MADRAS HIGH COURT - 3 JUDGES BENCH JUNE 26Employee's express consent is required FOR deductions under Cooperative Societies Act(s)

 SOURCE/COURTESY LABOUR LAW REPORTER: 2026 LLR 830

MADRAS HIGH COURT

Hon'ble Dr. G. Jayachandran, J.

Hon'ble Mr. Senthilkumar Ramamoorthy, J.

Hon'ble Mr. K. Kumaresh Babu, J.

WP Nos. 18644/2023 etc., Dt/– 10-6-2026

The Central Warehousing Corporation Employees Cooperative Society Ltd.

v.

The Joint Secretary to the Government of India/The Central Registrar ofCooperative Societies & Ors.

For Petitioner: Mr. S.R. Rajagopal, Sr. Counsel for Mr. L.P. Shanmugasundaram and Mr. M.Thirumoorthy a/b Mr. Aditya Sarangarajan and Mr. K. Rajendran, Advocates (in both WPs).

For Respondent No. 1: Mr. K. Srinivasa Murthy, Sr.P.C. (in WP No. 18644/2023) and Mr. P.K.Ganesh, Advocate (in WP No. 23554/2023).

For Respondent Nos. 2&3: Mr. V.P. Raman a/b Mr. M.S. Seshadri, Mr. K. Seshasayee and Mr.R.B. Rishabh (in both cases).

IMPORTANT POINTS

The definition of wages, in the Wages Code, covers remuneration, includingdearness allowance, but house rent allowance, leave travel allowance, pensionor provident fund contributions of the employer and gratuity are excludedsubject, however, to the first proviso thereto.

In contrast to the Payment of Wages Act, the Wages Code makes all theexclusions in clauses (a) to (k) of section 2(y) subject to the first provisothereof.

Under the first proviso of the definition of ‘wages', if the payments under theabove sub-clauses exceed one half or the per cent notified by the CentralGovernment of all remuneration, the amount exceeding one-half or thenotified per cent of the total remuneration would be deemed to be wages.

The part of provident or pension fund contributions by the employer andgratuity exceeding the 50% threshold would be deemed as remuneration andadded to the wages.

Section 18 of the Wages Code, which deals with deductions, opens with a non-obstante clause, which expressly stipulates that no deductions shall be madefrom the wages of an employee except those authorised under the Code.

Any deduction made in terms of section 60 of the MS Co-operative SocietiesAct has to be in consonance with the Wages Code, which being the laterstatute with a non-obstante clause would prevail in case of inconsistency.

Sub-section (3) of section 18 of the Code on Wages is subject to any other lawfor the time being in force, but prescribes the ceiling of 50% of the wagespayable for any wage period.

The deductions authorised in the agreement under section 60 of the MS Co-operative Societies Act should not exceed the ceiling prescribed in the WagesCode.

Reading section 60 of the MS Co-operative Societies Act harmoniously withsections 18 and 61 of the Wages Code leads to the inference that the amountspecified in the agreement should not exceed the ceiling prescribed in theapplicable statute.

Because the ceiling in the Wages Code is lower, said ceiling would apply to allagreements and deductions made after the entry into force of said statute,whereas deductions made prior thereto, in consonance with the Payment ofWages Act, would be valid by virtue of the savings clause in the Wages Coderead with section 6 of the General Clauses Act, 1897.

COMMON ORDER

Senthilkumar Ramamoorthy, J.–1.

While considering matters relating to the interpretationof section 60 of the Multi-State Co-operative Societies Act, 2002 (‘the MS Co-operativeSocieties Act'), a Single Judge of this Court, by order dated 08-11-2023 in these writ petitions,observed as under:

“The Central Warehousing Corporation (hereinafter referred to as ‘the CWC' forshort) is a body corporate established under section 3 of the WarehousingCorporation Act, 1962, and its employees have formed the Central WarehousingCorporation Employees' Co-operative Society Limited (hereinafter referred to as‘the CWCECS' for short), which is governed by the Multi-State Co-operativeSocieties Act, 2002 (hereinafter referred to as ‘the MSCS Act' for short).

2. According to the CWCECS, who has filed these Writ Petitions, a Letter No.CWC/RO/MDS/SR-Union/16/12693 dated 29-10-1980 had been sent by the CWC to the Chief Promoter of theCWCECS informing that it has no objection to effect recovery from the salaries of itsrespective employees as per the advice of the CWCECS for the loans sanctioned by it, subjectto the approval of its Head Office. The CWCECS has been acting upon the said arrangement torecover the loans advanced to its members from their salaries by deductions made by theSalaries Disbursing Officer of the CWC. While so, the Head Office of the CWC by ProceedingsNo. CWC CO-PD0ESTT/1199/2020-PERS dated 05-06-2023 had passed the following order:

“Apropos above, recently a case pertaining to lapses in management of Creditand Thrift Society has come to the notices.

