Andhra HC (Pre-Telangana)
V. Bhaskar Reddy And Ors. vs Managing Director, The Tirupati ... on 20 May, 1997
Equivalent citations: 1998(4)ALT116
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
ORDER B. Sudershan Reddy, J.
1. In the instant writ petition, the petitioners are aggrieved by the action of the respondents in fixing their seniority below the respondents 5 to 11 and they seek for the issuance of a writ of Mandamus declaring; the action of the respondents as unjust, arbitrary and illegal and without jurisdiction. The petitioners also pray for a consequential direction directing; the respondents 1 to 4 herein to fix up the petitioners seniority in the cadre of Accountant with retrospective effect, in the same way as it was done in case of similarly situated employees vide Order Dt. 8-9-1993.
2. It is required to notice that the writ petition is mainly directed against the respondents 1 and 2, though the Deputy Registrar/Divisional Co-operative Officer and the Registrar of Co-operative Societies, Government of A.P. are also added as respondents 3 and 4. There are no averments as against respondents 3 and 4 and the affidavit docs not disclose any cause as against them except the statement in the affidavit that the petitioners have made representation to respondents 1 to 4 about their grievance. Practically the writ petition is directed against the Thirupati Co-operative Bank Ltd., Tirupati, Chittoor District. All the petitioners and respondents 5 to 11 are its employees. The dispute relates to the inter se seniority between the petitioners and respondents 5 to 11 and others.
3. In the counter-affidavit filed on behalf of respondents 1 and 2 a specific plea is taken as to the maintainability of the writ petition. It is stated that Thirupathi Co-operative Bank Ltd., is registered as a society under the provisions of the A.P. Co-operative Societies Act, 1964 and therefore, the writ petition as such is not maintainable. In the affidavit filed in support of the writ petition, there are no averments stating as to how the writ petition is maintainable against a Co-operative Society. However, in the reply affidavit filed by the petitioners, it is stated that the Government has got full control over the respondents-Co-op. Societies and all the Rules, Bye-laws and Regulations of the Bank are to be made with the prior approval of the Registrar of Co-operative Societies and only Government officials are always managing the affairs of the Bank and the Staff Committee which has issued the proceedings Dt. 6-3-1996 consists of (1) the Deputy Registrar of Co-operative Societies/Managing Director, (2) the District Co-operative Audit Officer/ Person-in-Charge and the Manager, Dena Bank, a Nationalised Bank. It is the case of the respondents that all of them are Government officials, their actions are amenable to be tested in a judicial review proceedings by this Court and therefore, writ is maintainable even against a Co-operative Society.
4. The short question that arises at the threshold for consideration in this writ petition is as to whether writ petition against Co-operative Society is maintainable and as to whether Co-operative Society could be said to be an 'authority' or an 'instrumentality' of the State either for the purposes of Article 12 or for the purpose of Article 226 of the Constitution of India.
5. The question whether a writ petition lies against Co-operative Society is not res integra. A Full Bench of this Court in Sri Konaseema Co-operative Central Bank Ltd., Amalapuran and Anr. v. N. Seetharama Raju 1990 (2) ALT 1 = AIR 1990 A.P. 171 had an occasion to consider the very question. After an elaborate survey of the case law on the subject and applying the test for determining whether a particular Society or company is an agency or instrumentality of the State, so that it can be characterised as an authority within the meaning of Article 12, came to the conclusion that a Co-operative Society cannot be characterised as 'State' within the meaning of Article 12. The Court further held that the bye-laws of the appellant Bank therein and its dealings were confined to its members and its membership consists of members society, Government, or a few nominal members. Those bye-laws had merely constitute terms of contract between a Society and its employees and do not have, or do not gain the force of law. The Full Bench further observed that "a Co-operative Society cannot be called a public body. It has no duty towards public. Its duty is towards its members only. It has no power to take any action, or pass any order affecting the rights of the members of public. The binding nature of its orders and actions is confined to its members, and to its employees. It is neither a statutory body nor are its relations with its employees governed by a statute. Its functions are also not akin to governmental functions. Nor is it a case where it can be said that the reality behind the Society is the executive power of the State. Moreover, even if for some distant reason it can be characterised as a public body, even so the contract of service between it and the writ petitioner cannot be treated as belonging to 'public law' field. It is a pure and simple contract of service, and there is no statutory provision regulating, circumscribing, and governing the said relationship excepting Section 47 of the A.P. Shops and Establishments Act, 1988, which imposes certain restrictions in the matter of termination of service of the employees of a Co-operative society."
