1. This special civil application raise a short question regarding the construction of S. 24A of the Bombay Co-operative Societies Act, 1925, and S. 7(2)(j) of the Payment of Wages Act, IV of 1936.
2. The question arises in the following manner : Petitioner 1 society is a co-operative society registered under the Bombay Co-operative Societies Act, 1925, and its business is inter alia to grant loans to its members who are workers in the textile mills in Ahmedabad. Under the bylaws of the society, only the permanent employees of the textile mills in Ahmedabad and who are also members of the Textile Labour Association, Ahmedabad, can become members of the society. In accordance with these bylaws, respondent 1 was a member of petitioner 1 society. One Natwarlal Mohanlal, another member of the society, applied in February 1957 for a loan from the society. Under the said bylaws, the society would advance such a loan on the personal security of a member if two other members were to stand as sureties for him. Respondent 1 and one Ahmed Dawood, both of whom were at the material time employees of the petitioner 2 mills, stood sureties for the said Natwarlal who also happened to be an employee at the time of the petitioner 2 mills. The said Natwarlal executed a writing in favour of the society, agreeing therein to repay the loan of Rs. 600 granted by the society. Below the said writing, respondent 1 and the said Ahmed executed a bond of suretyship as contemplated by S. 24A of the Co-operative Societies Act, 1925. The said writing inter alia provided that the sureties agreed that they were liable jointly and severally to pay in time and properly the aforesaid amount of loan together with interest thereupon and all costs to the bank subject to all the conditions accepted by the debtor, the said Natwarlal Mohanlal, and to the rules of the society regarding the loan. It also provided that in case the said Natwarlal failed to pay regularly the installments the sureties agreed that the society should recover all the amounts due in the account of the said Natwarlal
'from our wages, dearness allowance, bonus payable to us by the mill (i.e., petitioner 2 mills) by getting the same deducted from the mill in full or in installments as the bank thinks fit.'
3. Before the aforesaid loan of Rs. 600 was repaid in full, the said Natwarlal and the said Ahmed Dawood left the service of petitioner 2 mills. It is an admitted fact that only an amount of Rs. 345 out of the said amount of Rs. 600 was paid by the said Ahmed Dawood and the said Natwarlal, leaving the balance unpaid. Thereafter, by its letter dated 9 July 1958 petitioner 1 society called upon petitioner 2 mills to deduct the amount from the wages, dearness allowance, bonus, etc., payable to respondent 1 and the said Ahmed Dawood by the mills and to pay the deducted amount to the society until the debt was wiped off. The said letter drew the attention of petitioner 2 mills to the provisions of S. 24A(2) of the Bombay Co-operative Societies Act, 1925, stating therein that it was permissible to the mills to make such deductions under the Payment of Wages Act, 1926. It appears that in pursuance of the said letter, the petitioner-mills withheld the payment of wages to respondent 1, and thereupon the respondent 1 filed Application No. 281 of 1958 under the Payment of Wages Act before the authority under the Act. The defence of petitioner 2 mills was that they had retained the said amount from respondent 1 in view of the letter dated 4 July 1958 received from petitioner 1 society and in view of the fact that the society had approached them under the provisions of S. 24A of the Bombay Co-operative Societies Act, 1925, and S. 7(2)(j) of the Payment of Wages Act, 1936.
4. The Authority under the Payment of Wages Act raised two preliminary issues, namely,
(1) whether the bank was entitled to require the petitioner-mills to make deductions from the wages payable to respondent 1, and
(2) if not, Whether such deductions were illegal.
5. The authority found the first issue in the negative and the second in the affirmative, with the result that the only thing left to be done was to decide as to what was the amount of deduction made from the wages during the period from 1 June 1956 to 9 August 1958. This petition challenges the aforesaid findings given by the authority on the said two preliminary issues.