Therefore, with the approval of Competent Authority, in order to protect theinterest of the Corporation & to avoid reoccurrence of said event in future, it isinformed that the subscription/loan repayment to Credit & Thrift Societies is theresponsibility of the individual employee concerned and no deduction/remittance,in this regard, is permitted from the salary of the employee.

Usage of name, logo of the Corporation (CWC) by the society, is also notpermitted.”

The CWCECS then made a representation dated 08-06-2023 to the Director (Personnel) of theCWC to reconsider the said decision, but it was declined by Proceedings No. CWC CO-PD0ESTT/123/2023-PERSONNEL dated 19-07-2023. In that backdrop, the CWCECS has filedthese Writ Petitions challenging the aforesaid orders dated 05-06-2023 and 19-07-2023passed by the CWC in W.P. Nos. 18644 and 23554 of 2023 respectively.

3. The pivotal attack on the impugned orders by Learned Counsel appearing for the CWCECSrelying on the decision of this Court in

Thiruvalluvar Transport Corporation Employees Co-operative Credit Society Limited

v.

State Express Transport, Tamil Nadu Corporation Limited

,(2009) WLR 440 is that in view of the non-obstante clause in section 60 of the MSCS Act,there is no necessity for obtaining the prior consent of the employer in each case beforeeffecting recovery from the salary of the respective employee towards the loans advanced bythe Co-operative Society to its member. In other words, the impugned orders of the CWC areinconsequential and cannot create any fetter on the obligation of the CWC to deduct amountsauthorized by its employees, who are members of the CWCECS, towards recovery of the loansadvanced by the CWCECS to them.

4. The said contention is vehemently resisted by Learned Counsel appearing for the CWCciting the decision of the Division Bench of this Court in

Tamil Nadu Accountant General'sOffice Staff Co-op. Credit Society Limited

v.

Accountant General (A&E), Tamil Nadu

(Orderdated 23-11-2017 in W.A. No. 1079 of 2017) affirming the decision of the Learned SingleJudge of this Court in

Tamil Nadu Accountant General's Office Staff Co-op. Credit SocietyLimited

v.

Accountant General (A&E), Tamil Nadu

(Order dated 14-07-2017 in W.P. No. 4349of 2017) holding that section 60 of MSCS Act does not enable the Co-operative Society tostraightaway recover the loans advanced by it to its members from their salaries by fasteningliability on the Salaries Disbursing Officer of the employer merely based on the authorizationexecuted by the employees in the absence of obtaining prior consent of the employer in eachcase. It is apparent that though the earlier decision in

Thiruvalluvar Transport CorporationEmployees Co-operative Credit Society Limited

v.

State Express Transport, Tamil NaduCorporation Limited

, (2009) WLR 440, had been brought to the notice of the Court in thatcase, the said view has been taken without expressly dissenting on the said position of law.

5. That apart, it has been demonstrated from the model form of application for admission ofmember in the CWCECS that it has to be routed through the concerned officer of the CWCcertifying that the information furnished by the employee, who is making the application, isfactually correct, in addition to agreeing to recover the installments of loan, thrift deposit, etc.,and remit it to the CWCECS directly. In that event, another question incidentally falls forconsideration as to whether the CWC could unilaterally withdraw such consent alreadyobtained for recovery, by the impugned orders?

6. Having due regard to the divergence of judicial opinion on the controversy involved, whichhas severe legal ramifications affecting a large number of Employees' Co-operative Societiesand the corresponding employers across the State, it would be appropriate that it is resolvedby a Larger Bench of the Court.

Registry is directed to place the papers before the Hon'ble Chief Justice for obtainingnecessary orders in this regard.”

2.

On account of the observations in paragraph 6 of the order to the effect that it would beappropriate to constitute a larger bench of this Court, by letter dated 02-10-2024, learnedcounsel for the Central Warehousing Corporation requested that a Full Bench be constituted todecide the matter. Pursuant to the administrative order dated 10-02-2026 of the Hon'ble ChiefJustice, the present Bench was constituted.

Question of law

3.The question of law arising for consideration in view of the perceived inconsistency betweenthe judgments referenced in the above extracted order may be framed as under:

Whether either a tripartite agreement between the employer, employee and the society or theconsent of the employer is a pre-requisite for the imposition of obligations under section 60 ofthe Multi-State Co-operative Societies Act?

Counsel and their contentions

4.Submissions were made on behalf of the petitioner by Mr. S.R. Rajagopal, learned seniorcounsel, and on behalf of the respondents by Mr. V.P. Raman, learned counsel for the CentralWarehousing Corporation and by Mr. Srinivasa Murthy, learned counsel for the firstrespondent.

