Punjab & Haryana High Court Strikes Down 1997 Rule Mandating Govt-Parity Retiral Benefits For Cooperative Society Employees

The Punjab & Haryana High Court has held that the 1997 Service Rules mandating retiral benefits for employees of cooperative societies at par with government employees are ultra vires the parent statute and unenforceable. The Court observed that the State Government had no authority to further delegate its rule-making power to the Registrar, and such sub-delegation was neither expressly permitted nor implied under the governing Act.Justice Harpreet Singh Brar was hearing a batch of writ petitions filed by retired employees of cooperative societies seeking release of retiral benefits along with interest, as well as a petition filed by a cooperative society challenging directions to release such benefits. The employees contended that under the Punjab State Co-operative Agricultural Service Societies Service Rules, 1997, they were entitled to gratuity, leave encashment and other retiral benefits at par with Punjab Government employees, while the societies resisted such claims, citing financial incapacity and pending recoveries in certain cases.The Court examined the statutory framework under the Punjab Cooperative Societies Act, 1961, which vests the rule-making power with the State Government under Section 85. It noted that although the State Government had framed the 1963 Rules, it subsequently delegated its power to the Registrar through Rule 28, pursuant to which the Registrar framed the 1997 Service Rules governing service conditions of employees of cooperative societies.Upon consideration, the Court held that the parent Act does not authorize the State Government to further delegate its rule-making power, and therefore the delegation made to the Registrar was impermissible. Consequently, the 1997 Service Rules framed by the Registrar were held to be beyond the scope of the Act.“… the State Government could not have delegated its rule-making power under Section 85(2)(xxxviii) of the 1961 Act to the Registrar, Co-operative Societies. Such sub-delegation is neither expressly authorized nor permitted by necessary implication under the parent statute. Thus, this Court holds that the 1997 Service Rules are ultra vires the 1961 Act,” the Court observed. The Court further observed that cooperative societies are independent entities, managed by elected committees and operating from their own resources without financial support from the State. It noted that many such societies are financially distressed, with limited income sources and substantial accumulated losses, and that imposing obligations to pay retiral benefits at par with government employees without any financial backing from the State would be unsustainable.Accordingly, the Court held that the 1997 Service Rules are ultra vires the 1961 Act and unenforceable, and consequently dismissed the writ petitions filed by the employees seeking retiral benefits as non-maintainable. The petition filed by the cooperative society was allowed, the show cause notice directing release of retiral benefits was quashed, and it was clarified that no recovery shall be effected from retired employees in respect of benefits already disbursed.Case Title: Samarjit Singh vs. State of Punjab & Ors. and connected matters [CWP-1422-2026 and connected cases]Click Here To Read/Download Order

Punjab & Haryana High Court Strikes Down 1997 Rule Mandating Govt-Parity Retiral Benefits For Cooperative Society Employees

Saksham Vaishya

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