Gujarat High Court
Hema Ritesh Thakker & Others & 15 vs State Of Gujarat Through Registrar & 4 on 31 August, 2016
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/586/2011 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 586 of 2011
With
SPECIAL CIVIL APPLICATION NO. 1030 of 2010
With
SPECIAL CIVIL APPLICATION NO. 2541 of 2011
TO
SPECIAL CIVIL APPLICATION NO. 2555 of 2011
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
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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 or any order made thereunder ?
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HEMA RITESH THAKKER & OTHERS & 15....Petitioner(s)
Versus
STATE OF GUJARAT THROUGH REGISTRAR & 4....Respondent(s)
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Appearance:
MR HARDIK C RAWAL, ADVOCATE for the Petitioner(s) No. 1 - 16
GOVERNMENT PLEADER for the Respondent(s) No. 1
MR DIPAK R DAVE, ADVOCATE for the Respondent(s) No. 3 - 5
NOTICE SERVED for the Respondent(s) No. 2
NOTICE SERVED BY DS for the Respondent(s) No. 2
RULE SERVED for the Respondent(s) No. 1 - 5
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 31/08/2016
COMMON ORAL JUDGMENT
1. Since the issues raised in all the captioned writ applications are more or less the same, those were heard analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience, the Special Civil Application No.586 of 2011 is treated as the lead matter.
3. By this writ application under Article 226 of the Constitution of India, the writ applicants, former employees of the State Transport (Employees) Co-operative Bank Limited, have prayed for the following reliefs;
"(A) be pleased to allow this petition.
(B) be pleased to issue a writ of mandamus or any other appropriate writ, order or direction by quashing and setting aside the impugned action / order dated 10.1.2011 (Annexure-C) and Annexure C(1) colly of terminating the services of the petitioners and/or further be pleased to punish the respondents No.1, 2,4 and 5 by holding them guilty of contempt for wilfully flouting the order passed by this Hon'ble Court at Annexure -A to this petition and / or further be pleased to direct the respondents to forthwith reinstate the petitioner with continuity of service and all consequential and incidental benefits.
(C ) pending admission, hearing and final disposal of this petition, be pleased to stay the further operation, implementation, execution and enforcement of the Page 2 of 77 HC-NIC Page 2 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT impugned action/order dated 10.1.2011 Annex.C and Annex.C(1) colly terminating the services of the petitioners and further be pleased to direct the respondents to forthwith reinstate the petitioners on their original post with continuity of service on the same terms and conditions and all consequential and incidental benefits.
(D) be pleased to pass such other and further orders may be deemed just and proper looking to the facts and circumstances of the case and in the interest of the justice."
4. The case of the writ applicants may be summarized as under;
4.1 The writ applicants joined the services of the respondent No.5-Bank as the clerks and peons in the decade of early 90's. To be precise, the details are elicited as under;
Sr. Name of petitioner Date of Post
No. appointment
1 Hema Ritesh Thakkar 22.12.93 Clerk
2 Jignasha Sandip Raval 09/03/93 Clerk
3 Mahendrabhai Ramjibhai Patel 02/01/95 Clerk
4 Kanubhai Tribhovandas Ratnottar 02/01/95 Clerk
5 Yogesh Shanrkarlal Mehta 28.1.1992 Clerk
6 Sandip Piyushkumar Raval 02/01/95 Clerk
7 Ashvin Suryakant Parmar 09/03/93 Clerk
8 Ketan J. Patel 09/03/93 Clerk
9 Rakesh A. Parmar 09/03/93 Clerk
10 Kirti K. Parmar 09/03/93 Clerk
11 Ashok R. Zala 01/03/93 Clerk
12 Ishwar M. Desai 09/03/93 Peon
13 Dipak B. Dave 09/03/93 Clerk
14 Haresh R. Patel 09/03/93 Clerk
15 Natubhai B. Parmar 09/03/93 Peon
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16 Rafiqali A. Saiyed 21.1.1995 Peon
4.2 It appears that their services were ordered to be terminated vide order dated 29th January, 2010 passed by the Registrar, Co-operative Societies, in the purported exercise of power under section 160 of the Gujarat Co-operative Societies Act, 1961. The writ applicants rushed to this Court by filing the Special Civil Application No.1030 of 2010 and prayed that their services may be protected as the termination was arbitrary, illegal and in violation of the principles of natural justice.
4.3 On 10th February, 2010, a learned Single Judge of this Court passed the following order;
"1. Petitioners approached this Court on 03.02.2010 with a request to urgently circulate the petition for hearing and grant of mandatory relief so as to restrain the respondent concerned from discharging the petitioners from service. The Court, however, ordered to issue urgent notice as to admission and interim relief, pursuant to which learned A.G.P. has appeared for respondent No.1 and learned counsel Mr.N.A.Pandya appears for respondent No.2 and learned counsel on both sides are heard in extenso. At the end of arguments on both sides, learned counsel Mr.Pandya declared that respondent No.2 has conveyed to him instructions to support the petitioners and hence he no longer wanted to represent respondent No.2.
2. The petitioners are 17 clerks and peons employed by respondent No.2 since the year 1992 to 1995 and they have rushed to this Court to prevent illegal termination of their service pursuant to the order dated 29.01.2010, made under section 160 of Gujarat Co-operative Societies Act, 1961 by Registrar for Co-operative Societies. That order is also called into question on the grounds that it is arbitrary, illegal, without jurisdiction and made in violation of principles of natural justice. Each of these grounds has been substantiated on the Page 4 of 77 HC-NIC Page 4 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT basis of material on record and by arguments of learned counsel Mr.Rawal. Respondent No.2 bank has admittedly sought to terminate service of the petitioners only on the basis of the directions contained in the aforesaid order dated 29.01.2010 of the Registrar. Since legality of that order and jurisdiction of the Registrar to make such order is seriously disputed and in doubt, petition is required to be admitted as far as challenge to that order is concerned. The action of respondent Bank based upon the said order was sought to be defended only on the basis that the order was not illegal. In reply to the query as to whether any provision of law were attracted and applied in the matter of termination of service of the petitioners, the bland answer by learned counsel Mr.Pandya was that no other provision of any other law applied in the facts of the case as the very appointments of the petitioners were held to be illegal in the impugned order of Registrar.
3. Learned counsel Mr.Rawal, relying upon judgment of this Court in Arvindbhai M.Bhutaiya v. Amreli District Central Co-op. Bank Ltd. [(1998) 1 GLH 846], submitted that the petitioners' service could not have been terminated in the manner it was sought to be done and Article 226 of the Constitution confers wide power on the High Courts to reach injustice wherever it is found. He submitted that the facts and ratio contained in the said judgment squarely applied in the facts of the present case. It was further submitted that, in that case employees were ordered to be reinstated by an order granting mandatory interim relief, and that order as well as the final judgment mentioned hereinabove were carried in appeal. He pointed out from the impugned order of the Registrar that the order was, ex facie, not only illegal but made in contempt of an earlier judgment of this Court, insofar as the decision reported in Parmar Dipubhai B. v. Registrar of Co-operative Societies, Gujarat State [2006 (2) GCD 1341 ] was cited before and disregarded by the Registrar only by observing that an L.P.A. was pending against that judgment. He further submitted that the plea of availability of alternative remedy could not be entertained in the peculiar facts of the present case and relied upon judgments of the Supreme Court in Committee of Management v. Vice Chancellor [(2009) 2 SCC 630 and Whirlpool Corporation v. Registrar of Trade marks, Mumbai [(1998) 8 SCC 1].
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He submitted that, in fact service of the petitioners was sought to be terminated in flagrant violation of mandatory provisions of the Bombay Industrial Relations Act as well as section 25-J of the Industrial Disputes Act. Since service is the only source of livelihood for the petitioners, it could not be snatched away, except in accordance with law and after following the procedure prescribed by law. There is not even an averment or argument to the effect that any procedure, much less any legal procedure prescribed by law, was complied by the respondent Bank in seeking to terminate services of the petitioners. Learned counsel Mr.Pandya only submitted in this context that undated Resolution No.1 passed in a meeting of the executive committee of the employer bank had already authorized en- mass termination of service of 18 employees. Perusing a copy of the resolution, which was placed on record, it appears that the resolution which is supposed to be unanimous is as yet to be approved in a regular meeting and it purported to have been signed by eight members of the Board of Directors. As against the submission of Mr.Pandya, learned counsel Mr.Rawal placed on record affidavits of seven Directors, out of total 12 Directors, of the respondent Bank stating in substance that termination of service is illegal and service of the petitioners is required by the bank. Curiously it was also the case of the respondent Bank before the Registrar that appointment of the petitioners were legal and their services were required by the bank. It was further stated at the bar that, out of total staff of 38 employees, 18 employees were sought to be discharged by the impugned action of the bank. Therefore, it is, prima facie, clear that the bank has sought to terminate service of the petitioners in hot haste only on the basis of the impugned order of the Registrar and without following any procedure worth the name. Observations of the Apex Court in recent decision in Harjinder Singh v. Punjab State Warehousing Corporation [2010 (1) SCALE 613] are apposite in the present context.
4. In the facts and circumstances briefly narrated hereinabove, it, prima facie, appears that respondent No.2 Bank is a house divided against itself and there is no valid reason to terminate service of the petitioners, except the impugned order of Registrar; and the bank has sought to terminate service of the petitioners without Page 6 of 77 HC-NIC Page 6 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT following any procedure, except sending letters dated 03.02.2010 to the petitioners to collect their legal dues. In such circumstances, mere admission of the petition and denial of interim relief would render the petition infructuous and the impugned action of terminating services would be harmful both to the petitioners as well as the respondent bank. Therefore, the Court finds it to be an exceptional case in which mandatory injunction is required to be granted in the interest of justice and to prevent multiplicity of proceedings as also violation of fundamental rights of the petitioners.
5. Accordingly, PETITION IS ADMITTED and, by way of interim relief, respondent No.2 bank is directed not to operate or execute the orders terminating service of the petitioners and, even if they are relieved by now, reinstate them in their original post, on the same terms and conditions on which they were serving before 03.02.2010, till and subject to further orders of this court. It would, however, be open for the respondent bank to initiate necessary legal procedure for termination of service of any of the petitioners in accordance with law. RULE returnable on 09.03.2010. Notice of Rule is waived by learned A.G.P. for respondent No.1 and notice of Rule may be served upon respondent No.2 by way of direct service as learned counsel Mr.Pandya has expressed his inability to waive service of Rule."
4.4 In view of the order passed by this Court referred to above, the writ applicants were reinstated in service with an understanding that the Bank may initiate appropriate proceedings in accordance with law for the purpose of terminating the services.
4.5 It appears that pursuant to the order passed by this Court referred to above, more particularly, the liberty reserved for the Bank to initiate the necessary legal process for termination of service of the writ applicants, fresh orders came to be passed, terminating the services of the writ applicants. Each of the writ applicants were paid a particular amount towards the Page 7 of 77 HC-NIC Page 7 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT dues payable to them for the service of almost twenty years put in with the Bank.
4.6 Being dissatisfied with the orders of termination passed by the Managing Director of the Bank, the writ applicants have preferred the present writ application.
5. Mr. Raval, the learned counsel appearing for the writ applicants vehemently submitted that although this Court had made it very abundantly clear that if the Bank intended to terminate the writ applicants from the service, then it may do so after following the due process of law, yet without following any process of law, stereotype termination orders came to be passed by the Managing Director and that too under the pressure and dictates of the Registrar, Co-operative Societies.
6. Mr. Raval submits that the impugned action of the respondents of terminating the services of the writ applicants is in gross violation of the model standing orders framed under the Bombay Industrial Relations Act, 1946 for the Banking Industry, more particularly, the clause 22 of the model standing order. According to Mr. Raval, the model standing orders are statutory provisions having force of law.
7. According to Mr. Raval, the facts of this case are very gross and there cannot be a better example of a highhanded and arbitrary action on the part of the respondents than the case in hand.
8. Mr. Raval submitted that all his clients were appointed by way of a regular recruitment process and in accordance with Page 8 of 77 HC-NIC Page 8 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT the rules and regulations. The termination of his clients was nothing but a political move on account of rivalry between the unions, and the Registrar, Co-operative Societies, State of Gujarat saw to it that all the writ applicants are terminated from the service on one ground or the other. He submitted that the allegations leveled against his clients that their appointments, at the relevant point of time, were illegal and smacked of favouritism, are absolutely baseless and false.
9. Mr. Raval submitted that the letter of the Joint Registrar (Audit), Co-operative Societies, Gujarat State dated 6th January 2011 addressed to the Chairman/Manager of the Bank, Annexure-F to this petition, page-28 is self-explanatory. Mr. Raval also invited the attention of the Court to the letter dated 14th December, 2009 addressed by the Managing Director of the Bank to the Registrar, Co-operative Societies, informing that the appointments, at the relevant point of time, were in accordance with the rules and regulations including the educational qualification, and the Bank was in need of the employees, whose services, the Registrar, Co-operative Societies wanted to be terminated.