5.The contentions of Mr. S.R. Rajagopal may be summarised as under:

(i) Section 60 envisages a bipartite agreement between the society and itsmember. It does not prescribe a tripartite agreement.

(ii) After the execution of the agreement, it requires a requisition in writing fromthe society to the employer to make deductions in accordance with the bipartiteagreement between the society and the member and to pay the amount sodeducted to the society within a period of 14 days from the date on which thededuction was made.

(iii) In case the employer fails to make the deduction specified in the requisitionor commits default in remitting the amount deducted to the society, the society isentitled to recover the amount from the employer as arrears of land revenue.The employer is not entitled to refuse to make deduction because the obligationis statutory. The judgment of the Bombay High Court in

Poona Post and TelecomCooperative Credit Society Ltd.

v.

Union of India and others,

(2010) 1 Mh LJ 858,interpreting section 49 of the Maharashtra Co-operative Societies Act, 1961, isrelied on in support of this interpretation. Emphasis is placed on paragraph-10thereof.

6.The contentions of Mr. V.P. Raman on behalf of the Central Warehousing Corporation may besummarised as under:

(i) The consent of the employee for deductions by the employer should becommunicated directly by the employee to the employer. Unless suchrequirement is read into section 60, the provision may not be workable inpractice.

(ii) The agreement between the member and the society may provide fordeduction on monthly basis over a period of 120 months, whereas the member /employee may cease to be an employee prior thereto on account of resignation,termination or otherwise. Clarity is necessary with regard to the obligations ofthe employer in those situations.

(iii) The member/employee may be placed under suspension. Clarity is necessaryas to whether the employer's obligation to deduct as per the agreementcontinues to operate in that situation.

7.The contentions of Mr. Srinivasa Murthy may be summarised as under:

(i) Section 60 was incorporated for the benefit of the member / employee aftertaking into account the difficulties encountered by employees in availing of loansfrom banks and other financial institutions. Thus, it is intended to enableemployees to obtain loans from a multi-state co-operative society.

(ii) The employer is only entitled to make deductions from the salary or wages ofthe employee even if the agreement enables deduction from other sources ofincome such as gratuity or provident fund.

(iii) The definition of wages in the Payment of Wages Act, 1936 (‘Payment ofWages Act') expressly excludes pension, provident fund and gratuity.

Discussion, analysis and conclusions

8.The interpretation of section 60 of the MS Co-operative Societies Act is at the core of theissue placed before us for decision. Said provision reads as under:

“60. Deduction from salary to meet multi-State co-operative society's claim in certain cases.—

(1) Notwithstanding anything contained in any law for the time being in force, amember of a multi-State co-operative society may execute an agreement infavour of that society providing that his employer disbursing his salary or wagesshall be competent to deduct every month from the salary or wages payable tohim, such amount as may be specified in the agreement and to pay the amountso deducted to the society in satisfaction of any debt or other demand themember owes to the society.

(2) On the execution of such agreement, the employer disbursing the salary orwages of the members shall, if so required by the multi-State co operativesociety, by a requisition in writing and so long as the society does not intimatethat the whole of such debt or other demand has been paid, make the deductionin accordance with the agreement and pay the amount so deducted to thesociety within a period of fourteen days of the date on which deduction has beenmade, as if it were a part of the salary

or wages payable on the day as required under the Payment of Wages Act, 1936

(4 of 1936), and such payment shall be valid discharge of the employer for hisliability to pay the amount deducted.

(3) If after the receipt of a requisition made under sub-section (2), the employerdisbursing the salary or wages of the member at any time fails to deduct theamount specified in the requisition from the salary or wages payable to themember concerned or makes default in remitting the amount deducted to themulti-State co-operative society, the society shall be entitled to recover any suchamount from such employer as arrears of land revenue and the amount so due from such employer shall rank in priority in respect of the liability of suchemployer equal to that of the salary or wages in arrears.” (emphasis added)

9. For purposes of interpretation, it is profitable to breakdown the elements of the sub-sections of section 60. Sub-section (1) thereof may be broken down into its elements andexplained as under:

(i) Because of the preambular non-obstante clause, the provision overridesanything inconsistent thereto in any law in force as on the date of entry intoforce of section 60. Consequently, it becomes necessary to examine whether anyother relevant law, which was in force on the date of entry into force of section60, is inconsistent therewith.

(ii) A member of a multi-state co-operative society may enter into an agreementwith the society of which such person is a member. The use of the permissiveword “may” indicates that such member has the option, but not the obligation toenter into an agreement with such society.

(iii) Sub-section (1) enables the member to authorise his employer by theagreement to make deductions from the salary or wages payable to him by theemployer on a monthly basis at the time of making disbursement, and to insteadpay the deducted sum to the society in discharge of such member's dues to thesociety.

