Holding

The writ petition is not maintainable as the cooperative sugar factory is not a State under Article 12, but the Court directs payment of 10% back wages to the workers.

Summary

The Chitradurga Mazdoor Sangh filed a writ petition in the Karnataka High Court seeking enforcement of a 1998 settlement and payment of 40% back wages to 51 reinstated workmen of a cooperative sugar factory. The High Court ordered the factory to implement the settlement and pay the back wages. The factory appealed, contending that as a cooperative registered under the Cooperative Societies Act it is not a "State" within Article 12 and thus the writ petition was not maintainable. The Supreme Court held that the cooperative does not fall within the definition of State, rendering the writ petition non‑maintainable, but in view of the workers' plight and the factory's dire financial condition, directed payment of 10% back wages (Rs.9.52 lakh) for 1992‑1999. The appeal was disposed of, with the court modifying the lower court’s order to a reduced back‑wage payment.

Issues considered

Whether a cooperative sugar factory registered under the Cooperative Societies Act qualifies as a 'State' under Article 12 of the Constitution, making a writ petition under Article 226 maintainable.
Whether the Supreme Court can alter the quantum of back‑wages ordered by the High Court in view of the factory's financial situation.

Legislation cited

Constitution of Indias. Article 12, s. Article 226

Subjects

Writ petitionArticle 12State definitionCooperative societyBack wagesLabour disputeSupreme CourtArticle 226Financial constraintsImplementation of settlement

Judgment

A M.D., BI-iADRA SHAHAKARI S.K. NIYAMITA
v.
PRESIDENT, CHITRADURGA MAZDOOR SANGH AND ORS.

OCTOBER 31, 2006

B [DR. AR. LAKSHMANAN AND TARUN CHATTERJEE, JJ.]

Constitution of India:

Articles I 2 and 226-Co-operative Sugar Factory-Employees-
C Settlement-Writ petition for direction to implement-High Court directing
implementation of settlement and Management to pay 40% back wages to
workers since their reinstatement had already been allowed-Held, writ
petition against co-operative Sugar Factory was not maintainable-However,
in the interest of justice and in the interest of workers, Management is
D directed to pay 10% back wages for the periods 1992 to 1999.

Respondent No. 1 Maj door Sangh in CA No. 4534 of 2004 filed a writ
petition before the High Court praying for a wriUdirection to the appellant-
co-operative sugar factory to implement the settlement stated to have been
arrived at between the parties. The High Court allowed the writ petition and
E directed the Management to pay 40% of back wages to the 51 reinstated
workmen. Later, the respondent-Mazdoor Sangh filed a contempt petition,
which was rejected. Both the Management as also the Majdoor Sangh filed
appeals before the Supreme Court.

It was contended for the Management that the Co-operative Sugar
F Factory being registered under the Cooperative Societies Act, would not fall
within the definition of 'State' under Article 12 of the Constitution of India
and, therefore, the writ petition filed by the respondent- Mazdoor Sangh before
the High Court was not maintainable.

Disposing of the appeals, the Court
0
HELD: 1. The Writ Petition filed by the respondent-Union against the
co-operative sugar factory is not maintainable. (214-D]

General Manager, Kisan Sahkari Chini Mills Ltd., Sultanpur, U.P. v.

H 212
- M.D. BHADRA SHAHAKARI S.K. NIYAMITA "· PRESIDENT. CHITRADURGA MAZDOOR SANGH IAR. LAKSHMANAN. I.I

Satrughan Nishad & Ors., (2003) 8 SCC 639; Federal Bank Ltd v. Sagar
213
A
Thomas & Ors., (2003) 10 SCC 733; Gayatri Dev. Mousumi Cooperative
Housing Society Ltd& Ors., (2004) 5 SCC 90; Shrikant v. Vasantrao & Ors.,
(2006) 2 SCC 682 and Pradeep Kumar Biswas v. Indian Institute of Chemical
Biology & Ors., (2002) 5 SCC 111, referred to.

2. However, considering the long pendency of the matter before the High B
Court and this Court and the plight of the workers as also the critical financial
situation of the sugar factory, the appellant-Management is directed to pay
10% back wages to the 51 workmen for the periods 1992 to 1999. Since the
.~
reinstatement has been ordered by the High Court, the workers will not be
disturbed except in accordance with law. (214-F; 215-B-E) C
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4534 of2004.

From the Judgment and Final Order dated 25-2-2003 of the High Court
ofKamatakaatBangalore in W.P. No. 13524/1999

Ranjit Kumar, Rajesh Mahale, Gururaj C.B., M.A. Krishnamoorthy, M.A. D
Chinnaswamy and Krishna Kumar for the Appellant.

G.V. Chandrashekar, Anjana Chandrashekar, P.P. Singh, Sanjay R. Hegde,
Anil K. Mishra, Vikrant Yadav and Sashidhar for the Respondents.

The Judgment of the Court was delivered by: E

DR. AR. LAKSHMANAN, J. Civil Appeal No. 4534/2004.

