Madras High Court

State Banks' Staff Union (Chennai ... vs N. Venkatasubramanian on 18 July, 2025

                                                                                                 S.A.No.815 of 2019



                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                           Reserved on                            23.06.2025
                                          Pronounced on                           18.07.2025
                                                               CORAM


                        THE HONOURABLE MRS.JUSTICE K.GOVINDARAJAN THILAKAVADI

                                                       S.A. No.815 of 2019

                     State Banks' Staff Union (Chennai Circle)
                     (Regn. No.883)
                     Rep. by its General Secretary S.M. Selvaraj,
                     State Bank Buildings,
                     No.84, Rajaji Salai, Chennai 600 001                                      ...Appellant
                                                                    Vs.

                     N. Venkatasubramanian                                                       ... Respondent

                      Prayer : Second Appeal filed under Section 100 CPC, 1908 to set aside
                     the judgment and decree passed in A.S. No.272 of 2017 dated 20.12.2018
                     on the file of the VI Additional City Civil Court, Chennai, reversing the
                     judgment and decree passed in O.S. No.1057 of 2015 dated 05.05.2017
                     on the file of the XVII Assistant Judge, City Civil Court, Chennai.
                                  For Appellant             : Mr. K.M. Ramesh, Senior Advocate
                                                              for Mr.S.Apunu
                                  For Respondent            : Mr. K. Elango


                     Page 1 of 26




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                                                                                               S.A.No.815 of 2019



                                                             JUDGMENT

The Second Appeal is at the instance of the defendant in O.S.

No.1057 of 2015 on the file of the XVII Assistant Judge, City Civil

Court, Chennai. The said suit was laid down by the plaintiff for the

following reliefs:

I. Declaring that spending money from the general funds of the

defendant union for conducting any activity not specified in the

objects enumerated in certified Bye Law No.51 of the defendant

Union and Section 15 of the Trade Union's Act, 1926 (hereinafter

referred to as 'the Act') as illegal.

II. Permanent injunction restraining the defendant from spending

money from the general funds of the defendant union for

conducting any activity not specified in the objects enumerated in

certified Bye-Law No.51 of the defendant union and for costs.

2. For the sake of convenience, the parties are referred to as per

their ranking in the trial court.

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3. The case of the plaintiff in brief is as follows:

3.1. The defendant union is registered under Trade Union Act

having its registration Number as 883. The defendant union has got its

own certified Bye-Laws. There are more than 9500 members in the

defendant union including the plaintiff. The defendant union has 4

modules namely Madurai, Tiruchirapalli, Chennai and Coimbatore. The

Central Committee of the defendant’s Union in its meeting dated

27.10.2014 decided to organize felicitation functions for the defendant’s

General Secretary Mr.C.M.Baskaran for which circular No.64 dated

18.12.2014 was issued for the said 4 modules and thus, Madurai,

Tiruchirapalli, Chennai and Coimbatore module conducted the

felicitation functions at Madurai, Tiruchirapalli, Chennai and Coimbatore

on 20.12.2014, 4.1.2015, 11.1.2015 and 31.1.2015 respectively. The

respective 4 modules issued circular to its respective members to collect

contribution from the members. Vide defendant’s circular dated

18.12.2014, it was proposed to held a function to felicitate

Mr.C.M.Baskaran at Chennai on 28.2.2015 at the state level by inviting

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dignitaries from all over the country and accordingly, a function was

held at 3.30 pm at Raja Annamalai Mandram, Chennai. But, the

defendant has not given any call to its members for contribution of funds

to conduct the felicitation function. About 25 dignitaries participated in

that function from all over India and the function was celebrated in a

very grand manner by providing dinner and tea to all of them. The

defendant Union bore the entire expenses. It seems the Union spent

several lakhs of Rupees for that function, that too, without collecting

contribution from its member. The plaintiff has learnt from reliable

sources that the defendant Union has made bulk withdrawal from its

general funds for this function. It is against the Bye-law under clause 51

and section 15 of the Act. The plaintiff received an invitation card from a

member of the defendant union. Hence the plaintiff, through his letter

dated 16.2.2015, requested the defendant Union to clarify whether the

money was being spent from the general funds of the union. In spite of

receiving the said notice, the defendant Union did not give any reply.

Hence the suit.

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3.2 The suit was resisted by the defendant by contending that it is

true that clause 51 of the certified bye-laws prescribes spending money

from the general fund. Apart from clause 51, clause 52 also provides for

spending money from the general fund on the basis of the decision taken

by the Central Committee and clause 51(j) provides for spending general

funds which is intended to benefit the workers and the employees in

general and the felicitation of an officer-bearer who relinquishes his post

on his superannuation would certainly come under the provision for the

benefit of workers and employees in general as the members would get

valuable suggestions from the outgoing office bearers as to what are the

modes which proved to be success in getting the benefit from the

employer when he occupied the position and which will help the

members to follow the same methodology for achieving the object of the

Union. The practice of the defendant Union is to organize felicitations to

the outgoing office-bearers and this is in practice for the past few

decades and none of the members have raised any objections so far. The

circular No.64 issued by the defendant Union has also clearly stated that

the felicitation function will be held at module culminating in grand

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thanksgiving function at Chennai on 28.2.2015. The said decision was

taken in the central committee meeting held on 27.10.2014 and the same

was communicated to all the members through circular No.64 dated

18.12.2014 and the plaintiff was well aware of that. The contributions

were paid voluntarily by the members and there is no compulsion in

paying the contribution. The defendant Union invited office-bearers from

all over India and at the time of felicitation function, the crucial wage

negotiation between the unions and the management of the State Bank of

India was half way through and the dignitaries attended the function have

had negotiation with the top officials of the management of the State

Bank of India. The felicitation function is a platform for the dignitaries to

share their views and views of the management and Indian Bank

associations in the ongoing wage negotiations and the speeches of the

dignitaries was very useful to the employees and the members who got

first hand information about the wage negotiations. The defendant Union

did not bear the expenses towards lodging, food and travel for guests.

The wage negotiation with the management of the State Bank of India

was half way through and was held in various stages at various places.

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The management of State Bank of India decided to hold a central

Bipartite meeting with executive committee of the all India State Bank of

India staff federation for resolving various issues on 27.2.2015 at

Chennai. A few of the dignitaries who were in the wage negotiation

panel attended the above Central Bipartite meeting participated in the

felicitation function at Chennai. As per the Bank’s instructions, the

members of the Executive Committee of the All India State Bank of India

Federation are entitled to be reimbursed all the expenses including

boarding and lodging, food, travel etc for the guests who came to

Chennai to participate in the felicitation function as they are entitled to

full reimbursement from the bank since they are going to participate in

the Central Bipartite meeting with the Bank on 27.2.2015 at Chennai.

The members who attended the felicitation function were provided with

high tea which cannot be termed as wasteful expenditure and the faithful

members stood by the Union to felicitate the members who enriched their

knowledge on the happenings of the wage negotiations and lurking

dangers and the attacks on the trade union and the members contributed

on their own and not out of any compulsion. The bye-laws provides for

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payment of salaries to the office-bearers of the Union, but none of the

office-bearers including the Secretary had drawn even a single pie from

the union towards salary though they have completely dedicated

themselves for the Union work without minding their family and

personal commitments and office bearers are working full day without

any time conscious. The Central Committee of the Union has resolved

to organize farewell function to the General Secretary on the eve of his

retirement, a single member has no locus standi to challenge the decision

of the central committee. The defendant Union had conducted several

such felicitation functions in the past and no-one questioned that and the

Union issued the circular dated 18.12.2014 notifying the felicitation

function to be held on 28.2.2015 and before the General Secretary could

respond to the plaintiff’s letter dated 16.02.2015 requesting to clarify as

to whether the general funds of the union would be spent for the

function, the plaintiff filed this suit against the defendant and therefore,

all the actions done pursuant to the decision taken in the general

committee meeting will be placed before the general committee meeting

which is the supreme body. The object of the Union as enshrined in the

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bye-laws do permits spending money for the good cause and there is no

embargo or prohibition from spending money from the general fund of

the Union. The plaintiff has not come to the court with clean hands and

therefore the suit is liable to be dismissed.

3.3. Before the trial court, the plaintiff examined himself as P.W.1

and marked 10 documents. On the side of the defendant, D.W.1 was

examined and 19 documents were marked.

