing wages exceeding Rs. 500 per mensem or because they exercise functions mainly of a managerial nature by virtue of their duties or powers.
Whether the Deputy Commissioner of Labour's two opposite conclusions on identical materials (allowing some applications and rejecting others) can be sustained or require correction by this Court.

Arguments of the Parties

Employer's Arguments (as advanced by Sri P. Jagadeesan)

Exhibit M1 (duties and responsibilities of supervisors deputed as paid secretaries) demonstrates that the employees perform managerial or administrative roles.
The employees were employed in supervisory capacities and drew wages exceeding Rs. 500 per month; therefore they fall within the statutory exclusions in S. 2(a)(i) and (ii) of the Act and are not "employees" entitled to enhanced subsistence allowance under the Act.
The reasons given by the Deputy Commissioner for repelling the employees' claims in some files should apply uniformly to all employees whose duties are described in Exhibit M1.

Employees' Arguments (as advanced by Sri A.L. Somayaji)

The contents of Exhibit M1 do not establish that the supervisors were mainly employed in a managerial or administrative capacity or that they performed functions mainly of a managerial nature.
Even if the employees were drawing emoluments above Rs. 500 per mensem, that fact alone is not decisive under the statutory definition and does not exclude them from the Act.
Evidence (including cross‑examination of the employer's witness) shows the supervisors lacked powers characteristic of management or supervision (e.g., power to appoint, fix or increase salaries, comprehensively sanction leave, suspend or terminate staff, or take disciplinary action by themselves), which undermines the employer's claim that they occupy managerial/supervisory positions excluded from the Act.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court proceeded by reference to the statutory definition of "employee" in S. 2(a) of the Act, which includes a wide class of persons but expressly excludes certain categories:

“(a) ‘employee’ means any person employed in, or in connection with the work or activities of, any establishment to do any skilled, semi‑skilled or unskilled, manual, supervisory, technical, clerical or any other kind of work or activities for hire or reward, whether the terms of employment be expressed or implied, but does not include any such person— (i) who is employed mainly in a managerial or administrative capacity; or (ii) who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.”

The Court emphasized that the statutory expressions "managerial or administrative capacity" are not defined in the Act and hence must receive their ordinary meaning. The Court explained the legal approach to the exclusions:

Managerial or administrative functions ordinarily require the person to control the work of others, to take decisions, and to assume responsibility for ensuring that tasks entrusted to subordinates are efficiently and properly executed within a defined area of work.
Designation alone is not decisive; the true test is the nature of the functions actually performed and the powers exercised.
Drawing wages over Rs. 500 per mensem is a factor in the exclusion clause but is not conclusive by itself to exclude a person from the definition of "employee."

Turning to the materials, the Court examined Exhibit M1 (the duties and responsibilities of supervisors deputed as paid secretaries) and the evidence given by the employer's witness. The Court's factual-legal assessment was as follows:

Exhibit M1 sets out extensive operational duties of a paid secretary (maintaining registers, cash balances, preparing loan applications, being available to members, maintaining minutes and vouchers, assisting in disbursement of loans in the presence of the society's president and directors, taking coercive recovery action under S. 73 of the Tamil Nadu Co‑operative Societies Act, etc.).
However, Exhibit M1 does not expressly confer control over the work of other employees, nor does it stipulate that the paid secretary must take managerial decisions or assume responsibility for supervising subordinates' work in the sense required to exclude a person from the Act.
Crucially, cross‑examination of the employer's witness produced admissions that the supervisors/secretaries had no power to appoint staff; had no power to grant increases or determine salaries; had no comprehensive power to sanction leave; had no power to suspend or terminate employees; and could not by themselves take disciplinary action.
Given these material facts, the Court found it unsustainable to characterize the employees as employed mainly in a managerial or administrative capacity, or as exercising functions mainly of a managerial nature, or as supervisors who by virtue of their role and pay should be excluded from the Act's definition.

