Malimath, C.J.
1. The petitioner in this writ petition is Shertallai Taluk Co-operative Land Mortgage Bank Ltd., a co-operative society registered under the Kerala Co-operative Societies Act, 1969. The third respondent Smt. C.A. Vijayam was its paid Secretary. On the ground that she has committed certain misconduct pending disciplinary proceedings, she was kept under suspension on January 17, 1979. The said decision did not make any provision for grant of any subsistence allowance during the period of suspension. The third respondent made an application under Section 4 of the Kerala Payment of Subsistence Allowance Act 1972 (hereinafter referred to as the 'Subsistence Allowance Act') for grant of subsistence allowance to her in accordance with the provisions of the said Act. That application was opposed by the petitioner on various grounds, inter alia, contending that the third respondent is not an employee as defined in Section 2(a) of the Subsistence Allowance Act, she having been employed only in a managerial capacity. The first respondent made an order on the application as per Ext.P4 dated January 13, 1981 awarding subsistence allowance of Rs. 8,211.81. The first respondent has held that the third respondent as the Secretary cannot be regarded as a person employed in a managerial capacity and that therefore the Subsistence Allowance Act applies to the facts of the present case. It is the said decision that is challenged in this writ petition.
2. Rule 198(6) of the Kerala Co-operative Rules (hereinafter referred to as the 'Rules'), before it was amended with effect from January 13, 1981, which regulated the grant of subsistence allowance to an employee of the Cooperative Society under suspension read as follows:
'An authority competent to appoint an employee may suspend him pending enquiry into serious charges against such employee. No employee shall, however, be kept under suspension for a period exceeding six months at a time. In no case an employee shall be kept under suspension for a continuous period exceeding one year without the prior approval of the Registrar. An employee under suspension shall be entitled for subsistence allowance at the rates admissible to State Government employees as prescribed under the Kerala Service Rules.'
This is a specific provision dealing with grant of subsistence allowance to employees of the Co-operative Societies who are kept under suspension. They were, by the operation of this rule, required to be paid subsistence allowance at the rates admissible to State Government employees in accordance with the provisions of the Kerala Service Rules. Though this was the position so far as the rules framed under the Act are concerned, the Kerala Legislature enacted the Kerala Payment of Subsistence Allowance Act 1972 (Act 27 of 1973). The Act came into force on February 2, 1974. The said Act provides for grant of subsistence allowance in accordance with the scheme prescribed therein to employees as defined in Section 2(a) of the said Act. Thus there are two sets of provisions operating in the same field regarding grant of subsistence allowance so far as the employees of the societies registered under the Kerala Co-operative Societies are concerned. One set of provisions are contained in Rule 198(6) which say that an employee kept under suspension shall be entitled to subsistence allowance at the rates admissible to State Government employees as prescribed under the Kerala Service Rules. At the same time, the Subsistence Allowance Act enables an employee as defined in Section 2(a) of the said Act to secure relief of subsistence allowance in accordance with the provisions of the said Act. As there were two sets of provisions governing the same field, this court had occasion to examine as to which set of provisions govern the employee of the Co-operative Societies. This question is decided by the decision reported in 1979 KLT 392 between the Deputy Labour Commissioner and Emmanual. That was a case in which the Secretary of a Co-operative Society who was kept under suspension approached the prescribed authority under the Subsistence Allowance Act and secured an order for grant of subsistence allowance in accordance with the provisions of the said Act. The society took the stand that the employees of the society are governed by Rule 198(6) of the rules and not by the Subsistence Allowance Act. After an exhaustive consideration of the question, this is what the Division Bench has ruled in the said decision:
'The effect of Section 5 of the Payment of Subsistence Allowance Act is to save any law for the time being in force under which a right or privilege more favourable to the employee is available. By implication, any law under which the right or provilege available is less favourable, cannot be, and is not to be, saved. In the present case, there can be little doubt and there was indeed no controversy, that the rate of subsistence allowance payable under the Payment of Subsistence Allowance Act is more favourable than under Rule 198(6) of the Co- operative Societies Rules. Having regard to the scheme, the purpose and the object of the two enactments, it appears that the Payment of Subsistence Allowance Act must be regarded as a special Act which will over-ride the provisions of the general Act, which, in this case, is the Co-operative Societies Act.'
