Ashfaq Husain vs Chief Executive Officer
2013 Latest Caselaw 415 Bom

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                  IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                                                    
                            NAGPUR BENCH, NAGPUR




                                                                      
                                SECOND APPEAL No.266 OF 2012

     Ashfaq Husain s/o. Sk. Lal,
     Aged about 65 years,




                                                                     
     Occupation : Retired,
     R/o. Diwanpura, Mangrulpir,
     Tq. Mangrulpir, Distt. Washim.                                           :      APPELLANT
                                                                                     




                                                   
                                         ...VERSUS...
                           
     1.   Chief Executive Officer, 
           Zilla Parishad, Washim.
           Tq. and Distt. Washim.
                          
     2.   Block Development Officer,
           Panchayat Samitee Mangrulpir,
           Tq. Mangrulpir, Distt. Washim. 
      


     3.   State of Maharashtra,
   



           Through Collector, Washim.               :       RESPONDENTS 

     =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
     Mr. V.K. Paliwal, Advocate for the Appellant.





     Mr. M.L. Vairagade, Advocate for the Respondent Nos.1 and 2.
     Mr. H.D. Dubey, A.G.P. for the Respondent No.3.
     =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=

                                         CORAM :   S.B. SHUKRE, J.                                                   

rd DATE : 23 DECEMBER, 2013.

ORAL JUDGMENT :

1. This appeal is preferred against the concurrent

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judgments and decrees passed by both the Courts below. The

appellant had filed a suit bearing Regular Civil Suit No.83 of

2005 for declaration and mandatory injunction against the

respondents claiming that they had no authority in law to

direct deduction of an amount of Rs.1,81,691/- out of the total

amount Rs.2,14,088/-, being payable to the appellant as his

retirement gratuity, upon his retirement from his service as

Section Officer with Zilla Parishad, Washim. He submitted that

only ground on which said direction issued on behalf of the

respondent No.1 could have been justified was when the said

amount was considered as a Government due under the

provisions of Rule 132 read with Rule 134 of the Maharashtra

Civil Service (Pension) Rules, 1982 (hereinafter referred to as

"the Pension Rules"). Appellant submitted that there was no

Government due found to be recoverable from him at the time

of his retirement and, therefore, respondent Nos.1 and 2 lacked

authority in law to direct payment of retirement gratuity by

deducting an amount of Rs.1,81,691/-, alleged to be the loan

taken by the appellant from the Employees Co-operative Credit

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Society and not re-paid by him.

2. The suit was resisted by the respondent Nos.1 and 2,

who filed their common written statement while respondent

No.3 did not file any written statement. These respondents

submitted that the appellant had borrowed some amount as

loan from the Employees Co-operative Credit Society and at

that time he had executed a "Hamipatra" or an undertaking for

re-payment of loan on the basis of which the loan was

sanctioned. These respondents further submitted that the

respondent No.2 had given no objection to the Society in

sanctioning of loan to the appellant and had also assured the

Employees Co-operative Credit Society that the loan would be

re-paid. Therefore, when it was found by these respondents

that the loan was not actually re-paid and the appellant had

even pressurized his subordinates, he being the Section Officer,

not to remit loan installments to the Employees Co-operative

Credit Society, the respondent No.1, as head of the

Department, passed an order for deducting the said amount

from the retirement gratuity payable to the appellant, for its

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being sent to the Society towards re-payment of its loan.

3. The suit, upon consideration of the evidence on

record, was dismissed by the learned Civil Judge, Senior

Division, Washim by his judgment and decree passed on 12th

January, 2009. The first appeal that was preferred against the

said judgment and decree by the present appellant, being

Regular Civil Appeal No.23 of 2009, was also dismissed by the

learned District Judge-1, Washim by his judgment and order

passed on 10th February, 2012. Not satisfied, the appellant is

now before this Court by way of the present second appeal.

4. Having regard to the rival submissions, only

substantial question of law which arises for my consideration in

this appeal and which has been formulated by this Court on

28th January, 2013, is as under :-

"Whether the respondents are competent to deduct an amount of loan said to be outstanding

against the appellant in respect of loan said to have been obtained from Employees Credit Coopertive Society from the amount of pension due and payable to the appellant ?"

5. Before proceeding to deal with the substantial

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question of law in the light of the arguments advanced by both

sides, it would be appropriate to make clarification about the

meaning of the term 'pension amount' used in the plaint and

also in the prayer clause (b) of the plaint. The

appellant/plaintiff has sought a declaration that the order

passed on behalf of respondent No.1 on 2nd March, 2005,

directing deduction of sum of Rs.1,81,691/- from the total

amount of Rs.2,14,088/- payable upon retirement on

superannuation to the appellant is illegal. This amount of Rs.