The Court noted the anomaly that the Deputy Commissioner of Labour had reached opposite conclusions on the same body of evidence in different files. The Court declined a merely technical response to those contradictory orders and instead applied a uniform legal inference: the evidence, taken together, supports the employees' claims that they fall within the Act's definition of "employee."

Holding and Implications

Holding: The Court concluded that the Deputy Commissioner of Labour's orders allowing the three applications (subject of Writ Petitions Nos. 6145 to 6147 of 1985) were correct and that the orders dismissing the applications (subject of Writ Petitions Nos. 6736 and 6905 of 1984) were incorrect.

The Court therefore rendered the following dispositive orders:

Writ Petitions Nos. 6145–6147 of 1985: DISMISSED. (These petitions were filed by the employer challenging the Deputy Commissioner’s orders in favour of the three employees; the Court upheld those orders.)
Writ Petitions Nos. 6736 & 6905 of 1984: ALLOWED. (These petitions were filed by the employees challenging the Deputy Commissioner’s orders dismissing their claims; the Court allowed their claims.)
The employer was directed to pay the difference in the subsistence allowance to the employees as claimed, within 30 days from the date of the order.
There was to be no order as to costs in all these writ petitions.

Implications: The direct effect is an order for payment of the claimed subsistence allowance differences to the employees and final resolution of the challenged orders. The opinion does not purport to lay down a novel legal principle; rather, it applies ordinary interpretative standards to the statutory exclusions and resolves the factual question (whether the persons occupied managerial/supervisory roles) against the employer on the material before the Court. The Court did not cite any binding precedents in the provided text.

Summary of Exhibit M1 (duties & responsibilities quoted in the opinion)

Exhibit M1 (annexed to the order) sets out the duties and responsibilities of supervisors deputed as paid secretaries of societies. Key duties and features recorded in Exhibit M1 (as relied on and examined by the Court) include:

The paid secretary is described as important to the Bank's functioning for agricultural credit and is expected to be resident at headquarters and available to members (24‑hour availability).
Maintenance of multiple registers and records (day book, ledgers, loan registers, stock registers, remittance registers, tour register, registers of overdues, etc.) and proper filing and voucher maintenance.
Joint responsibility with the society president for cash balance and stock; signing of receipts and maintenance of minutes book.
Preparation of annual credit limit and drawal applications and facilitating timely disbursement of loans (disbursement in presence of the president and two directors).
Obligation to take coercive recovery action under S. 73 of the Tamil Nadu Co‑operative Societies Act and to file execution petitions after obtaining decrees.
Other managerially‑oriented tasks such as ensuring loan transactions develop, monitoring members' repayment capacity, and ensuring societies operate profitably.

The Court treated these duties as operationally extensive but found they did not, on the face of Exhibit M1 or the accompanying evidence, demonstrate that the paid secretaries exercised independent managerial control or supervisory powers over subordinate employees sufficient to take them outside the statutory definition of "employee."

End of summary based exclusively on the provided opinion text.

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Selvaraj (C.) And Others v. Deputy Commissioner Of Labour, Salem, And Another

