Gujarat High Court
Banaskantha vs Meghrajbhai on 5 May, 1997
Author: Jayant Patel
Bench: Jayant Patel
BANASKANTHA JILLA SAHAKARI DUDH UTPADAK SANGH LTDV/SMEGHRAJBHAI GALBABHAI PATEL....Defendant(s) C/FA/4517/1999 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL NO. 4517 of 1999 with CROSS OBJECTION NO. 302 of 1999 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE JAYANT PATEL and HONOURABLE MR.JUSTICE Z.K.SAIYED ===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ===================================================== BANASKANTHA JILLA SAHAKARI DUDH UTPADAK SANGH LTD & 2....Appellant(s) Versus MEGHRAJBHAI GALBABHAI PATEL....Defendant(s) ===================================================== Appearance: MR DC DAVE, ADVOCATE for the Appellant(s) No. 2 MR JIGAR M PATEL, ADVOCATE for the Appellant(s) No. 1 , 3 MR SP MAJMUDAR, ADVOCATE for the Defendant(s) No. 1 ===================================================== CORAM: HONOURABLE MR.JUSTICE JAYANT PATEL and HONOURABLE MR.JUSTICE Z.K.SAIYED Date : 01/10/2013 ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE JAYANT PATEL) The present appeal is directed against the judgement and decree passed by the lower Court, whereby the suit of the plaintiff respondent is partly allowed and it is declared that the respondent was permanent employee in the managerial cadre of the appellant and the action for termination dated 5.5.1997 was illegal and unconstitutional and the further declaration has been given that he was entitled to continue in service up to the age of 58 years. The relief for reinstatement has not been granted, but the damages are awarded of Rs.26 lac with the interest at the rate of 6% per annum, if the said amount is not paid within a period of three months.
We may refer to the parties as plaintiff/respondent, defendant/appellant as per their status in the present judgement herein after.
The short facts of the case are that the original plaintiff joined the service with the appellant defendant on 23.6.1980 as Veterinary Officer and after completion of probation period he was confirmed in service on 23.6.1981. As per the plaintiff his birth date was 19.7.1955 and his age of superannuation was 58 years i.e. up to 18.7.2013. He continuously served with the defendant and no inquiry or any adverse remarks were made during his service, but on 5.5.1997 abruptly the defendant terminated the services of the plaintiff respondent herein without giving any opportunity of hearing and got the salary of three months credited in the bank account, which was accepted under protest. Under these circumstances, the original plaintiff filed the suit for declaration and reinstatement and he prayed in the suit that the declaration be given that the plaintiff was permanent employee in the managerial cadre of the defendant No.1 and the termination order dated 5.5.1997 was illegal and mala fide and against the principles of natural justice and it was also prayed that he be reinstated in service with all monetary benefits, but alternatively, it was prayed that the amount of Rs.1,03,57,000/- with the interest at the rate of 18% per annum be awarded as damages and further consequential prayers for compensatory cost was also prayed.
The defendant appellant herein resisted the suit. However, the averments made at paragraph 2 of the plaint that the defendant No.1 is a Cooperative Society registered under the provisions of the Gujarat Cooperative Societies Act and that the operation or area of operation is Banaskantha District and its annual turn over is Rs.200 crore and the operation of the Sangh defendant No.1 is being governed by the provisions of the Act and bye-laws were admitted by the defendant in the written statement. The other aspects including that of termination letter being illegal and the entitlement of the plaintiff for damages, etc., were denied.
The lower Court framed the issues and ultimately passed the above referred judgement and decree. It is under these circumstances, the present appeal before this Court.
It may be recorded that the original defendants have preferred appeal being First Appeal No.4517 of 1999, whereas Cross Objections are been filed being Cross Objection No.302 of 1999 by the original plaintiff so far as denial of relief for reinstatement.
We have heard Mr.Jigar M. Patel, learned Counsel for the appellant original defendant and Mr.Majmudar, learned Counsel for the respondent original plaintiff. We have considered the judgement and reasons recorded by the lower Court. We have also considered the records and proceedings and certain additional documents, which are forming part of the record of the trial Court made available by the learned Counsel appearing for both the sides during the course of hearing.
In our view, three aspects are mainly required to be considered; one is the declaration given by the lower Court for entitlement of the original plaintiff to continue in service up to the age of 58 years; another is about the legality and validity of the order of termination; and the third aspect is the quantum of damages to which the original plaintiff may be entitled to. At this stage, we may record that when the present appeal is heard, admittedly original plaintiff has already reached the age of superannuation in August 2013. Therefore, we do not find that the question of reinstatement being now academic is required to be examined in the present matter as contended in the Cross Objection.