2,14,088/- has been stated in the said order to be an amount

payable to the appellant on account of certain head, described

in Marathi as "e`R;qlsok minku". In Marathi into English

dictionary published under the title ''kklu O;ogkj

'kCnkoyh' (Government Business Dictionary) by Directorate of

languages, Government of Maharashtra, Bombay in August

2005, the words "e`R;qlsok minku" are not referred together for

translation. The word "minku" finds mention at Page No.68

and the words "e`R;qlsok minku" appear at page No.369. They

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have been shown to carry meanings in English respectively as

"gratuity" and "death-gratuity". Since, there is no question of

"death-gratuity" in the instant case, the term "e`R;qlsok minku"

would have to be understood as meaning "retirement gratuity"

and not the 'pension amount' as has been mentioned in the

plaint and the prayer clause. Therefore, for the purposes of

this appeal, the amount of Rs.2,14,088/- payable to the

appellant upon his retirement on superannuation would be

considered and referred to as the amount of "retirement

gratuity" and term 'pension amount' used in this matter would

be taken to be referring to "retirement gratuity".

6. Mr.V.K.Paliwal, learned counsel for the appellant has

forcefully argued that respondent Nos. 1 and 2 do not have any

authority under the law to issue a direction about the

deduction of any amount of loan obtained by an employee

from some Co-operative Credit Society from the retirement

dues or gratuity payable to an employee, treating such loan

amount as a government due. He submits that the loan

obtained from a society does not fall within the scope and

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ambit of Rules 132 and 134 of the Pension Rules. Therefore,

he submits, entire action of the respondent Nos.1 and 2 in this

case against the appellant is illegal and both the Courts below

have committed serious error in law in not decreeing the reliefs

prayed for by the appellant.

7. Mr.M.L.Vairagade, learned counsel for the

respondent Nos.1 and 2 has strongly contested the contentions

so raised on behalf of the appellant. He submits that the

expression "any other advance" used in sub-rule 3(b) of Rule

132 of the Pension Rules is sufficiently wide to take within its

fold the loan amount due and payable to Employees

Co-operative Credit Society by a government employee and,

therefore, it cannot be said that the direction issued by the

respondent No.1 on 2nd March, 2005 is illegal. He also submits

that "Bandhapatra" (Exhibit-55) executed by the appellant in

favour of respondent Nos.1 and 2 would show that the

appellant had authorized respondent Nos.1 and 2 to make

deductions from his retirement dues, if those deductions were

found to be necessary for satisfaction of his liabilities including

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liability towards a credit Society. Thus, according to him, on

both these counts the findings recorded by both the Courts

below can be justified and so this appeal deserves to be

dismissed. Learned A.G.P. for respondent No.3 has adapted his

argument.

8. Upon perusal of the judgments of both the Courts

below and also the evidence brought on record by both sides

with the assistance of learned counsel for the appellant, and

learned counsel for the respondent Nos.1 and 2 and also

learned A.G.P. for the respondent No.3/State, I do not think

that any legal justification is there for both the Courts below to

refuse the reliefs sought for by the appellant against the

respondents.

9. From the defence taken by the respondent Nos.1 and

2, it is seen that the order dated 2nd March, 2005 has been

sought to be justified by these respondents by putting forward

a ground that at the time when loan was sanctioned by the

Employees Co-operative Credit Society, respondent No.

1/defendant No.1 was the head of the Department for the

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appellant and in that capacity, he had assured the society that

there would be re-payment of loan amount and in order to

fulfill this assurance that the respondent No.1 had passed an

order directing recovery of loan amount from the retirement

dues payable to the appellant. The written statement does not

take a plea in specific manner that the respondent Nos.1 and 2

were competent to deduct the loan amount under the

provisions of Rules 132 and 134 of the Pension Rules. It

appears that it was only at a later stage, particularly at the

stage of argument, that the resort to these Rules was made by

the respondent Nos.1 and 2 in order to justify their action of

directing deduction of the aforesaid amount from the

retirement gratuity of the appellant. So, before turning to the

Rules, it would have to be examined what evidence was

adduced by the respondent Nos.1 and 2 to support the

contention that there was an assurance given to the Credit

Society as regards re-payment of loan by the appellant.