6. Sri Nanavati appearing for the two petitioners attacked the aforesaid decision of the authority on the ground that it was contrary to the provisions of S. 24A of the Bombay Co-operative Societies Act, 1925, and S. 7(2)(j) of the Payment of Wages Act, 1936. He contended that on a true construction of these provisions, the petitioner-mills were bound to withhold the payment of wages for the aforesaid period to respondent 1 on a requisition made therefor by petitioner 1 society upon the ground that there was a debt due and payable by respondent 1 to the society. He further contended that the provisions of S. 24A being mandatory, the petitioner mills were not only bound to withhold and deduct the payment, but that such deductions were lawful and therefore no application under the Payment of Wages Act was maintainable at the instance of respondent 1.
7. The question involved, therefore, in this application is whether the petitioner-mills were entitled to deduct from the wages of their employee, respondent 1, the amount of Rs. 260 claimed by petitioner 1 society to be due by him to it. The cause of action of the employee was the deductions made by the employer which, according to the employee, were illegal and contrary to the provisions of the Payment of Wages Act. Therefore, the dispute before the authority was between the employee and his employer and not between the employee and petitioner 1 society. In deciding such a dispute, namely, whether the employer had made illegal deductions from the wages to the employee, the question that would arise would be whether the employer was right in making the deductions and was bound to make the payment to the society under S. 24A of the Bombay Co-operative Societies Act. The authority therefore had to construe the provisions of that Act. The fact that the authority construed the provisions of that Act without the co-operative society before him would not render his findings on such construction bad, and no question of any breach of the principles of natural justice would arise in such a case, as has been averred in the petition.
8. But the contention that has been strenuously urged before us by Sri Nanavati arises on the construction of S. 24A of the Bombay Co-operative Societies Act and also S. 7(2) of the Payment of Wages Act, and the question is whether on a true and proper construction of these provisions, petitioner 2 mills were entitled and/or bound to deduct the amount claimed by petitioner 1 society to be due to it, in other words, whether such an employer is bound to deduct from his employee's wages the amount which the society claimed from such employee-member merely on the society requiring the employer so to do or whether the employer is bound to deduct and pay to the society only if the society's claim is adjudged by some tribunal or authority or there has been an adjudication of such a claim by the Registrar and such adjudication has resulted in a decision or an award.
9. Section 24A of the Bombay Co-operative Societies Act provides :
'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 salary or wages payable to him by the employer such amount as may be specified in the agreement and to pay the amount so deducted to the society in satisfaction of any debt or other demand owing by the member to the society.'
10. Sub-section (2) of that section provides :
'On the execution of such agreement the employer shall, if so required by the society by a requisition in writing and so long as such debt or demand or any part of it remains unpaid, make the deduction in accordance with the agreement and pay the amount so deducted to the society within fourteen days from the date on which such deduction is made.'
11. For a proper interpretation of S. 24A, it is necessary to appreciate the scheme of the Act and to consider whether the legislature could have intended to permit recovery of a debt claimed by a society by a somewhat unusual mode of recovery provided in S. 24A even where the claim in question has not yet crystallized into an award or a decree or an order of some tribunal or some authority. As seen from S. 24A, Sub-section (1) provides for an agreement which a member may execute empowering thereunder his employer to deduct from his wages the amount specified in such claim and to pay the deducted amount to the society in satisfaction of
'any debt or other demand owing by the member to the society.'
12. It would seem that this provision became necessary because without it the employer would not be entitled to deduct any sum from the employee's wages as on the contract between him and his employee he would be liable to pay the amount of wages or other sums due thereunder to the employee in full. The agreement contemplated by Sub-section (1) would enable the employer to deduct and pay the amount specified in the agreement or such other amount as may be due and payable to the society at the date of the requisition. Under Sub-section (2), the employer is bound to deduct and pay the amount so deducted to the society when an agreement under Sub-section (1) has been executed and the society makes a requisition in writing for payment from the employer. But it is also clear from S. 24A that a deduction can be made from the employee's wages and payment of the deducted amount can be made to the society if the amount set out in the agreement or in the requisition is in satisfaction of a debt or other demand owing by the member to the society. The crucial words in Sub-section (1) are :
'in satisfaction of any debt or other demand owing by the member to the society.'
