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PETITIONER: G.S. DHARA SINGH

       Vs.

RESPONDENT: E.K. THOMAS & ORS.

DATE OF JUDGMENT09/08/1988

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) DUTT, M.M. (J)

CITATION:  1988 AIR 1829            1988 SCR  Supl. (2) 258  1988 SCC  (4) 565        JT 1988 (3)   310  1988 SCALE  (2)648

ACT:     Trade Unions Act, 1926: Sections 15 and 18 Trade  Union- Worker  resigning from membership-Whether entitled   to  ask for  account and claim refund of amounts received  by  trade union from management. %     Civil Procedure Code 1908, Section 9.     Central Trade Union Regulations 1938, Regulation ll(i).     Civil  suit by workers-Against office bearers  of  Trade Union-Claiming  refund  of amounts received  by  Union  from management-Maintainability of.

HEADNOTE:    The terms and conditions of service including the  rates of  wages and other allied matters were decided and  settled through   mutual  negotiations  between  the   trade   union represented  by respondent No. 3, its General Secretary  and respondent  No. 4, President of the Employers   Association. Respondent Nos. 1 and 2 were workers and were members of the trade union.     Under  an  agreement entered into in  October,  1973  an amount  equivalent to 10 paise out of every rupee earned  by the  workers  was  deducted by the  management  towards  the gratuity fund and transferred to the trade union for and  on behalf  of  the  workers.  Under  another  agreement  a  sum equivalent to 10 paise per rupee in the wages of the workers was  paid  by  the management to  the  trade  union  towards accident  benefit  fund  of  which  the  workers  were   the beneficiaries.  The amounts so collected were  entrusted  to the petitioner, who was also the treasurer and custodian  of these  funds of the trade union.  The  petitioner  deposited the amounts received by him in his personal name in his bank account, and no account of these amounts was rendered by him to  the  members  of the trade union. He did  not  call  any general  body  meeting and the members of  the  trade  union could not ventilate their grievance regarding  mismanagement of the funds.     In   view  of  the  aforesaid  difficulty,  85   workers including Respon-                                                   PG NO 258                                                   PG NO 259

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dent Nos. 1 and 2 and three others resigned from this  trade union on January 13, 1976, and formed a separate trade union of  their  own and  A registered the same  under  the  Trade Unions Act, 1926.     Respondent Nos. 1 & 2 and three other persons instituted five  suits in the Munsiff Court against the petitioner  and respondent  No. 3 for a decree directing the petitioner  and respondent  No.  3  to  render an  account  of  the  amounts collected   on their behalf from December, 1969 towards  the accident  benefit  fund and from October,  1973’towards  the gratuity fund.     The  petitioner who was the President and the  Treasurer of  the  trade union resisted the suits and  contended  that since  the plaintiffs had resigned and ceased to be  members of the trade union they had no right to claim the refund  of the  sums  due to them from out of the funds  of  the  trade union and that the suits were not maintainable in the  Civil Courts in view of the provisions of the Payment of  Gratuity Act, 1972 and the Workmen’s Compensation Act, 1923.     All  these  suits were tried together  and  the  Munsiff passed  a  preliminary  decree against  the  petitioner  and respondent No. 3 directing them to render an account of  the amounts received by them, and further directed that each  of the  plaintiffs was entitled to get his proportionate  share of  the  amount  due to him from out  of  the  total  amount received by the petitioner and respondent No. 3. The petitioner filed an appeal and the Additional  Sub-Judge found that the petitioner and respondent No. 3 had  received from  the management amounts on behalf of the  workmen,  but held that the plaintiffs were not entitled to any decree  at the  hands  of  the Civil Court since  the  suits  were  not maintainable  in  view of the provisions of the  Payment  of Gratuity Act, l972 and the Workmen’s Compensation Act, 1923.    Second Appeals were filed in the High Court by respondent Nos. 1 & 2 and the High Court by a common judgment set aside the judgment and decree passed by the First Appellate  Court and  restored  the judgment and decree passed by  the  Trial Court.    In  the  appeal  by Special Leave to this  Court  it  was contended  that  the provisions of the Payment  of  Gratuity Act,  1972  and the Workmen’s Compensation  Act,  1923  have debarred the filing of the suit, that respondent Nos. 1 &  2 could  not  claim  the  amount  after  resigning  from   the                                                   PG NO 260 membership  of  the trade union as the said  amounts  formed part  of the general fund of the trade union, and that  only on  the  dissolution of the trade union its funds  could  be distributed  as per the rules of the trade union, and  where the  rules did not provide for the same, then the  fund  was liable  to be distributed as per Rule 11(1) of  the  Central Trade Union Regulations, l938.     On the question: whether a member of the trade union  is entitled     to  ask for an account and to claim  refund  of sums received by the trade union from the management for and on his behalf on his ceasing to be a member.     Dismissing the Special Leave Petition,     HELD: 1. The civil suits filed by the workers-Respondent Nos.  1  &  2 were not barred under the  provisions  of  the Payment   of   Gratuity     Act  1972  and   the   Workmen’s Compensation Act, 1923. [264C]     2. The amounts were received by the trade union from the employer concerned towards the gratuity and accident benefit to  which  the workers were entitled. There  was  no  scheme drawn  up  by the trade union regarding the payment  of  the gratuity  amount and the accident benefit fund  received  on