10. Upon a careful examination of the evidence brought

on record, one can very well see that there is not even an iota

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of evidence produced before the trial Court by the respondent

Nos.1 and 2 to establish the contention that these respondents

had given assurance to Society for re-payment of loan. No

evidence has been produced to show that Mr.XYZ was the

concerned officer at the relevant time and he had given such

an assurance. There is no documentary evidence adduced

either by the respondents in this regard. Therefore, so far as

the contention that there was an assurance given by the

respondent No.2 as regards re-payment of loan is concerned,

one has to say that it has not been proved by the respondents.

11. About the competency of respondent Nos.1 and 2 to

direct deduction of the loan amount from the retirement

gratuity payable to the appellant, I find that there is no Rule

under the Pension Rules authorizing the respondents to issue

the direction impugned herein. Rules 132 and 134 refer to

recovery and adjustment of Government dues and not to the

dues of any Credit Society or Bank or the financial institutions.

Rule 132 is extremely relevant in this regard and it is

reproduced as under :-

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"132. Recovery and adjustment of Government

dues.

(1) It shall be the duty of the Head

of Office to ascertain and asses Government dues, payable by a Government servant due for retirement.

(2) The Government dues as

ascertained and assessed by the Head of office which remain outstanding till the date of retirement of the Government servant, shall be adjusted against the amount of the [retirement

gratuity] becoming payable.

ig (3) The expression 'Government dues' include-

(a) dues pertaining to Government accommodation including arrears of license fee, if

any;

(b) dues other than those pertaining to Government accommodation, namely balance of house building or conveyance or any other

advance, overpayment of pay and allowances or

leave salary and arrears of income-tax deduction at source under the Income Tax Act, 1961 (43 of 1961)."

12. Upon overall reading of Rule 132, the only

conclusion that can be drawn is that it authorizes the Head of

Office to adjust the amount found to be due and payable by a

retiring Government servant to the Government at the time of

his retirement against the amount of retirement gratuity

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becoming payable to him. The expression "Government dues"

has been defined in sub-section 3 in an inclusive manner. All

the clauses thereunder refer to the liabilities incurred by the

retiring Government servant towards the Government or the

employer. No doubt, there is use of an expression "any other

advance" in sub-rule 3(b). But, this expression cannot be read

and construed to mean an advance obtained by a Government

servant from any institution or agency other than the

Government. The reason being that the Pension Rules define

the rights and liabilities between the Government and the

Government servant and so are applicable only as between the

Government and the Government servant. These Rules have a

force of law and create a binding jural relationship between the

Government and its servant. These Rules only contemplate

rights and duties of the Government qua the servant and vice

versa and therefore unless it is expressed in specific words in

the Rules, it cannot be said that the Rules also create rights in

favour of persons to whom they are not applicable and impose

consequent duties upon the Government towards such

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outsiders. In the entire Rule 132, it is nowhere stated expressly

that the Head of the Office is also authorized to deduct from

the retirement gratuity, an advance taken by the retiring

servant from any outside agency and which is due and payable

to that agency by the Government servant. Therefore, I find no

substance in the argument of learned counsel for respondent

Nos.1 and 2 that the term "any other advance" in sub-rule 3(b)

would cover the loan taken from a credit Society by a

Government servant.

13. A reference to Rule 134 has been made by the

learned counsel for the respondent Nos.1 and 2 to support his

argument that it also authorises the Head of Office to deduct

from retirement dues the advances taken by the Government

servant from the credit Society. Insofar as this provision is

concerned, suffice it to say that since it lays down a procedure

for adjustment and recovery of dues of the kinds mentioned in

Rule 3(b) of Rule 132, barring the dues pertaining to

Government accommodation, it must receive the same

construction as has been given to Section 132 earlier.

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14. Learned counsel for the respondent Nos.1 and 2 has

invited my attention to a duty imposed upon the employer

under Section 49(2) of the Maharashtra Co-operative Societies

Act, 1960. He submits that under this Section, when the

employer receives a copy of the agreement executed by a

member of the Society agreeing that his employer would be

competent to deduct from his salary or wages, the amount of

loan due from him to the Society, the employer would be

perfectly within the limits of law to issue a direction regarding

deduction of loan amount from the retirement gratuity.

15. Section 49 of the Maharashtra Co-operative Societies

Act, 1960 (hereinafter referred to as "the Societies Act")

without any doubt imposes a duty upon the employer to

deduct the loan amount from the salary or wages of the

employee and remit the same to the Society and keep on

remitting the same as long as total loan amount stands re-paid.