On the first aspect, it appears that the appointment letter dated 2.7.1980 of the plaintiff has come on record and in the said letter, at condition 7 it has been stated as under:-
7. You are required to give one month notice in writing or pay in lieu of notice to the Unit while leaving the service after confirmation.
It may also recorded that the aforesaid document came to be exhibited with the consent of both the sides as per rojkam of the Court proceedings dated 9.7.1998. Another document is office order dated 23.6.1992, at Exh. 85. As per the said office order the conditions of service of officers and the employees working in the managerial cadre were fixed and condition No.6 provided as under:-
6. The age of retirement for the employees, who are in service and who may be in service in future is fixed at 58 years.
The aforesaid two documents clearly show that the original plaintiffs was appointed in service, confirmed in service, and was entitled to continue in service up to the age of 58 years and, therefore, on the said aspect, we do not find that the trial Court has committed any error in issuing the declaration for such purpose.
The examination of the second aspect shows that as such from the aforesaid two documents, there is no express provision made enabling the termination of service by giving three months notice or three months salary in lieu of notice to the defendant No.1 Society. The above referred Condition No.7 provided the enabling power to the original plaintiff to leave the service. Therefore, if the conditions of appointment orders are considered with the office order (Exh. 85) dated 26.3.1992, it can be said that the termination was not warranted by the contract of employment.
However, that does not mean that even if misconduct is committed by any employee, the employer will have no right or authority to terminate the services, but such aspect may fall in the general powers of the employer for taking penal action. Had it been a case where after holding any inquiry or even after giving opportunity of hearing to the original plaintiff, the termination of service was made, the matter might stand on different footing and different consideration, but nothing has come on record, neither in the pleadings, nor in the evidence before the lower Court showing that any show-cause notice was issued prior to the termination in question and/or at any point of time hearing was given to the original plaintiff before passing the order for termination. Therefore, if no opportunity of hearing whatsoever has been given, general powers for imposing penalty by the employer would not be available.
Even if it is considered on the aspect of observance of principles of natural justice to be followed in order to meet with the fairness to be observed by the employer, it has not come on record or no evidence is led, nor there is any pleading that at any point of time prior to the termination, any opportunity of hearing was given by the defendant No.1 or any office-bearers of defendant No.1 to the plaintiff.
The aforesaid is coupled with the additional aspects, which also deserve to be considered and the same is that the defendant No.1 is unlike any private person, but is a federal level cooperative society, whose operation involves huge public interest as per the provisions of Gujarat Cooperative Societies Act read with the Rules and the Bye-laws of society. At this stage, we may refer to the decision of this Court in the case of V.J. Patel, Chairman and Anr. Vs. Registrar of Cooperative Societies and Ors., reported in 2010(1) GLH, 633 (which was by one of us Jayant Patel, J. - sitting as a Single Judge of this Court), wherein this Court had an occasion to examine the principles of fairness to be observed by the office-bearers of a District Level Unit/Federal Cooperative Society registered under the Gujarat Cooperative Societies Act.
The said decision at para 7 to 11 is as under :-
7.
In order to examine the controversy, the first aspect deserves to be dealt with is about the preliminary contentions raised by the learned counsel for the respondent District Union on the point of maintainability. It is an admitted position that the District Union is a specified Society under the Act. In the case of Ahmedabad District Co-op. Purchase and Sale Union Ltd. Vs. Gujarat State Co-op. Bank Ltd. & Ors. reported at 2006(3) GLH 539, this Court had an occasion to consider more or less similar preliminary objection about the maintainability of the petition against a specified society under Article 226 of the Constitution. It was inter alia observed by this Court in the said decision as under:
14.
Second preliminary objection which needs to be disposed of at this stage is with respect to the maintainability of the petition. It is not in doubt that the petitioner has laid any foundation to urge that respondents Nos.1 to 4 are State within the meaning of Article 12 of the Constitution. There is no material nor are there any averments to this effect. In that view of the matter, it is necessary for this Court to find out whether a would be maintainable in respect of the prayers made in the present petition.