1. The petitioners in Writ Petitions Nos. 6736 and 6905 of 1984 and the first respondent in each of the writ petitions. Writ Petitions Nos. 6145 to 6147 of 1985 and who shall hereinafter for convenience sake be referred to as the employees were employed as supervisors grade II of the common petitioner in Writ Petitions Nos. 6145 to 6147 of 1985, who is also the second respondent in each of the other writ petitions, Writ Petitions Nos. 6736 and 6905 of 1984 and who shall hereinafter for convenience sake be referred to as the employer. The employees at the relevant point of time were deputed to work as secretaries in various societies, which are members of the employer. The employees were placed under suspension pending disciplinary action. The employees were paid subsistence allowance as per the special bye-laws, governing the service conditions of the employees of the employer. But the employees wanted disbursement of subsistence allowance as per the provisions of the Tamil Nadu Payment of Subsistence Allowance Act, 43 of 1981, hereinafter referred to as the Act, and they filed applications claiming the difference between the subsistence allowance due to them under the Act and the subsistence allowance paid to them as per the special bye-laws. The Deputy Commissioner of Labour, Salem, dealt with these applications and in the case of the employees/petitioners in Writ Petitions Nos. 6736 and 6905 of 1984, held that they are not employees within the meaning of the Act and dismissed the applications taken by the employees. This has obliged the employees to come by way of Writ Petitions Nos. 6736 and 6905 of 1984 to this Court, challenging the orders passed by the Deputy Commissioner of Labour, Salem. In respect of the three employees/first respondent in each of the writ petitions, Writ Petitions Nos. 6145 to 6147 of 1985, the very same Deputy Commissioner of Labour, Salem, opined the other way about and held that they are employees within the meaning of the Act and allowed the applications and directed the employer to pay the three employees the difference in the subsistence allowance as claimed by them. The employer has come to this Court by way of writ petitions, Writ Petitions Nos. 6145 to 6147 of 1985, challenging the orders of the Deputy Commissioner of Labour, Salem. Learned counsel appearing for both the sides say that the evidence placed by the parties is common for all the cases. The employer would contend that the employees were employed in a supervisory capacity, doing managerial function and drawing salary exceeding Rs. 500 per mensem, and hence the employees must go out of the definition of an “employee” under the Act. The definition of an “employee” as per S. 2(a) of the Act runs as follows:

“(a) ‘employee’ means any person employed in, or in connection with the work or activities of, any establishment to do any skilled, semi-skilled or unskilled, manual, supervisory, technical, clerical or any other kind of work or activities for hire or reward, whether the terms of employment be expressed or implied, but does not include any such person—

(i) who is employed mainly in a managerial or administrative capacity; or

(ii) who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.”