This duty in the employer is created under sub-section (2)

when he receives a copy of the agreement and written

requisition of the society as contemplated under sub-sections

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(1) and (2) of Section 49. Sub-section (1) states that the

member of the Society may execute an agreement in favour of

the Society to the effect that his employer shall be competent

to deduct from the salary or wages payable to him by the

employer, such total amount payable to the Society and in such

installments as may be specified in the agreement. The duty so

created in the employer upon fulfillment of the conditions of

sub-sections (1) and (2) is mandatory, which can be seen from

the imperative nature of the language of sub-section (2), the

penal consequences provided in sub-section (3) for failure to

perform the duty and object for which the Societies Act has

been enacted by the Legislature. At this juncture, it would be

useful to reproduce relevant portion of Section 49. It reads :

"49. Deduction from salary to meet Society's claim in

certain cases

(1) A member of a society may execute an agreement in favour of the society, providing that his employer shall be competent to deduct from the or wages payable to him by the employer, such total amount payable to the society and in such instalments as may be specified in the agreement and to pay to the society the amounts

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so deducted in satisfaction of any debt or other

demand of the society against the member. A copy of such agreement duly attested by an officer of

the society shall be forwarded by the society to the employer.

(2) On receipt of a copy of such agreement, the employer shall, if so required by

the society by a requisition in writing, and so long as the total amount shown in the copy of the agreement as payable to the society has been deducted and paid to the society, make the

deduction in accordance with the agreement and pay the amount so deducted to the society, as if it

were a part of the wages payable by him as required under the Payment of Wages Act, 1936 on the day on which he makes payment.

(3) If after the receipt of a requisition made under the foregoing sub-section, the employer at any time fails to deduct the amount specified in the requisition from the salary or

wages payable to the member concerned, or makes

default in remitting the amount deducted to the society, the employer shall be personally liable for the payment of such amount or where the employer has made deductions but the amount so

deducted is not remitted to the society, then such amount together with interest thereon at one and half times the rate of interest charged by the society to the member for the period commencing on the date on which the amount was due to be

paid to the society and ending on the date of actually remitting it to the society; and such amount together with the interest thereon, if any, shall, on a certificate issued by the Registrar, be recoverable from him as an arrear of land revenue, and the amount and interest so due shall rank in priority in respect of such liability of the employer

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as wages in arrears.

(4) ................"

Language of sub-section (2) is clear and leaves no

doubt about mandatory nature of employers duty. Once the

employer receives copy of the argument, and when the society

requires him to deduct and remit to it the amount specified in

the agreement, the employer is left with no choice but to

deduct and pay the amount deducted to the society. That is

why the word 'shall' has been used instead of the word 'may'

and the deducted amount to be paid to the society has been

treated to be just like the wages payable under the Payment of

Wages Act, 1936. Sub-section (3) prescribes penal

consequences for failure to perform the duty under sub-section

(2) by imposing personal responsibility upon the employer.

The duty so created, if performed well, will only contribute

ultimately towards orderly growth and development of co-

operative movement in the State of Maharashtra in accordance

with relevant directive principles of State policy enunciated in

the Constitution of India, the object of the Societies Act. If the

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duty as imposed by sub-section (2) upon the employer is not

held to be of mandatory nature, it may not go well with the

effort of the State in achieving the object of the Act and may

create hurdles in the development of co-operative sector in the

State. Thus, having considered all these aspects, the only

conclusion that can be made about the nature of duty under

sub-section (2) is that it is mandatory and leaves the employer

with no option but to perform it, once the conditions set out in

sub-sections (1) and (2) are fulfilled.

16. But, the question is whether or not any occasion

arose in this case for the employer or the government to

perform the duty as required by sub-section (2) of Section 49

of the Societies Act. The answer is a firm no as no evidence

has been adduced by the respondent Nos.1 and 2 about receipt

by them of the copy of the agreement and requisition as

contemplated under sub-sections (1) and (2). In fact, there is

no specific pleading made by the respondent Nos.1 and 2 in

this regard and all that they have set up as a defence is that the

respondent No.2 had made an assurance to the credit society

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that the loan amount would be re-paid. I have already held

that as regards this assurance, there is no evidence available on

record. Therefore, no substance can be found in the argument

canvassed on behalf of respondent Nos.1 and 2 about the

authority given under Section 49 of Societies Act to respondent

Nos.1 and 2 by the appellant for making of deduction of the

loan amount.