13. These words must mean a debt or other demand outstanding at the date of the requisition. The mere fact, therefore, that a member has executed an agreement or a requisition is made by a society thereunder is not sufficient, for that fact must be accompanied by another fact, namely, the existence of an outstanding debt at the date of the requisition due by the member to the society. This is also clear from the provisions of Sub-section (2), for, under that sub-section, an employer can make the deduction and pay the deducted amount provided that
'such debt or demand or any part of it remains unpaid.'
14. Therefore, if the debt has not remained outstanding or unpaid at the date of the requisition upon the employer by the society, no deduction and no payment of such deducted amount can be made by such an employer to the society, and if he does so, it would not be binding upon the employee. The question then would arise : Who is to decide whether there was a debt or other demand owing by an employee-member to the society, and if there was such a debt or other demand whether it was outstanding at the date of the requisition by the society It is clear from S. 24A that a mere requisition by the society is not sufficient. There must at the time of the requisition be an outstanding debt, for the deduction and payment are to be made only in satisfaction of such an outstanding debt or other demand. It is clear from the other provisions of the Bombay Co-operative Societies Act that the policy of the legislature was that disputes between a co-operative society and its members or between members and members touching the constitution or the business of the society should be decided not by the usual recourse to Courts but through arbitration by the Registrar or his nominee. Section 54 of the Act provides that such a dispute would include a claim made by a society against its members and such dispute is to be decided by the Registrar or his nominee, whether such claim or demand is admitted or not. In other words, whether a debt or a demand claimed by the society or its member as due to it or him is an admitted debt or not, it has to be referred to the Registrar or his nominee for his decision. The scope of S. 54 being wide and the manifest intention of the legislature being that all disputes touching the constitution or the business of the society should be referred to the Registrar or his nominee for his decision, a claim made by a society against its member that a debt is due by such a member to it would undoubtedly constitute a dispute within the meaning of S. 54 and would, therefore, be referable to the Registrar or his nominee for decision. The question then is : Is there anything in S. 24A which takes away such a dispute from the purview of S. 54 and does S. 24A permit recovery of such a claim which ordinarily would constitute a dispute under S. 54, without such a claim having been adjudged by the Registrar or his nominee, as laid down in S. 54 Suppose a society claims a certain amount from its member and the case of the member is that no such claim is due by him and yet the society calls upon the member's employer to make deduction from his wages and pay that deducted amount. Is it possible to say that under S. 24A the employer is bound to deduct and pay even though he is not satisfied that the claim is due Obviously, it cannot be so as under S. 24A the deduction and payment are to be made in satisfaction of a debt which is still outstanding and unpaid at the date or the society's requisition. Therefore, at the date of the requisition, there must exist a debt which is adjudged, either under a decision by the Registrar or his nominee or otherwise, which the society is entitled to recover as an outstanding debt. The words 'the debt or other demand' in S. 24A read in the light of the section as a whole must, therefore, mean an adjudged debt or other demand and not merely a claim or an allegation by a society that there is due by its member to it a certain amount as a debt or other demand. If the construction suggested by Sri Nanavati were to be accepted, it would land the employer into considerable difficulty. If on a requisition made by a society, an employer were to deduct and pay to the society and it turned that there was no outstanding debt due by the employee in satisfaction of which the employer purported to deduct and pay, would the deduction and payment be still valid and binding on the employee The answer must indeed be in the negative, for S. 24A is abundantly clear that the deduction and payment can be for satisfaction of an outstanding debt or other demand. In the absence of a deduction or payment in satisfaction of an outstanding debt, the deduction or payment would not be a deduction or payment within the meaning of S. 24A and would not, therefore, be binding on the employee. If the interpretation suggested by Sri Nanavati were to be accepted, the result would be somewhat astounding, for even if there is a dispute as to a debt or other demand between a member and a society, even then there would be recovery of the amount claimed under such demand or claim before the determination of the question whether there was any debt outstanding at the date of the requisition. Surely, such a result could not possible have been contemplated by the legislature.
