What did the Supreme Court decide in this case?

The Court held that a trade union must refund money it receives from management for workers—like gratuity and accident benefit—because it holds it on behalf of the workers.

Does a worker lose the right to refund after leaving the union?

No. Resignation does not cancel the worker’s right. The funds were collected for the worker, so the union must return them when asked.

Do labour statutes block a civil suit for refund here?

No. The claim is for money held in trust for the worker, not for statutory computation. Hence, a civil court decree for refund can be granted.

Was there any agreement to keep these funds as union property?

No such agreement existed. So the union could not treat the amounts as its own funds.

G.S. Dhara Singh v. E.K. Thomas

Quick Summary

This case says something simple: when a trade union receives money from the management for workers—like gratuity and accident benefit—it holds that money on behalf of those workers. It is not union property. If a worker leaves the union and asks for the amount, the union must refund it. The Supreme Court dismissed the Special Leave Petition and let the decree for refund stand.

Issues

Can a union member demand accounts and refund of amounts the management paid to the union on his behalf after he resigns?

Rules

There was no agreement that gratuity and accident benefit amounts would become union funds.
Any amount received for and on behalf of workers must be returned to the workers concerned upon demand.

Facts (Timeline)

Workers: Respondents 1 & 2 were head-load workers. Many workers were members of Cochin Port Thozhilali Union.

Oct 1973 Agreement: Management deducted ₹0.10 per ₹1 of wages toward a gratuity fund and transferred it to the union for the workers.

Second Agreement: Another ₹0.10 per ₹1 was paid by management to the union for an accident benefit fund for workers.

Custody: The petitioner (union President & Treasurer) held these funds as custodian.

Claim: Each plaintiff estimated about ₹3,000 due and sought accounts + refund after leaving the union.

Defence: Petitioner said ex-members cannot claim; refund only if they rejoin and later qualify for payment.

First Appeal: Court accepted that amounts were received on behalf of workers but held civil suit not maintainable due to the Payment of Gratuity Act, 1972 and Workmen’s Compensation Act, 1923.

High Court: Restored trial court decree for refund.

Supreme Court: SLP dismissed; amounts must be refunded to the workers.

Timeline illustration of funds collected and refund claim

Arguments

Appellants (Union Officials)

After resignation, members cannot demand refund from “union funds”.
Refund only when they rejoin and qualify under future schemes.
Civil court barred by Gratuity Act and Workmen’s Compensation Act.

Respondents (Workers)

Management paid amounts for them; union was only a custodian.
No agreement to absorb these sums into union funds.
Right to accounts and refund survives resignation.

Judgment

The Supreme Court dismissed the Special Leave Petition. It agreed that:

There was no scheme or agreement making these amounts part of union funds.
The union and its officers received money on behalf of workers; thus, they must refund it on demand.
The civil court’s decree for refund was proper in the facts.

Judgment visual: refund obligation of trade union-held funds

Ratio Decidendi

Money collected by a union from management for workers is held in a representative or fiduciary capacity. Without a clear agreement to the contrary, such money must be returned to the workers who are its beneficiaries—even after they leave the union.

Why It Matters

Protects workers from unions treating earmarked funds as their own.
Clarifies that resignation does not kill the right to refund.
Separates “statutory computation” disputes from “trust/refund” claims.

Key Takeaways

Point	Quick Note
Refund duty	Union must refund earmarked worker funds on demand.
No conversion	No agreement = cannot convert into union corpus.
Resignation	Right survives leaving the union.
Civil suit	Refund relief is maintainable in civil court context.

Mnemonic + 3-Step Hook

Mnemonic: “U-REFUND” — Union Returns Earmarked funds; Fiduciary duty; Unless agreement; Not corpus; Demand honored.

Ask: Was the money collected for workers?
Check: Any agreement making it union property?
Result: If no, refund on request—even post-resignation.

IRAC Outline

Issue: Can ex-members demand accounts and refund of amounts the union received from management on their behalf?

Rule: No agreement converting such amounts into union funds; sums held for workers must be refunded.

Application: Management paid ₹0.10/₹1 toward gratuity and accident benefits for workers. Union officials held the money as custodians. Workers resigned and sought refund. No agreement said these sums were union property.

Conclusion: Refund is due. Civil decree stands. SLP dismissed.

Glossary

Gratuity: A lump-sum benefit linked to long service, payable by employer.
Accident Benefit: Amount set aside to support workers injured at work.
Custodian: A person/union holding money for someone else’s benefit.
SLP: Special Leave Petition to the Supreme Court seeking leave to appeal.

FAQs

No. The money was collected for them. Resignation does not erase that right.

Only if there is a clear agreement. Here, there was none. So the union must refund.

No. The dispute is about refund of money held for workers, not statutory calculation.

Union receipts, wage records showing deductions, and any correspondence showing the union held money for the worker.

Case Meta

CASE_TITLE	G.S. Dhara Singh v. E.K. Thomas
PRIMARY_KEYWORDS	trade union refund; gratuity fund; accident benefit fund; fiduciary duty; worker rights
SECONDARY_KEYWORDS	Payment of Gratuity Act 1972; Workmen’s Compensation Act 1923; Cochin Port Thozhilali Union; head-load workers; civil suit maintainability
PUBLISH_DATE	23 Oct 2025
AUTHOR_NAME	Gulzar Hashmi
LOCATION	India
Slug	gs-dhara-singh-v-e-k-thomas