6. The learned Counsel for the petitioners, however, placed reliance of a Division Bench judgment of this Court in B. Prakash Rao v. The District Educational Officer, Karnool and Ors. 1996 (1) APLJ 193 (HC) in which the Division Bench held:
"No writ, however, shall issue so long as the Management and the Correspondent of Manager act within the four comers of the private law including the bye-laws which do not have the sanction of a Statute. Area in which Article 226 of the Constitution of India shall operate, however, is not confined to commands to the authorities which satisfy the definition of 'State' in Article 12 of the Constitution. A person or authority, not necessarily an authority under Article 12 of the Constitution, can always be subjected to the Writ jurisdiction of the Court provided he has a public duty to perform and has failed to perform the duty or has some command of public law under which he has to discharge some part of the sovereign functions, that is once again an act under a law or conventions under the Constitution of India or of necessity as residuary powers under any Statute. Courts have, except in case of invasion of constitutional rights, such as Articles 14, 16, 21 and 23 of the Constitution of India or statutory rights, exercise self-imposed constraints and decline to issue writs and directions for obligations arising under private laws such as Articles of Association of any society or company which will include the bye-laws under which the Management appears to have acted and taken action against the appellant herein."
It is difficult to appreciate as to in what manner this Judgment would support the case of the petitioners. The principle laid down by the Division Bench does not run counter or contrary to the principle enunciated by the Full Bench of this Court in Sree Konaseema (supra). The Full Bench in Sree Konaseema (supra) on the other hand categorically held that the bye-laws of the Co-M operative Society are in the nature of a contract/agreement between its members and while enforcing and acting under the bye-laws, the Co-operative Society cannot take any decision which would bind the public at large but only its members. There is no public duty as such imposed upon a Co-operative Society. However, there may be Societies even registered under the a Co-operative Societies Act which could be termed as authority for the purpose of Article 12 of the Constitution of India provided it satisfies the test laid down by the Supreme Court for characterising any Society, Agency or Corporation as an authority for the purpose of Articles 12 and 226 of the Constitution of India and the tests are indicated by the Apex Court in Ajay Hasia v. Khalid Mujib . They are the following:
(1) One thing is clear that if the entire share capital of the Corporation is held by Government it would go a long way towards indicating that the Corporation is an instrumentality or agency of Government.
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the Corporation, it would afford some indication of the Corporation being impregnated with governmental character.
(3) It may also be a relevant factor......whether the Corporation enjoys monopoly status which is the State conferred or State protected.
(4) Existence of "deep and pervasive State control" may afford an indication that the Corporation is a State agency or instrumentality.
(5) If the functions of the Corporation of public importance and closely related to Governmental functions, it would be a relevant factor in classifying the Corporation as an instrumentality or agency of Government.
7. The learned Counsel relied on another decision rendered by a Division Bench in Rakesh Gupta and Ors. v. The Hyderabad Stock Exchange Ltd. Hyderabad 1996 (1) APLJ 193. The Division Bench judgment relied upon by the learned Counsel for the petitioners also does not render any assistance to the case of the petitioners. The Division Bench observed:
"The words 'any person or authority' used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not every much relevant. What is relevant is the nature of the duty imposed on that body. The duty must be judged in the light of positive obligation owned by the person or authority to the affected party, no matter by what means the duty is imposed....".
There cannot be any dispute with the proposition and the principle laid down by the Division Bench. As observed above, the respondent-Co-operative Society does not discharge any public duty as such and its actions cannot be said to have the potential or ramification of affecting the public in any manner. All its actions would have the affect and bind only its members and its employees.