15. Sections 24A and 54 are in substance procedural sections. Section 54 deals with the procedure of adjudication of disputes referred to therein, while, S. 24A deals with the procedure of recovery of a debt or demand adjudged and finalized under S. 54. The two sections, therefore, have to be read together in order to ascertain their true meaning What S. 24A provides is an additional remedy to a co-operative society so that in order to recover a debt due to it, the society would not have to undergo the elaborate procedure of execution. It provides a procedure whereby it can follow the moneys due by a third party to its creditor and reach such funds for the satisfaction of the debt or demand due to it. Section 24A presumably was inserted in the Act to avoid the difficulty of execution under S. 60 of the Civil Procedure Code. Under that section no execution can lie against wages payable to a workman. Section 24A, therefore, applies and is available to a co-operative society at the stage of recovery of a debt which is crystallized as such after it is adjudged as such debt.
16. Read in this light, the meaning of S. 7(2) of the Payment of Wages Act becomes fairly clear. Sub-section (2) of S. 7 of that Act provides that deductions from the wages of an employed person shall be made only in accordance with the provisions of the Act, and may be of the following kinds only, namely :-
* * * (j) deductions for payment to co-operative societies approved by the State Government or to a scheme or insurance maintained by the Indian Post Office.'
17. The deductions for payment to co-operative societies as contemplated by this clause must mean deductions for payment to a co-operative society in satisfaction of an outstanding debt or demand and not otherwise. The requirement is that such deduction for payment must be for satisfaction of a debt due to the society and not merely a claim or allegation by a society that a member owes an amount to it. The requisition for payment by a co-operative society, therefore, can be for a debt which is adjudged as such and which is still outstanding, and not merely a mere allegation or a claim for a debt made by a cooperative society. Sri Nanavati however, drew our attention to Cl.(h) of S. 7(2) of the Payment of Wages Act, and contended that that clause dealt with deductions required to be made by an order of a Court or other authority competent to make such order and that that clause would show that in order that a deduction would fall under Cl.(j), it was not necessary that the debt should mean a claim adjudged either under S. 54 of the Bombay Co-operative Societies Act or otherwise. The submission made by Sri Nanavati, in our view, is defective, for the two Cls.(h) and (j) of S. 7(2) deal with two different and distinct topics. The deductions spoken of in Cl.(h) are required to be made by an order of the Court or other authority competent to make such an order. That clause would mean that if there is an order of a Court requiring an employer to make a deduction, such deduction would fall under that clause. The deductions which are contemplated in Cl.(j), on the other hand, are deductions which are made for the purpose of payment to a co-operative society approved by the State Government. Such deductions falling under Cl.(j) would require any order of a Court as would be the case in Cl.(h). There is, therefore no analogy between the two clauses, nor would it be correct to say that because Cl.(h) deals with deductions required to be made by an order of the Court, the deductions spoken of by Cl.(j) would not mean deductions in the case of debts which are adjudged as such either under the provisions of the Co-operative Societies Act or otherwise. That being the position, it is not possible to accept the construction suggested by Sri Nanavati of Cls.(h) and (j) of S. 7(2). In the view that we take of the provisions of S. 24A of the Bombay Co-operative Societies Act and the provisions of S. 7(2)(j) of the Payment of Wages Act, 1936, it seems to us clear that the deductions made or the withholding of the wages due and payable to respondent 1 by petitioner 2 mills, though at the instance of and on the request purported to have been made by the petitioner 1 society under S. 24A of the Bombay Co-operative Societies Act, did not fall within the scope of S. 24A and, therefore, were not justified, and respondent 1, therefore, was entitled to maintain his application under the provisions of the Payment of Wages Act.
18. For the reasons aforesaid, the decision of the competent Authority under the Payment of Wages Act was correct and, consequently, the petition must fail. The petition is rejected and the rule is discharged. The petitioners will pay to respondent 1 the costs of this petition.