3.4. The trial court dismissed the suit, against which an appeal was

preferred by the plaintiff in A.S. No.272/2017 on the file of the VI

Additional City Civil Court, Chennai. The lower appellate court reversed

the judgment and decree of the trial court by concluding that the plaintiff,

being a member of the defendant Union is well within his right to

question the Union if the amounts from the general fund is spent or will

be spent other than the objects specified in Clause 51 of the Bye-laws.

Accordingly, the lower appellate court decreed the suit filed by the

plaintiff .

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4. Aggrieved over the same, the defendant has come up with this

Second Appeal.

5. The following substantial question of law was framed at the time

of admission.

"Whether the Court below is right in ignoring

educational and social benefits of meeting members

periodically at the cost of the union for any reason

whatsoever and the same is allowed under Section 15 of the

Trade Unions vis-a-vis Clause Bye Law 51"

6. Heard Mr.K.M.Ramesh, learned Senior Advocate appearing for

Mr.S.Apunu, learned counsel for the appellant and Mr. K.Elango, learned

counsel appearing for the respondent.

7. Mr.K.M.Ramesh, learned Senior Advocate appearing for the

appellant would contend that the first appellate court while discussing

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Section 15 vis-a-vis Bye-law 51 failed to give legal reasoning as to why

meeting of members and office bearers at the cost of union does not

constitute educational benefits, social and other similar benefits for

members and other dependants and failed to explain what constitutes

such benefits. He would further submit that the fact remains that Section

15(h) of the Act is meant for meeting and sharing of thought among the

members and office bearers of the Union so as to learn the principles of

trade unionism and modalities to win collective bargaining which

otherwise defeats the whole purpose of trade union which consequently

defeats the welfare of the members/employees of the union. It is further

contended that it is well established position of law under Section 15 vis-

a-vis Bye law 51 about spending of general funds for the object of the

Union is inclusive of organising meeting of members in any form and

manner as decided by the office bearers of the Union and such

expenditure is audited through a chartered accountant under established

legal procedures and approved in the general council meeting in a

democratic process. It is his further submission that the first appellate

court failed to consider the purpose and object behind Bye law 51 and

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has come to an erroneous conclusion that spending money for laudable

object of holding meeting for felicitating would amount to violation of

bye law 51. There is no mainstream educational institutions that teach

principles of trade union nor are there modern seminars, symposiums

conducted for the office bearers to learn the tricks of principles and

procedures in taking forward the welfare of the employees of the trade

union. Such education happens only through felicitation or valedictory

function among other meetings where members and office bearers of the

trade union learn through word of mouth through senior members/office

bearers which is nothing but educational learning for the younger

generation to take the object of the trade union forward. Therefore, the

first appellate court in allowing the suit with an omnibus prayer is

nothing but taking over of day to day management and affairs of the

union and that court of law is neither empowered nor authorized under

any provision of law and that any such acts of taking over of powers and

functions of members, office bearers, statutory auditors, Central council

of the union is not only against the principles of law but also defeats the

democratic values vests upon such elements in running the union.

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8. Contending contra, the respondent/plaintiff would submit that

the the evidence of D.W.1 who is one of the vice president of respondent

Union admitted that the appellant union had been spending money from

the general funds from October 2014 till 27.02.2015 for the felicitation

function to be held on 28.02.2015. There is no provision in the bye-laws

(Ex.A1) of the Union to spend money for felicitation functions from the

general funds. D.W.1 further admits that Ex.A8 invitation is for

felicitating the then General Secretary of the appellant Union. Only after

obtaining the order of interim injunction, the appellant/defendant stopped

spending for felicitation function from the general funds. Hence it is an

admitted fact that the appellant/defendant was spending money without

any authority and illegally from the general funds for such felicitation

functions prior to the interim order passed by the trial court. The

appellant/defendant has not produced any evidence which permits them

to spend money from the general funds of the Union for conducting

felicitation functions.

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8.1 . The learned counsel would further submit that the felicitation

function was held on 28.2.2015 at Chennai and the appellant/ defendant

had marked their income and expenditure statement for the year ending

31.12.2014 as Ex.B.19 and that the said statement would not reflect the

expenditure involved for conducting the function on 28.2.2015. The

plaintiff has not sought relief against the felicitation function conducted

on 28.2.2015, but for declaration declaring that spending money from the

general funds of the appellant Union for conducting any activity not

specified in the objects enumerated in certified Bye-law No.51 of the

appellant Union and Section 15 of the Act as illegal and for permanent

injunction restraining the appellant/defendant from spending money from

the general funds of the appellant Union for conducting any activity not

specified in the objects enumerated in certified Bye-law No.51 of the

appellant Union.