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behalf of the workmen to the workmen concerned. There was no agreement  between the trade union and its members that  the amount received towards gratuity and accident benefit should form  part of funds of the trade union. Any amount  received for and on behalf of the members is liable to be refunded to the workmen concerned. [264D]     In the instant Case, the amount which had been  received on  behalf  of Respondent Nos. 1 & 2 by the  petitioner  and Respondent  No. 3 had, therefore, to be refunded to them  on their  resignation from the membership of the  trade  union. [264E]     3.  There  is no warrant for the view that only  on  the dissolution   of  the  trade  union  its  funds   could   be distributed  as  per the rules of the trade union  and  that where  the rules did not provide for the same, the fund  was liable  to be distributed as per Rule 11(1) of  the  Central Trade Union Regulations 1938. [264B]     Balmer  Lawrie Workers Union. Bombay and Anr. v.  Balmer Lawrie   and  Co.  Ltd.  and  Ors.,  [l985]  2  S.C.R.   492 distinguished.                                                   PG NO 261

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) No. 7506 of 1988.     From  the  Judgment and Order dated  22.10.1987  of  the Kerala High Court in S.A. Nos. 527 of 1981 and 535 of 1981.     M.K.   Ramamurthy,   Mrs.   C.   Ramamurthy   and   M.A. Krishnamurthy for the Petitioner.     The Order of the Court was delivered by     VENKATARAMIAH, J. The question involved in this petition is whether a member of a trade union is entitled to ask  for an  account and to claim refund of the sums received by  the trade union from the management for and on his behalf on his ceasing to be a member of the said trade union.     Respondents  1  and 2, E.K. Thomas  and  K.K.  Surendran respectively,  were employees of a certain management  which was  the  member  of the Cochin  Railway  Forwarding  Agents Association whose President is impleaded as Respondent No. 4 in  this  petition. The management concerned was  doing  the business of a clearing agent in the Cochin Harbour  Terminus Railways Goods Shed. The respondents 1 and 2 were working as head  load workers. Some of the employees working under  the management  concerned were members of a trade  union  called Cochin Port Thozhilali Union (hereafter referred to as  ‘the trade  union’)  whose  General  Secretary  is  impleaded  as Respondent  No.  3 in this petition.  The  petitioner,  G.S. Dhara Singh was the President of the trade union. The  terms and  conditions of service including the rates of wages  and other allied matters relating to the head load workers  were decided and settled through mutual ’negotiations between the trade union and Respondent No. 4. Under an agreement entered into  in October, l973 an amount equivalent to 10 paise  out of  every  rupee earned by the workers was deducted  by  the management towards the gratuity fund and transferred to  the trade union for and on behalf of the workers. Under  another agreement  a  sum equivalent to 10 paise per  rupee  in  the wages of the workers was paid by the management to the trade union  towards  accident benefit fund of which  the  workers were  the  beneficiaries.  The  amounts  so  collected  were entrusted to the petitioner, who was also the treasurer  and custodian  of  the funds of the trade union. It  is  alleged that the Petitioner deposited the amounts so received by him