10. In support of his submissions, Mr. Raval has placed strong reliance on a decision of this Court in the case of Arvindbhai M. Bhutaiya vs. Amreli District Central Co-Op. Bank Ltd., (1998) 1 GLH, 846.
11. On the other hand, all the writ applications have been vehemently opposed by Mr. Deepak R. Dave, the learned counsel appearing for the Bank and the learned AGP appearing for the State-respondents.
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12. Mr. Dave raised a preliminary objection as regards the maintainability of the writ application under Article 226 of the Constitution of India. According to Mr. Dave, the Bank is a society registered under the Gujarat Co-operative Societies Act, 1961, carrying on the business of Banking, as defined in the clause(b) of sub-section(1) of section 5 of the Banking Companies Act, 1949. He submitted that the Bank is not an 'authority' or an 'instrumentality' or 'agency' of the State within the meaning of Article 12 of the Constitution of India and, therefore, the writ application, seeking an appropriate writ of certiorari or mandamus is not maintainable. Mr. Dave submits that like the bye-laws of a Co-operative Society, the Model Standing Orders framed under the Bombay Industrial Relations Act, 1946 constitute a contract between the parties and, therefore, they cannot be enforced by a writ of this Court. In other words, it is not open to this Court to issue a writ to enforce a contractual obligation. He further submitted that a mandamus lies to secure the performance of a public duty or statutory duty, in the performance of which, the one who applies for it, has a sufficient legal interest. In other words, the condition precedent for the issue of mandamus is that there is in one claiming it a legal right to the performance of a legal duty by one against whom it is sought. According to Mr. Dave, even if the Banking Society is considered as a statutory body incorporated under the Gujarat Co-operative Societies Act, there is neither a statutory nor a public duty imposed on it by a statute, in respect of which, enforcement can be sought by means of a mandamus, nor is there in its employees any corresponding legal right for the enforcement of any such statutory or public duty. Mr. Dave submits that the certified Page 10 of 77 HC-NIC Page 10 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT standing orders or the model standing orders have no statutory force and are not enforceable by way of a writ. He would submit that the model standing orders, violation of which is complained of, are conditions of service framed by the employer which are approved/certified by the prescribed authority, after hearing the concerned workmen. The standing orders do not acquire any statutory effect or become part of the statute. Although, the standing orders are binding upon both, the employer and the employees and constitute the conditions of the service of the employees, yet they do not have any statutory force so as to make the writ applications maintainable for the enforcement of the same. According to Mr. Dave, the writ applicants have an alternative efficacious remedy by going before the Labour Court, invoking the provisions of the Industrial Disputes Act. Mr. Dave submits that the Industrial Disputes Act, 1947, is a self-contained code. The rights of a workman arise under the said Act. The said act also provide forums for adjudicating upon the disputes, inter alia, in relation to the dismissal, discharge or removal from the service. He submitted that it is now well known that even if an order of dismissal passed by the employer is found to be illegal/invalid, having been passed in violation of the provisions of the Certified Standing Orders or without complying with the principles of natural justice, or by an authority having no jurisdiction in such matters, a preliminary issue can be raised at the instance of the employer as regards the maintainability of the writ application.
13. Mr. Dave submitted that the issue, by and large, is covered by the decision of the Supreme Court in the case of S.S. Rana vs. Registrar, Co-operative Societies & Anr., Page 11 of 77 HC-NIC Page 11 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT 2006 AIR SCW 3723 and the decision of this Court in the case of Manoj Ambaram Kahar vs. Indian Red Cross Society & Ors., Special Civil Application No.7328 of 2014, decided on 12th July, 2016.
14. Mr. Dave submitted that assuming for the moment without admitting that the writ applications are maintainable, they may not be entertained on the ground that the writ applicants have an alternative efficacious remedy of invoking the provisions of the Industrial Disputes Act. In support of this submission, he has placed reliance on the following decisions;
(I) U.P. State Bridge Corpn. Ltd. vs. U.P. Rajya Setu Nigam S. Karamchari Sangh, (2004) 4 SCC268;
(ii) Hindustan Steel Works Construction Ltd. & Anr. vs. Hindustan Works Construction Ltd. Employees Union, (2005) 6 SCC 725.
(iii) S.P. State Spinning Company Ltd. vs. R.S. Pandey and Anr., (2005) 8 SCC 264.
15. Mr. Raval, in rejoinder to the submissions canvassed by Mr. Dave, submitted that the standing orders, after they are duly certified and, provided they are intra vires, have the force of law like any other statutory instrument. The dismissal in violation of the requirements of a certified standing order or model standing order is not a mere violation of the terms of the contract between the parties. As the certified standing orders or the model orders have the force of law, even a private party or a company may be compelled by a mandamus Page 12 of 77 HC-NIC Page 12 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT to perform the legal duties imposed upon it by the statute.
16. Mr. Raval, the learned counsel appearing for the writ applicants, in support of his submissions, placed strong reliance on the following decisions of the Supreme Court;
(I) Begalkot Cement Co. Ltd. v. R. K. Pathan, AIR 1963 SC 439
(ii) Buckingham & Carnatic Co. ltd. v. Venkatiah, AIR 1964 SC 1272
(iii) Workmen of Dewan Tea Estate v. The Management, AIR 1964 SC 1458
(iv) Workmen of Buckingham & Carnatic Mills, Madras vs. Buckingham & Carnatic Mills, Madras, 1970 (I) Lab LJ 26(SC)
(v) D.K. Yadav vs. J.M.A Industries Ltd., 1993 (3) SCC
259.
17. Thus, according to Mr. Raval, in view of the aforesaid decisions of the Supreme Court, the model standing orders have statutory force, and if those are violative, then a writ application under Article 226 of the Constitution of India is maintainable for the enforcement of the same.
18. Having heard the learned counsel appearing for the parties and having considered the materials on record, two questions fall for my consideration. First, whether this writ application under Article 226 of the Constitution of India is maintainable against a Co-operative Bank as it failed to discharge its obligations under the standing orders framed under the BIR Act and secondly, even if the writ application is held to be maintainable, whether the same should be Page 13 of 77 HC-NIC Page 13 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT entertained in view of the efficacious alternative remedy under the Industrial Disputes Act, 1947.
19. Let me look into some of the provisions of the Gujarat Co- operative Societies Act, 1961. Section 2(2) of the Act defines the term "bye laws" as under;
"bye-laws means bye-laws registered under this act and for the time being in force, and include registered amendments of such bye-laws."
20. Section 2(7) defines the term "Co-operative Bank". It reads as under;
"co-operative bank" means a society registered under this Act and doing the business of banking, as defined in clause (b) of sub-section (1) of section 5 of the Banking Companies Act, 1949(X of 1949)"
21. Section 2(19)defines the term "Society". It reads as under;
"society" means a co-operative society registered, or deemed to be registered, under this Act;"
22. That a co-operative society can also be an 'authority' within the meaning of Article 12 and therefor a 'State' is beyond dispute. The tests for determining whether a particular Society or Company is an agency or instrumentality of the State, so that it can be characterized as an 'authority' within the meaning of Art. 12, have been enunciated in Ramana Dayaram Shetty (AIR 1979 SC 1628) and affirmed in Ajay Hasia v. Khalid Mujib AIR 1981 SC 487. 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 Page 14 of 77 HC-NIC Page 14 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT 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 aford 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 go governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.
(6) "Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference" of the corporation being an instrumentality or agency of Government."
23. Proceeding further, the Supreme Court held that it was immaterial whether the corporation was created by a statute or under a state. The test is whether it is an instrumentality or agency of the Government and not as to how it was created. In the said case their Lordships proceeded to observe that the Government may act through the instrumentality or agency of a natural person or it may employ the instrumentality or agency of juridical person to carry out its functions. The test is that it will be considered to be an agency and instrumentality of the State. It is true that the corporation is a distinct juristic entity with a corporate structure of its own and it carries on its functions on business principles with a certain amount of Page 15 of 77 HC-NIC Page 15 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT autonomy which is necessary as well as useful from the point of view of effective business management but behind the formal ownership which is cast in the corporate mould, the reality is very much the deeply pervasive presence of the Government, and it is in fact the Government which acts through the instrumentality or agency of the corporation or the juristic person. If the instrumentality and agency of the Govt. discharges the Governmental functions it must be subject to same limitations in the field of constitutional law as the Government itself, though in the eye of the law it would be a distinct and independent legal entity. In Ajay Hasia's case (supra), the Supreme Court was considering the obligations of instrumentalities and agencies of the Government to respect the fundamental rights of the citizens and they were held to be bound to enforce the fundamental rights guaranteed to the citizens of India under Part III of the Constitution of India. If this binding was not there, the fundamental rights in the opinion of the Supreme Court would then be reduced to an idle dream or a promise of unreality. Because in the constitution philosophy of a democratic socialist public Govt. has to undertake a multitude of socio-economic operations and the Govt. having regard to the practical advantages of functioning through the legal device of a corporation by resorting to create instrumentalities or agencies which will not exonerate the Govt. itself from obeying the fundamental rights of the citizens. In the context of enforcing the fundamental rights, the Supreme Court laid emphasis that by process of judicial construction the fundamental rights cannot be rendered futile and meaningless. Because in the opinion of the Apex Court, it is the fundamental rights which alone with the directive principles constitute the life force of the Constitution of India Page 16 of 77 HC-NIC Page 16 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT and they must be put into effective action by a meaningful and purposeful interpretation. Therefore, it was observed that if a corporation or a company is the instrumentality or agency of Government, it must be held to be an authority within the meaning of Article 12 of the Constitution and subject to the same basic obligation to obey the fundamental rights as the Government.
24. Applying the Test Nos.1 and 2 to the facts of the case on hand, no materials have been placed on record to even remotely indicate that the share capital of the Society is held by the State Government or the society is dependent upon the Government for any financial assistance. There is nothing to even remotely suggest that the society enjoys any monopoly status conferred by the State. With regard to the fourth test, there is nothing to indicate existence of deep and pervasive State control. The fifth test whether the functions of the society are of public importance, and further the society could be said to be discharging a public function, which is akin to a Government function also could not be said to have been satisfied.
25. Even, according to Mr. Raval, the learned counsel appearing for the writ applicants, the Bank is not an "authority" or "agency" or "instrumentality" of a State. However, according to him, the Bank, as an employer, was under an obligation to follow the Model Standing Orders framed under the Bombay Industrial Relations Act, 1946 which could be treated as statutory in nature before terminating the services of the writ applicants.
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26 In short, the contention of Mr. Raval is that if the Bank has violated any mandatory provisions of the Act or rules framed thereunder, then his clients are entitled to invoke the writ jurisdiction of this Court under Article 226 of the Constitution of India and pray for a writ of certiorari as well as mandamus. This submission of Mr. Raval is sought to be fortified by the decision of this Court in the case of A.M. Bhutaiya (supra). In A.M. Bhutaiya (supra), this Court took the view that as the bank had failed to discharge its obligation under the standing orders registered under the Bombay Industrial Relations Act, the termination orders could not be sustained in the eye of law. The observations made in para-26 are relevant. Those are elicited hereunder;
"26. Whatever may have been the objections with regard to the selections and appointments given to these petitioners, the fact is that these 45 petitioners had been given appointments in the respondent - Bank and they were continuing in the service of the respondent - Bank from the dates, as aforesaid, irrespective of the fact whether they are treated as ad hoc or temporary or probationers or permanent. Mr. Patel has invited the attention of this Court to the provisions of the Bombay Industrial Relations Act and it has been contended that under Rule 33 of the Gujarat Co-operative Societies Rules the Managing Committee of the Society has the power to appoint, to give salary to staff for the conduct of the business of the Society and to define their duties. Mr.Patel has invited the attention of the Court to the averments made in para 2.2 of the Special Civil Application No.5552 of 1997 and it has been submitted that the Standing orders for governing the service conditions of the employees of the respondent - Bank have been registered under the Bombay Industrial Relations Act on 13.3.80 and clause 22 providing for their termination of the employment reads as under:-
"22. Termination of Employment:
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(1) The employment of a permanent employee or probationer may be terminated by one months notice or on payment of one month's wages (including all allowances) in lieu of notice.
(2) The reason for termination of service under clause (1) of this Standing order shall be recorded in writing and shall be communicated to him, if he so desires, at the time of discharge unless such communication, in the opinion of the Manager is likely directly or indirectly to lay any person open to civil or criminal proceedings at the instance of the employee.
(3) A permanent employee desirous of leaving the service of the Bank shall give one month's notice in writing to the Manager. He shall then he leaves the service, be given an order of relief signed by the Manager.
(4) If any permanent employee leaves the service of the bank without giving notice, he shall be liable to pay the bank one month's wages (including all allowances) in lieu of notice.
(5) The service of any other employee may be terminated or he may leave service, on one week's notice.
(6) An order relating to discharge or termination of service shall be in writing and shall be signed by the Manager. A copy of such order shall be supplied to the employee concerned. In cases of general retrenchment closing down, strike or lock-out no such order may be given.
(7) Every employee will retire from service on attaining an age of 58 (fifty eight years). Extension not exceeding 5 years in all may be given at the discretion of the Board of Directors. Every employee, if he desires will voluntarily retire from service of the Bank after completion of 30 years of his service.