This court therefore ruled in the said decision that notwithstanding the provisions contained in Rule 198(6), as they stood, employees of the Society registered under the Act are entitled to claim subsistence allowance invoking the provisions of the Subsistence Allowance Act. The award of subsistence allowance by the authority prescribed under the Subsistence Allowance Act was held to be legal and proper in the said decision. Immediately thereafter the rule making authority amended Rule 198(6) by notification dated December 30, 1980 published in the gazette dated January 10, 1981. The concluding portion of Rule 198(6) which reads as:
'An employee under suspension shall be en-tilled for subsistence allowance at the rates admissible to State Government employees as prescribed under the Kerala Service Rules'
were substituted by the provision which reads:
'An employee under suspension shall be entitled to subsistence allowance payable under the Kerala Payment of Subsistence Allowance Act, 1972 (Act 27 of 1973).'
The rule making authority, it is therefore obvious, has brought Rule 198(6) of the rules in tune with the law laid down by this court in 1979 KLT 392 (supra). The explanatory note attached to the amended rules expressly stated so in the following words:
'Sub-rule (6) of Section 198 of Ch.XV of the Kerala Co-operative Societies Rules 1969 provides that an employee under suspension shall be entitled for subsistence allowance at the rates admissible to State Government employees as prescribed under the Kerala Service Rules.'
The Hon'ble High Court of Kerala in W.A. No. 287/78 observed that the provisions of the Payment of Subsistence Allowance Act is a Special Law, which must prevail over the provisions contained in the General Law, the Co-operative Societies Act. The amendment to the rule is intended to give effect to the decision of the Hon'ble High Court.'
3. Thus there cannot be any doubt that the rule making authority clearly intended when it amended Rule 198(6) that the employees of the Co-operative Societies should be governed by the provisions of the Subsistence Allowance Act in the matter of grant of subsistence allowance pending suspension. It is clear that the reference to the Act is not merely for the purpose of incorporating the rates prescribed under the Subsistence Allowance Act. The Act itself is applicable to employees of the Societies in the matter of grant of subsistence allowance pending suspension. The same question was once again considered in another decision of this court reported in 1984 KLT 284 between Edathua Service Co-operative Bank Ltd. and Authority under Section 6 of the K.P.S.A. Act. The Division Bench which dealt with this case re-affirmed the view taken earlier in 1979 KLT 392. Thus the law stands clearly settled which has held the field all these years to the effect that the Subsistence Allowance Act governs the employees of the societies registered under the Act.
4. As the Subsistence Allowance Act has been made applicable to the employees of the societies, whenever a question arises as to whether a particular employee is entitled to subsistence allowance in accordance with the said Act, it has to be examined as to whether the person claiming subsistence allowance under the said Act is an employee as defined in Section 2(a) of the Act. We say so because Section 3 of the Subsistence Allowance Act entitles an employee placed under suspension to be paid by the employer for the period during which he is under suspension, subsistence allowance for an amount equal to 50% of the wages which the employee was drawing immediately before the said suspension. The right to subsistence allowance under the said Act is therefore granted only to an employee who has been kept under suspension. The expression 'employee' has been defined in Section 2(a) to mean:
'any person employed in or in connection with the work of any establishment to do skilled, semi-skilled or unskilled manual, supervisory, technical, clerical or any other kind of work for hire or reward, whether the terms of employment be expressed or implied, but does not include any such person who is employed mainly in a managerial or an administrative capacity or as an out-worker, that is to say, a person to whom any articles or materials are given out by or on behalf of the employer to be cleaned, washed, altered, ornamented or repaired by such out-worker in any place not under the control and management of the employer.'
It is clear from the definition of the expression 'employee' that it is not every person who is in employment that can be regarded as an employee for the purpose of the Subsistence Allowance Act. The definition of the expression 'employee' makes it clear that if a person is employed mainly in a managerial or an administrative capacity or as an out-worker, he cannot be regarded as an employee for the purpose of the said Act. Therefore, whenever a claim is made by a person employed by the society for grant of subsistence allowance invoking the Subsistence Allowance Act, a question may arise as to whether the person claiming such relief is an employee as defined in Section 2(a) of the Act, entitled to claim such relief. If such a question is raised, it is obvious that the authority functioning under the Subsistence Allowance Act has to determine the said question after giving an opportunity to all the parties of placing material in support of their respective contentions. It is only the employee as defined in Section 2(a) of the Act that can claim subsistence allowance under the Subsistence Allowance Act and not every employee of a Co-operative Society.
5. The contention raised by the petitioner in this case is that the third respondent Smt. C.A. Vijayam who is the Secretary of the petitioner-Society, though in the employment of the society as a Secretary, is not an employee as defined in Section 2(a) of the Subsistence Allowance Act. It is their case that she is not an employee on the ground that she has been employed mainly in a managerial capacity. Such a contention was urged before the first respondent under the Act but the said authority recorded a finding against the petitioner in this behalf.