8. The learned Counsel for the petitioners, however, placed reliance upon . a judgment rendered by a learned Single Judge in K. Tata Babu v. The Board of Management, Hyderabad District Co-op. Central Bank Limited, Nampally Station Road, Hyderabad and Anr. . Dealing with the question about the maintainability of the writ petition, the Court observed:
"A similar objection was raised and considered in the judgment in Writ Petition No. 16214 of 1993 dated 21-7-1994 by this Court, relating to the respondent-bank viz, Hyderabad Dist. Co-operative Central Bank Limited, Nampally Station Road, Hyderabad. The effect of the Full Bench decision of this Court in Konaseema Co-operative Central Bank Limited, Amalapuram v. N. Seetharama Raju (AIR 1990 A.P. 171 (F.B.) ) was also considered and it was held that there was deep and pervasive State Control and many of the Officers are deputed by the Government control. It was further held that the respondent-bank being a Central Co-operative Bank, the functions of the bank are of public importance and are closely related to the Government functions. In that view of the matter, it was held that the respondent-bank could be classified as an "instrumentality of the State" and must be considered as "State" within the meaning of Article 12 of the Constitution of India.
9. The learned Counsel for the petitioner as well as the learned Counsel appearing for the respondents submitted that the above judgment dated 21-7-1994 in Writ Petition No. 16214 of 1993 has been confirmed in Writ Appeal (vide Order dt. 14-9-1992 in Writ Appeal No. 988/1995) and the same has become final. In the circumstances, I hold that the present writ petition is maintainable."
It is true in Sree Konaseema, the Full Bench of this Court took the view that the control vested in the Government and the Registrar is liable to be characterised as deep and pervasive control within the meaning of the test . laid down by the Supreme Court in Ajay Hasia (supra). But the Full Bench did not took the view that only for such reason a Co-operative Society is to be held as an 'authority' or the 'instrumentality' of the State.
10. It is required to notice the view expressed by a Division Bench of this Court in Writ Appeal No. 1498 of 1995 dealing with the same question. In the said judgment, the Division Bench after referring to the law laid down by this Court in Sri Konaseema (supra) observed:
"The learned Counsel for the respondent-employee then submitted that the writ petition was maintainable even against the union co-operative society since the several tests laid down in the Full Bench decision in Sri. Konaseema Co-op Central Bank Limited v. N. Seetharama Raju (AIR 990 A.P. 171) were fulfilled. These tests were: (i) whether the entire share capital was held by the Government; (ii) whether the financial assistance to meet the entire expenditure was given by the Government; (iii) whether it enjoys monopoly status; (iv) whether there was deep and pervasive State control; (v) whether the functions are of public importance and closely related to governmental functions; and (vi) whether it was earlier a department of the Government. The learned Counsel for the respondent submitted that since the union was carrying on the operations which were carried on by a Government department initially under the "Operation Flood" Scheme and all the assets had come from the Government and the expenditure was being met by the Government and there was also deep and pervasive State control of its activities, the union must be considered to be an instrumentality of the State. On the facts of this case, we are unable to accept this contention. G.O.Ms. No. 242 dated 23-6-1986 which evidenced transfer of all the assets of the Federation to the union with the employees, shows that those assets no longer belong to the Government. In fact even at the time when the Federation was found, the assets ceased to be that of the Government. The G.O., further stipulated that there will be no State support to under-write their losses and the Government loans will be repayable by the union, thus establishing an independent private entity. The transfer agreement also stipulated that the employees will be permanently absorbed in the union and none of them shall be repatriated to the Federation. Thus, an employee ceased to be in Government service and became an employee of the union/District Co-operative Society. No doubt, the agreement between the Federation and the union spells, out various functions of the union which was to be supervised by the Federation and provides that the union shall abide by the directions issued by the Federation or the Government in the conduct of the business, but the stress is on business which is not a Government function viz., procurement and supply of milk and in that regard that union will be subject to the policy decision of the Government. That alone will not make it either governmental function or the administration of deep and pervasive State control. We find, therefore, that none of these tests are factually satisfied. It is also interesting to note that one of us (M.N. Rao, J) had held in A.P.D.D. Co-op. Federation v. Milk Producers' Co-op. Union Limited (1989 (2) A.P.L.J. 455) that a Co-operative Society was amenable to writ jurisdiction. That judgment was specifically overruled by the Full Bench. When an appeal against that judgment came up, that part of the order holding that writ petition was maintainable against a society was not challenged and the writ appeal was dismissed in W.A. No. 1777 of 1989. In the circumstances, we must hold that the union which was only a successor entity to the Federation being a Co-operative Society is not an instrumentality of the State within the meaning of Article 12 of the Constitution and the writ petition is not maintainable".