8.2. His further submission is that, D.W.1, in his proof affidavit

stated that it is not correct to say that members would contribute money

for organising such felicitation functions. Hence it goes to show that the

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appellant/defendant Union had not collected money for conducting such

felicitation functions if the function is held at the Head quarters.

Moreover, in his cross examination, D.W.1 has admitted that for

felicitation functions of the retired office bearers, they collect money

from the members and that if there was a need they also spend money

from the general funds. Therefore, from his evidence it is seen that the

appellant/defendant has been following a wrong practice of spending

money from general funds for the felicitation functions. The

appellant/defendant should not be allowed to perpetuate an illegal act by

spending money from general funds for any other object other than those

enumerated in Clause 51 of Ex.A.1 Bye-laws. If the appellant decides to

spend from general funds for any other object, those objects have to be

notified by the appropriate Government in the official Gazette as per

clause 51(k) of Ex.A.1 and that it is not the case of the

appellant/defendant that the Government has notified for such an

expenditure. Therefore, the first appellate court is right in concluding that

the plaintiff is entitled for the relief claimed in the suit, which calls for

any interference by this Court.

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9. Heard on both sides. Records perused.

10. Firstly, it has to be seen whether the Court can interfere in the

Bye-laws of Trade Union. The answer is that, Courts can interfere with

the Bye-laws of a Trade Union – but only under specific circumstances ,

when there is,

➢ Violation of Fundamental Rights: If a Trade Union's bye-laws

infringe upon the constitutional rights of its members (e.g.,

equality, freedom of association), courts can step in.

➢ Contravention of the Trade Union Act: Bye-laws must comply

with the mandatory provisions of the Act. If they don't, Courts

may declare them invalid.

➢ Disputes over Membership or Elections: Courts have entertained

civil suits when disputes arise over the interpretation or

implementation of bye-laws, especially regarding membership

eligibility or internal elections.

➢ Fraud or Malafide intent: If the be-laws are bing used to

perpetrate fraud or suppress dissent within the union, judicial

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scrutiny is possible.

Limitations to judicial interference:

➢ Autonomy of Trade Unions: Courts generally respect the internal

autonomy of unions. They avoid interfering in policy matters or

internal management unless there is a clear legal violation.

➢ No Adjudicatory Mechanism in the Act: The Trade Union Act,

1926 does not provide a specific forum for resolving internal

disputes. Hence, such matters are usually addressed through civil

suits in competent courts.

In Amalesh Kumar and another vs. State of Jharkand reported in 2017

SCC Online Jhar 1814, the Hon'ble Apex Court acknowledged that

dispute over Trade Union Bye-laws must be resolved through civil

litigation, as the Act lacks a built-in adjudicatory mechanism.

10.1. Therefore, even when there is no explicit law whether Court

can interfere with the Bye-laws of the Trade Union, the Court can

intervene in the Bye-laws of the Trade Union if it violates the statutory

provisions of the Act, violate principles of natural justice, infringe

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constitutional or legal rights of members. Generally, the Court respects

the autonomy and internal governance of the Trade Union.

10.2. In the present case, the contention of the plaintiff is that the

money from the general funds of the defendant Union cannot be utilised

for conducting any activity not specified in the objects enumerated in

certified Bye-law No.51 of the defendant Union and that Section 15 of

the Act deals with the object on which the general funds can be spent.

This Section exhaustively list the purposes for which general funds of a

registered Trade Union may be spent. These includes:- Trade disputes,

salaries of Union staff, legal proceedings, compensation to members,

educational, social or religious benefits, insurance, funeral benefits,etc.

Therefore, the learned counsel for the respondent/plaintiff contends that

since the above Section of the Act, does not explicitly mention the

farewell functions and facilitative activities, the conduct of the defendant

Union conducting the felicitation functions by spending money from the

general funds is illegal.

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10.3. The Section 15 of the Act lays down the provisions relating

to the purposes for which the general funds of a Trade Union may be

utilised.