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in his personal name in his bank account. No account of  the amounts  so received by him was rendered and the members  of                                                   PG NO 262 the  trade  union  found that it was not  possible  to  keep control  over  the funds so received by  the  petitioner.The petitioner who was the President of the trade union did  not call  any general body meeting and thus the members  of  the trade  union could not ventilate their  grievance  regarding the mismanagement of the funds received by the petitioner by democratic  means. In view of the above difficulty faced  by them  85  workers  including Respondents 1  &  2  and  three others,   namely,  K.T.  Raghavan,  A.N.  Joseph  and   K.J. Anthappan,  resigned from the trade union on  13.1.1976  and formed  a separate union of their own, which was  registered under  the Trade Unions Act. Thereafter Respondent Nos. 1  & 2, K.T. Raghavan, ’A.N. Joseph and K.J. Anthappan instituted five suits being Original Suits Nos. 49 to 52 and 54 of 1977 on  the file of the Munsiff, Cochin against  the  petitioner and  Respondent  No. 3 praying for a  decree  directing  the petitioner and Respondent No. 3 to render an account of  the amounts  collected  on  their  behalf  from  December,  1969 towards  the  accident benefit fund and from  October,  1973 towards the gratuity at the rate of 10 paise per rupee under each  head and to pay the amounts due to them. Each  of  the plaintiffs in the said suits estimated the amount payable to him at Rs. 3000. They also claimed future interest at 6  per cent  per annum on the amounts found to be due to them  till the date of payment.     The  petitioner, who was the President and Treasurer  of the  trade     union  took  up  various  pleas  denying  his liability to render account and    to refund the amount. One of  the  pleas raised by the petitioner was that  since  the plaintiffs had resigned and ceased to be the members of  the trade  union  they had no right to claim the refund  of  the sums  due to them from out of the funds of the  trade  union and  that  if they rejoined the trade union  they  would  be entitled  for  payment of    gratuity and  accident  benefit when occasion arose for payment of the same. He also pleaded that  the suits were not maintainable in civil    courts  in view of the provisions of the Payment of Gratuity Act,  1972 and  the Workmen’s Compensation Act, 1923. On the  basis  of the  pleas    raised by the parties, the Trial Court  framed two issues, in each of the    suits namely, (i) whether  the plaintiff  could ask the petitioner and    Respondent No.  3 to render an account of the amounts received by    them  and (ii)  whether  he was entitled to claim the  refund  of  any amount. All the five suits were tried together and they were disposed  of  by a common Judgment dated 31.5. 1979  by  the learned  Munsiff.  By  his judgment  the  Munsiff  passed  a preliminary decree against the petitioner and Respondent No. 3  directing  them  to  render an  account  of  the  amounts received  by  them towards the accident  benefit  fund  from                                                   PG NO 263 December  l969  to  16.11.1975  and  towards  gratuity  from October,  1973  to 16.11.1975. The learned  Munsiff  further directed   that each of the plaintiffs was entitled  to  get proportionate share of the amount due to him from out of the total  amount received by the petitioner and Respondent  No. 3.  He further directed the plaintiffs to apply for a  final decree  for  ascertaining the actual amount due to  them  in accordance  with the preliminary decree passed by him  along with   future interest at 6 per cent per annum from the date of suit till date of realization. Aggrieved by the  judgment and  decree  passed by the learned  Munsiff  the  petitioner filed  two appeals in A.S. 122 of 1979 and A.S. 124 of  1979