17. Learned counsel for the respondent Nos.1 and 2 has

also referred to one 'Bandhapatra' (Exhibit-55), in order to

support his argument that respondent Nos.1 and 2 did have

authority to make deductions. Again, I find no substance in

such an argument for two reasons. Firstly, this document has

not been duly proved by the respondents. There is only one

witness examined by the respondent No.1 and 2 on their behalf

and he is DW 1, Vasant Pandurang Patil (Exhibit-50). His

evidence does not show any reference having been made to

this document by him. Secondly, there is also no pleading in

the written statement as regards the authority allegedly given

by the appellant to the respondent Nos.1 and 2 for making of

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deductions as per said Bandhapatra. So, without any pleading

and without any evidence, it cannot be said that the

respondent Nos.1 and 2 were authorized to make deductions of

the alleged loan amount from the retirement gratuity. Even

otherwise, presuming, just for the sake of argument, that this

'Bandhapatra' or an undertaking has been duly proved by the

respondent Nos.1 and 2, still, one finds that it does not take

the case of respondents anywhere. From its contents what

emerges is that the authority for deduction and payment has

been given only in respect of the Government dues and nothing

more. So, even from the contents of this document

(Exhibit-55), the claim of respondent Nos.1 and 2 that they

had the authority to deduct the loan amount from the

retirement gratuity and remit the same to the society stands

demolished.

18. The trial Court, as seen from its impugned judgment

and decree, appears to have made some presumption not

permissible under the law. It has presumed that since it is

proved that appellant, a Government employee, had been

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sanctioned loan by the co-operative credit Society and had also

availed of it, he must have given authority under Section 49 of

the Societies Act to the employer to deduct loan amount from

the salary payable to him. This presumption is upon the

premise that without such authority, no co-operative credit

Society would sanction the loan. This may be a general rule.

But, I am afraid, such a presumption cannot be drawn when

there is no legal or factual basis. There have been cases when

Societies have sanctioned loans by making exceptions to

general rule. Therefore, it cannot be said that on the basis of

sanction of loan by a society, giving of authority under Section

49 of the Societies Act can be presumed as a matter of

common course of events, human conduct and private

business, within the meaning of Section 114 of the Indian

Evidence Act, 1872. Then, what is contemplated as authority

to make deduction under Section 49 is not oral but written, in

the nature of a specific agreement providing that the employer

shall be competent to deduct specified amount from the

employees salary or wages and pay the same to the society.

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Therefore, unless the agreement is produced in evidence, no

presumption about it's due execution can be drawn. So, the

trial Court committed a serious error of law and fact in this

regard.

19. Upon such an erroneous presumption, the trial Court

further held that since the loan was obtained by the appellant

from the credit society during his service tenure and has not

been re-paid by him before his retirement, his case would fall

within the ambit of Rule 134-A of the Pension Rules. No doubt

Rule 134-A and particularly its sub-rule (ii) authorizes the

Government to recover from the amount of pension sanctioned

to him such amount as is found to be obtained by the

pensioner during his service tenure and is recoverable from

him. This reasoning of the trial Court has been confirmed by

the first appellate Court, but without considering the

applicability of Rule 134-A to the facts of the present case. Both

these Courts have mis-directed themselves in applying the

provisions of Rule 134-A to the facts of the instant case. As

already stated, the provisions of Rules 132 and 134 only

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govern the rights and duties created between the Government

and the Government servants and have no application to the

rights of another person or agency independently created

under a specific agreement between him or it and the

Government servant, unless that agreement is also expressly

covered under these Rules. These Rules do not cover any

agreement independently entered into between the

Government servant and the other institution or agency.

Similar being the position of Rule 134-A, it cannot be given any

different construction. Therefore, the reasons given by both

the Courts below in rejecting the reliefs to the appellant are

mis-conceived and contrary to the legal provisions.

20. Thus, I find that the impugned order dated 2.3.2005

directing the deduction of the amount of Rs.1,81,691/- from

the retirement gratuity payable to the appellant was without

any authority of law and could not have been issued by the

respondent Nos.1 and 2. Consequently, I hold that the

appellant has made out his case for issuance of the declaration

and injunction as sought for by him. The substantial question

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of law is answered accordingly and the appeal deserves to be

allowed.

21. The appeal is allowed with costs throughout.

22. The judgments and decrees of both the Courts below

are hereby quashed and set aside.

23. The suit of the appellant is decreed.

24. It is hereby declared that the direction issued in the

order dated 2.3.2005 regarding deduction of amount of

Rs.181,691/- from the retirement gratuity is illegal and the

respondents are permanently restrained from recovering the

amount of Rs.1,81,691/- from the retirement gratuity payable

to the appellant, except in accordance with law.

25. If any amount is deposited by the appellant in the

trial Court, same shall be refunded to him and, in case, it is

kept in a term deposit account, it be refunded with interest

accrued thereon within four weeks from the date of order.

JUDGE

DWW