The employer mainly relied on exhibit M1 which delienated the duties and responsibilities of supervisors, deputed to work as paid secretaries of societies. Since that is being heavily relied on by Sri P. Jagadeesan, learned counsel appearing for the employer, I feel obliged to annex a copy of exhibit M1 to this order. Sri A.L Somayaji, learned counsel for the employees, would submit that from the contents of exhibit M1, it is not possible to spell out that the employees were mainly employed in a managerial or administrative capacity or were employed in a supervisory capacity though drawing wages exceeding Rs. 500 per mensem or exercised either by the nature of the duties attached to their offices or by reason of the powers vested in them, functions mainly of managerial nature, and on the other hand, the evidence of the witness examined on behalf of the employer clearly demonstrated a position the other way about and the Deputy Commissioner of Labour, Salem, erred in dismissing the applications of the employees/petitioners in Writ Petitions Nos. 6736 and 6905 of 1984. In contrast, Sri P. Jagadeesan, learned counsel for the employer, would submit that the duties allocated under exhibit M1 clearly demonstrate that the employees had only a managerial or administrative role and they were employed in a supervisory capacity and were drawing wages over Rs. 500 per mensem and their functions were mainly of a managerial nature, and learned counsel for the employer wants to say that the reasons expressed by the Deputy Commissioner of Labour, Salem, for repelling the cases of the employees/petitioners in Writ Petitions Nos. 6736 and 6905 of 1984 ought to have been applied for repelling the cases of the three employees/first respondent in each of the writ petitions, Writ Petitions Nos. 6145 to 6147 of 1985. As we could see from the definition of an “employee” under the Act, it excludes only specified classes. For an employee to be taken out of the definition clause, he must have been employed mainly in a managerial or in an administrative capacity or he must have been employed in a supervisory capacity, drawing wages exceeding Rs. 500 per mensem or he must have exercised either by the nature of the duties attached to his office or by reason of the powers vested in him, functions mainly of a managerial nature. The expressions “managerial or administrative capacity” have not found a definition in the Act itself. Hence, they have to be given the interpretation in the ordinary manner. If a person should be stated to be in the position of management, though it is not necessary that he should be at the top of the hierarchy in the services or that he should have absolute power in any respect, yet managerial or administrative functions do require a person to control the work of others. If a person has employees subordinate to him, whose work he is required to supervise, and if he has to take decisions and responsibility for ensuring that the works entrusted to his subordinates are efficiently and properly executed and there is a defined area of such work assigned to him, then it is possible to draw an inference that he is in a position of management or supervision. It has been always countenanced by pronouncements including those of the highest Court in the land that one factor or the other is not decisive. Certainly the designation of the post is not a decisive factor. One has to see whether the person employed is in fact mainly employed in a managerial or administrative capacity or in a supervisory capacity or exercises functions mainly of a managerial nature. In the present case, admittedly the employees were drawing the emoluments over Rs. 500 per mensem. That by itself is not conclusive even as per the definition under the Act so as to exclude the person from the category of an “employee.” The contents of exhibit M1 allocates various duties to be discharged by a supervisor deputed to work as a secretary in a society. Nowhere from the said contents, it is possible to say that the supervisor deputed to work as a secretary was given the control over the work of others. It is not stipulated in exhibit M1 that the said personnel has to take decisions and has also to assume the responsibility for ensuring that any work entrusted to any one below him is properly and efficiently executed. The said personnel is not conferred with any control to supervise the work of others, subordinate to him. It is in this connection, Sri A.L Somayaji, learned counsel for the employees, drew my attention to the evidence of the witness examined on behalf of the employer. In the course of the cross-examination, the witness of the employer admitted that the employees have no power to appoint any one; they have no power to grant increase in the salary; they have no power to determine the salary of any employee; they have no comprehensive power to sanction leave; they have no power to suspend or terminate any employee and they have no power by themselves to take disciplinary action. If this evidence is taken note of, it is not possible to countenance the theory that the employees had any main managerial or administrative or supervisory role. They have to function as per the mandates set out in exhibit M1. But that does not mean that they were vested with any managerial or administrative or supervisory role. On the facts of the cases, and as per the materials disclosed, I do not find a warrant for excluding the employees from the ambit of the definition of an “employee” under the Act. The Deputy Commissioner of Labour, Salem, taking note of the very same materials, repelled the case of the employer by the orders challenged in Writ Petitions Nos. 6145 to 6147 of 1985, and countenanced the case of the employer by the orders, challenged in Writ Petitions Nos. 6736 and 6905 of 1984. It is possible to question the propriety of these two contradictory decisions on the very same materials. That will be a technical approach. But the legal inferences to be drawn from the materials exposed uniformly support the cases of the employees and it must be held that the Deputy Commissioner of Labour, Salem, erred in repelling the cases of the employees by orders challenged in Writ Petitions Nos. 6736 and 6905 of 1984. For the reasons expressed above, I am obliged to uphold the ultimate decision of the Deputy Commissioner of Labour, Salem, subject-matter of challenge in Writ Petitions Nos. 6145 to 6147 of 1985, and accordingly the said writ petitions are dismissed. For the very same reasons, I cannot uphold the decision of the Deputy Commissioner of Labours Salem, subject-matter of challenge in Writ Petitions Nos. 6736 and 6905 of 1984, and accordingly the said writ petitions are allowed, and the applications of the employees will stand ordered as prayed for and the employer is directed to pay the difference in the subsistence allowance to the employees as claimed by them within 30 days from today. There will be no order as to co sts in all these writ petitions.

ANNEXURE TO ORDER, DATED 5 APRIL 1988, IN WRIT PETITIONS NOS. 6736

AND 6905 OF 1984 AND 6145 TO 6147 OF 1985.

