1997 Cooperative Society Service Rules Held Ultra Vires: Punjab & Haryana HC Denies Retiral Benefit Claims of Employees

Case Name: Samarjit Singh v. State of Punjab and Others (and connected matters)

Date of Judgment: 05.03.2026

Citation: CWP-1422-2026 & connected cases

Bench: Justice Harpreet Singh Brar

Held: The Punjab & Haryana High Court held that the Punjab State Cooperative Agricultural Service Societies Service Rules, 1997 are ultra vires the parent Act due to impermissible sub-delegation. Consequently, employees of Cooperative Societies cannot claim retiral benefits on the basis of these Rules. The Court further held that writ petitions seeking enforcement of such non-statutory rules are not maintainable.

Summary: The batch of writ petitions raised a common issue regarding entitlement of employees of Cooperative Societies to retiral benefits such as gratuity, leave encashment, provident fund, and interest on delayed payments.

Three petitions were filed by retired employees seeking release of retiral dues and interest, while one petition was filed by a Cooperative Society challenging coercive directions issued by authorities to release such benefits despite pending recoveries.

The employees argued that under the Punjab State Cooperative Agricultural Service Societies Service Rules, 1997, they were entitled to retiral benefits at par with government employees. They contended that withholding or delaying such benefits was illegal, and financial incapacity of the Society could not be a valid ground.

On the other hand, the Cooperative Society and State argued that these Rules were non-statutory, imposed an unsustainable financial burden, and were framed through impermissible sub-delegation. It was also contended that Cooperative Societies are autonomous bodies operating on limited financial resources without State funding.

The Court examined the statutory scheme under the Punjab Cooperative Societies Act, 1961 and the 1963 Rules. It found that the power to frame service rules was vested exclusively in the State Government under Section 85, and there was no provision permitting further delegation to the Registrar. However, Rule 28 of the 1963 Rules had delegated this power to the Registrar, who then framed the 1997 Service Rules.

Relying on settled principles of administrative law, the Court held that sub-delegation of legislative power is impermissible unless expressly authorized. Since the parent Act did not allow such delegation, the 1997 Rules suffered from excessive delegation and were ultra vires.

The Court also noted that these Rules were not statutory in nature, were not laid before the legislature, and did not create enforceable rights. It further observed that most Cooperative Societies operate under severe financial constraints, with minimal income and no State aid, making it impractical to impose government-equivalent retiral liabilities.

Additionally, the Court held that the Payment of Gratuity Act, 1972 was not applicable in many cases as the Societies employed fewer than ten persons.

Decision: The High Court dismissed the writ petitions filed by employees as non-maintainable, holding that no enforceable right flows from the 1997 Service Rules. It declared the said Rules ultra vires the 1961 Act and incapable of enforcement.

The petition filed by the Cooperative Society was allowed, and the show cause notice directing release of retiral benefits was quashed. Authorities were restrained from compelling the Society to make such payments under the invalid Rules.

However, the Court clarified that no recovery shall be made from retired employees in respect of benefits already paid.