14.1 By virtue of the areas and the importance of activities that certain cooperative societies have undertaken over a period of time, they have achieved considerable importance. To regulate some of the aspects of management of such societies, certain special provisions have been made in the said Act. Such societies which are referred to as specified cooperative societies under the provisions of the said Act are governed by special provisions made in the said Act. In particular section 74C of the Act and Chapter XI-A of the said Act provide that election to the members of the managing committee of such society shall be governed by the said provisions. In Chapter XI-A of the said Act, elaborate provisions have been made for conduct of elections to the members of managing committee of such societies. These provisions are substantially pari-materia with the provisions contained in the legislation governing election of State Legislatures. Detailed and elaborate provisions have been made for preparation of electoral rolls, for filing of nominations, for holding of elections, for counting of the ballots and for declaration of the results of the elections. The provisions are also made for the purpose of resolving election disputes. Special machinery is created to hear any complaint about the election mal-practices and other election disputes. The provisions contained in Chapter XI-A also provide for offences and penalties. It can thus be seen that in a limited sphere of constitution of managing committees of the specified cooperative societies, in view of the considerable importance that such societies enjoy, it is no longer a matter of mere contract between the parties. The Legislature has intercepted and made detailed provisions to ensure that election of the committees of such societies are held in a free and fair manner. In the case of Daman Singh v. State of Punjab, (1985) 2 SCC 670 also, the Hon'ble Supreme Court recognized the concept of statutory interference with the composition of cooperative societies. In para 9 of the said decision, it is observed that in the cases before us we are concerned with cooperative societies which from the inception are governed by statute. They are created by statute, they are controlled by statute and so, there can be no objection to statutory interference with their composition on the ground of contravention of the individual right of freedom of association . It can thus be seen that such societies hold considerable importance in so far its constitution and management is concerned. It is in this regard, that the provisions contained in section 74-C (3) provide that notwithstanding anything contained in the bye-laws of any such society, the committee of management shall be elected by the general body of members of the society and all other committees authorized by or under the bye-laws may be constituted by electing or appointing persons from among the persons who are members of the committee of management. In the present petition, the petitioner has sought implementation of the said statutory provision. In the case of A.M. Bhutaiya v. Amreli Dist. Central Coop. Bank Ltd., 1998 (2) GLR 1740, learned single Judge of this Court observed that whether a cooperative society is an instrumentality of the State or not would depend on the nature of functions and duties of the society, Government financing and extent of Government control and in that case, the Court found that the Amreli District Cooperative Bank is not State within the meaning of Article 12 of the Constitution of India. It was, however, held that writ jurisdiction of the High Court can be invoked as a public law remedy for fulfillment of public duty or obligation.
15. In view of the above discussion, I find that the petition cannot be rejected only on the ground of not being maintainable. There is yet another aspect of this issue. Respondents Nos.5 & 6 are the official respondents, i.e. the Registrar of Cooperative Societies and the Department of the State Government who are entrusted with the duty of ensuring that the provisions contained in the said Act are implemented and corresponding powers are also available with the authorities particularly in section 82 and section 160 of the said Act. Such powers have been recognized by this Court in the case of A.M.Bhutaiya v. Amreli District Central Coop. Bank Ltd (supra) as well in the case case of Jain Merchants Cooperative Housing Society Ltd v. HUF of Manubhai Shah, (1995) 1 GLR 19 wherein the Bench was pleased to note the observations made in para 55 of the decision in the case of Amreli District Cooperative Sale and Purchase Union (supra) to the following effect:
In any case, an aggrieved person has always a right to move the Courts by seeking appropriate remedies by regular civil action in Civil Court or before Registrar by invoking his special jurisdiction where the membership is refused on flimsy and trivial grounds.
15.1 Under section 82 of the said Act, the Registrar has power to enforce performance of obligation of a society. It provides, inter alia, that where any society is required to take any action under the Act, the rules or the byelaws and such action is not taken within the time provided in the Act or rules or the byelaws or where no such time is provided, within such time as the Registrar may specify by notice in writing, the Registrar may himself or through a person authorized by him, take such action at the expense of the society. Under the provisions of section 160 of the said Act, the Registrar enjoys certain powers to give directions to the co-operative societies. The prayers made by the petitioner also include prayers for direction to respondents Nos. 5 & 6 to ensure that the provisions contained in section 74C particularly sub-section (3) thereof are properly implemented. Surely, such directions are not out of the purview of writ jurisdiction of this Court under Article 226 of the Constitution of India. Merely on the ground of maintainability, I do not find that this petition can be rejected.
8.
It may also be recorded that in the matter of action of the District Cooperative Bank brought under challenge in a petition under Article 226 of the Constitution, this Court in the case of Arvindbhai Mulubhai Bhutaiya & Ors. Vs. Amreli District Central Co-op Bank Ltd. & Anr reported at 1998(2) GLR 1740 found that even if it is not a State within the meaning of the Article 12 of the Constitution, the writ jurisdiction can be invoked as a public law remedy for fulfillment of the public duty and obligation. In the said decision, after recording the conclusion that the District Bank would not be said to be a State within the meaning of Article 12 of the Constitution, it was further observed by the Court at para 22 as under:
22.