(iv) The deduction is to be made by the employer of the amount specified in anysuch agreement. Because the authorisation to deduct is limited to the amountspecified in the agreement, even if other requirements in this regard were to besatisfied, the obligation to deduct cannot be enforced against the employer bythe society unless the amount is specified.

(v) The agreement should also specify that the amount deducted is required tobe paid by the employer to the society in satisfaction of the debt or otherdemand that the member/ employee owes to the society.

(vi) In effect, sub-section (1) enables and provides statutory recognition to abipartite contract between member and society authorising monthly deductionsby the employer of payables to the employee from two sources, viz

, salary orwages, to the extent specified in such agreement.

10.Continuing this exercise with regard to sub-section (2), said provision may be brokendown into the following elements and explained as under:

(i) After execution of the agreement referred to in sub-section (1), if a requisitionin writing were to be received from a multi-state cooperative society by theemployer to make a deduction from the monthly salary or wages of the member,the employer shall make a deduction in accordance with the agreement.

(ii) The amount deducted pursuant to such requisition is required to be paid tothe society within a period of 14 days from the date of deduction as if it werepart of the salary or wages payable as per the Payment of Wages Act.

(iii) Such payment shall be a valid discharge of the employer's liability to pay theamount deducted to the employee.

11.Sub-section (3) may be broken down into its elements and explained as follows:

(i) In spite of receipt of a requisition in writing as per sub-section (2):

(a) if the employer disbursing the salary or wages fails to deductthe amounts specified in the agreement from the salary or wagespayable to the member, the society shall be entitled to recover suchamount from the employer as arrears of land revenue; or

(b) If the employer makes the deduction as per (i) above from thesalary or wages payable to the member / employee but fails toremit the amount deducted to the society, the society shall beentitled to recover the amount from the employer as arrears of landrevenue.

(ii) The amount due from the employer to the society shall rank in priority on apar with the liability of such employer in relation to the payment of salary orwages in arrears.

12.The conclusion that flows from the above analysis is that a tripartite agreement involvingthe employer, employee and society is not prescribed in sub-section (1) or (2) of section 60.The text of sub-section (1) clearly indicates that a member may enter into a bipartiteagreement with the society. If the member/employee opts to enter into such agreement, itshould clearly authorise the deduction of a specified amount from the salary or wages of theemployee by the employer at the time of disbursement thereof every month. Especially inview of the agreement not involving the employer, the stipulation that the amount to bededucted be specified in the agreement assumes significance. This requirement ensures thatthe employee's consent is available not only for making the deduction, but also in respect ofthe amount to be deducted.

13. Because of the additional requirement in sub-section (2), it is not sufficient for anagreement to be executed between the society and its member. Pursuant thereto, it isnecessary that the society makes a requisition in writing to the employer calling upon theemployer to make the deduction in accordance with the agreement. Although sub-section (2)does not expressly provide that a copy of the agreement should be submitted to the employerby the society, in our view, it is implicit in sub-section (2) that a copy of the agreement shouldbe provided.

14.The reasons for the above conclusion are as follows. Sub-section (1) prescribes that theauthorisation to deduct is in respect of the amount specified in the agreement and sub-section(2) prescribes that the society shall make the deduction in accordance with the agreement.Significantly, sub-section (2) stipulates that the deduction shall be made in accordance withthe agreement and not in accordance with the written requisition from the society. Hence,even if the requisition from the society specifies the amount to be deducted, without checkingthe agreement, it is not possible for the employer to be certain that the employee hasconsented to the deduction of the amount mentioned in the requisition from the salary orwages payable on a monthly basis. Sub-section (2) also incorporates a statutory discharge ofthe employer's liability to the employee with regard to the amount deducted and paid to thesociety from and out of the salary or wages of the employee. In the absence of such expressconsent from the employee, the deduction would not be in consonance with statute and,consequently, would not result in a statutory discharge of the employer's liability to the extentof such deduction. Therefore, unless the employer is provided a copy of the agreement, thestatutory mandate cannot be complied with.

15.Having drawn the above conclusions on interpreting section 60, a question arises as towhether an employer can include a term in the employment contract requiring the employer'sconsent in relation to a loan agreement authorising deductions by the employer. We find nostatutory embargo in the MS Co-operative Societies Act preventing the inclusion of such termin the contract between the employer and employee. The sources from which deductions maybe made and whether there are ceilings in respect of the extent of deduction remain to beconsidered.