This decision rendered by the Division Bench on 18-12-1995 was not made available and placed before the learned Single Judge.
11. Another Division Bench in Writ Appeal No. 28 of 1990 Dt. 8th November, 1994 also took the same view that a writ against the Co-operative Society seeking declaration of seniority basing their case upon the bye-laws framed by the society is not maintainable. The Division Bench observed:
"The petitioners approached this Court seeking declaration of seniority for respondents 2 to 24 basing their case upon the bye-laws framed by the first respondent, a Corporative Society, Their case having been dismissed on merit, this appeal has been preferred. The learned Counsel for the appellants brings to out notice a Full Bench decision of this Court in Sri Konaseema Co-operative Central Bank Ltd. v. N. Seetharama Raju (AIR 1990 AP 171) deciding the rights accruing under bye-laws of a Co-operative Society to be not even for adjudication in petitions under Article 226 of the Constitution of India. The writ petition, hence was not maintainable before this Court which consequently makes the appeal also not maintainable. The judgment under appeal must, however, be held to have not created any rights or liabilities in favour of the parties, the petition itself being not maintainable. This Writ Appeal, is, hence, dismissed as not maintainable. The petitioner may seek redress, if any, as it available to them before the contempt forums."
This decision rendered by another Division Bench on 8-11-1994 was also not made available and placed before the learned Single Judge in K. Tata Babu (supra).
12. The Supreme Court in Tekraj Vasandi alias K.L. Basandhi v. Union of India and Ors. while considering the question as to whether the Institution of Constitutional and Parliamentary Studies (ICPS) is State within the meaning of Article 12 held that it is always necessary to look into the Constitution of the body, the purpose for which it has been created, the manner of its functioning including the mode of its funding and the broad features which have been found by the Supreme Court in several decisions to be relevant in the matter of determining a dispute of this type. The Supreme Court made pertinent observation that "there cannot be a strait-jacket formula" and further observed that "in a Welfare State, governmental control is very pervasive and in fact touches all aspect of social existence. In the absence of a fair application of the tests to be made, there is possibility of turning every non-governmental society into an agency or instrumentality of the State. In Chander Mohan Khanna v. National Council of Educational Research and Training and Ors. (1997) 4 SCC 578 the Apex Court administered caution and held:
"Article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression "State". A wide enlargement of the meaning must be tempered by a wise limitation. It must not be lost sight of that in the modem concept of Welfare State, independent institution, corporation and agency are generally subject to State control. The State control does not render such bodies as "State" under Article 12. The State control, however vast and pervasive is not determinative. The financial contribution by the State is also not conclusive."
13. The A.P. Co-operative Societies Act (Act 7 of 1964), for short 'the Act' was brought into existence to facilitate the formation and working of Cooperative Societies for the promotion of thrift and self-help among agriculturists, artisans and persons of limited means with common economic needs so as to bring about better living, better business and better methods of production. It is required to notice the right to form a Co-operative Society is a statutory right and regulated by the Act and is not a fundamental right. It is a body corporate Under Section 9 of the Act. It is true that every Society registered under the Act shall function, subject to such directions as may be issued by the Registrar, in the interest of the Co-operative movement or the public interest and the society shall comply with such directions. The rights and liabilities of the members are regulated by the very said Act. Section 19 regulates the eligibility of a member and prescribes qualifications. Whereas Section 21 prescribes disqualification for membership of the Society. Section 21-A prescribes disqualification for the membership of the committee.
14. The Society registered under the Act is required to be run on democratic lines and the management of the affairs of the Society is entrusted to a Managing Committee elected for the purpose by its own members. The ultimate authority of the Society vests in its general body. The Act itself prescribe procedure for holding the meetings of the General Body as well as the Managing Committee. The Act however, give power to the Registrar to supersede an elected committee but only on the ground that the committee is not functioning properly or wilfully disobey or fail to comply with lawful orders and directions issued by the Registrar under the Act. Chapter VII provides for Audit, Inquiry, Inspection and Surcharge for the mismanagement and recovery of amount found mismanaged or defaulted from the members of the Committee or Officers or the servants of the Society. The Act provides for the machinery for the settlement of disputes touching upon the constitution; management or the business of the Society other than a dispute regarding disciplinary action taken by the Society or its committee against any employee of the society. The Act also provides for the liquidation and winding up of the Society.
15. However, the Act requires the registration of the bye-laws including the amendment thereof. The Registrar is entrusted with" power to direct division, amalgamation of the Society, if the same is necessary in his own opinion and in the interest of the Society or of the co-operative movement.
16. The rights and obligations of its members are subject to the bye-laws, Rules and the Act. The existence of the Society to a very large extent depends upon the efficiency and proper management by the Managing Committee elected for the purpose and assisted in its day to day management by the staff. The staff of the society is required to be appointed in accordance with the Rules. The affairs of the Society including the appointment of the employees and servants is regulated by the provisions of the Act, Rules and bye-laws containing the scheme. It is clear that appointment of the staff of the establishment, control or disciplinary action regulated under the provisions of the Act and Society can enjoy the exclusive power to appoint and exercise disciplinary control over its employees in its establishment.
17. A look at the conspectous of the provisions of the Act and the Rules would undoubtedly reveal the autonomous nature of the society with regard to all its affairs and the interference by the governmental functionaries is at minimal and even such limited interference is structured by the very provisions , of the Act. There cannot be any interference by any of the governmental functionaries in the day to day management of the affairs of the society as long as it is managed in a lawful manner by the committee elected for the said purpose. The money by way of share capital belongs to its members. Of course, there may be Societies where the entire money may belong to the Government and in such cases different considerations would arise as to whether such society should be characterised as a 'State' or an 'authority'.
18. For the aforesaid reasons, a writ against a Co-operative Society of this nature is not maintainable and such Societies cannot beheld to be an 'authority' or State.
19. In the instant case, there is no material available on record about the financial contribution made by the State, the nature of the control exercised by the State and the nature of the functions discharged by the 1st respondent-Society. The Apex Court repeatedly pointed out that it is the duty of the person invoking jurisdiction of the Court to clearly State the jurisdictional facts and plead as to why a particular society or organisation should be characterised as a 'State' or 'authority'. It is not as if in this case, there are any features emerging "so boldly and prominently" so as to characterise the 1st respondent-Society as an authority or State. In such view of the matter a broad view of the matter has to be taken and a discerning mind has to be applied keeping the realities and human experiences in view, so as to reach a reasonable conclusion. Having given my anxious considerations to all the facts and issues that arise for consideration in this case, I hold that the 1st respondent-Cooperative Society is neither an agency nor an instrumentality of the State so as to characterise the same as an 'other authority' within the meaning of Article 12 or 226 of the Constitution of India.
20. However, it is always open to the petitioners to avail such remedy as may be available to them in law. They are also entitled to approach the statutory authorities for appropriate relief. The power conferred Under Section 4(2) of the Act upon the Registrar to give appropriate directions in the interest of co-operative movement, public interest etc., is wide enough to give appropriate directions even in a service matter of this nature. The petitioners are entitled to invoke the said jurisdiction of the Registrar by satisfying that the Registrar's intervention is required in the matter in terms of Section 4(2)' of the Act.
21. The writ petition is accordingly dismissed. No costs.