However, the matter does not end here. The question still remains as to whether in the facts and circumstances of the case, any writ,order or direction can be issued against the respondent - Bank under Article 226 of the Constitution of India. Mr. Jayant Patel on behalf of the petitioners has resolutely argued that the scope of Article 226 is wider than that of Article 32 of the Constitution of India. The jurisdiction of the Supreme Court under Article 32 can be invoked only in cases where there is a breach of the fundamental right and fundamental rights can be enforced only against those bodies which are covered by Article 12 of the Constitution of India. But so far as Article 226 is concerned, the writ can be issued even for the purpose of rights, which are not fundamental, and as has been provided in Article 226 it is to any person and for any other purpose. Therefore, Article 226 is couched in a large and wider terminology and it has been so considered, construed and explained in various decisions and even after holding that a particular body is not covered by the term 'State' or 'other authority' or an 'agency' or 'instrumentality' within the scope of Article 12,the writs have been issued when the Court has found that such body has failed to discharge the duty cast upon it under any statute and such writs, orders or directions in the nature of writ have been issued by this Court itself. Mr. Patel has placed strong reliance on the five decisions; three of which have been rendered by the Supreme Court, one by Andhra Pradesh High Court and one by our own High Court. Reference has already been made to the aforesaid decisions in the earlier part of this order. I have considered the aforesaid submissions made by Mr. Patel on the question of the scope of Article 226 and find that this submission made by Mr. Patel is not without force. In Shri Anadi Mukta's case (Supra), the case went to the Supreme Court from our own High Court. It has been clearly ruled by the Supreme Court that the issue of the writ of mandamus under Article 226 is not confined to statutory authorities and instrumentalities of the State only and further that it can be issued to any other person or authority performing public duty and that such duty need not be imposed by the State Government. Para 19 of Shri Anadi Mukta's case (Supra) is reproduced as under:-
"The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Art.32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. 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 very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied."
Hence as a principle the issue of any order or direction in the nature of mandamus cannot be denied on the ground that the body against which the writ is sought to be issued is not an 'authority' or 'agency' or 'instrumentality' of the State under Article 12 nor it can be denied on the ground that the duty to be enforced is not imposed by the statute. The following quotation on the development of this law by Professor De Smith has been referred by the Supreme Court in Para 21 of the judgment as under:-
"To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter. common law, custom or even contract."
(Judicial Review of Administrative Action 4th Ex.p.540).The Supreme Court has shared this view and has opined that the judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available 'to reach injustice wherever it is found' and technicalities should not come in the way of granting that relief under Article 226 and the objection about the maintainability of the writ petition was rejected by the Supreme Court in this case. In AIR 1993 SC 2178 (Supra) the dictum laid down in Shri Anadi Mukta's case has been followed; scope of Article 226 has been further explained vis a vis the issue of prerogative writ in England and while referring to the Supreme Court decision rendered in Dwarkanath v. I.T.O. i.e. AIR 1966 SC 81 it has been held that Article 226 is couched in comprehensive phraseology and it ex facie confers a wide power on the High Courts to reach injustice wherever it is found and that Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article
32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights and the words 'any person or authority' used in Article 226 are not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. What is relevant is the nature of the duty imposed on the body and the duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed, if a positive obligation exists mandamus cannot be denied. In K. Krishnamacharyulu's case (Supra) the significant observation made by the Supreme Court in Para 4 is that, "When an element of public interest is created and the institution is catering to that element, the teacher, being the arm of the institution, is also entitled to avail of the remedy provided under Article 226." When the State launches a co-operative movement and the Government and its agencies introduced several Schemes for the benefit of public at large and such Schemes are sought to be implemented through the co-operative society like the respondent - Bank, it can safely be said that the element of public interest is created and such bodies do cater to that element of public interest and the employees of such Society are certainly the arms of such Co-operative Societies, through which the co-operative movement is taken care of and in such cases it cannot be said that there is no creation of the element of public interest. Reference has also been made to Vazir Sultan Tobacco Company Ltd.'s case (Supra), a Division Bench decision rendered by the Andhra Pradesh High Court, in which the reasoning given in the aforesaid Supreme Court decisions has been summarised as has already been quoted in the earlier part of this order. And the last but not the least case cited by Mr. Patel in this regard is a Division Bench decision of our own High Court reported in 1992(2) GLR 1065 (Supra), which has also been discussed in the earlier part of this order and in view of the authoritative pronouncements by the Division bench of this Court in this Misc.Mazdoor Sabha's case, this Court has no hesitation in holding that in a given case a writ order or direction can be issued against a co-operative society like the respondent - Bank even if it is not an 'authority' or an 'agency' or 'instrumentality' of the State under Article 12 of the Constitution of India, in the writ jurisdiction of this court in the nature of public law remedy. The only rider is that it can not be invoked for enforcement of any private right against such body. The only question, therefore, now remains is as to whether there was any statutory obligation on the respondent Bank as an employer in the nature of public duty or obligation and not private duty and obligation and this aspect of the matter has to be dealt with now so as to adjudicate as to whether the petitioners are entitled to the issue of such an order or direction in the nature of writ in their favour vis a vis the respondent - Bank and which is that statutory obligation on the respondent - Bank as an employer in the nature of public duty or obligation, which it has failed to discharge. This aspect is to be dealt with in later part of this order while considering the merits.