6. Sri. Panicker, learned counsel for the petitioner, contended that the finding recorded by the authority under Section 6 of the Subsistence Allowance Act that the third respondent is not an employee in a managerial capacity suffers from error apparent on the face of the record and therfore calls for interference. The discussion of this question in the order of the first respondent Ext. P4 is very brief and may be extracted as follows:
'... The employer bank is one of the status of a primary co-operative society and its function is that of disbursing loans for agricultural developments. She had no power to take any decision on the loan application received. Such decisions are taken by the Directors Board. She was not a member of the Directors Board. As a paid Secretary, she had no powers similar to those of a manager other than that of incurring contingency expenditure not exceeding Rs. 2/-. The bank has not produced any evidence before the District Labour Officer in support that she was employed in a managerial capacity in the bank. At the time of suspension she was drawing Rs.783/- p.m.
In the above circumstances, I find that Smt. Vijayam is an employee as defined under Section 2(a) of the Act and hence eligible for subsistence allowance at the following rates.'
Three factors have weighed with the authority in holding that the third respondent is not an employee in a managerial capacity. The first is that as Secretary the third respondent had no power to take decision on the loan application received and that such decisions are required to be taken by the Board of Directors. The second is that the Secretary is not a member of the Board of Directors. The third is that she has power only of incurring contingent expenditure not exceeding Rs. 2/-. That the ultimate decision to grant loans is required to be taken by the Board of Directors is not in our opinion, a sufficient ground which has a bearing on the question as to whether the Secretary is an employee in a managerial capacity on not. Sanctioning of loan is the privilege of the Co-operative Society which right is ordinarily exercised by the Board of Directors. That such a crucial decision is not allowed to be taken by its Secretary does not suggest that she is not an employee in a managerial capacity. Similarly the fact that the Secretary is not one of the members of the Board of Directors is not a relevant factor. As regards the right to incur contingency expenditure not exceeding Rs. 2/- is concerned, if at all, it is a circumstance which is consistent with the Secretary having been employed in a managerial capacity. That is why he has been given the latitude of spending the amount of the society. We are therefore inclined to take the view that the authority has not applied its mind to the relevant factors and has rendered its decision based on considerations which are not relevant.
7. As to what are the factors which have a bearing on deciding the question as to whether a particular person is an employee in a managerial capacity or not is a matter on which the Supreme Court has expressed itself in the case reported in (1964-I-LLJ-47) between T. Premsagar v. S. V. Oil Company, Madras and Ors.. That was a case in which the Supreme Court was required to construe Section 4(1)(a) of the Madras Shops and Establishments Act, which laid down that nothing contined in the said Act shall apply to a person employed in any establishment in the position of management. The Supreme Court had to examine the test to be applied to ascertain as to who can be regarded as the person employed in the position of management. We are also concerned with a similar question of determining as to whether the Secretary can be regarded as a person employed in a managerial capacity.
The Supreme Court has laid down certain tests to determine as to whether a person is employed in a managerial capacity or not. This is what the Supreme Court has said (p.53):
'That takes us to the question as to whether the appellant is an employee whose case falls under the category of exempted cases provided by Section 4(1)(a). Section 4(1)(a) refers to persons employed in any establishment in a position of management, and so, the question is when can a person be said to have been employed by the respondent in a position of management. It is difficult to lay down exhaustively all the tests which can be reasonably applied in deciding this question. Several considerations would naturally be relevant in dealing with this problem. It may be enquired whether the person had a power to operate on the bank account or could he make payments to third parties and enter into agreements with them on behalf of the employer, was he entitled to represent the employer to the world at large in regard to the dealings of the employer with strangers, did he have authority to supervise the work of the clerks employed in the establishment, did he have control and charge of the correspondence, could he make commitments on behalf of the employer, could he grant leave to the members of the staff and hold disciplinary proceedings against them, has he power to appoint members of the staff or punish them; these and similar other tests may be usefully applied in determining the question about the status of an employee in relation to the requirements of Section 4(1)(a).'
In the light of the guidance that is available to us we have to determine as to whether the third respondent who is the Secretary of the Society can be regarded as a person employed in a managerial capacity.