This appeal was filed by the Managing Director, Bhadra Shahakari
S.K.Niyamita against the President, Chitradurga Mazdoor Sangh & Ors. against F
the judgment dt.25.02.2003 passed by the High Court in W.P. No. 13524/1999.
The Writ Petition was preferred by Chitradurga District Mazdoor Sangh calling
in question the inaction of the Management in implementing the settlement
produced as Annexure-A dt.14.05.1998 and for a consequent direction to the
Management to implement the aforementioned settlement. The High Court in
para 40 of its judgment observed as follows :- G
"In the result and for the foregoing reasons, we allow the writ
petition with costs quantified at Rs. 3000/- payable by the first
Respondent to the Petitioner's counsel within two weeks. A writ of
mandamus shall issue to the management of the first Respondent
sugar factory to implement the settlement Annexure-A dated 14.05.1998 H
214 SUPREME COURT REPORTS [2006] SUPP. 8 S.C.R.

A and continue 51 workmen already reinstated into service and pay 40%
of backwages, if not already paid, within a period of one month from
today."

Aggrieved against the said order, the appellant-Management has
preferred the above Civil Appeal.
B
Mr. Ranjit Kuinar, learned senior counsel appearing on behalf of the
appellant submitted that the appellant being a co-operative sugar factory
registered under the Co-operative Societies Act with a view to earn profit for
the members of its society is purely a non-governmental organisation and will ..,_
not fall within the definition of 'State' under Article 12 of the Constitution of
c India and, therefore, the Writ Petition filed by the respondent-Union was not
maintainable. In support of his contention, the learned senior counsel placed
strong reliance on the Judgments in General Manager, Kisan Sahkari Chini
Mills Ltd., Sultanpur, U.P. v. Satrughan Nishad & Ors., [2003] 8 SCC 639;
Federal Bank Ltd. v. Sagar Thomas & Ors., [2003] 10 SCC 733; Gayatri De
D v. Mousumi Cooperative Housing Society Ltd.& Ors., [2004] 5 SCC 90;
Shrikant V. Vasantrao & Ors., [2006] 2 sec 682 and Pradeep Kumar Biswas
v. Indian Institute of Chemical Biology & Ors., [2002] 5 SCC 111. We have
perused the above Judgments. In our opinion, the Writ Petition filed by the
respondent-Union against the co-operative sugar factory is not maintainable.
We, therefore answer the said issue of maintainability of the Writ Petition in
E favour of the appellant-Management.

When the matter came up for hearing on the last occasion, considering
the long pendency of the matter before this Court and also before the High
Court and considering the plight of the workers employed in the appellant-
F factory, we called for information as to whether it would be possible for the
appellant to pay back wages to the respondent-workmen and the extent
thereof Pursuant to our direction, Dr.Iftiqhar, the Managing Director of the
appellant placed before us, at the time of hearing, an affidavit duly signed on
26.07.2006. The same is taken on record. We have perused the said affidavit.
The appellant also, at the time of hearing, furnished information about the
G financial commitment required to pay back wages to the respondents in the
Civil Appeal. The learned senior counsel has submitted that in view of the
financial situation of the appellant being in the red, it is not possible for the
appellant to sustain additional financial burden in the nature of back wages
fo the 51 workmen represented by the respondent-Union. He has also further
submitted that it will not be able to make a financial commitment at this stage,
H
M.D. BHADRA SHAHAKARJ S.K. NIY AMITA v. PRESIDENT. CHITRADURGA MAZDOOR SANGH fAR. LAKSHMANAN. l.f 215

especially when the accumulated loss of the factory is Rs. 4252.85 lacs as on A
31.03.2006 and that the payment of back wages to the 51 workmen represented
by the respondent-Union at this stage may cause labour unrest, especially
since the appellant sugar factory has not been able to pay even monthly
wages to its workmen and they have initiated litigations and Contempt Petitions
before various courts. As already noticed, the High Court while disposing of B
the Writ Petition ordered payment of 40% back wages to the workmen by the
Management. Considering the critical financial situation of the appellant sugar
factory, we feel that a direction for payment of 10% back wages which comes
to Rs.9.52 lacs if now ordered would meet the ends of justice. Mr. G.V.
Chandrashekhar, learned counsel for the respondents has agreed to receive
10% back wages amounting to Rs.9.52 lacs which represent the back wages c
for the period 1992 to 1999. We, therefore, in the interest of justice and in the
interest of workers, direct the appellant-Management to pay a sum of Rs.9.52
lacs by way of back wages for the period 1992 to 1999. The said amount shall
be distributed among 51 workmen as per their dues. The amount shall be
distributed within a period of two months by the Management itself.
D,
We also placed on record the statement made by Mr. G.V. Chandrashekhar,
learned counsel for the respondent that the workers have already been
reinstated in service on 27.09.1999 by virtue of an order passed by the learned
Single Judge of the High Court. Since the reinstatement has been ordered by
the High Court, the workers will not be disturbed except in accordance with E
law. The appeal stands disposed of accordingly. No costs.

C.A.No. 1223 of 2006

The above appeal was filed by the Chitradurga Mazdoor Sangh against
the order passed by the High Court dt.26.05.2005 in C.C.C.No. 1437/2004
dismissing the Contempt Petition filed by the appellant. In view of the Judgment
F
now passed by us in C.A.No. 4534/2004, this appeal has become infructuous
and the same is dismissed.

R.P. Appeals disposed of.
G