This Court in the said decision inter alia at para 30, further observed thus-
I also find that such writ also could be issued on failure of discharge of the public duty under charter, common law, custom or even contract as per the quotation of Professor De Smith, to which reference has been made hereinabove and this view of Prof. De Smith, had been shared by the Supreme Court, as mentioned in para 21 of Shri Anadi Mukta's case (Supra). By no stretch of imagination the Standing orders framed under the Bombay Industrial Relations Act can be treated at a pedestal lower than a charter or common law or custom or even contract. It may be further mentioned that under the common law and custom also the respondent - Bank was under an obligation to follow the principles of natural justice before passing the orders and appraise the concerned petitioners as to on what ground their services were sought to be terminated. In Praga Tools Corporation v. Shri C.A. Imanual reported in AIR 1969 SC 1306 the Supreme Court has observed that the writ could be issued against a person or body to carry out the duties placed on them by the Statutes even though they are not public officials or statutory body and according to the observations of Subba Rao, J in Dwarkanath v. Income Tax Officer, reported in AIR 1966 SC 81, Article 226 confers a wide power on the High Courts to reach injustice wherever it is found.
Ultimately, the decision for termination of the 45 employees of the Bank was set aside by the Court.
9. In view of the aforesaid, it is not possible to accept the contention of the learned counsel for the respondent that the petition would not be maintainable under Article 226 of the Constitution or that writ jurisdiction cannot be invoked by the petitioners just because the respondent Union may not be a State within the meaning of Article 12 of the Constitution. Be it noted that the aforesaid observations and conclusions would strongly apply in a matter of deciding the legality and validity of action in the domain of fulfillment of public duty or obligation by a specified Cooperative Society which has a separate status under the Act and Rules and the functioning of such specified Society involves huge public importance.
10. The next aspect which may be required to be considered is as to whether there is any inbuilt mechanism provided under the Act or the Rules for providing the remedy to such challenge against the appointment and recruitment process undertaken by the District Union. This Court in the case of Parmar Dipubhai B. and Ors. Vs. Registrar of Cooperative Societies & Ors. reported at 2006(2) GLR 1615 had an occasion to consider as to whether the Registrar in exercise of power under Section 160 of the Act could issue directions to a particular Society to terminate the services of the employees of a Society on the ground that such employees were not properly appointed and had also an occasion to consider the question as to whether the service conditions, mode of recruitment, or the validity of the appointment of the employees could be a subject matter of dispute under Section 96 of the Act or not. In the said decision, qua exercise of the power under Section 160 of the Act, the Court observed at para 33 as under:
33.