10.4. Section 15(j) of the Act, states that the payment, in

furtherance of any of the objects on which the general funds of the Trade

Union may be spent, or contributions to any cause intended to benefit

workmen in general, provided that the expenditure in respect of such

contributions in any financial year shall not at any time during that year

be in excess of one fourth of the combined total of the gross income

which has upto that time accrued to the general funds of the Trade Union

during that year and of the balance at the credit of those funds at the

commencement of that year. This sub section provides the power to the

Trade Union to use its general funds for the benefits of its workers but it

should be within one fourth of the gross income of the Trade Union.

10.5. Section 15(k) of the Act talks about, if the appropriate

Government lays any condition regarding the spending of separate fund

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notified in the official gazette then it shall be followed.

10.6. Therefore, Section 15 of the Act outlines the purposes for

which the general funds of a registered Trade Union may be spent.

Clause(h) allows expenditure for:

“...the conduct of educational, social or religions activities

for the benefit of its members.”

The term “social activities” is broad and open-ended and intentionally

non exhaustive. Felicitations of outgoing members is a community

building gesture that enhances morale, promotes loyalty and strengthens

collective identity. The function serves social benefits by honoring

contributions and providing continuity and role modeling for newer

members. Section 15(h) is drafted without limiting language, suggesting

legislative intent to allow Unions discretion in community-focused

spending.

10.7. Furthermore, the term “social activities” is crucial in this

context. It covers more than entertainment or celebrations. It includes

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any activities that enhances social cohesion within the Union, strengthens

member bonds and morale, promotes cultural or ethical values and

supports non material welfare. Felicitations, especially for those retiring

or transferring, serve as transitional social functions. They publicly

honor service, offer a platform for guidance from outgoing to incoming

members, reinforce institutional memory and are consistent with social

customs. Therefore, a felicitation function can be interpreted as a “social

activity” under Section 15(h), especially when done in good faith and in

line with Trade Union objectives. Though statutory bodies like Trade

Unions must act within their governing frame work, however, the Bye-

laws do not restrict the expense, it may be deemed to be subjective.

Social activities cannot be restricted to welfare measures like medical

camps, mutual aid, and disaster relief, etc. Moreover, ignoring the social

dimensions would reduce the Union to a mere administrative office,

undermining its broader purpose as a community of labour. Since the

utilisation of general fund for felicitation functions of a retired member

shall be presumed to be within the ambit of Section 15(h) and done in

good faith and no personal benefit was involved and moreover, when

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there is no tangible harm or misuse of the fund, the conduct of the

defendant Union spending money from the general fund for such

felicitation function would not amount to violation of Bye-law 51 and

Section 15 of the Act. As rightly pointed out by the learned counsel for

the appellant, the issue is purely internal and not a breach of law. It is not

a case of clear illegality, breach of fiduciary or failure of internal

governance mechanisms. The felicitation function is just a form of

gratitude to the outgoing member who has/ had his fair share of

contributions to the Union. No one around or even the

Defendant/Plaintiff for that matter in the shoes of the felicitated person

would deny such a function in their name. Just because something is not

expressly mentioned does not make it impermissible, especially if it fits

within the spirit and scope of the law.

10.8. The statute does not list examples, giving Unions discretion

to define it through their culture and practice. If the Act had intended to

restrict this, it could have used the phrase “as prescribed” or “as specified

in the Bye-laws”.

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10.9. Thus, a felicitation, especially, for retiring or transferring

members, can be seen as:

                          ➢       A community-building exercise,

                          ➢       A recognition of service,

                          ➢       A moment of collective memory and continuity.

These are social benefits, even if not tangible like a salary or allowance.

Section 15(5) uses open-ended terms (social/educational), not closed

lists. Therefore, the statute must be interpreted purposively and

contextually and not mechanically. The Court can interfere with the Bye-

laws of the Trade Union when it thinks that there is a necessity to

interfere and it will provide benefits for the members of the Union. But,

in this case, it is a matter of spending general fund for the members of the

Trade Union who are leaving. The only duty cast upon the defendant

Union is that, all expenditures must be transparent and auditable,

ensuring accountability to the members.

10.10. However, this Court can still issue directions to the

defendant Union for amendment of Bye-laws and for future compliance,