8. The petitioner has relied upon the rules, the bye-laws and the averments in the statement of the petitioner along with the statement of the third respondent. The petitioner's case is that the authorities are bound to look into the rules as also the bye-laws and the evidence produced before them for recording a finding on the crucial issue regarding jurisdiction. We have already noticed that none of these materials have been considered by the authority in the impugned order. To avoid protraction of litigation, we consider it appropriate to examine the materials and record a finding in this behalf.
9. The third respondent is admittedly the highest paid employee of the society. She was receiving at the relevant point of time Rs. 783/-per month. She has no doubt to function in accordance with the decision of the Board of Directors as the ultimate authority of the society vests in the Board. What we are required to examine is not as to in whom the ultimate authority of the society vests but as to whether the third respondent who is an employee of the society has been employed to discharge the managerial functions. The petitioner-society is a primary land mortgage bank and falls under Class I. The staff pattern of this class of societies is given in Appendix HI to the rules and consists of one Secretary, three Supervisors, one Accountant, one-Senior Clerk, two Junior Clerks and two Attenders/Peons. The Secretary enjoys the highest scale pay among all the employees. Rule 198(3) empowers the Secretary to impose on the employees of the society with a pay of less than Rs. 300/-, the minor penalties of censure, fine and with-holding of increments with or without cumulative effect. Thus disciplinary control over a section of the employees is conferred on the Secretary by the statutory provision. Bye-law 29(c) of the bye-laws of the society provides that the Secretary shall be responsible for the executive administration of the bank subject to the control of the President. Thus it is clear that the Secretary is in full charge of the executive administration of the society subject to the control of the President. Clause of bye-law 29 provides that the Treasurer shall take custody of all properties of the Bank. The Treasurer and in his absence the Director appointed by the President shall have power for and on behalf of the Bank to operate on the accounts to endorse and transfer promissory note, Government and other securities standing in the name of or held by the bank and to sign, endorse and negotiate cheques and other negotiable instruments. He shall make disbursements in accordance with the direction of the board. He shall sign in the cash book in token of its correctness and produce the cash balance whenever called upon to do so by the board or by the Inspecting Officers. These powers and functions can be transferred to the paid Secretary when appointed. The evidence in this case clearly indicates that there is no Treasurer so far as this society is concerned and that the third respondent as the Secretary has been appointed to discharge all the functions of the Treasurer. Thus the crucial duties and responsibilities are entrusted, as stated earlier, with the Secretary of the society. In the evidence the third respondent has ad-milted that she is the custodian of the properties and assets of the bank, there being no Treasurer in the society. She has stated that there is a joint account of the society in the bank and it is the President and herself as the Secretary that are authorised to sign the cheques. She has admitted that she exercises control over the staff in accordance with Section 80 of the Act and Rules 182 and 200. She has further stated that she executes all the decisions of the Board of Directors. In paragraph 3 of the reply affidavit filed by the petitioner in the writ petition it is stated that the correspondence is required to be carried out by the Secretary, that the registers and record books are required to be maintained by her and that the supervision and control vests in the Secretary. It is further stated that the day book and cash book are to be counter-signed by the Secretary every day. She is the custodian of the cash and all other assets of the Bank. It is also stated that the staff of the bank such as peons, clerks, supervisors and accountants are under the control of the Secretary of the bank. It is also stated that the Secretary of the bank is competent to impose prescribed penalties over all employees in accordance with Rule 198. The statements of the petitioner in the reply affidavit stand corroborated by the admissions of the third respondent and receives full support from the statutory provisions and bye-laws discussed above. We are satisfied, on the consideration of the functions, duties and responsibilities of the Secretary that most of the tests enumerated by the S.C. are satisfied in this case justifying an inference that she is employed in a managerial capacity. As the third respondent, Secretary of the society, is a person who is employed in a managerial capacity, she cannot be regarded as an employee as defined in Section 2(a) of the Subsistence Allowance Act. As the provisions of the said Act can be invoked only by an employee, it is clear that the third respondent, the Secretary of the society, she not being an employee as defined in the said Act, cannot claim any relief for grant of subsistence allowance invoking the provisions of the Subsistence Allowance Act. It is unnecessary for us to consider in these proceedings as to whether the third respondent is entitled to receive any sums by way of subsistence allowance or otherwise during the period of suspension under any other law. That question is left open for decision in appropriate proceedings. We limit our decision to the applicability of the Subsistence Allowance Act to the facts of the present case.
10. For the reasons stated above this writ petition is allowed and the impugned order Ext.P4 is quashed and the application of the third respondent for grant of subsistence allowance made under the Subsistence Allowance Act is rejected without prejudice to her right to work out her rights if any in accordance with law in appropriate proceedings. No costs.