In light of this back ground of section 160 of the Act, whether the Registrar, Cooperative Societies has power to issue any direction against the society to terminate services of such employee or not is the question to be decided. If whole section is kept in mind in light of the observations made by the Division Bench of this Court, then, it becomes clear that Registrar has power under section 160 only in respect of proper implementation of cooperative production, development progress linking and coordinating of cooperative societies and marketing and crediting, proper management of business and affairs of the society being conducted in a manner detrimental to the interest of members or depositors and creditors. Nowhere it includes power to decide validity of appointments made by the society. In the facts of this case, undisputably, respondent No.2 has not framed any service bye laws or service regulations. Even State Government has also not framed service rules or regulations under section 76 of the Act. Not only that, respondent No.2 has also not prescribed qualifications for the posts in which recruitment has been made. In such circumstances, when no bye laws or any statutory rule which is required to be followed as a mandate to the society, then, if society, according to their procedure, prescribes qualification at the time of appointing candidates and follows procedure of interview and selection by appointing sub committee by Managing Committee and on their selection, appoints such candidates, whether it can be said that society has acted arbitrarily or in a discriminatory manner in violation of Article 14 of the Constitution of India. Respondent No.2 is not a State or other authority of the State within the meaning of Article 12 of the Constitution of India as held by this Court in Bipinchandra J. Soni versus Gujarat State Cooperative Cotton Federation and others reported in 1985 (2) GLR 698 (Coram : S.L. Talati,J.). In such circumstances, a private management of the society decides their own affairs, how to manage activities and business of the society, how to employ employees is within their jurisdiction, power and authority. Issuance of direction by the Registrar to society to terminate service of such employees who are not recruited as per rules or procedure is not satisfying the requirement of section 160 of the Societies Act. Admittedly, in this case, no members of the society has challenged or raised any grievance against appointment of petitioners. Not a single member of Managing Committee has also raised any contention grievance that such appointment is bad as procedure is not followed . Further, at the relevant time, Registrar was ex-officio member of the Managing Committee of the Society. He must, naturally, be knowing such type of appointments being made by the society, For appointment of petitioners, selection was made by sub committee constituted by the Managing Committee and ultimately each appointments were approved by Managing Committee wherein Registrar was ex officio member of such a committee, therefore, Registrar, while exercising powers under section 160 of the Societies Act, cannot enlarge the scope of it beyond the language employed in section 160 of the Act. Language of section 160 of the Act is very much clear, limited to certain activities of the society but it does not include decision of society in respect of appointment of its employees by proper procedure of interview and selection by sub committee. Apparently, this action of society in appointing candidates as an employee is out side the scope of section 160 of the Act, otherwise, while exercising powers under section 160 of Act, Registrar can issue direction to the society to terminate any employee working with the society though society is satisfied with the performance of such employee. The Registrar can direct the society to suspend any employee or to revert or punish any employee. The Registrar is not having any disciplinary control over the employees of society and also not having any power to interfere with mode of recruitment of such employee in absence of statutory Rules or Bye laws. If such kind of interference of Registrar once recognized, then, it become direct conflict between society and Registrar. So, Registrar is having very limited power touching business, management and constitution of society which does not include the mode of recruitment of employees. Therefore, Division Bench of this Court in Amreli District Cooperative Sale and Purchase Union observed that the entire power of Registrar under section 160 of the Act are unreasonable.
Thereafter, the Court further proceeded to examine the question as to whether appointment of an employee is touching to the constitution, management or business of the society or not and whether the Registrar has the jurisdiction under Section 96 of the Act in relation to termination of an employee by the Society or not. It was further observed at para 35 as under:
35Question is, whether the appointment of an employee is touching the constitution, management or business of the society or not. Second question is whether the Registrar has jurisdiction under section 96 of the Act in relation to termination of an employee by society or alteration in service conditions by the society or any other matter or dispute between the society and its employees. This question has been examined by apex court as well as various other High Courts in number of cases. Apex court has come to the conclusion that the matters relating to termination of employees of society or any alteration in service conditions by the society or any dispute about service condition with the society by its employees are not covered within the jurisdiction of Registrar under section 96 of the Act. Registrar is having power to decide disputes arising under the Cooperative Societies Act and is having limited jurisdiction to decide dispute touching constitution, management and business of the society. In these circumstances, quasi judicial power of the Registrar is limited. Therefore, question arise, whether the Registrar is having power and jurisdiction under section 160 of the Act to decide legality, validity and propriety of the appointments of petitioners made by society which is relating to service condition of such employees. If Registrar is not having quasi judicial power, then,how he is having administrative power upon society in relation to service condition of employees or recruitment procedure or appointments of such petitioners. Scheme of the Act is very much clear that the registrar is having control only in respect of the matters relating to constitution, management and business of the society and beyond that, Registrar is not having any control over the society. These parameters, disputes between employees and society relating to service condition is clearly out side the scope of section 96 of the Act, therefore, section 160 is required to be kept in mind while considering the question of jurisdiction, power and authority of Registrar to decide legality and validity of appointment orders of petitioners. Provisions of section 96 of the Act are relating to quasi judicial power of Registrar to decide disputes touching constitution, management and business of the society. Therefore, when service condition of employee, mode of recruitment procedure, appointment order and validity of such appointment are not a dispute within the purview of section 96, then, under the guise of sec. 160 which is general in nature, cannot be interpreted to the extent which include decision or action of society relating to condition of service or mode of recruitment procedure or employment of petitioners. Power to terminate service of an employee is with the society who has appointed such employee. There is no need under the bye laws which would require prior approval of Registrar for appointment of any employees in the society. Bye laws are not having statutory force. In this case, respondent No.2 is not having service bye laws. Bye laws which are in existence do not provide for mode of recruitment procedure, qualification. Under section 76, State Government has not framed any rules. So, there is no statutory rules for mode of recruitment procedure and there is no service bye laws for recruitment in respondent no.2, therefore, in absence of such service bye laws or regulation or statutory rules, procedure which has been adopted by society, respondent No.2 also not required to have any prior permission or subsequent approval from the Registrar. Such appointments are not touching constitution, management and business of the Society. If that be so, then, under section 160, by suo motu or otherwise, how Registrar can direct respondent No.2 society to terminate service of its employees? Therefore, it is beyond the scope of section 160 of the Societies Act. Except that, there is no other provision which would give power or jurisdiction to Registrar to cancel such appointment.
11. If the aforesaid observations made by this Court are taken into consideration, it cannot be said that there is any remedy available under Section 160 of the Act before the Registrar or under Section 96 of the Act before the Registrar s Board of Nominee for recruitment in any Cooperative Society.
The aforesaid observations were made by this Court in a case where the recruitment process of District Level Federal Body of Sabarkantha District Cooperative Purchase and Sale Union Ltd. was under
consideration before the Court. The appellant, as recorded by us hereinabove, is also a District Level Cooperative Milk Producer Federal Society. Further, the plaintiff has averred in the suit which has not denied in the written statement to the effect that yearly turn over is of Rs.200 crore. As per the Scheme of the Cooperative Societies Act read with the rules, the District Level Cooperative Federal Societies are specified societies, whose election are to be held by the District Collector and its operation involves huge public interest. Once again it will not be out of place to mention that in the decision of this Court in case of V.J.Patel, Chairman and Anr., (Supra), this Court did refer to its earlier decision, wherein it was found that the functioning of Federal Level Cooperative Body is unlike the Primary Level Cooperative Society, but is rather involving huge public interest and, therefore, under these circumstances, we find that the defendant is if not a public body but is at par with the public body, and hence cannot get away from its obligation to act fairly in the matter of employment for giving treatment to its employees. By no stretch of imagination the termination of service of an employee by stroke of pen, who has worked in the regular setup from 1980 till 1997 for about 17 years that too without holding any inquiry whatsoever or without giving any opportunity of hearing whatsoever, could be said as fair or reasonable action. Hence we do not find any fault committed by the lower Court in declaring the action of termination as illegal and bad in law.
The aforesaid would now take us to examine the aspect of damages to be made available to the respondent original plaintiff. It was submitted on behalf of the appellant by Mr.Patel that the damages could not be for full back wages nor could be for a longer period, but at the most it could be for a reasonable period during which the original plaintiff could get the another employment. He relied upon the decision in the case of Mookan Ouseph Thomakutty Vs. Thomas and Ors., reported in AIR 1954 Travancore-Cochin 104 and submitted that at the most the damages could be six months salary and not until the employee concerned reaches to the age of 58 years. It was also submitted that the burden was upon the original plaintiff to prove that he had made attempt to get the employment but the employment was not available and if that burden is not discharged, the original plaintiff would not be entitled to full back wages as if he had continued in service.
Whereas on behalf of the respondent - original plaintiff it was submitted by Mr.Majmudar that whenever the termination is found to be illegal, the back wages for the salary is required to be ordered and as such reinstatement was also required to be ordered, but the Civil Court has not ordered for reinstatement and being aggrieved by the said part, the original plaintiff has preferred cross-objection, but unfortunately on the date when the matter is being decided, the original plaintiff has already reached to the age of superannuation. Therefore, there is no reason why he should not be allowed damages equivalent to the back wages or the salary which has been lost by him on account of illegal termination. He further submitted that while awarding the quantum of back wages, the Court may take into account the mental trauma or agony undergone by the original plaintiff and further had he continued in service he would be entitled to gratuity also. Under these circumstances, it was submitted that the amount of damages of Rs.26 lacs as already ordered by the lower Court is proper and this Court may not interfere with the same.
As such, in view of the finding recorded earlier that the termination was illegal the original plaintiff would be entitled to the damages. However, the salary certificate shows that at the time when services were terminated the salary of the plaintiff was Rs.10,700/- p.m. and yearly such amount would come to Rs.1,28,400/-. Had the plaintiff continued in service upto the age of 58 years he would have been entitled for the aforesaid amount plus other benefits as may be available in service. We are not impressed by the submission made by the learned counsel appearing for the appellant that if the termination is found to be illegal merely because the appellant herein original defendant was not a State within the meaning of Article 12, the salary of only six months could be considered as damages, because as observed by us hereinabove the appellant original defendant cannot be equated with a private party or a private organization when its operation is not only governed by the statutory provisions but its operation involve huge public interest. Since the discussion in this regard about the operation and importance of the operation of the defendant coupled with the obligation to treat its employees in a fair manner as already made by us hereinabove we need not repeat the same, but we find it proper to observe that the analogy as sought to be canvassed by taking support of decision of the other High Court in the case of Mookan Ouseph Thomakutty (Supra) which is altogether on different facts, as if the defendant could be termed as only a private person or a private organization is totally misconceived. In our view, taking into consideration the operation of the original defendant, the plaintiff would be entitled to the amount of damages had he continued in service until he reached to the age of 58 years because there was expressed decision taken by the appellant defendant to continue all its existing staffs upto age of 58 years. When such was expressly provided and if termination is found to be illegal, the damages if considered, should be equal to the amount of loss suffered by the plaintiff. We cannot consider the damages on the hypothesis or surmises that had the plaintiff continued in service he would have been entitled to the promotion or the increment or that he would be entitled to retiral benefits etc., because conferment of such benefit is dependent upon so many other factors like efficiency, proved merit, competition with other eligible candidates and the satisfactory service until one reaches to the age of 58 years. Therefore, we find that the damages at the most could be equated with the amount as salary which the plaintiff could have received had he continued in service. The aspect of mental trauma or pain, shock and suffering as sought to be canvassed, in our view, was neither pleaded nor any evidence was led for such purpose and, therefore, cannot be considered at appellate stage. However, if the person has continued in service, the aspect of retiral benefits in a reasonable manner can be considered.
If the salary of the plaintiff as stated by him on the date of termination was Rs.10,700/- p.m. the amount of damages should be quantified in a manner so that the plaintiff may be entitled to such amount in a reasonable manner.
As observed earlier, per year, the amount will be Rs.1,28,400/-. As such, the normal bank rate interest can be considered at 8% p.a. Therefore, if the amount of Rs.16,05,000/- and if rounded off, at Rs.16,00,000/- is invested with any nationalised bank, it would earn interest of Rs.1,28,400/- per year and such would be equivalent to the yearly salary which was available to the plaintiff at the time of termination. Therefore, it appears to us that awarding of damages of Rs.26 lakhs is on higher side because even if reasonable rate of interest is considered at the rate of 8% p.a. on the amount of Rs.26 lakhs, the consequence would be that the person concerned would get higher amount than he was receiving as his salary. As observed by us hereinabove, the criteria for damages at the most could be equivalent to the loss suffered by the person concerned. Further, the additional aspect is that at the expiry of the period, the original plaintiff in any case is to get the principal amount had the amount invested and the interest was withdrawn by him. In our view the receipt of principal amount of investment would take care of a reasonable retiral benefits. Therefore, taking into consideration the aforesaid aspects, we find that if the principles of damages are considered, the appropriate quantification of damages would be Rs.16 lakhs and not Rs.26 Lakhs as awarded by the trial court.
It has been further stated that pending the appeal, on account of the interim order passed by this Court, the amount of Rs.5 lakhs was deposited and the same is invested and the original plaintiff is permitted to withdraw the interest and therefore, we find that if the damages are quantified at Rs.16 lakhs, additional amount of Rs.10 lakhs will be required to be considered for deposit of the balance amount plus interest at the rate of 6% p.a. as already decreed by the trial court.
In view of the aforesaid observations and discussions, the judgment and decree passed by the trial court for awarding damages exceeding the amount of Rs.16 lakhs is quashed and set aside and the judgment and decree of the trial court is modified to the effect that the original plaintiff-respondent herein shall be entitled to receive the amount of Rs.16 lakhs in place of Rs.26 lakhs as per the decree of the trial court. It is also observed that the amount already deposited pending the appeal shall be given set-off and the remaining amount shall be paid to the original plaintiff by the appellant within a period of three months from today.
The appeal is allowed to the the aforesaid extent. Considering the facts and circumstances, no order as to costs. Cross-objection shall stand dismissed.
(JAYANT PATEL, J.) (Z.K.SAIYED, J.) vinod/kks/bjoy Page 33 of 33