16.The statutory obligation imposed on the employer under section 60 is with regard tomaking deductions from the salary or wages payable to the employee by the employer. Thenecessary implication is that the employer's obligation is dependent on salary or wages beingpayable to the employee concerned during the relevant period. The MS Co-operative SocietiesAct does not define either salary or wages. It, however, makes express reference to thePayment of Wages Act in section 60. Therefore, it is instructive to turn to the definition of wages in the Payment of Wages Act. ‘Wages' are defined as under in section 2(vi) of saidstatute:

“(vi) “wages” means all remuneration (whether by way of salary, allowances, or otherwise)expressed in terms of money or capable of being so expressed which would, if the terms ofemployment, express or implied, were fulfilled, be payable to a person employed in respect ofhis employment or of work done in such employment, and includes—

(a) any remuneration payable under any award or settlement between theparties or order of a Court;

(b) any remuneration to which the person employed is entitled in respect ofovertime work or holidays or any leave period;

(c) any additional remuneration payable under the terms of employment(whether called a bonus or by any other name);

(d) any sum which by reason of the termination of employment of the personemployed is payable under any law, contract or instrument which provides for thepayment of such sum, whether with or without deductions, but does not providefor the time within which the payment is to be made;

(e) any sum to which the person employed is entitled under any scheme framedunder any law for the time being in force, but does not include—

(1) any bonus (whether under a scheme of profit-sharing orotherwise) which does not form part of the remuneration payableunder the terms of employment or which is not payable under anyaward or settlement between the parties or order of a Court;

(2) the value of any house-accommodation, or of the supply oflight, water, medical attendance or other amenity or of any serviceexcluded from the computation of wages by a general or specialorder of the appropriate Government;

(3) any contribution paid by the employer to any pension orprovident fund, and the interest which may have accrued thereon;

(4) any travelling allowance or the value of any travellingconcession;

(5) any sum paid to the employed person to defray specialexpenses entailed on him by the nature of his employment; or

(6) any gratuity payable on the termination of employment in casesother than those specified in sub-clause (d).”

17. As can be seen from the above, it appears that remuneration (including bonus) isincluded, but house rent allowance, leave travel allowance and pension or provident fundcontributions of the employer are excluded. As regards gratuity, it is included in cases wherethe law, contract or instrument providing for such payment does not specify a time limit forpayment; whereas, it is excluded from the definition of wages if a time limit were to bespecified. In order to examine whether gratuity paid under the Payment of Gratuity Act, 1972(the Payment of Gratuity Act) would fall within sub-clause (d) of section 2(vi), it is necessaryto examine whether a time limit is prescribed in the Payment of Gratuity Act.

18. Section 7 of the Payment of Gratuity Act deals with the determination of the amount ofgratuity and sub-section (3) thereof prescribes as under:

“(3) The employer shall arrange to pay the amount of gratuity, within thirty daysfrom the date it becomes payable to the person to whom the gratuity is payable.”

Thus, the statute governing gratuity prescribes a time limit for making payment.Consequently, gratuity payable under the Payment of Gratuity Act would not fall within thedefinition of wages under the Payment of Wages Act. Therefore, deductions cannot be madeby the employer from such sums.

19. The Payment of Wages Act was repealed and replaced by the Code on Wages, 2019 (theWages Code). Most sections of the Wages Code, including all sections relevant for presentpurposes, came into effect on 21-11-2025 pursuant to Notification S.O. 5322(E) of theMinistry of Labour and Employment dated 21-11-2025. The definition of wages in the WagesCode should be examined to ascertain if there are differences. The definition of wages iscontained in section 2(y) of the Wages Code, which is set out below:

“wages” means all remuneration whether by way of salaries, allowances, or otherwiseexpressed in terms of money or capable of being so expressed which would, if the terms ofemployment, express or implied, were fulfilled, be payable to a person employed in respect ofhis employment or of work done in such employment, and includes—

(i) basic pay;

(ii) dearness allowance; and

(iii) retaining allowance, if any but does not include—

(a) any bonus payable under any law for the time being in force,which does not form part of the remuneration payable under theterms of employment;

(b) the value of any house-accommodation, or of the supply oflight, water, medical attendance or other amenity or of any serviceexcluded from the computation of wages by a general or specialorder of the appropriate Government;

(c) any contribution paid by the employer to any pension orprovident fund, and the interest which may have accrued thereon;

(d) any conveyance allowance or the value of any travellingconcession;

(e) any sum paid to the employed person to defray special expensesentailed on him by the nature of his employment;

(f) house rent allowance;

(g) remuneration payable under any award or settlement betweenthe parties or order of a court of Tribunal;

(h) any overtime allowance;

(i) any commission payable to the employee;

(j) any gratuity payable on the termination of employment;

(k) any retrenchment compensation or other retirement benefitpayable to the employee or any ex gratia

payment made to him onthe termination of employment:

Provided that, for calculating the wages under this clause, if payments made by the employerto the employee under clauses (a) to (i) exceeds one-half or such other per cent as may benotified by the Central Government, of all the remuneration calculated under this clause, theamount which exceeds such one-half, or the per cent so notified, shall be deemed asremuneration and shall be accordingly added in wages under this clause:

Provided further that for the purpose of equal wages to all genders and for the purpose ofpayment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage.