(8) An employee before retirement shall be granted the privilege leave due to him on his applying for it or salary and allowances in lieu thereof."
The averments made in para 2.2 of the Special Civil Page 19 of 77 HC-NIC Page 19 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Application have been replied in para 28 of the affidavit- in-reply dated 4.8.97 filed by the respondent - bank, which reads as under :-
"28. With reference to averments made in para 2.2. of the petition, I offer no comments. I crave leave to refer to and rely upon the provisions of the Order at the time of hearing of this petition."
It is, therefore, clear that the factum of the registration of the bye-laws and the bye-law 22 with regard to termination of employment, as has been quoted by the petitioners, has not been disputed. According to Standing Order No.22(1) appointment of the permanent employee or probationer can be terminated by one month's notice or on payment of one month's wages in lieu of notice. The reason for termination under clause (1) is required to be recorded in writing as provided in Standing Order No.22(2). According to Standing Order No.22(5), the service of any employee, other than permanent or probationer, may be terminated on week's notice. It is, therefore, clear that the respondent Bank as an employer was under an obligation under the aforesaid Standing Orders, registered under the Bombay Industrial Relations Act, which is at par with statutory obligation and yet the services of each of these 45 petitioners were terminated without following the aforesaid Standing Order No.22 and the violation of Standing Order No.22 is ex facie clear. Even if the respondent - Bank seeks to dispute before this Court the status of the petitioners as permanent employees or as probationers or as a regularly appointed employee and even if some of them are not treated to be permanent and are employees of status other than permanent or probationer and even if it is assumed in favour of the respondent - Bank that the status of permanent employees was wrongly conferred upon the petitioners, the fact remains that at the time of termination of their services, Standing Order No.22 had to be complied and the respondent - bank could not have terminated their services in the manner it terminated on 28.7.97. It is, therefore, held that the respondent Bank had failed to discharge its obligations under the Standing Orders registered under the Bombay Industrial Relations Act and, therefore, the termination orders cannot be sustained in the eye of law. "
Page 20 of 77HC-NIC Page 20 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT
27. At this stage, let me look into the model standing orders, on which, reliance is placed. It reads as under;
"1. These Orders shall apply to all employees employed in the Bank.
2.(1) In these Orders, unless there is anything repugnant in the subject or context;
(a) "The Bank" means the undertaking known as'_____
(b) "Employee" means an employee employed in the Bank.
(c ) "Manager means the person for the time being managing the Bank and includes "Agent".
(2) Words and expressions not defined in these orders shall have the meanings assigned to them under the Bombay Industrial Relations Act, 1946.
2(a) "Permanent employee" means an employee who has been appointed as such in writing by the Bank.
(b) "Probationer" means an employee who is provisionally employed to fill permanent vacancy or post and has not been made permanent or continued in service.
(c ) "Temporary employee" means an employee who has been appointed for a limited period for work which is of as essentially temporary nature, or who is employed temporarily as an additional employee in connection with a temporary increase in work of a permanent nature.
(d) "Apprentice" means an employee who is a learner and is paid an allowance during the period of his training:
Provided that no employee shall be classified as an apprentice if he has had training for an aggregate period of one year."
28. What is relevant for my purpose is clause (20) which Page 21 of 77 HC-NIC Page 21 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT reads as under;
"20.Termination of employment-(1) The employment of a permanent employee or probationer may be terminated by one month's notice or an payment of one month's wages (including all allowances) in lieu of notice.
(2)The reasons for the termination of service under clause (1) of this Standing Order shall be recorded in writing and shall be communicated to him, if he so desires, at the time of discharge unless such communication, in the opinion of the Manager, is likely directly or indirectly to lay any person open to civil or criminal proceedings at the instance of the employee.
(3) A permanent employee or a probationer desirous of leaving the service of the Bank shall give one month's notice in writing to the Manager. He shall when he leaves the service be given an order of relief signed by the Manager.
(4) If any permanent employee or a probationer leaves the service of the Bank without giving notice, he shall be liable to pay the Bank one month's wages (including all allowances) in lieu of notice.
(5) The services of any other employee may be terminated, and he may leave service, without notice.
(6) As order relating to discharge or termination of service shall be in writing and shall be signed by the Manager. A copy of such order shall be supplied to the employee concerned. In cases of general retrenchment, closing down, strike or lock-out no such order may be given."
29. The bye-laws of a co-operative society framed by the society under the Gujarat Co-operative Societies Act including the model standing orders framed under the Bombay Industrial Relations Act, 1946, cannot be said to be the law or to have force of law. They are in the nature of contract, terms of contract between the society and its employees, or between Page 22 of 77 HC-NIC Page 22 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT the society and its members, as the case may be.
30. Hence, where a co-operative society cannot be characterized as a "state", the service conditions of its employees governed by the bye-laws or standing orders cannot be enforced through a writ petition under Article 226 of the Constitution of India. The writ of mandamus, certiorari and prohibition are the public law remedies. They are not available to enforce private law rights. Every act of a society which may be a "State" within the meaning of Article 12 does not necessarily belong to public, law field. A contractual obligation, which is not statutory, cannot be enforced by way of a writ petition under Article 226 of the Constitution of India.
31. I may quote with profit a decision of the Supreme Court in the case of Thalappalam Service Co-operative Bank Ltd. & Ors. vs. State of Kerala & Ors.,2013 (16) SCC 82, wherein the Supreme Court has considered the issue of co- operative societies vis-a-vis Article 12 of the Constitution. The observations, as contained in paras-13 to 17, are relevant. Those are elicited herein below.
"13. We may first examine, whether the Co-operative Societies, with which we are concerned, will fall within the expression "State" within the meaning of Article 12 of the Constitution of India and, hence subject to all constitutional limitations as enshrined in Part III of the Constitution. This Court in U.P. State Co-operative Land Development Bank Limited v. Chandra Bhan Dubey and others (1999) 1 SCC 741, while dealing with the question of the maintainability of the writ petition against the U.P. State Cooperative Development Bank Limited held the same as an instrumentality of the State and an authority mentioned in Article 12 of the Constitution. On facts, the Court noticed that the control of the State Government Page 23 of 77 HC-NIC Page 23 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT on the Bank is all pervasive and that the affairs of the Bank are controlled by the State Government though it is functioning as a cooperative society, it is an extended arm of the State and thus an instrumentality of the State or authority as mentioned under Article 12 of the Constitution. In All India Sainik Schools employees' Association v. Defence Minister-cum-Chairman Board of Governors, Sainik Schools Society, New Delhi and others (1989) Supplement 1 SCC 205, this Court held that the Sainik School society is "State" within the meaning of Article 12 of the Constitution after having found that the entire funding is by the State Government and by the Central Government and the overall control vests in the governmental authority and the main object of the society is to run schools and prepare students for the purpose feeding the National Defence Academy.
14. This Court in Executive Committee of Vaish Degree College, Shamli and Others v. Lakshmi Narain and Others (1976) 2 SCC 58, while dealing with the status of the Executive Committee of a Degree College registered under the Co-operative Societies Act, held as follows:
"10.........It seems to us that before an institution can be a statutory body it must be created by or under the statute and owe its existence to a statute. This must be the primary thing which has got to be established. Here a distinction must be made between an institution which is not created by or under a statute but is governed by certain statutory provisions for the proper maintenance and administration of the institution. There have been a number of institutions which though not created by or under any statute have adopted certain statutory provisions, but that by itself is not, in our opinion, sufficient to clothe the institution with a statutory character.........."
15. We can, therefore, draw a clear distinction between a body which is created by a Statute and a body which, after having come into existence, is governed in accordance with the provisions of a Statute. Societies, with which we are concerned, fall under the later category that is governed by the Societies Act and are not statutory bodies, but only body corporate within the meaning of Section 9 of the Kerala Cooperative Societies Act having perpetual succession and common seal and Page 24 of 77 HC-NIC Page 24 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT hence have the power to hold property, enter into contract, institute and defend suites and other legal proceedings and to do all things necessary for the purpose, for which it was constituted. Section 27 of the Societies Act categorically states that the final authority of a society vests in the general body of its members and every society is managed by the managing committee constituted in terms of the bye-laws as provided under Section 28 of the Societies Act. Final authority so far as such types of Societies are concerned, as Statute says, is the general body and not the Registrar of Cooperative Societies or State Government.
16. This Court in Federal Bank Ltd. v. Sagar Thomas and Others (2003) 10 SCC 733, held as follows:
"32.Merely because Reserve Bank of India lays the banking policy in the interest of the banking system or in the interest of monetary stability or sound economic growth having due regard to the interests of the depositors etc. as provided under Section 5(c)(a) of the Banking Regulation Act does not mean that the private companies carrying on the business or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activity in banking and these companies are to act according to these provisions failing which certain consequences follow as indicated in the Act itself. As to the provision regarding acquisition of a banking company by the Government, it may be pointed out that any private property can be acquired by the Government in public interest. It is now a judicially accepted norm that private interest has to give way to the public interest. If a private property is acquired in public interest it does not mean that the party whose property is acquired is performing or discharging any function or duty of public character though it would be so for the acquiring authority".
17. Societies are, of course, subject to the control of the statutory authorities like Registrar, Joint Registrar, the Government, etc. but cannot be said that the State exercises any direct or indirect control over the affairs of the society which is deep and all pervasive. Supervisory or general regulation under the statute over the co- operative societies, which are body corporate does not Page 25 of 77 HC-NIC Page 25 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT render activities of the body so regulated as subject to such control of the State so as to bring it within the meaning of the "State" or instrumentality of the State."
32. At this stage, I may quote with profit a three judge bench decision of the Supreme Court in the case of the Co- Operative Central Bank Ltd., & Ors. vs. The Addl. Industrial Tribunal, Andhra Pradesh & Ors.,1969 (II) SCC
43. It was a case in which an industrial dispute arose between 25 Co-operative Central Banks in the stage of Andhra Pradesh and their workmen represented by the Andhra Pradesh Bank Employees Federation, Hyderabad. It was referred by the Government of Andhra Pradesh to the Industrial Tribunal, Hyderabad, under sec. 10(1)(d) of the Industrial Disputes Act, 1947. The Tribunal and the High Court rejected the plea taken on behalf of the banks and expressed the view that the disputes Actually referred to the tribunal were not capable of being decided by the registrar of the Co-operative Societies under sec. 61 of the Andhra Pradesh Co-operative Societies Act, 1964 and that, therefore, the reference made to the industrial tribunal under the Industrial Disputes Act was competent. In order to appreciate this contention raised on behalf of the banks, the Supreme Court examined, the provisions of secs. 16, 61, 61 and 133 of the Andhra Pradesh Act. It was in that context that the bye-laws of the Co- operative Bank came up for consideration. A contention was raised challenging the jurisdiction of the industrial tribunal to decide the dispute relating to the conditions of service on the ground that the conditions of service were laid down by bye- laws and were therefore, statutory. Therefore, an industrial tribunal was not competent to alter them because it has no jurisdiction to make orders contrary to law. It was contended in Page 26 of 77 HC-NIC Page 26 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT that context on behalf of the banks that the bye-laws, which laid down the conditions service, were themselves law and that, therefore, no direction could be issued by the industrial tribunal, altering those conditions of service because such a direction would be contrary to law and, therefore, illegal. It is in that context that the Supreme Court examined the nature and character of the bye-laws of a co-operative society. This is what has been observed by the Supreme Court in that behalf.
"We are unable to accept the submission that the bye- laws of a co-operative society framed in pursuance of the provisions of the Act can be held to be law or to have the force of law. It has no doubt been held that, if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute. That principle, however, does not apply to bye- laws of the nature that a co-operative society is empowered by the Act to make. The bye-laws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They may be binding between the persons affected by them, but they do not have the force of a statute. In respect of bye-laws laying down conditions of service of the employees of a society, the bye-laws would be binding between the society and the employees just in the same manner as conditions of service laid down by contract between the parties. In fact, after such bye-laws laying down the conditions of service are made and any person enters the employment of a society those conditions of service will have to be treated as conditions accepted by the employee when entering the service and will thus bind him like conditions of service specifically forming part of the contract of service. The bye-laws that can be framed by a society under the Act are similar in nature to the articles of association of a company incorporated under the companies Act and such articles of association have never been held to have the force of law. In a number of cases conditions of service for industries are laid down by standing orders certified under the industrial Page 27 of 77 HC-NIC Page 27 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT employment (standing orders) Act, 1946, and it has been held that, though such standing orders are binding between the employers and the employees of the industry governed by these standing orders, they not have such force of law as to be binding on industrial tribunal adjudicating an industrial dispute,"
33. Thus, it is clear from the above referred decision that the certified standing orders do not have force of a statute and like the bye-laws of a society or articles of association of a company, they constitute a contract between the parties.
34. The five decisions of the Supreme Court, on which strong reliance has been placed by Mr. Raval to fortify his submission that the certified standing orders or the model standing orders have statutory force, were considered by a bench of three judges of the Supreme Court in the case of Rajasthan State Road Transport Corporation & Anr. Vs. Krishna Kant & Ors., 1995 (5) SCC 1715. In this case, pursuant to the disciplinary inquiries held against the respondents therein on the charges of misconduct, their services were terminated. The respondents filed civil suits for a declaration that the order, terminating their services was illegal and invalid and for a further declaration that they must be deemed to have continued and were still continuing in the service of the corporation with all consequential benefits. The Corporation resisted the suits on the ground, inter alia, that the civil court had no jurisdiction to entertain the suits. The Trial Court decreed the suits as prayed for. The appeals as also the second appeals preferred by the Corporation were dismissed by the District Judge and High Court respectively. The precise question before the Supreme Court was whether a suit of such a nature was maintainable in a civil court. The Corporation said Page 28 of 77 HC-NIC Page 28 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT that it was not maintainable and the only remedy was to approach the Labour Court for the reliefs sought for by them in the suit. The Supreme Court, while holding that the suits were not maintainable in law, observed in paras-12 to 17, as under;
"12. With a view to clear the ground, we may deal with these two issues debated before us at some length. The first one relates to the nature and character of the certified Standing Orders. We may indicate the relevance of this discussion. Sri Jitender Sharma, learned counsel for respondents-workmen submits that the certified Standing Orders have statutory force and their violation enables the Civil Court to decree reinstatement in service and that bar of Section 14 of the Specific Relief Act does not operate in such a case. He relies upon the holding in Sukhdev Singh v. Bhagat Ram (1975 (3) S.C.R.618). The appellant's counsel, however, dispute this proposition. Bereft of authority, we find it difficult to agree with Sri Sharma. The certified Standing Orders are not in the nature of delegated/subordinate legislation. It is true that the Act makes it obligatory upon the employer (of an industrial establishment to which the Act applies or is made applicable) to submit draft Standing Orders providing for the several matters prescribed in the Schedule to the Act and it also provides the procedure - inter alia, the certifying officer has to examine their fairness and reasonableness - for certification thereof. Yet it must be noted that these are conditions of service framed by the employer - the employer may be a private corporation, a firm or an individual and not necessarily a statutory Corporation- which are approved/certified by the prescribed statutory authority, after hearing the concerned workmen. The Act does not say that on such certification, the Standing Orders acquire statutory effect or become part of the statute. It can certainly not be suggested that by virtue of certification, they get metamorphosed into delegated/subordinate legislation. Though these Standing Orders are undoubtedly binding upon both the employer and the employees and constitute the conditions of service of the employees, it appears difficult to say, on principle, that they have statutory force. The decisions of this Court, however, read differently though some dissonance is to be found among them. In Baqalkot Cement Co.Ltd. V. R.K.Pathan & Page 29 of 77 HC-NIC Page 29 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Ors. (1962 Suppl.(2) S.C.R.697), the question was whether the certifying officer had the power to add a condition prescribing the procedure for applying for leave and the authority competent to sanction it. The Court held that the officer did possess such a power. In that connection, Gajendragadkar, J. speaking for the Bench, referred to the object and scheme of the enactment and observed:
"That is why the Legislature took the view that in regard to industrial establishments to which the Act applied, the conditions of employment subject to which industrial labour was employed, should be well-defined and should be precisely known to both the parties. With that object, the Act has made relevant provisions for making Standing Orders which, after they are certified, constitute the statutory terms of employment between the industrial establishments in question and their employees. That is the principal object of the Act."
17. It is evident from a perusal of the above decisions that while the first decision referred to the certified Standing Orders as constituting " the statutory terms of employment". they were described as "conditions of service in a statutory form" and as "binding on the parties at least as much, if not more, as private contracts embodying similar terms and conditions of service" in the second decision. The third decision, reiterated the holding in the first decision. So far as the two last- mentioned decisions are concerned, it is obvious, they only purport to set out the purport of the earlier decisions. Vaidialingam,J. used the very expression "part of the statutory terms and conditions of service", while K.Ramaswamy,J. stated more emphatically that "certified standing orders have statutory force". It must, however, be said that in the decision rendered by Ramaswamy,J., the question as to the nature and character of the certified Standing Orders did not arise for consideration; the said observation was made in another context. The concensus of these decisions is: the certified Standing Orders constitute statutory terms and conditions of service. Though we have some reservations as to the basis of the above dicta as pointed out supra, we respectfully accept it both on the ground of stare decisis as well as judicial discipline. Even so, we are unable to say that they constitue "statutory provisions" within the Page 30 of 77 HC-NIC Page 30 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT meaning of the dicta in Sukhdev Singh where it was held:
"(T)he employees of these statutory bodies have a statutory status and they are entitled to declaration of being in employment when their dismissal or removal is in contravention of statutory provisions". Indeed, if it is held that certified Standing Orders constitute statutory provisions or have statutory force, a writ petition would also lie for their enforcement just as in the case of violation of the Rules made under the proviso to Article 309 of the Constitution. Neither a suit would be necessary nor a reference under Industrial Disputes Act.
We do not think the certified Standing Orders can be elevated to that status. It is one thing to say that they are statutorily imposed conditions of service and an altogether different thing to say that they constitute statutory provisions themselves.
So far as the meaning and ambit of Section 13-A of the Standing Orders Act is concerned, a good amount of debate took place before us. Certain decisions of the High Courts have also been brought to our notice. The Section provides that "if any question arises as to the application or interpretation of a Standing Order certified under this Act," any employer or workman or their union may refer the question to " the Labour Court constituted under the Industrial Disputes Act, 1947 and specified for the disposal of such proceedings by the appropriate Government by notification in the official gazette". The determination of the Labour Court is made final and binding on the parties. The contention of Sri Altaf Ahmed, learned Additional Solicitor General is that any and every violation of Standing Order entitles the workman to appoach the Labour Court directly under this provision and obtain relief. He submits that the Labour Court is empowered under this provision to adjudicate disputes between workmen and employer arising from the certified Standing Orders and grant such relief as is appropriate in the circumstances of the case. We are afraid, we cannot give effect to this submission. Acceptance of the said submission would mean that Section 13-A creates a parallel forum for adjudication of the very questions which the Labour Court or the Industrial Tribunal has been empowered to adjudicate under the Industrial Disputes Act and that too without the requirement of a reference by the Government. While we agree that language of Section 13-A is not very clear, it Page 31 of 77 HC-NIC Page 31 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT cannot certainly be understood as creating a forum for adjudication of industrial disputes involving the application and/or interpretation of the Standing Orders. That is the function of the Courts and Tribunals constituted under the Industrial Disputes Act. The limited purpose of Section 13-A is to provide a forum for determination of any question arising "as to the application or interpretation" of the certified Standing Orders as such, in case either the employer or the employee(s) entertain a doubt as to their meaning or their applicability. Probably it was thought that a decision of the appointed forum on the said question would itself facilitate the resolution of an industrial dispute, whether existing or apprehended. So far as the Labour Court, Industrial Tribunal or other adjudicatory bodies under the Industrial Disputes Act are concerned, it is agreed on hands - and we endorse it - that where a dispute is referred to any of them they are undoubtedly competent to go into and decide questions as to the application or interpretation of the certified Standing Orders insofar as they are necessary for a proper adjudication of the question or dispute referred.
The scope of "Industrial Dispute".
35. The Supreme Court, after considering all the five judgments relied upon by Mr. Raval, took the view that the certified standing orders cannot be elevated to the status of having statutory force. The observations in para-17, the emphasis on which is supplied, makes it abundantly clear that a writ petition would not lie for the enforcement of the certified standing orders.
36. Relying on the aforesaid decision of the Supreme Court in the case of R.S. R.T.C. & Ors. vs. Deen Dayal Sharma, AIR 2010 SC 2662, a Division Bench of the Supreme Court, once again reiterated that the standing orders have no statutory force and are not in the nature of delegated/subordinate legislation. The observations in para-14 are relevant. Those are Page 32 of 77 HC-NIC Page 32 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT elicited as under;
"14. The case of the respondent as set up in the plaint, therefore, is that in the absence of departmental enquiry as contemplated in Standing Orders, the order of dismissal is bad in law. It is true that respondent pleaded that he has been dismissed from service without affording any opportunity of defence and hearing and in breach of principles of natural justice but the said plea has to be understood in the backdrop of his pleading that the dismissal order has been passed contrary to Standing Orders without holding any departmental enquiry. The legal position that Standing Orders have no statutory force and are not in the nature of delegated / subordinate legislation is clearly stated by this Court in Krishna Kant2. In that case (Krishna Kant2), this Court while summarizing the legal principles in paragraph 35(6) stated that the certified Standing Orders framed under and in accordance with the Industrial Employment (Standing Orders) Act, 1946 are statutorily imposed conditions of service and are binding both upon the employers and employees, though they do not amount to 'statutory provisions' and any violation of these Standing Orders entitles an employee to appropriate relief either before the forum created by the Industrial Disputes Act or the civil court where recourse to civil court is open according to the principles indicated therein."
37. The next important judgment of the Supreme Court, in my view, is the one in the case of S.S. Rana (supra). In this case, the petitioner was working as a Branch Manager in the Kangra Central Co-operative Bank Ltd. A disciplinary proceeding was initiated against him purporting to be in terms of rule 56(B) of the Kangra Central Co-operative Bank Employees (Terms of Employment and Working Conditions) Rules, 1980 read with section 35-B(4) of the Himachal Pradesh Co-operative Societies Act, 1968. He was found guilty therein. The Managing Director of the society, by an order dated 18.11.1993, terminated his services purported to be in Page 33 of 77 HC-NIC Page 33 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT exercise of his power under rule 2(p) of the appendix 1(a) of the Rules. The appellant preferred an appeal against the said order, terminating his services before the Administrator. In a writ petition, a Division Bench of the High Court held against the petitioner on the ground that the petition was not maintainable. The Division Bench, accordingly, dismissed the writ petition. The Himachal Pradesh Co-operative Societies Rules, 1971 have been framed in pursuance of the power conferred by the Himachal Pradesh Co-operative Societies Act, 1968. Rule 56, Clause (5), inter alia, contain a provision by which the Registrar could direct the committee of a society pending an investigation into the conduct of an officer or servant of the society into an obligation of grave misdemeanor to place such a person under suspension. The Supreme Court held that the society had not been constituted under an Act. The state had no role in the functions of the society. Adverting to the provisions of rule 56, the Supreme Court noted that though the terms and conditions of an officer of the Co- operative Societies are governed by the rules, yet rule 56 did not contain any provision in terms whereof any legal right as such is conferred upon an officer of the society. Moreover, it was held that the State does not have a deep and pervasive control over the society and general regulations under an Act, such as the Companies Act or the Co-operative Societies Act, wold not render the activities of the company or the society as subject to the control of the State.
38. The decision in S.S. Rana (supra), therefore, involved a situation where neither was a society created under the statute nor was it established before the Supreme Court that the termination was in violation of the mandatory provisions of Page 34 of 77 HC-NIC Page 34 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT the act or the rules framed under it. While upholding the decision of the High Court that the writ petition could not be maintainable, the Supreme Court, observed as under;
"9. It is not in dispute that the Society has not been constituted under an Act. Its functions like any other Co- operative Society are mainly regulated in terms of the provisions of the Act, except as provided in the bye-laws of the Society. The State has no say in the functions of the Society. Membership, acquisition of shares and all other matters are governed by the bye-laws framed under the Act. The terms and conditions of an officer of the Co-operative Society, indisputably, are governed by the Rules. Rule 56, to which reference has been made by Mr. Vijay Kumar, does not contain any provision in terms whereof any legal right as such is conferred upon an officer of the Society.
10. It has not been shown before us that the State exercises any direct or indirect control over the affairs of the Society for deep and pervasive control. The State furthermore is not the majority shareholder. The State has the power only to nominate one director. It cannot, thus, be said that the State exercises any functional control over the affairs of the Society in the sense that the majority directors are nominated by the State. For arriving at the conclusion that the State has a deep and pervasive control over the Society, several other relevant questions are required to be considered, namely: (1) How the Society was created?; (2) Whether it enjoys any monopoly character?; (3) Do the functions of the Society partake to statutory functions or public functions?; and (4) Can it be characterized as public Authority?
11. The respondent No.1-Society does not answer any of the aforementioned tests. In the case of a non-
statutory society, the control thereover would mean that the same satisfies the tests laid down by this Court in Ajay Hasia vs. Khalid Mujib Sehravardi [(1981) 1 SCC 722]. [See Zoroastrian Coop. Housing Society Ltd. vs. District Registrar, Coop. Societies (Urban) & Ors. reported in 2005 (5) SCC 632.]
12. It is well settled that general regulations under an Page 35 of 77 HC-NIC Page 35 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Act, like Companies Act or the Co-operative Societies Act, would not render the activities of a company or a society as subject to control of the State. Such control in terms of the provisions of the Act are meant to ensure proper functioning of the Society and the State or statutory authorities would have nothing to do with its day-to-day functions.
13. The decision of the Seven Judge Bench of this Court in Pradeep Kumar Biswas (supra), whereupon strong reliance has been placed, has no application in the instant case. In that case, the Bench was deciding a question as to whether in view of the subsequent decisions of this Court, the law was correctly laid down in Sabajit Tewary vs. Union of India & Ors. [(1975) 1 SCC 485], and it not whether the same deserved to be overruled. The majority opined that the Council of Scientific and Industrial Research (CSIR) was a 'State' within the meaning of Article 12 of the Constitution of India. This Court noticed the history of the formation thereof, its objects and functions, its management and control as also the extent of financial aid received by it. Apart from the said fact it was noticed by reason of an appropriate notification issued by the Central Government that CSIR was amenable to the jurisdiction of the Central Administrative Tribunal in terms of Section 14(2) of the Administrative Tribunals Act, 1985. It was on the aforementioned premises this Court opined that Sabhajit Tewary (supra) did not lay down the correct law. This Court reiterated the following six tests laid down in Ajay Hasia vs. Khalid Mujib Sehravardi [(1981) 1 SCC 722]:
"(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 relevant factor \005..whether the corporation enjoys monopoly status which is State conferred or State protected.Page 36 of 77
HC-NIC Page 36 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT (4) Existence of deep and pervasive State control may afford an indication that the corporationis a State agency or instrumentality.
(5) If the functions of the corporation are 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.
(6) 'Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government."
This Court further held:
"This picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State."
(Emphasis supplied)
14. As the respondent No.1 does not satisfy any of the tests laid down in Pradeep Kumar Biswas (supra), we are of the opinion that the High Court cannot be said to have commtted any error in arriving at a finding that the respondent-Bank is not a State within the meaning of Article 12 of the Constitution of India.
15. We are, however, not oblivious of a three judge Bench decision in Gayatri De vs. Mousumi Cooperative Housing Society Ltd. & Ors. [(2004) 5 SCC 90], wherein this Court held a writ petition to be maintainable against Page 37 of 77 HC-NIC Page 37 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT the cooperative society only stating:
"We have, in paragraphs supra, considered the judgments for and against on the question of maintainability of writ petition. The judgments cited by the learned Senior Counsel appearing for the respondents are distinguishable on facts and on law. Those cases are not cases covered by the appointment of a Special Officer to manage the administration of the Society and its affairs. In the instant case, the Special Officer was appointed by the High Court to discharge the functions of the Society, therefore, he should be regarded as a public authority and hence, the writ petition is maintainable."
The said decision, therefore, is of no assistance to us.
16. Our attention has also been drawn to U.P. State Cooperative Land development Bank Ltd. vs. Chandra Bhan Dubey & Ors. [(1999) 1 SCC 741], wherein the writ petition was held to be maintainable principally on the ground that it had been created under an Act. Reliance has also been placed upon Ram Sahan Rai vs. Sachiv Samanaya Prabandhak & Anr. [(2001) 3 SCC 323], wherein again the appellant thus was recruited in a Society constituted under the U.P. Cooperative Land Development Bank Act, 1964 and this Court, having examined different provisions of rules, bye-laws and regulations, was of the firm opinion that the State Government exercised all-pervasive control over the Bank and moreover its employees were governed by statutory rules, prescribing an entire gamut of procedure of initiation of disciplinary proceedings by framing a set of charges culminating in inflicting of appropriate punishment, after complying with the requirements of giving a show-cause and an opportunity of hearing to the delinquent.
17. It is, therefore, evident that in Ram Sahan Rai (supra) also the cooperative society was held to be established under a statute. We may notice that in Nayagarh Cooperative Central Bank Ltd. & Anr. vs. Narayan Rath & Anr. [(1977) 3 SCC 576], this Court was of the opinion that:
"The High Court has dealt with the question whether a writ petition can be maintained against a cooperative Page 38 of 77 HC-NIC Page 38 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT society, but we are inclined to the view that the observations made by the High Court and its decision that such a writ petition is maintainable are not strictly in accordance with the decisions of this Court. We would have liked to go into the question for ourselves, but it is unnecessary to do so as Respondent 1 by his writ petition, was asking for relief not really against a cooperative society but in regard to the order which was passed by the Registrar, who was acting as a statutory authority in the purported exercise of powers conferred on him by the Cooperative Societies Act. The writ petition was in that view maintainable."
18. We may notice in some decisions, some High Courts have held wherein that a writ petition would be maintainable against a society if it is demonstrated that any mandatory provision of the Act or the rules framed thereunder, have been violated by it. [See Bholanath Roy & Ors. vs. State of West Bengal & Ors. reported in (1996) Vol.1 Calcutta Law Journal 502.]
19. The Society has not been created under any statute. It has not been shown before that in terminating the services of the appellant, the Respondent has violated any mandatory provisions of the Act or the rules framed thereunder. In fact, in the writ petition no such case was made out.
20. For the foregoing reasons, the appeal being devoid of any merit is dismissed. However in the facts and circumstances of the case, there shall be no order as to costs."
39. So far as the case in hand is concerned, the society could not be said to have been constituted under the Act, more particularly, having regard to the definition of the "co- operative bank" as provided in section 2(7) . It could also not be said that the action of the Bank in terminating the services of the writ applicants, was in violation of any statutory provisions of law or the rules. In that regard, the society herein cannot be called a public body. It has no duty towards the Page 39 of 77 HC-NIC Page 39 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT 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 member of public. The binding nature of its orders and actions is confined to its members and to its employees. Even if It is a statutory body its relations with its employees are not governed by a statute. Its functions are also not akin to the governmental functions nor is it a case where it can be said that the reality behind the society is the executive power of the society. Moreover, even if for some distant reason it can be characterized as a public body, the contract of service between each of the writ applicants cannot be treated as belonging to "public law" field. It is a power and simple contract and there is no statutory provision regulating, subscribing and governing the said relationship.
40. The Decision of this Court in the case of A.M. Bhutaiya (supra) will not be of any help to the writ applicants because it appears that the attention of his lordship was not invited to the decision of the Supreme Court in the case of the Co-operative Central Bank Ltd. & Ors. (supra) referred to above.
41. The Industrial Disputes Act, 1947 is a self-contained code. The rights of a workman arise under the said act. The said act also provides forums for adjudicating upon the disputes, inter alia, in relation to dismissal, discharge or removal from the service. In view of several decisions of the Supreme Court, it is now well settled that even if an order of dismissal or termination passed by the employer is found to be illegal/invalid, having been passed in violation of the provisions of the certified standing orders, or without complying with the principles of natural justice, or by an authority having no Page 40 of 77 HC-NIC Page 40 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT jurisdiction in such matters, the High Court should decline to entertain the writ application under Articles 226/227 of the Constitution of India.
42. In U.P. State Bridge Corpn. Ltd (supra), the Corporation had undertaken a work at Betwa Bridge Jhansi. Certain workmen did not report for duty. A notice was published by the corporation that those workmen who continuously absents fro more than 10 days of their service be terminated according to certified standing orders of the Corporation. Services of one workman was terminated. He filed writ petition in this High Court. The writ petition was dismissed that the workman could raise an industrial dispute if he so desired. The Supreme Court, in the said case, in paras-11 and 12, observed as under;
"11. We are of the firm opinion that the High Court erred in entertaining the writ petition of the respondent-Union at all. The dispute was an industrial dispute both within the meaning of the Industrial Disputes Act, 1947 as well the UPIDA, 1947. The rights and obligations sought to be enforced by the respondent-Union in the writ petition are those created by the Industrial Disputes Act. In The Premier Automobiles Ltd. V. Kemlekar Shantaram Wadke 1976 (1) SCC 496, it was held that when the dispute relates to the enforcement of a right or an obligation created under the Act, then the only remedy available to the claimant is to get adjudication under the Act. This was because the Industrial Disputes Act was made to provide "a speedy, inexpensive and effective forum for resolution of disputes arising between workmen and their employers. The idea has been to ensure that the workmen do not get caught in the labyrinth of civil courts with their layers upon layers of appeals and revisions and the elaborate procedural laws, which the workmen can ill afford. The procedure followed by civil courts, it was Page 41 of 77 HC-NIC Page 41 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT thought, would not facilitate a prompt and effective disposal of these disputes. As against this, the courts and tribunals created by the Industrial Disputes Act are not shackled by these procedural laws nor is their award subject to any appeals or revisions. Because of their informality, the workmen and their representatives can themselves prosecute or defend their cases. These forums are empowered to grant such relief as they think just and appropriate. They can even substitute the punishment in many cases. They can make and re-make the contracts, settlement, wage structures and what not. Their awards are no doubt amenable to jurisdiction of the High Court under Article 226 as also to the jurisdiction of this Court under Article 32, but they are extraordinary remedies subject to several self-imposed constraints. It is, therefore, always in the interest of the workmen that disputes concerning them are adjudicated in the forums created by the Act and not in a civil court. That is the entire policy underlying the vast array of enactments concerning workmen. This legislative policy and intendment should necessarily weigh with the courts in interpreting these enactments and the disputes arising under them".
12. Although these observations were made in the context of the jurisdiction of the Civil Court to entertain the proceedings relating to an industrial dispute and may not be read as a limitation on the Court's powers under Article 226, nevertheless it would need a very strong case indeed for the High Court to deviate from the principle that where a specific remedy is given by the statute, the person who insists upon such remedy can avail of the process as provided in that statute and in no other manner.
43. In Hindustan Steel Works Construction (supra), an appeal was filed by the Company challenging the judgment of the Andhra Pradesh High Court by which the writ petition was allowed challenging the withdrawal of construction allowances to the workmen. The employer raised objection that the writ petition could not have been entertained, since remedy of the workmen was to raise an industrial dispute. The following was Page 42 of 77 HC-NIC Page 42 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT said in paras-8 and 9 of the said judgment.
"8. In U.P. State Bridge Corporation Ltd. and Ors. v. U.P. Rajya Setu Nigam S. Karamchari Sangh (2004 (4) SCC
268), it was held that when the dispute relates to enforcement of a right or obligation under the statute and specific remedy is, therefore, provided under the statute, the High Court should not deviate from the general view and interfere under Article 226 except when a very strong case is made out for making a departure.
The person who insists upon such remedy can avail of the process as provided under the statute. To same effect are the decisions in Premier Automobiles Ltd. v. Kamlekar Shantarum Wadke (1976 (1) SCC 496), Rajasthan SRTC v. Krishna Kant (1995 (5) SCC 75), Chandrakant Tukaram Nikam v. Muncipal Corporation of Ahmedabad and Anr. (2002) (2) SCC 542) and in Scooters India and Ors. v. Vijai V. Eldred (1998 (6) SCC 549).
9. In Rajasthan SRTC case it was observed as follows.
"A speedy, inexpensive and effective forum for resolution of disputes arising between workmen and their employers. The idea has been to ensure that the workmen do not get caught in the labyrinth of civil courts with their layers upon layers of appeals and revisions and the elaborate procedural laws, which the workmen can ill afford. The procedure followed by civil courts, it was thought, would not facilitate a prompt and effective disposal of these disputes. As against this, the courts and tribunals created by the Industrial Disputes Act are not shackled by these procedural laws nor is their award subject to any appeals or revisions. Because of their informality, the workmen and their representatives can themselves prosecute or defend their cases. These forums are empowered to grant such relief as they think just and appropriate. They can even substitute the punishment in many cases. They can make and re-make the contracts, settlement, wage structures and what not. Their awards are no doubt amenable to jurisdiction of the High Court under Article 226 as also to the jurisdiction of this Court under Article 32, but they are extraordinary remedies subject to several self-imposed constraints. It is, therefore, always in the interest of the workmen that Page 43 of 77 HC-NIC Page 43 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT disputes concerning them are adjudicated in the forums created by the Act and not in a civil court. That is the entire policy underlying the vast array of enactments concerning workmen. This legislative policy and intendment should necessarily weigh with the courts in interpreting these enactments and the disputes arising under them". "
44. In S.P. State Spining Co. Ltd. (supra), a workmen filed a writ petition challenging the termination order. The writ petition was allowed on the ground that services were terminated in violation of the principles of natural justice. Before the Apex Court the Company submitted that the High Court ought not to have entertained the writ petition when there being alternate remedy available. The Supreme Court, in the said case, observed in paras-16, 17 and 20 as under;
"16. If, as was noted in Ram and Shyam Co. v. State of Haryana and Ors., AIR (1985) SC 1147 the appeal is from "Caeser to Caeser's wife" the existence of alternative remedy would be a mirage and an exercise in futility. In the instant case the writ petitioners had indicated the reasons as to why they thought that the alternative remedy would not be efficacious. Though the High Court did not go into that plea relating to bias in detail, yet it felt that alternative remedy would not be a bar to entertain the writ petition. Since the High Court has elaborately dealt with the question as to why the statutory remedy available was not efficacious, it would not be proper for this Court to consider the question again. When the High Court had entertained a writ petition notwithstanding existence of an alternative remedy this Court while dealing with the matter in an appeal should not permit the question to be raised unless the High Court's reasoning for entertaining the writ petition is found to be palpably unsound and irrational. Similar view was expressed by this Court in First Income- Tax Officer, Salem v. M/s. Short Brothers (P) Ltd., [1966] 3 SCR 84 and State of U.P. and Ors. v. M/s. Indian Hume Pipe Co. Ltd., [1977] 2 SCC 724. That being the position, Page 44 of 77 HC-NIC Page 44 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT we do not consider the High Court's judgment to be vulnerable on the ground that alternative remedy was not availed. There are two well recognized exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in violation of the principles of natural justice. We may add that where the proceedings itself are an abuse of process of law the High Court in an appropriate case can entertain a writ petition.
17. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. It was noted by this Court in L. Hirday Narain v. Income Tax Officer, Bareilly AIR (1971) SC 33 that if the High Court had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable for the High Court to dismiss the same on the ground of non exhaustion of statutory remedies; unless the High Court finds that factual disputes are involved and it would not be desirable to deal with them in a writ petition.
20. In a catena of decisions it has been held that writ petition under Article 226 of the Constitution should not be entertained when the statutory remedy is available under the Act, unless exceptional circumstances are made out."
45. The above referred three decisions lay down a proposition of law that a writ petition under Article 226 of the Page 45 of 77 HC-NIC Page 45 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Constitution of India should not be entertained when the statutory remedy is available under the Act unless exceptional circumstances are made out.
46. In view of the aforesaid discussion, at least one thing is clear that the writ applications could not be said to be maintainable only on the ground that the model standing orders framed under the BIR Act, 1946 have been violated.
47. The matter does not rest overhear and the facts of this litigation are such that I must carry it to its logical end. As observed by me earlier, the genesis of this litigation lies in the Special Civil Application No.1030 of 2010. I have also taken note of the interim order passed by this Court dated 10 th February, 2010 in the Special Civil Application No.1030 of 2010. The subject matter of challenge in the Special Civil Application No.1030 of 2010 is the order passed by the Registrar, Co-operative Societies dated 29th January, 2010, terminating the services of the writ applicants on the ground that their initial appointments were illegal. Such order of termination was passed by the Registrar, Co-operative Societies in the purported exercise of power under section 160 of the Gujarat Co-operative Societies Act as evident from the impugned order itself. The common order dated 29th January, 2010 passed by the Registrar, Co-operative Societies, in exercise of its power under section 160 of the Gujarat Co- operative Societies Act was pursuant to an order passed by this Court in a public interest litigation. Let me give a fair idea about the same. Three writ applications were filed before the Court being the Special Civil Applications Nos.1469 of 2000, 5435 of 2001 and 2944 of 2001 respectively, seeking Page 46 of 77 HC-NIC Page 46 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT appropriate action as regards the alleged illegal appointments of the writ applicants in the Bank. The three writ applications, in the nature of public interest litigation, came to be disposed of in the following terms;
"Common question is involved in all three writ petitions for our consideration. Main relief sought for in Special Civil Application No.1469 of 2000 is for directions to the respondent Nos.1 and 2 to take immediate actions against respondent Nos.3 to 5 authority under various provisions of Gujarat Co-operative Societies Activities for taking appropriate actions against the private respondents who have been appointed not following the due procedure of recruitment rules.
Reference was made to the report of the Joint Registrar which according to the petitioners the bank has committed many irregularities in the matter of appointment of contesting respondents. Reference was also made to the letters of the Joint Registrar addressed to the Chairman and Manager of the Bank to take appropriate actions on the basis of his report.
Learned AGP also made reference to the counter-affidavit filed by the respondent No.2 District Registrar, Co- operative Societies, especially, para-7 of the affidavit referring the letters dated 17.08.2000 and 01.09.2000 and also stated that they have filed separate counter affidavit in other two writ petitions.
Considering the averments, contentions and submissions raised in the writ petitions, we leave it to the authority to act in accordance with law, especially, strictly in accordance with provisions of the Gujarat Co-operative Societies Act. Since the matters are pending before this Court for number of years, respondent-State Authority to take appropriate actions within three months from the date of receipt of copy of this order with notice to the affected parties. We make it clear that we express no opinion on the merits of the case.
We record that the respondent No.3 of Special Civil Application No.1469 of 2000 is no more and respondent Page 47 of 77 HC-NIC Page 47 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Nos.4, 5 and 6 have retired.
With the aforesaid observations and direction, all three Special Civil Applications stand disposed of. "
48. Relying on the aforesaid order passed by this Court, the Registrar, Co-operative Societies, with undue haste and non- application of mind, proceeded to pass the order dated 29th January, 2010, terminating the services of the writ applicants after a formal inquiry in that regard. I am told that in the inquiry conducted by the Registrar, Co-operative Societies, the writ applicants were heard and, thereafter, the order was passed.
49. A question that falls for my consideration is whether the Registrar had the power or the authority to pass the impugned order in exercise of his power under section 160 of the Gujarat Co-operative Societies Act, declaring the appointments of the writ applicants, made decades back, as illegal and terminating their services.
50. Answering the aforesaid question should not be a problem as the same has been answered by this Court in the case of Parmar Dipubhai & Ors. vs. A co-operative Societies, 2006 (2) GLH 659. In the said case, the challenge was to the order passed by the Registrar, terminating the services of 161 employees on the ground that their appointments in the Society registered under the provisions of the Gujarat Co-operative Hosing Societies Act, 1969 were illegal and liable to be terminated. This Court, while explaining the true purport of section 160 of the Act, 1961 and the powers of the Registrar, observed as under;
Page 48 of 77
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"31. Though in affidavit filed by Deputy Registrar on behalf of respondent No.1, it is clearly stated that the order is not passed under section 160 of the Act, reliance thereon has been placed. Since reliance is placed thereon, it is required to be appreciated. Section 160 gives power to Registrar to issue direction to society if Registrar, of his own motion or otherwise is satisfied that
(i) in public interest or (ii) for the purpose of securing proper implementation of cooperation production and other development progress approved or undertaken by the State Government or (iii) linking coordinating of cooperative activities such as marketing and credit or (iv) for securing proper management or business of the society or (v) for preventing affairs of the society being conducted in a manner detrimental to the interests of the members or of the depositors or creditors thereof. Relevant section 160 of the Act is reproduced as under:
"160.Registrar's power to give direction.-(1) If the Registrar of his own motion or otherwise is satisfied that in public interest or for the purposes of securing the proper implementation of co-operative production and other development programmes approved or undertaken by the State Government or for linking and co-ordinating of co-operative activities such as marketing and credit or securing the proper management of the business of the society generally or preventing the affairs of the society being conducted in a manner detrimental to the interest of the members, or of the depositors or the creditors thereof, it is necessary to issue directions to any class of societies generally or to any society or societies in particular, he may issue directions to them, from time to time, and all societies or the society concerned, as the case may be, shall be bound to comply with such directions.
(2) The Registrar may of his own motion or otherwise modify or cancel any directions issued under sub-section (1), and in modifying or cancelling such directions he may impose such conditions as he may deem fit.
(3) Where the Registrar is satisfied that any committee or, as the case may be, a general body of any society, whose duty it was to comply with any directions issued or Page 49 of 77 HC-NIC Page 49 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT modified as aforesaid, has failed, without any reasonable or sufficient cause, to comply with such directions, the Registrar may exercise the powers conferred on him under sub-section (1) of section 81 or, as the case may be, under sub-section (1) of section 107.
(4) Where the Registrar is satisfied that any person, whose duty it was to comply with any directions issued or modified as aforesaid, has failed without any reasonable or sufficient cause, to comply with such directions, the Registrar may, by an order in writing,-
(a) if such failure is committed by a member of the committee of the society in his capacity as a member of such committee, remove him as a member from the committee and appoint any other person as a member of the committee in his place for the remainder of the term of his office;
(b) if such failure is committed by a member of the society not falling under clause (a), remove him as a member of the society:
(c) if such failure is, committed by an employee of the society, direct the society to remove such employee from employment of the society forth-with and if the society fails, without reasonable or sufficient cause to take action in pursuance of such direction, make an order removing such person from employment of the society and thereupon such person shall be deemed to have been removed by the society:
Provided that, before making any order under this sub- section, the Registrar shall give or cause to be given a reasonable opportunity to the person concerned to show cause against the action proposed to be taken in regard to him."
32. Validity of section 160 of the Act has been considered by the Division Bench of this Court in Amreli District Cooperative Sale and Purchase Union (Supra). Relevant observations made by the Division Bench in para 86 at page 1319 of judgment are reproduced as under:
Page 50 of 77HC-NIC Page 50 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT "86. In our opinion the consequences prescribed for non-compliance of the directions amount to unreasonable restrictions which cannot be justified on the ground of public interest. The reasons are obvious. We have not been able to appreciate in the first place the mischief ensuing as a result of the old sec.160 as pleaded by the State Government. The old section insofar as it provided an obligation of obtaining prior approval of the State Co-
operative Council was a very healthy and a necessary safeguard against the power of the Registrar of issuing directions becoming too arbitrary and subjective. The additional ground for exercise of the power namely public interest or the prejudicial management of the affairs of the society are terms of uncertain import. The inbuilt check which was prescribed in the original sec.160 was required to be removed because according to the State Government the State Co-operative Council could not be constituted on account of political changes or President's Rules or its permission could not be obtained within reasonable time. This is to say mildly an apology of justification. The inaction on the part of the authorities to constitute Council due to political changes or President's Rules or delay in obtaining its approval can hardly be said to be a mischief ensuing as a result of any lacuna in the old section. The difficulties, if there were any, ensuing as a result of abrupt transfer of political powers or the necessity of President's Rule cannot be said to be mischievous reason out of any inherent lacuna in the section or as a result of working thereof. The extent of the consequences ensuing as a result of the remedy which has been provided now in the new section is too far reaching and that too without any opportunity of hearing to the aggrieved society or a persons concerned. Merely because the Registrar has a power to modify his directions can hardly be said to be a substitute for the opportunity of hearing before the power is exercised. We must, therefore, hold that the consequences prescribed in sub-sec. (3) and Page 51 of 77 HC-NIC Page 51 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT (4) make the entire power an unreasonable restriction on the fundamental right to carry on business or trade. We must, therefore, hold that sub-secs. (3) and (4) should be held to ultra vires Art.19(1)(g) of the Constitution and must be quashed and set aside."
33 Thus, as per the observations made by Division Bench of this Court in aforesaid decision, consequences prescribed in sub section (3) and (4) make entire power unreasonable restriction on the fundamental right to carry on business or trade. It means entire power of Registrar under section 160 of the Act has been treated as unreasonable restriction.
34 In view of the above observations of the Division Bench , considering entire power of Registrar under section 160 as unreasonable and to held ultra vires section 160(3) and (4), then, what further remains in the powers of the Registrar under section 160 of the Act ? When Registrar exercised powers under section 160 and he has no right to take any action for non compliance against society, then, such powers become redundant and no legal value could be attached to such power and such powers become formal or meaningless.
35. 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 Page 52 of 77 HC-NIC Page 52 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT 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 or 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, Page 53 of 77 HC-NIC Page 53 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT 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.
36 Now, there is another provision in the Societies Act which is giving power to Registrar to decide disputes touching constitution, management or business of society that it shall be referred to in the prescribed form either by any of the parties to dispute or by federal society to which the society is affiliated or by a creditor of the society, therefore, under section 96, if any dispute touching constitution, management or business of the society, then, it shall have to be referred to the Registrar by an aggrieved party and Registrar is having jurisdiction to decide disputes under section 96 of the Societies Act, 1961. Section 96 of the Act is reproduced as under:
"Section 96. Disputes.(1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, management or business of a society shall be referred in the prescribed form either by Page 54 of 77 HC-NIC Page 54 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT any of the parties to the dispute, or by a federal society, to the Registrar, if the parties thereof are from amongst the following:-
(a) a society, its committee, any past committee, any past or present officer, any past or present agent, any past or present servant or nominee, heir or legal representative of any deceased officer, deceased agent or deceased servant of the society, or the Liquidator of the society:
(b) a member, past member or a person claiming through a member, past member or a deceased member of a society, or a society which is a member of the society;
(c) a person, other than a member of the society, who has been granted loan by the society, or with whom the society has or had transactions under the provisions of section 46, and any person claiming through such a person;
(d) a surety of a member, past member or a deceased member, or a person other than a member who has been granted a loan by the society under section 46, whether such a surety is or is not a member of the society;
(e) any other society, or the Liquidator of such a society.
(2) When any question arises whether for the purposes of sub-section (1) a matter referred to for decision is a dispute or not, the question shall be considered by the Registrar, whose decision shall be final;
Explanation I.- For the purposes of this sub- section, a dispute shall include-
(i) a claim by a society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member, without such a debt or demand be admitted or not;(ii) a claim by a surety for any sum or demand due to him from the principal borrower in respect of a Page 55 of 77 HC-NIC Page 55 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT loan by a society and recovered from the surety owing to the default of the principal borrower, whether such a sum or demand be admitted or not;
(iii) a claim by a society for any loss caused to it by a member, past member, or deceased member, by any officer, past officer or deceased officer, by any agent, past agent or deceased agent, or by any servant, past servant or deceased servant, or by its committee, past or present whether such loss be admitted or not;
(iv) a refusal or failure by a member, a past member or a nominee, heir or legal representative of a deceased member, to deliver possession to a society of land or any other asset resumed by it for breach of conditions of the assignment.
Explanation II- For the purposes of this section, the expression ?agent? includes in the case of a housing society, an architect, engineer or contractor engaged by the society. "
38 Question 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 Page 56 of 77 HC-NIC Page 56 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT 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 Page 57 of 77 HC-NIC Page 57 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT 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.
39 In Allahabad District Cooperative Bank Ltd. Versus Hanuman Dutt Tiwari, AIR 1982 SC 120, apex court has observed as under in para 1,2 and 3 in respect of section 96:
"1. The only question raised in this appeal is whether the suit filed by the respondent for a declaration that the retrenchment of his services by the appellant Allahabad Dist. Co-op. Ltd., Allahabad, a co-operative society constituted under the Uttar Pradesh Co-operative Societies Act is (sic) barred by the provisions of S:70 of the Act. According to Mr.Pramod Swarup, learned counsel for the appellant, the dispute relates to the business of the co-operative society and, therefore, the suit is barred by the provisions of S.70.
2. The expression "business of the society" has been construed by several decisions of this Court. In Deccan Merchants Co-operative Bank Ltd. V. Dalichand Jugraj Jain, (1969) 1, SCR 887 (AIR 1969 SC 1320) it was pointed out ? the word business? has been used in a narrower sense and it means the actual trading or commercial or other similar business activity of the society which the society is authorized to enter into under the Act and the Rules and its bye-laws?. In Co-operative Central Bank Ltd. v. Additional Industrial Tribunal, Andhra Pradesh, (1970) 1 SCR 205 : (AIR 1970 SC 245), it is said ?but the meaning given to the expression 'touching the business of the society', in our opinion, makes it very doubtful whether a dispute in respect of Page 58 of 77 HC-NIC Page 58 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT alteration of conditions of service can be held to be covered by this expression. Since the word 'business' is equated with the actual trading or commercial or other similar business activity of the society, and since it has been held that it would be difficult to subscribe to the proposition that whatever the society does or is necessarily required to do for the purpose of carrying out its objects, such as laying down the conditions of its employees, can be said to be a part of its business, it would appear that a dispute relating to conditions of service of the workmen employed by the society cannot be held to be a dispute touching the business of the society."
3. In view of the above pronouncements of this Court, we cannot accept the submission of Shri Pramod Swarup. The appeal is, therefore, dismissed with costs."
40. Similar view has been taken by various High Courts. [See: Kendriya Sarvodya Sahakari Sangh versus Jawan Singh and another, reported in AIR 1968 Rajasthan page 33; Kaasturbanagar Cooperative Houses Construction Society versus K. Soundararajan and another, AIR 1968 Madras page 67; Rambhau Jairam Dhamange and others versus President, Vinkar Cooperative Society Ltd., Chanda and others, AIR 1966 Bombay 187 (at Nagpur)].
41. In Bihar State Cooperative Marketing Union Ltd. Versus Registrar,Cooperative Societies, Bihar and another, AIR 1974 Patna 77 it is observed as under : [Head Note A] "The word 'dispute' in section 48 does not include within its ambit service conditions of the employees of a society. Therefore, a dispute that the promotion of cashier to the post of Accountant was not valid and justified, being a dispute in relation to the service conditions of the servant employee cannot be held to be a dispute touching the business of the society. The Registrar, therefore, has no jurisdiction to deal with such a dispute under section 48 (1) of the Act (1962) ILR 41 Pat 325 Distinguished.
Nor could the application under section 48 (1)(b) and © be held to be an appeal under S. A (iii) or H (II) of the Staff Regulations of the Bihar State Page 59 of 77 HC-NIC Page 59 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Cooperative Marketing Union Ltd."
42. Head Notes (A), (B) and (C ) in Co-operative Central Bank Ltd. And others etc. v. Additional Industrial Tribunal Andhra Pradesh, Hyderabad and others etc., AIR 1970 SC 245 are reproduced as under :
"(A) Cooperative Societies ? Andhra Pradesh Cooperative Societies Act (7 of 1964), Section 61 ?
Dispute capable of being resolved by Registrar under section 61 ? Jurisdiction of Industrial Tribunal under Industrial Disputes Act, 1947 is barred (Para
2) (B) Cooperative Societies- Andhra Pradesh Cooperative Societies Act (7 of 1964), Sections 61, 16 - 'Dispute touching business of society'- dispute relating to alterations of conditions of service- It cannot be held to be dispute touching 'business' of society - Such dispute is not contemplated to be dealt with under Section 62 and is, therefore, out side scope of section 61; it could only be dealt with by Industrial Tribunal under Industrial Disputes Act, 1947 - Provisions of Section 16(5) are irrelevant when considering scope of jurisdiction of Registrar under section 61.
(C) Cooperative Societies-Andhra Pradesh Cooperative Societies Act (7 of 1964) bye laws of cooperative society framed in pursuance of provisions of the Act 0 They cannot be held to have force of law ? (Companies Act (1956), Section 36) ? (Industrial Employment (Standing Orders) Act (1946) Sec.2 (g)).
The bye laws of a cooperative society framed in pursuance of the provisions of the Act cannot be held to be law or to have the force of law. It has no doubt been held that if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of Statute and are to be deemed to be incorporated as a part of the statute. That principle,however, does not apply to bye laws of the nature that a cooperative society is empowered by the Act to make. The bye laws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They are of the nature of Page 60 of 77 HC-NIC Page 60 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT the Articles of Association of a company incorporated under the companies Act. They may be binding between the persons affected by them but they do not have the force of a statute. (para 10)"
43. Same view has been taken by Delhi High Court as per the decision in National Cooperative Consumers Federation Ltd. Versus Delhi Administration, reported in AIR 1971 Delhi page 141.
In Gujarat State Cooperative Land Development Bank Ltd. Versus P.R. Mankad, AIR 1979 SC 1203, apex court observed as under in para 21, 34, 35 and 37:
"21. As regards the first test, it is to be noted that the express 'any dispute' has not been defined in the Acts of 1925 and 1961. The term 'dispute' means a controversy having both positive and negative aspects. It postulates the assertion of a claim by one party and its denial by the other. The word 'any' prefixed to 'dispute' may, at first glance, appear to give the expression 'any dispute' a very wide amplitude covering all classes of disputes, whatever be their nature. But the context of these provisions, the object and scheme of the Acts of 1925/1961 show that the Legislature never intended to give such a wide scope to this expression. The related provisions and the scheme of the Acts unerringly indicate that the expression 'any dispute' has been used in a narrower sense limited to contested claims of a civil nature, which could have been decided by civil nature, which could have been decided by civil or revenue courts, but for the provisions with regard to compulsory arbitration by the Registrar or his nominee, found in Section 54 of the Act of 1925 or S.96 of the Act of 1961. The first indication of this being the right construction, is discernible in sub- section (2) of Sec.96 which states that when any question arises whether for the purposes of sub- section (1) a matter referred to for decision is a dispute or not, the question shall be considered by the Registrar, whose decision shall be final. This means, it is incumbent on the Registrar to decide as a preliminary issue, whether the dispute is of a kind under sub-section(1) of Section 96 falling Page 61 of 77 HC-NIC Page 61 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT within his jurisdiction. If this preliminary issue is found in the negative, he will have no further jurisdiction to deal with the matter."
"34. In this connection, it may be noticed that just as in Section 96(1), in Section 61 of the Andhra Pradesh Co-operative Societies Act, 1964, also, which came up for consideration in Co-operative Central Bank's case (AIR 1970 SC 245) before this Court, the term management does occur in the collocation of words 'constitution, management or business'. But no specific argument seems to have been then raised that a dispute between the Society and its former servants relating to the conditions of service, comes within the purview of the expression 'touching the management of the Society'. Perhaps, it was taken for granted that if the dispute was not comprehended by the expression 'business of the Society', it would not be covered by the words 'management of the Society', either. Although there is little discussion in the judgment about the ambit and import of the expression 'management', yet, in conclusion, it was clearly and emphatically held that the dispute in that case was 'outside the scope of Section 61."
"35. We will now, focus attention on the expression 'management of the Society' used in Section 96(1) of the Act of 1961. Grammatically, one meaning of the term 'management' is: 'the Board of Directors' or 'the apex body' or Executive Committee at the helm which guides, regulates, supervises, directs and controls the affairs of the Society'. In this sense, it may not include the individuals who under the overall control of that governing body or Committee, run the day-to-day business of the Society. (See words and Phrases by West Publishing Co., Permanent Edition, Vol.26, page 357, citing, Warner & Swasey CO. v.
Rusterholz D.C.Minn 41 F. Supp 398, 505). Another meaning of the term 'management', may be: 'the act or acts of managing or governing by direction, guidance, superintendence, regulation and control the affairs of a Society."
"37. Be that as it may, what has been directly Page 62 of 77 HC-NIC Page 62 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT bidden 'out-of-bounds' for the Registrar by the very scheme and object of the Act, cannot be indirectly inducted by widening the connotation of 'management'. A construction free from contexual constraints, having the effect of smuggling into the circumscribed limits of the expression 'any dispute', a dispute which from its very nature is incapable of being resolved by the Registrar, has to be eschewed. Thus considered, a dispute raised against the Society by its discharged servant claiming reliefs such as reinstatement in service with back wages, which are not enforceable in a Civil Court is outside the scope of the expression 'touching the management of the Society' used in Section 96 (1) of the Act of 1961, and the Registrar has no jurisdiction to deal with and determine it. Such a dispute squarely falls within the jurisdiction of the Labour Court under the B.I.R.Act."
Same view has been taken in Jallandar Transport Cooperative Society Jallandar versus Punjab State through Secretary to Government, Labour Department, AIR 1959 Punjab page 34.
From the aforesaid decisions and also in view of the facts of this case, it is clear that language employed in section 160 is giving powers to the Registrar for the purpose of securing proper implementation of cooperative production, other developmental programmes, linking and coordinating of cooperation activities such as marketing and credit and securing proper management of business of the society, conducted in a manner detrimental to the interests of members or depositors or creditors. In view of that, none of the items specified in section 160 of the Act covers the issue about validity of appointments and validity of mode of recruitment/appointments made by society without following recruitment procedure. Section 160 of the Act must be given narrow meaning because management of society which is having number of activities carried out with the help of employees but validity of appointment of such employees or termination or retrenchment are not incorporated in the section which would give power and jurisdiction to Registrar to issue such direction to respondent no. 2 to cancel or terminate the appointments made by respondent No.2 society.
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Registrar cannot be permitted to do something indirectly which he cannot do directly in respect of service conditions of employees or appointments of employees or mode of recruitment procedure as per section 160 of the Act. Therefore, it is clear that the action of Registrar to direct respondent no.2 society to cancel or terminate service of 161 employees of respondent no.2 is beyond jurisdiction and not covered by the language employed in section 160 of the Act.
44. The contention raised by Mr. Yagnik on behalf of respondent No.3 that writ petitions are not maintainable since the petitioner is having alternative remedy to challenge retrenchment notices before the industrial forum cannot be accepted because the main challenge in these petitions is the order of Registrar, Cooperative Societies dated 28th February, 2003/3rd March, 2003 and the retrenchment notices issued by respondent No.2 society are based on the said directions of Registrar Cooperative Societies. Further, industrial forum cannot decide the legality, validity and propriety of the order/direction of respondent No.1 Registrar and it can be decided only in writ jurisdiction. Therefore, these petitions under Article 226 of Constitution of India are maintainable.
45. In Madan Mohan Sen Gupta and another versus State of West Bengal and others, AIR 1966 Calcutta 23, it has been held that the writ petition against cooperative society is maintainable. (See AK Gulamnabi Mansuri versus Janata Commercial Cooperative Bank Ltd., 1998 (2) GLH 226).
46 By placing reliance on the decision of this Court (Coram : D.N. Patel,J.) in Special Civil Application NO. 20625 of 2005 dated 29th November, 2005, it was submitted by Mr.Yagnik that this Court has prima facie come to the conclusion that the Registrar is having power under section 160 of the Act even in case of service condition of such employee. He has also placed copy of said order before this Court and submitted that in view of that, if this court is having different view, then, it should be referred to Division Bench. I have perused said order. In said order, this court has observed as under:
Page 64 of 77HC-NIC Page 64 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT "In the facts of the present case, I am of the opinion that the Registrar has prima-faice power and jurisdiction to issue the notice under Section 160 of the Gujarat Cooperative Societies Act, 1961. There is no total lack of jurisdiction. Nonetheless, this question is left open for its decision, by the Registrar and for appellate authority under the Gujarat Cooperative Societies Act, 1961. At this stage, this Court is not entering into the justification of the averments made in the show cause notice dated 6th October, 2005. Suffice it to say that prima ? facie, there is connection between the interest of the petitioner- society, the members, the creditors, the depositors of the petitioner-society and the additional liability.