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on the file of the Additional Sub-Judge, Cochin against  the decrees passed by the Munsiff in favour of Respondent Nos. 1 and  3 respectively. After hearing the parties  the  learned SubJudge found that the petitioner and Respondent No. 3  had received  from  the  management amounts  on  behalf  of  the workmen concerned towards gratuity and accident benefit fund but  the plaintiffs were not entitled to the decree  at  the hands   of  the  Civil  Court  since  the  suits  were   not maintainable  in  view of the provisions of the  Payment  of Gratuity  Act,  19)7?. and the Workmen’s  Compensation  Act, 1923  which provided for separate remedies.  He  accordingly set aside the decrees passed in favour of Respondent Nos.  1 and  2 in the suits filed by them. Aggrieved by  the  common Judgment dated 21.8.1980 of the learned Additional Sub-Judge Respondent Nos. 1 and 7 filed Second Appeal No. 537 of 1981- F  and Second Appeal No. 535 of 1981-G respectively  on  the file  of  the High Court of Kerala. The two  second  appeals were   heard  together  and the High  Court  by  its  common Judgment  dated  22.  10. 1987 set aside  the  judgment  and decrees passed by the First Appellate Court and restored the judgment and decrees passed by the Trial Court. This Special Leave  Petition is filed by the petitioner against the  said common  judgment of the High Court under Article 136 of  the Constitution of lndia.     At the hearing of the Special Leave Petition the learned counsel for the petitioner stated and we think rightly  that the ground on which the First Appellate Court had set  aside the  decrees  passed by the Trial Court,  namely,  that  the suits  were  barred under the provisions of the  Payment  of Gratuity Act, 1972 and the Workmen’s Compensation Act,  1923 was unsustainable. But he, however, contended that since the amounts  had been realised by the petitioner and  Respondent No.  3 from the management under settlements which had  been entered  into  through the trade union Respondents 1  and  2 could  not  claim  the  amount  after  resigning  from   the membership  of  the trade union as the said  amounts  formed part  of  the  general fund of the trade union  to  which  a                                                   PG NO 264 member  who had resigned had no right. The  learned  counsel further urged that since the amounts were made available  to the  trade  union  by the employer for the  benefit  of  the members  of  the  trade union on the  happening  of  certain contingencies  and since the resignation from membership  of the  trade union was not one such contingency a member of  a trade  union  who had resigned from the  membership  of  the trade  union  could not claim the amount. He  further  urged that  only on the dissolution of the trade union  its  funds could be distributed as per the rules of the trade union and where  the rules did not provide for the same then the  fund was  liable  to  be distributed as per  rule  11(1)  of  the Central Trade Union Regulations, 1938.     We  do  not  find that the petitioner is  right  in  his contentions.  Admittedly, the amounts were received  by  the trade union from the employer concerned towards the gratuity and  accident  benefit to which the workers  were  entitled. There  was no scheme drawn up by the trade  union  regarding the payment of the gratuity amount and the accident  benefit fund  received  on  behalf of the  Workmen  to  the  workmen concerned.  There was no agreement between the  trade  union and  its members that the amount received  towards  gratuity and accident benefit should form part of funds of the  trade union. Any amount received for and on behalf of the  members is  liable to he refunded to the workmen concerned.. In  the instant case the amount which had been received on behalf of Respondent Nos. 1 and 1 by the petitioner and Respondent No.

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3   had,  therefore,  to  be  refunded  to  them  on   their resignation  from the membership of the trade union.  We  do not find any tenable defence which the trade union could put forward in the circumstances of the case.     On the question that the workmen concerned were entitled to  the  amounts  received  on  their  behalf  there  is   a concurrent finding of all      the three courts in favour of the plaintiffs. The decision in Balmer      Lawrie  Workers’ Union,  Bombay  and Anr. v. Balmer Lawrie and Co.  Ltd.  and Ors.,  [  l985  ] 2 S.C.R. 492 is of no  assistance  to  the petitioner.  In that case this Court was concerned with  the validity  of  clause  17  of  the  Settlement,  referred  to therein, which read as follows:     "Arrears will be paid within two months from the date of signing  of  the  settlement.  Further,  the  Company  shall collect from each workman an amount equivalent to 15% of the gross arrears payable to each employee under this settlement as  contribution to the Union Fund and this Amount shall  be paid to the Union within 3 days of the payment of arrears by Payee’s A/c Cheque."                                     (emphasis added)                                                   PG NO 265     The  appellant  in  the  above case  which  was  a  non- recognised  union had challenged the validity of clause  17, referred  to  above,  on  the ground  that  it  permitted  a compulsory  exaction not permitted by the Payment  of  Wages Act  from  the arrears payable to the  workmen.  This  Court rejected  the  said  contention since under  clause  17  the amount of 15% of the gross arrears received by the Union was to be treated as contribution to the Union Fund and that the said clause was a valid one.     In the case before us the petitioner and Respondent  No. 3 have  not shown that there was any such settlement between the  management and the trade union or a scheme prepared  by the trade union which was binding on the workmen under which the  amounts received towards the gratuity and the  accident benefit fund on behalf of the workmen would become a part of the Union fund.     We do not, therefore, find any ground to interfere  with the judgment of the High Court. This Special Leave Petition, therefore, fails and it is dismissed. N.V.K.                         Petition dismissed.