Explanation

.—Where an employee is given in lieu of the whole or part of the wages payable tohim, any remuneration in kind by his employer, the value of such remuneration in kind whichdoes not exceed fifteen per of the total wages payable to him, shall be deemed to form part ofthe wages of such employee.

20. From the above, it appears that the definition of wages, in the Wages Code, coversremuneration, including dearness allowance, but house rent allowance, leave travel allowance,pension or provident fund contributions of the employer and gratuity are excluded subject,however, to the first proviso thereto. In contrast to the Payment of Wages Act, the WagesCode makes all the exclusions in clauses (a) to (k) of section 2(y) subject to the first provisothereof. Under the first proviso, if the payments under the above sub-clauses exceed one halfor the per cent notified by the Central Government of all remuneration, the amount exceedingone-half or the notified per cent of the total remuneration would be deemed to be wages. Insuch event, the part of provident or pension fund contributions by the employer and gratuityexceeding the above threshold would be deemed as remuneration and added to the wages. Ifso, such amount would become liable for deduction under section 60 of the MS Co-operativeSocieties Act read with the Wages Code.

21.This discussion underscores the significance of closely considering the interplay betweenand inconsistency, if any, between the MS Cooperative Societies Act and wage relatedlegislation with regard to deductions. Before doing so, a minor digression is in order tocompare and contrast the MS Co-operative Societies Act and the Tamil Nadu Co-operativeSocieties Act, 1983, and this aspect is examined next.

22.The position under the MS Co-operative Societies Act with regard to deduction fromgratuity may be contrasted with the position under the Tamil Nadu Co-operative Societies Act,1983. Section 48 thereof provides as under in sub-section (1):

“

48. Deduction from salary, wages or gratuity.

—(1) A member of a registeredsociety may execute an agreement in favour of that society providing that—

(a) his employer or the officer disbursing his salary or wages shallbe competent, on a requisition in writing from the society to deductevery month from the salary or wages payable to him such amountas may be specified in the requisition towards the amount; and

(b) if he ceases to be an employee, his employer shall be competenton a requisition in writing from the society to deduct from thegratuity payable to such employee such amount as may be specifiedin the requisition towards the entire balance, due by him to thesociety in respect of any debt or other demand owing by themember to the society.”

23.As can be seen from clause (b), the employer is competent to deduct from the gratuitypayable to an employee who ceases to be an employee if a requisition in writing is receivedfrom the society specifying the sum to be deducted towards the entire balance due from theemployee or member to the society. By contrast, as discussed earlier, the deduction under theMS Co-operative Societies Act may only be made from salary or wages and not from gratuity.

Interplay between the MS Cooperative Societies Act and wage-related legislation

24. Because section 60 makes reference to the Payment of Wages Act, it is also necessary toexamine whether said statute contains provisions relating to deductions from wages and, if so,further examine the effect of the Payment of Wages Act on the imposition and enforcement ofobligations under section 60 of the MS Co-operative Societies Act. Section 7 of the Payment ofWages Act provides, in relevant part, as under:

“

7. Deductions which may be made from wages.

—(1) Notwithstanding the provisions of theRailways Act, 1989 (24 of 1989), the wages of an employed person shall be paid to him without deductions of any kind except those authorised by or under this Act.

Explanation I

.—Every payment made by the employed person to the employer or his agentshall, for the purposes of this Act, be deemed to be a deduction from wages.

Explanation II.

—Any loss of wages resulting from the imposition, for good and sufficientcause, upon a person employed of any of the following penalties, namely:—

(i) the withholding of increment or promotion (including the stoppage ofincrement at an efficiency bar);

(ii) the reduction to a lower post or time-scale or to a lower stage in a timescale; or

(iii) suspension,

shall not be deemed to be a deduction from wages in any case where the rules framed by theemployer for the imposition of any such penalty are in conformity with the requirements, ifany, which may be specified in this behalf by the appropriate Government by notification inthe Official Gazette.

(2) Deductions from the wages of an employed person shall be made only in accordance withthe provisions of this Act, and may be of the following kinds only, namely:—

“….

(j) deductions for payments to co-operative societies approved by appropriate Government orany officer specified by it in this behalf or to a scheme of insurance maintained by the IndianPost Office;

….

