REGIONAL DIRECTOR EMPLOYEES STATE INSURANCE CORPORATION TRICHUR Vs. TAJ TEXTILES INDUSTRIAL CO OP SOCIETY LTD

JUDGEMENT

(1.) In both these cases a common question arises Are the employees of a Cooperative Society, deemed to be registered under the Kerala Cooperative Societies' Act, 1969, liable to be insured under the provisions of the Employees' State Insurance Act, 1948 It is contended by the Employees' State Insurance Corporation that they are liable to be so insured. The stand taken by the employers in these two cases is that there is no scope for such coverage since the employees are members of the Society and as such there cannot be an employer - employee relationship between them and those employed by them. This seems to have appealed to the Employees' Insurance Court with the result that the applications by the employers have been allowed in both the cases. In M.F.A. No. 404 of 1978 there is a further question to which we will refer later.

(2.) A Society registered under S.7 of the Kerala Cooperative Societies Act is a body corporate known by the name under which it is registered, having perpetual succession and a common seal and with power to hold property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it is constituted. S.9 provides so. It is a legal entity distinct from its shareholders. The shareholders may, no doubt, be interested in the proper governance of the Cooperative Society and its proper functioning, but that is not to say that they are owners of the Cooperative Society. That this is the position was held by this Court as early as in 1964 in the decision in Kerala State Handloom Ltd v. State of Kerala ( 1964 KLJ 175 ). There the question arose under the Industrial Disputes Act and the contention that there cannot be an employer - employee relationship between a Cooperative Society and its employees, who are members of the society was negatived in that case on the same reasoning as we have pointed out here. But, nevertheless the decision of the Employees' Insurance Court is sought to be supported by the learned counsel appearing for the respondent in M. F. A. No. 404 of 1978 on the authority of the decision of the High Court of Madras in S. A. Coop. Motor Transport Soc. Syed v. Batcha ( 1964 (1) LLJ 280 ). A Division Bench of the High Court of Madras no doubt considered more or less a similar situation in that case. The society which was the appellant before the Court in that case was one the membership of which was restricted to exservicemen and for getting employment in the society its membership was made a condition precedent. Some of the employees were retrenched and the claim made by the member - employees for retrenchment compensation under S.25F of the Industrial Disputes Act was negatived. When consequently the question of entertaining the dispute arose under S.33C(2) of the Industrial Disputes Act before the Labour Court, the court held that it had jurisdiction. The matter ultimately reached the High Court and in this context the High Court found:

(3.) In the Bank Nationalisation case R. C. Cooper v. Union of India ( AIR 1970 SC 564 ) the locus standi of a shareholder to challenge the Banking Companies (Acquisition and Transfer of Undertakings) Act came up for consideration. In that context the Supreme Court said at page 584 thus: