Andhra HC (Pre-Telangana)
A.P. Co-Operative Societies Employees ... vs Government Of A.P. And Ors. on 12 October, 2004
Equivalent citations: 2004(6)ALD441, 2004(6)ALT438
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
JUDGMENT V.V.S. Rao, J.
1. Introduction In all the writ petitions, except Writ Petition No. 3628 of 2004 the petitioners challenge the provisions of Section 116-C( 1) of the Andhra Pradesh Co-operative Societies Act, 1964 (for short, the Act), insofar as the same imposed condition that the expenditure towards pay and allowances of the employees shall not exceed two per cent of the working capital or thirty per cent of the gross profit, in terms of actuals in a year whichever is less, as illegal, arbitrary and violative of Articles 14, 16, 19, 21 and 300A of the Constitution of India. The petitioners also challenge Rules 28(4)(b) and 36-B of the Andhra Pradesh Co-operative Societies Rules, 1964 (for short, the Rules) as ultra vires Section 116-C(1) of the Act. Initially Writ Petition No. 5647 of 2003 filed by the Andhra Pradesh Cooperative Societies Employees Union was listed before a Division Bench of this Court which referred the following question to this Full Bench.
Whether provisions of Section 116-C(1) of the Act insofar as restrictive conditions that expenditure towards pay and allowances of employees shall not exceed 2% of the working capital or 30% of the gross profits in terms of actuals in a year whichever is less, are violative of the provisions of Articles 14, 16, 19, 21 and 300A of the Constitution.
Genesis of the reference
2. The Act was amended by A.P. Act No. 21 of 1985 inserting Section 116-C requiring a Co-operative society to fix the staffing pattern, qualifications, pay scales and other allowances for its employees with prior approval of the Registrar of Cooperative Societies and ordaining such societies not to appoint or remove the Chief Executive of the society without prior approval of the Registrar of Co-operative Societies. Sub-section (1) of Section 116-C which requires prior approval of the Registrar for fixing staff pattern was again amended by A.P. Act No. 22 of 2001 with effect from 25.4.2001. The same reads as under:
116-C. Staffing pattern of societies :-- (1) A society shall have power to fix the staffing pattern, qualifications, pay scales and others allowances for its employees with the prior approval of the Registrar of Cooperative Societies subject to the condition that expenditure towards pay and allowances of the employees shall not exceed two per cent of the working capital or thirty per cent of the Gross profit, in terms of actuals in a year whichever is less.
3. A.P. State Co-operative Societies Secretaries and Employees Union filed a writ petition questioning the constitutional validity of Section 116-AA of the Act. A learned Single Judge of this Court disposed of the same following earlier order of this Court in Writ Petition No. 15506 of 1989. In Writ Appeal No. 464 of 2001, dated 19.10.2001 reported in A.P. State Cooperative Societies Secretaries and Employees Association, Nizamabad Unit v. State of A.P., , (hereafter called, Employees Association case) a Division Bench of this Court, to which one of us (V.V.S. Rao, J) was a member, affirmed the judgment of the learned Single Judge and observed that no case was made out for holding that the provisions of Section 116-AA and 116-C of the Act are unconstitutional. Again in A.P. State Co-operative Societies Secretaries and Employees Union v. Government of Andhra Pradesh, (DB), (hereafter called, Employees Union case) the question of constitutional validity of Section 116-AA and 116-C of the Act was raised. This Court rejected the challenge and upheld the provisions.
4. The A.P. Co-operative Societies Employees Union, Guntur District, again filed Writ Petition No. 5647 of 2003 challenging Section 116-C(1) of the Act as amended by Act No. 22 of 2001. The petitioner contended before the Division Bench that in Employees Association case, Section 116-C of the Act was not challenged and that in Employees Union case, the Division Bench placed reliance on the decision in Employees Association case for upholding the constitutional validity. It was also urged that the absurdity of the provisions of Section 116-C(1) of the Act was not raised before the Court and therefore the Division Bench decisions in Employees Association case and Employees Union case are not binding precedents. The Division Bench, which heard the matter at the stage of admission felt persuaded by the submissions and thought it fit to refer the question to this Full Bench.
Contentions before this Full Bench
5. At the outset, learned Senior Counsel Sri S. Ramachandra Rao brought to the notice of this Court that against the decision in Employees Union case, a Special Leave Petition (SLP) was filed and that the Supreme Court dismissed the SLP. Another Division Bench in Writ Petition No. 17109 of 2002, dated 9.9.2002 followed the decision in Employees Union case and dismissed the writ petition against which petitioner therein filed SLP (Civil) No. 1997 of 2003 and that while granting leave to appeal, the Supreme Court by order dated 7.11.2003 dismissed the Civil Appeal No. 8913 of 2003. Nonetheless, learned Counsel for the petitioners in Writ Petition Nos. 5647, 15781 and 15799 of 2003 Sri D.V. Bhadram contends that the order of the Supreme Court in Civil Appeal No. 8913 of 2003 does not preclude the petitioners from challenging the vires of Section 116-C(1) of the Act insofar as the same restricts the power to fix staffing pattern, pay scales and other allowances subject to limiting the expenditure on that count to 2% of the working capital or 30% of the gross profit whichever is less. According to the learned Counsel, said provision is unworkable and irrational and therefore earlier decisions of this Court as affirmed by the Supreme Court do not bar the fresh challenge to the impugned provision. We are afraid we cannot countenance the submission of the learned Counsel.p-
Earlier decisions of this Court
6. In Employees Association case, a Division Bench of this Court, to which one of us (V.V.S. Rao, J) was a member, was concerned with constitutional validity of Section 116-AA of the Act. A learned Single Judge disposed of the matter by order dated 1.2.2001 following the earlier judgment of this Court in W.P. No. 15506 of 1989 dated 10.10.1991. In the appeal before the Division Bench, it was contended that decaderisation of paid secretaries of Co-operative Societies amounts to retrenchment without following the provisions of Section 25-N of Industrial Disputes Act, 1947. This Court considered Section 116-AA as inserted by A.P. Co-operative Societies (Amendment) Act, 1985 (A.P. Act No. 21 of 1985) and Section 116-C as amended by Act No. 22 of 2001, and while rejecting challenge to the provisions of Section 116-AA and Section 116-C, this Court observed that hardship by itself is not a ground for declaration of statutory provisions ultra vires and further observed as under:
The financial burden of payment of remuneration of the employees has to be borne by the respective co-operative societies. The Co-operative Societies are constituted for promoting thrift movement. It is also supposed to earn profit for its members. The expenditure to be incurred on the staff has direct nexus with the profit earned by the Co-operative Societies or the Working capital.
7 In Employees Union case, the petitioner therein sought directions to the respondents therein to pay the enhanced scales of pay to the members of the Union on par with Category-V Supervisors of the District Co-operative Central Banks with effect from 1.4.1996. During the pendency of the writ petition, two miscellaneous applications were filed seeking leave of the Court to amend the prayer so as to include a challenge to Section 116-AA of the Act as well as 116-C of the Act as amended by Act No. 22 of 2001. The challenge to Section 116-C of the Act was based on Article 14 of the Constitution of India whereas the challenge to Section 116-AA of the Act was sought to be sustained on the anvil of Articles 14, 16, 21, 39(a), (b), (C), 41, 42 and 43 of the Constitution of India. On behalf of the State, it was contended that the constitutional validity of Section 116-AA of the Act is no more res Integra. The Division Bench of this Court, to which one of us (B. Sudershan Reddy, J) was a member, noticed the earlier decision of this Court in Employees Association case, and an unreported judgment of M. Jagannadha Rao, J (as his Lordship then was) in W.P. No. 4266 of 1984 and batch. The Division Bench again considered the question in the light of the submissions made by the learned Counsel and upheld the vires of the impugned provision. The reasons for the same are contained in Paragraphs 66 and 67 of the judgment. We feel compelled to extract the same.
A word about Section 116-C of the Act: It has been noticed that unbearable burden has been imposed upon the PACSs on account of fixation of pay scales without any due regard to the resources available with the societies and all other relevant factors. The business turnover, the margin available and the financial resources of the societies have never been taken into consideration while fixing the pay scales of the Paid Secretaries. The situation inevitably led to stifling the growth and development of Co-operatives as viable self-serving unit. Attempts appear to have been made indiscriminately to fix pay scales of employees without any due regard to the financial viability and resources of the PACSs. It is under those circumstances, the Legislature has stepped in and suitably amended Section 116-C of the Act by substituting the earlier provision by Act 22 of 2001 with effect from 25.4.2001. Under the new provision, the power to fix the staffing pattern, qualifications, pay scales and other allowances of the employees shall not exceed two per cent of the working capital or thirty per cent of the gross profit, in terms of actuals in a year whichever is less. Obviously, the said provision appears to have been made in order to protect the financial viability of the societies. The preexisting rights of the Societies to fix the pay scales and other allowances remains unaltered. It is needless to reiterate that the Societies are formed by the people themselves on the principle that 'all for one and one for all'. The societies are organized and registered under the provisions of the Act and meant to cater the needs of its members. The societies are not meant for providing any employment to the unemployed. It is neither the function nor the duty of the societies to provide any job or employment to the unemployed. The society is bound to keep its financial status and availability of resources in view while making the appointment as well as fixing the staffing pattern, pay scales and other allowances for its employees. The societies cannot be permitted to indiscriminately appoint the employees and fix their pay scales and other allowances without having any due regard to its financial resources. Having regard to the experience that some societies have altogether vanished into thin air on account of such indiscriminate appointments and fixation of pay scales and other allowances, the Legislature has stepped in and put an embargo upon the societies not to incur expenditure towards the pay and allowances of the employees exceeding two per cent of the working capital or 30 per cent of the gross profit, in terms of actuals in a year whichever is less. The object is a laudable one. The provision is obviously amended in order to protect the interest of the societies and to save them from further financial ruination.
Yet again in Paragraph 68, this Court observed:
This bird's eye view of the provisions of Act would make it clear that the Co-operative Societies registered under the provisions of the Act are not the satellites of the Government or the Registrar of the Cooperative Societies. The Government and the Registrar of the Co-operative Societies are entitled to issue such orders and directions in accordance with the provisions of the Act only and in the interest of the Cooperative movement in the State or public interest or in the interest of the members of the society itself. Except to that extent, neither the Government nor the Registrar of the Co-operative Societies has any power or authority to interfere in the day-to-day management and affairs of the society. The Government, obviously, appears to have realized its limitations and mistakes it had committed by unnecessarily interfering in the affairs of Societies, more particularly in the matter of fixation of pay scales and other allowances of the Paid Secretaries and accordingly issued G.O. Ms. No. 314, dated 26-12-2000 which has received the approval of this Court. In the same process, steps were taken to substitute Section 116-C of the Act in order to protect the interest of the societies and its members and to prevent the societies from indulging in extravagant expenditure towards the salaries and other allowances payable to its employees. By no stretch of imagination, the provision could be characterized as an irrational one.
8. After perusing the judgment, we are convinced that the Division Bench considered the question independently though a passing reference was made to earlier judgment of Division Bench in Employees Association case. Further more, against the said judgment, the petitioner therein preferred a Special Leave Petition to Supreme Court, which was dismissed on 7.5.2003. Subsequently, A.P. Co-operative Central Bank Employees Association filed another Writ Petition No. 17109 of 2002 challenging Section 45(2) and Section 116(2) of the Act. This Court dismissed the writ petition on 9.9.2002. The said order reads as under :
The question that falls for consideration in this writ petition is not res Integra, but squarely covered by a Division Bench decision of this Court in A.R.S.C.S.S. and E. Union v. Government of Andhra Pradesh (Employees Union case). We do not find any reason or justification to take a different view other than the one taken by a Division Bench of this Court in the said case. What applies to Section 116-C of the Andhra Pradesh Co-operative Societies Act, 1964 would equally be applicable to the amended Section 45 of the Andhra Pradesh Cooperative Societies Act, 1964.
In the aforesaid circumstances, we do not find any merit in this writ petition.
Sri Krovvidi Narasimham, learned Counsel for the petitioner, however, contends that the settlement dated 15-6-1997 arrived at between the managements and the employees under the provisions of the Industrial Disputes Act, 1947 has become final and, therefore, there cannot be any revision of any emoluments payable to the employees pursuant to the impugned proceedings.
In the instant writ petition, we are concerned with the constitutional validity of the provisions of the Andhra Pradesh Cooperative Societies Act. We are not required to go into the question as to whether the employees are entitled to enforce the settlement stated to have been arrived at between the parties. The vires of the provisions of the Andhra Pradesh Cooperative Societies Act cannot be assailed on the ground that the impugned provisions would run counter to the said settlement stated to have been arrived at between the parties.
For the aforesaid reasons, we do not find any merit in this writ petition. The same shall accordingly stand dismissed at the admission stage.