(3) Notwithstanding anything contained in this Act, the total amount of deductions which maybe made under sub-section (2) in any wage-period from the wages of any employed personshall not exceed—

(i) in cases where such deductions are wholly or partly made for payments to co-operativesocieties under clause (j) of sub-section (2), seventy-five per cent. of such wages, and

(ii) in any other case, fifty per cent. of such wages:

Provided that where the total deductions authorised under sub-section (2) exceed seventy-fiveper cent. or, as the case may be, fifty per cent. of the wages, the excess may be recovered insuch manner as may be prescribed.

(4) Nothing contained in this section shall be construed as precluding the employer fromrecovering from the wages of the employed person or otherwise any amount payable by suchperson under any law for the time being in force other than the Railways Act, 1989 (24 of1989)”.

25. From the text of sub-section (2)(j) read with section 7 of the Payment of Wages Act,particularly clause (i) of sub-section (3) thereof, it is evident that a ceiling of 75% isprescribed with regard to deductions for payments to a co-operative society. Sub-section (4)prescribes that section 7 would not preclude recoveries from the wages in accordance with anyother law. In the case at hand, we are concerned with deductions and not recoveries. Moreimportantly, the MS Co-operative Societies Act enables, but does not mandate deductions orrecoveries. The MS Co-operative Societies Act is the later statute and contains a non-obstanteclause. As in the case of all non-obstante clauses, however, it would be triggered only if thetwo statutes cannot be reconciled. Instead of multiplying authorities in support of thisproposition, it is sufficient to cite

Union of India and others v.Rajeev Bansal, 2024 INSC 754,where it was held as under:

“39. The legislature is presumed to enact a consistent and harmonious body oflaws in deference to the rule of law. In case of any apparent conflict within aprovision or between two provisions of the same statute, the courts must readthe provisions harmoniously. The principle of harmonious construction requirescourts to bring about a reconciliation between seemingly conflicting provisions togive effect to both. An interpretation which reduces one of the provisions to a“dead letter” is not a harmonious construction. The principle of harmoniousconstruction also applies to reconcile two seemingly conflicting provisions ofdifferent statutes.

41. A non-obstante clause must be given effect to the extent Parliament intended and notbeyond. In construing a provision containing a non-obstante clause, courts must determinethe purpose and object for which the provision was enacted. The courts are also required tofind out the extent to which the legislature intended to give one provision overriding effectover another provision. In case of a clear inconsistency between two enactments, a provisioncontaining a non-obstante clause can be given an overriding effect over a provision containedin another statute.”

26. Whether the two statutes are incompatible, therefore, falls for consideration. If the MSCo-operative Societies Act had prescribed a different ceiling for deductions or stipulated thatno ceiling is applicable, the two statutes could be said to be in conflict. Section 60, however,neither prescribes a ceiling on deductions nor specifies that there is no ceiling. Instead, asnoticed earlier, section 60 of the MS Cooperative Societies Act merely enables a member of amulti-state cooperative society to enter into an agreement with such society authorising theemployer to deduct the amount specified therein from the salary or wages payable to suchmember. In our view, the two statutes are capable of being construed harmoniously and giveneffect to if it is implied that the amount specified for deduction in the agreement should notexceed the ceiling prescribed in the Payment of Wages Act. We, therefore, conclude that thespecified deduction in the agreement should be within the ceiling prescribed in the Payment ofWages Act in respect of all agreements entered into while said statute was in force. Thecorresponding provisions of the Wages Code warrant consideration next.

27.Section 18 of the Wages Code, which deals with deductions, is set out, in relevant part,below:

“

Deductions which may be made from wages.

—(1) Notwithstanding anythingcontained in any other law for the time being in force, there shall be nodeductions from the wages of the employee, except those as are authorisedunder this Code.

Explanation

.—For the purposes of this sub-section,–

(a) any payment made by an employee to the employer or hisagent shall be deemed to be a deduction from his wages.

(b) any loss of wages to an employee, for a good and sufficientcause, resulting from–

(i) the withholding of increment or promotion,including the stoppage of an increment; or

(ii) the reduction to a lower post or time-scale or timescale; or

(iii) the suspension, shall not be deemed to be adeduction from wages in a case where the provisionsmade by the employer for such purposes are satisfyingthe requirements specified in the notification issued bythe appropriate Government in this behalf.

(2) Deductions from the wages of an employee shall be made in accordance withthe provisions of this Code, and may be made only for the following purposes,namely:–

….

(j) deductions for payment of co-operative society subject to such conditions asthe appropriate Government may may impose;

….

(3) Notwithstanding anything contained in this Code and subject to theprovisions of any other law for the time being in force, the total amount ofdeductions which may be made under sub-section (2) in any wage-period fromthe wages of any employed person shall not exceed fifty per cent. of such wages.

(4) Where the total deductions authorised under sub-section (2) exceed fifty percent. of the wages, the excess may be recovered in such manner as may beprescribed.