EXHIBIT M1

THE VELLORE CENTRAL CO-OPERATIVE BANK, LTD., VELLORE

Duties and responsibilities of supervisors deputed to work as paid secretaries of societies

The post of the paid secretary is an important one for, without him, the Central Co-operative Bank cannot function since agricultural credit is directly looked after by him. He is the professionalised and in charge of the agricultural credit situation in that village and he holds a place of pride in the village economy. He is the image of the Central Co-operative Bank and on him depends everything in the village or the villages in the area of operation of the societies. His duties and responsibilities are as given below:

2. The paid secretary should necessarily stay in his headquarters. He should be a 24 hours servant. Even on Sundays, if there are rains and if members ask for fertilisers, he cannot quote Sundays and stop agricultural operations. At any time, he should be available to the members in meeting all their needs and also mopping up savings in the concerned branches.

3. He should maintain an information chart at the society showing the progress of the society holding loan-wise particulars, the months in which majority of the members are having no loan outstanding with the society, the crop loans disbursed together with acreage, the total acreage of the villagers in the area of operation of the society under different crops, seasonality pattern, the gross income cropwise, etc. All these figures should be comparative as that one could watch the continuous progress or decline.

4. He should maintain a tour register in the society. His movements whether it is within the area of operation of the society or outside should be noted therein with the purpose. The movement register should be made available to the inspecting officials.

5. He is jointly responsible for the cash balance and the stocks held by the society with the president of the society. He should maintain the cash balance correctly.

6. He should maintain the following registers up to date:

Day book

Fertilizer sales chitta.

Sugar sales chitta.

Family war register.

Liability register.

Furniture register.

Investment register.

Defects rectification register.

Sugar stock register.

Fertiliser stock register.

General ledger.

Suspense asset register.

Receipts and charges register.

Loan ledger.

Disbursement register

‘A’ register regarding the details of sugar cards allotted to the society.

Admission register.

Coin-war register.

Central bank borrowing register.

Immovable properties register.

Bond register.

Acquittance register.

Remittance register.

Tour register.

Suspense liability register.

7. He should maintain the voucher file properly. The vouchers should be numbered serially and filed chronologically.

8. The minutes book of the society should be properly maintained and the resolutions passed by the board of management should be properly recorded.

9. He should prepare the annual credit limit loan applications in time for all the members and for all the crops that are cultivated in the area of operation of the society and submit the same in time to the Central Bank through the Bank Inspector and the Assistant Executive Officer concerned.

10. He should prepare drawal applications as and when loans are required by the members to whom A.C.L loans have already been sanctioned and submit the same to the branch and get disbursement. On any account the ryots should not wait for money to carry on their agricultural operations.

11. All the receipts issued by the society should be signed by the secretary.

12. The loans borrowed by the society from the Central Bank should be disbursed by him to the members in the presence of the president and two other directors of the society.

13. He should take coercive action for the recovery of the overdue loans by filing arbitration under S. 73 of the Tamil Nadu Co-operative Societies Act and file execution petitions after obtaining decrees.

14. He should have keen contact with each and every member of the society and see that all the families in the area of operation of the society is covered by the co-operative movement.

15. He should see that the loan transactions of the society is developed and at the same time should take care that no member is over financed.

16. He should have a thorough knowledge of each and every member's repaying capacity.

17. It is his prime duty to see that the entire Central Bank overdues as well as the members' overdues is cleared as at the end of June every year.

18. He should take care that the society, in which he is the secretary, works in profit. If the society works under loss, he should see that the loss is recouped and the society works under profit.

19. He should submit replies to the bank's memos and rectification reports to the defects pointed out by the inspecting officials then and there. He should also submit replies to the other officials if asked for, then and there.

Selvaraj (C.) And Others v. Deputy Commissioner Of Labour, Salem, And Another

Structured Summary of the Court Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Employer's Arguments (as advanced by Sri P. Jagadeesan)

Employees' Arguments (as advanced by Sri A.L. Somayaji)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Summary of Exhibit M1 (duties & responsibilities quoted in the opinion)

Selvaraj (C.) And Others v. Deputy Commissioner Of Labour, Salem, And Another

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