9. Special Leave Petition being S.L.P. (Civil) No. 1997 of 2003 was filed against the order in W.P. No. 17109 of 2002. The Supreme Court granted leave and by order dated 7.11.2003 in Civil Appeal No. 8913 of 2003 upheld the judgment of this Court in W.P. No. 17109 of 2002, which followed the decision of the Division Bench in Employees Union case. This only shows that the decision of this Court upholding the constitutional validity to Section 116-C of the Act has been approved by the Supreme Court and the question cannot be re-agitated these proceedings. The order of the Supreme Court in Civil Appeal No. 8913 of 2003 - Doctrine of Merger
10. Learned Counsel for the petitioners Sri D. V. Bhadram sought to contend that when the Supreme Court dismissed the SLP, the same does not amount to approving the decision of this Court. The submission is misconceived. A distinction has to be made between an order of the Supreme Court dismissing SLP in limini and reasoned order of the Supreme Court dismissing the SLP on merits. In the latter case, the doctrine of merger does not apply though for reasons of judicial discipline the Court against the order on which SLP was preferred shall be precluded from adjudicating the same question again. If any authority is required, a reference may be made to decision of the three-Judge Bench of the Supreme Court in Kunhayammed v. State of Kerala, . His Lordship Justice R.C. Lahoti (as His Lordship then was) who delivered the judgment of the Court considered the legal implications and the impact of an order rejecting a petition seeking grant of special leave to appeal under Article 136 of the Constitution of India. The Court ruled that when the SLP is dismissed in limini as "Heard and dismissed" or "dismissed" or dismisses SLP after notice to opposite party by reasoned order, doctrine of merger is not attracted. But, nevertheless, such dismissal on the reasons shall take away the jurisdiction of any Court. It is apt to quote the following from the judgment.
Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other Court, Tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However, this would be so not by reference to the doctrine of merger,
11. A copy of the orders passed by the Supreme Court on 7.11.2003 is placed before this Court. The same would show that the Supreme Court granted leave to appeal and disposed of the Civil Appeal No. 8913 of 2003. When the Appellate Court adjudicates either reversing or affirming judgment against which appeal is filed, the decision of the subordinate forum mergers with the Superior Forum. The doctrine of merger applies here as the Supreme Court disposed of the Civil Appeal confirming the decision of this Court. A reference may also be made to the following principle of law reiterated in Kunhayammed v. State of Kerala (supra).
Where an appeal or revision is provided against an order passed by a Court, Tribunal or any other authority before Superior Forum and such Superior Forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the Superior Forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.
12. The decision of Kunhayammed v. State of Kerala (supra) was subsequently followed in S. Shanmugavel Nadar v. State of Tamil Nadu, .
13. Therefore, we are of the opinion that the decision of this Court in Writ Petition No. 17109 of 2002 dated 9.9.2002 following the decision of this Court in Employees Union case having merged in the decision of the Supreme Court in Civil Appeal No. 8913 of 2003 dated 7.11.2003, the question of vires of the impugned provision is no more res integra and stands concluded against writ petitioner. The same cannot be permitted to be re-agitated by repeated writ petitions.
Challenge on new ground
14. As noticed supra Sri Bhadram strenuously contends that the question raised in these writ petitions with regard to validity of Section 116-C (1) was never raised before and therefore it is permissible for this Court to examine vires of the provision afresh. We are afraid, the submission is misconceived and ignores the well settled principle of constitutional law that when once the constitutionality of a legal provision is scrutinised by the Court, the same cannot be permitted to be challenged again. A reference may be made to three-Judge decision of the Supreme Court in Delhi Cloth and General Mills Co. Ltd. v, Shambhu Nath Mukherji, . Placing reliance on the earlier decision in Niemla Textile Finishing Mills Ltd v. The 2nd Punjab Industrial Tribunal, AIR 1957 SC 329, wherein the Supreme Court upheld the constitutional validity of Section 10 of the Industrial Disputes Act, 1947, the Supreme Court did not permit a fresh challenge. It is apposite to refer to the following observations:
It is submitted by Mr. Dial that in that decision this Court was only required to consider the objection raised on the score of Article 14 on a ground which is different from the one he would like to take before us. We are, however, unable to accept this submission. If this Court held Section 10 as ultra vires and repelled the objection under Article 14 of the Constitution it would not be permissible to raise the question again by submitting that a new ground could be raised to sustain the objection. It is certainly easy to discover fresh grounds of attack to sustain the same objection, but that cannot be permitted once the law has been laid down by this Court holding that Section 10 of the Act does not violate. Article 14 of the Constitution. The ratio decidendi of Niemla Textile Finishing Mills (supra) will apply while dealing with the objection under Article 14 of the Constitution in respect of the present reference under Section 10(1)(c) of the Act. The submission of the learned Counsel is, therefore, devoid of substance,
15. Viewed from any angle the challenge to the constitutional validity of Section 116-C(1) of the Act is misconceived as the question stands concluded by the decision of this Court in Employee Union case as affirmed by the Supreme Court. The reference made to this Full Bench is answered accordingly.
16. The Registry is directed to place these writ petitions before appropriate Division Bench after obtaining orders of Hon'ble the Chief Justice for adjudication of other issues that might arise in the cases, including the question of vires of Rules 28(4)(b) and 36-B of the Rules. We make no order as to costs.