(5) Where any deduction is made by the employer from the wages of anemployee under this section but not deposited in the account of the trust orGovernment fund or any other account, as required by the provisions of the lawfor the time being in force, such employee shall not be held responsible for suchdefault of the employer.

28.It is noticeable that section 18 opens with a non-obstante clause, which expresslystipulates that no deductions shall be made from the wages of an employee except thoseauthorised under the Code. Consequently, any deduction made in terms of section 60 of theMS Co-operative Societies Act has to be in consonance with the Wages Code, which being thelater statute with a non-obstante clause would prevail in case of inconsistency. Deductions forpayment to a cooperative society are permitted under clause (j) of sub-section (2) of section18 subject to such conditions as the appropriate Government may impose. AppropriateGovernment is defined in section 2(d) and would be the Central Government as regards theCentral Warehousing Corporation. Sub-section (3) of section 18 is subject to any other law forthe time being in force, but prescribes the ceiling of 50% of the wages payable for any wageperiod. Another provision of relevance in the Wages Code is section 61, which is reproducedbelow:

“

61. Effect of laws agreements, etc., inconsistent with this Code.

—Theprovisions of this Code shall have effect notwithstanding anything inconsistenttherewith contained in any other law for the time being in force or in the terms ofany award, agreement, settlement or contract of service.”

29.As discussed and concluded in our analysis of the deduction provision in the Payment ofWages Act, in our view, the MS Cooperative Societies Act and the Wages Code are capable ofbeing construed harmoniously. To elaborate: the MS Cooperative Societies Act does notprescribe a ceiling or stipulate that there is no ceiling whereas the Wages Code prescribes aceiling on deductions for all purposes permitted therein, including specifically deductions infavour of a co-operative society. Therefore, the two statutes may be interpreted harmoniouslyby holding that the deductions authorised in the agreement under section 60 of the MS Co-operative Societies Act should not exceed the ceiling prescribed in the Wages Code. If so, itwould be enforceable against the employer; whereas, if not, it would be open to the employerto refuse to comply on the ground that it is in conflict with the obligation imposed by a laterstatute containing non-obstante clauses in sections 18 and 61, including specifically in relationto agreements inconsistent with the Wages Code.

30.A brief discussion on salary is warranted because section 60 of the MS Co-operativeSocieties Act also enables deductions from salary. The expression ‘salary' is not defined in theMS Co-operative Societies Act. Although defined inclusively in section 17 of the Income TaxAct, 1961, said definition is expressly for purposes of sections 15 and 16 of said statute.

Therefore, it cannot be extended and applied for purposes of interpreting section 60 of the MSCo-operative Societies Act. Effectively, in the absence of an applicable statutory definition, therelevant employment contract would govern. Therefore, the employer concerned should makedeductions only from the salary as per applicable terms of the employment contract. Anydispute, in this regard, would have to be decided by the competent court or tribunal byexamining and construing such employment contract.

31. Based on the aforesaid discussion and analysis, our answer to the question framed is setout below in summary:

(i) Section 60 of the MS Co-operative Societies Act prescribes that, at the optionof a member, a bipartite agreement may be entered into between the society andsaid member for deduction of amounts payable by such member to the societyfrom and out of the salary or wages payable on monthly basis by the employer tothe member/employee. Neither a tripartite agreement also involving theemployer nor the consent or authorisation of the employer is required undersection 60.

(ii) Section 60, however, does not prohibit the inclusion of a requirement ofobtaining the employer's consent in relation to such deduction as a term of therelevant employment contract.

(iii) The amount to be deducted should be specified in the agreement becausethe deduction is required to be made by the employer in accordance with theagreement.

(iv) It is implicit in section 60 that a copy of the agreement should be provided tothe employer to enable fulfilment of the statutory mandate of making thededuction in accordance with the agreement.

(v) Such deductions shall be made only from the salary or wages, as elucidatedherein, of the employee concerned. Consequently, if salary or wages are notpayable, deduction need not be made by the employer.

(vi) Reading section 60 of the MS Co-operative Societies Act harmoniously withsection 7 of the Payment of Wages Act and sections 18 and 61 of the WagesCode leads to the inference that the amount specified in the agreement shouldnot exceed the ceiling prescribed in the applicable statute. If the amountspecified were to exceed the ceiling, the employer would be entitled to refuse tomake deduction on the ground that it conflicts with obligations imposed underthe above statutes.

(vii) Because the ceiling in the Wages Code is lower, said ceiling would apply toall agreements and deductions made after the entry into force of said statute,whereas deductions made prior thereto, in consonance with the Payment ofWages Act, would be valid by virtue of the savings clause in the Wages Code readwith section 6 of the General Clauses Act, 1897.

32. The Registry is directed to list these writ petitions before the roster Bench for adjudicationbased on the answer provided by us to the reference.