47. From the aforesaid decision, it is clear that this Court in Special Civil Application NO. 20625 of 2005 was examining the matter at issue on prima facie consideration whereas this Court is examining the matter finally and therefore, there cannot be any question of prima facie consideration. It was merely a prima facie opinion given by the Court. There is no decision on merits of the matter. However, it is made clear that the matter which was examined by this Court (Coram : D.N. Patel,J.), the bank was having bye laws relating to recruitment procedure whereas in the case before hand, respondent society is not having bye laws relating to mode of recruitment procedure and the same have also not been framed by the State Government under section 76 of the Act. Therefore, decision of this Court in Special Civil Application No. 20625 of 2005 dated 29th November, 2005 is not having binding effect on this court as no issue has finally examined and decided in the said matter. Law on this point is decided by Apex Court in number of cases. In the case of Union of India v. Dhanvanti Devi (1966) 6 SCC 44; (1996 AIR SCW 4020), the apex court has settled law with regard to the circumstances where a decision will constitute a binding precedence. Their Lordships observed (at pages 4024- 2025 of AIR SCW):-
"A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what Page 65 of 77 HC-NIC Page 65 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT logically follows from the various observations made in the judgment. Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there is not intended to be explosion of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. "
Their Lordships further observed:-
Therefore, in order to understand and appreciate the binding force of a decision it is always necessary to see what were the facts in the case in which the decision was given and what was the point which had to be decided. No judgment can be read as if it is a statute. A word or a clause or a sentence in the judgment cannot be regarded as a full exposition of law. Law cannot afford to be static and, therefore, Judges are to employ an intelligent technique in the use of precedents."
51. In view of the above, I have no hesitation in coming to the conclusion that so far as the impugned order dated 29th January, 2010 challenged in the Special Civil Application No.1030 of 2010 is concerned, deserves to be quashed, and is hereby quashed.
52. The action taken by the Bank after reinstating the writ applicants in service by virtue of the interim order passed by this Court dated 10th February, 2010 referred to above, terminating the services of the writ applicants labeling it as retrenchment under section 25-F of the I.D. Act, 1947 without giving any opportunity of hearing to the writ applicants, was nothing but a direct outcome or consequence of the directions given by the Registrar, Co-operative Societies, State of Page 66 of 77 HC-NIC Page 66 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Gujarat. The overwhelming documentary evidence on record in this regard speaks for itself. The Registrar, Co-operative Societies, by hook and crook, wanted the Bank to terminate the services of the writ applicants, and succumbing to the pressure of the Registrar, the Bank adopted a very innovative idea to terminate the services of the writ applicants. What the Bank did, was something very unusual. It passed a resolution, which reads as under;
"In view of earlier decision taken by the Board of Directors dated 30.11.2010, the bank manager has taken the legal opinion of Senior Advocate, Mr. K.M. Patel, Gujarat High Court and after consulting him, the Board of Directors has decided to terminate all the 18 employees, who are illegally appointed by paying necessary payment as provided under the law. Accordingly, it is instructed that after following the procedure and making necessary payment as per the law, all the 18 employees may be terminated on 10.1.2011 and for that purpose, the bank manager is also instructed to prepare the list and termination dues and accordingly, do the needful as the Board of Directors has also agreed before the Registrar to terminate the services of aforesaid 18 employees. Accordingly, the Board of Directors has decided to terminate the services of 18 employees from 10.1.2011."
53. After passing the resolution referred to above, straightway, the orders were passed, terminating the services. If the orders of termination were a direct consequence of the directions and pressure given by the Registrar, then, in substance, it could be said that it is the illegal and dubious action of the Registrar, Co-operative Societies, which is under challenge and, therefore, I am of the view that the writ applications are maintainable and should be looked into.
54. I am supported in taking the aforesaid view by a Division Page 67 of 77 HC-NIC Page 67 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Bench decision of the Andhra Pradesh High Court in the case of V. Ram Reddy v. The Chairman, The Sircilla Co- operative Agricultural Development Bank Ltd. & Ors., reported in AIR 1982 AP 20. Its a very short judgment, but the principle enunciated in the same is important, and I propose to follow the same. The judgment is quoted herein below.
"The petitioner was appointed on 19-7-1974 as a temporary Supervisor in the Primary Land Mortgage Bank, Sircilla, now known as the Sircilla Co-operative Agricultural Development Bank Ltd. Earlier when he was occupying the post of a Supervisor in the Land Mortgage Bank, Jagtial his services were terminated in 1973 on the ground that he had misappropriated a sum of Rs.31/-. It is the case of the petitioner that no enquiry was conducted and his services were terminated in violation of the principles of natural justice. After the said termination, he joined the Sirciila Bank as a temporary Supervisor. The Manager of the Central Agricultural Development Bank informed the employer through his letter dated 12-9- 1974 that the petitioner was involved in misappropriation of funds of a sister institution and directed the first respondent viz., the Sircilla Bank to dispense with his services. Thereafter, a number of letters were written by the Deputy Registrar, Agricultural Development Bank, Warangal, during the period from 13-12-1974 to 3-9-1975 directing the Bank to terminate the services of the petitioner failing which it was threatened that the salary paid to the petitioner would be surcharged on the persons responsible. Ultimately a resolution was passed by the Managing Committee of the first respondent. Bank on 26-11-1976 that his services should be terminated. Giving effect to this resolution the Chairman passed an order dated 27-11-1976 terminating the services of the petitioner from 27-11-1976. Challenging the said order, the petitioner filed this writ petition.
2. A preliminary objection was raised that a writ is not maintainable to quash the order of a co-operative society-When the matter came up before Raghuvir, J., he directed the writ petition to be posted before a Division Bench.
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3. Sri Gururaja Rao, the learned counsel for the petitioner, contends that the decisions holding that a writ petition is not maintainable against a cooperative society including that of a Division Bench of this Court in W.P. No.818/75 dated 29-7-1977 (Reported in 1978 Lab 1C 528 (Andh Pra)) require re-consideration in view of the recent trend of decisions of the Supreme Court-We consider it, however, unnecessary to go into this question as we are of the view that in effect what is being challenged in this writ petition is the direction given by the Deputy Registrar, Agricultural Development Bank, who is the second respondent herein. It is clear even from the order of the Chairman dated 27-11-1974 that the Deputy Registrar through his letters dated 13-12- 1974, 17-5-1975, 19-6-1975 etc., was directing the Bank to terminate the services of the petitioner and was also threatening to levy surcharge if his directions were not carried out. These letters are specifically referred to in the impugned order. On a reading of the order as a whole, we are satisfied that the order of termination is a direct consequence of the directions given by the Deputy Registrar in his letters. Hence the writ petition is in substance, one challenging the directions given by the Deputy Registrar. In these circumstances, we are of the view that the writ petition is maintainable.
4. Reference may be made in this connection to a decision of the Supreme Court in Nayagarh Co-operative Central Bank v. Narayan, AIR 1977 SC 112 where the learned Judges of the Supreme Court, while pointing out that they were inclined to the view that writ petition is not maintainable against a co-operative society, observed that in that case the petitioner was asking for relief not really against the co-operative society but in regard to the order passed by the Registrar who disapproved the appointment of respondent No.1 as Secretary of the Bank and thereafter the President of the Bank issued an order terminating the services of the Secretary.
5. Sri Krishna Murty tried to persuade us that the impugned order was not made merely because the Deputy Registrar had directed the Bank to terminate the petitioner's services. He submitted that there was another reason for terminating the services viz., that the Page 69 of 77 HC-NIC Page 69 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT petitioner's appointment was irregular as it had been made without the prior approval of the President, Central Land Mortgage Bank as required by Special bye-law No.8. The termination of the services on the ground that he was also involved in misappropriation of funds of a sister institution was only a statement of fact which they were made aware of through a letter addressed by the Branch Manager of the A.P.C.C.A.D. Bank, Warangal. We are not inclined to agree with this interpretation of the impugned order. There can be no doubt that the main reason for passing the order of termination was the direction of the Deputy Registrar contained in the various letters referred to earlier and the threat of the Deputy Registrar that the employer should be surcharged for this irregular appointment.
6. Having regard to the conclusion that the order of termination was for the reason that the petitioner had been involved in misappropriation of funds earlier of a sister institution, it cannot be denied that the termination for such misconduct can be effected only after giving notice and an opportunity to the petitioner to state his objections. Admittedly no such opportunity was given. Assuming that the reason for termination was that, his prior appointment was irregular and contrary to the bye- law, even in such a case we are of the view that the petitioner should have been given an opportunity to show cause why his services should not be dispensed with.
7. We therefore, allow this writ petition and set aside the order of termination. This will not preclude the authorities, if they are so advised, to take appropriate proceedings against the petitioner after giving notice to the petitioner and a reasonable opportunity to meet any case sought to be made out. In the circumstances, there will be no order as to costs.
8. Sri Krishna Murty makes an oral application for leave to appeal to the Supreme Court. We see no substantial question of law of general importance which requires to be considered by the Supreme Court involved in this writ petition. The oral application is rejected.
Petition allowed."
55. In the above noted decision of the Andhra Pradesh High Page 70 of 77 HC-NIC Page 70 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT Court, there is a reference of the Supreme Court decision in the case of The Nayagarh Co-operative Central Bank Ltd. & Anr. vs. Narayan Rath & Anr., AIR 1977 SC 112, The Supreme Court therein observed in paras-3,4,5 and 6 as under;
"3. The learned Advocate General appearing on behalf of the appellants contends that the High Court was in error in taking the view that a writ application under Art. 226 of the Constitution can lie against a Co-operative Society registered under the Co-operative Societies Act. This is a question of far-reaching importance, but in view of the facts of this case we do not think that it is necessary to decide it. As stated above, respondent No.1 was appointed as a secretary of the Bank on May 25, 1955 and the appointment was made in a meeting over which the Registrar of Co-operative Societies had himself presided. Beyond informing the Bank from time to time that appropriate steps may be taken to terminate respondent No.1's services, nothing at all was done by the Registrar either for regularising the appointment of respondent No.1 or for removing him from service. It was thirteen long years after the date of appointment that on August 21, 1968 the Registrar issued an order disapproving the appointment of respondent No.1 as secretary of the Bank. It was in pursuance of an order five days later terminating the services of respondent No.1. The President's order was ratified by the Board of Management on September 4, 1968.
4. The writ petition filed by respondent No.4 could succeed. In our opinion, on the narrow ground that he had been permitted to function for over thirteen years as secretary of the Bank and that his appointment as secretary was decided upon in a meeting over which the Registrar of Co-operative Societies had himself presided. The writ petition in substance is directed not against any order passed by the Co-operative Bank but against the order passed by the Registrar disapproving the appointment of respondent No.1 as secretary of the Bank. It was not open to the Registrar,in our opinion, to set aside respondent No.1's appointment as a secretary after having acquiesced in it and after having for all practical purposes, accepted the appointment as valid. It Page 71 of 77 HC-NIC Page 71 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT is undesirable that appointments should be invalidated in this manner after a lapse of several years.
5. The High Court has dealt with the question whether a writ petition can be maintained against a co-operative society, but we are inclined to the view that the observations made by the High court and its decision that such a writ petition is maintainable are not strictly in accordance with the decisions of this Court. We would have liked to go into the question for ourselves, but it is unnecessary to do so as respondent No.1 by his writ petition, was asking for relief not really against a co- operative society but in regard to the order which was passed by the Registrar, who was acting as a statutory authority in the purported exercise of powers conferred on him by the Co-operative Societies Act. The writ petition was in that view maintainable.
6. We would like to observe that the judgment of the High Court should not be treated as an authority for the proposition that a writ petition is maintainable against a co-operative society. That question shall have to be decided by the High Court as and when it arises in the light of the decision of this Court."
56. I am also not impressed by the argument of Mr. Dave that the termination was nothing but the retrenchment within the meaning of section 2(OO) of the I.D. Act, 1947 and such retrenchment was in accordance with the provisions of section 25-F of the I.D. Act, 1947. In the facts of the case, section 25-F would have no application at all. I am also not impressed by the submission of Mr. Dave that clause-20 of the model standing orders do not speak of any opportunity of hearing to be given before terminating the services. The provision may be silent in that regard, but when it comes to terminating the service, the rules of natural justice should be read into it to make it more meaningful and suppress the mischief at the end of the employer. When this Court, while passing the interim order dated 10th February, 2010 in the Special Civil Application Page 72 of 77 HC-NIC Page 72 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT No.1030 of 2010 said that it would be open for the respondent- Bank to initiate the necessary legal procedure for termination of the service of any of the writ applicants in accordance with law, then the same can only be construed as after giving an opportunity of hearing to the writ applicants.
57. I am of the view that the entire action was grossly arbitrary. Let me, for the time being, believe that the appointments of the writ applicants were illegal and not in accordance with law, however, the same, by itself, would not confer any authority to act arbitrarily before terminating the services on such ground.
58. The meaning and true import of arbitrariness is more easily visualized than precisely stated or defined. The question, whether an impugned act is arbitrary or not, is ultimately to be answered on the facts and in the circumstances of a given case. An obvious test to apply is to see whether there is any discernible principle emerging from the impugned act and if so, does it satisfy the test of reasonableness. Where a mode is prescribed for doing an act and there is no impediment in following that procedure, performance of the act otherwise and in a manner which does not disclose any discernible principle which is reasonable, may itself attract the vice of arbitrariness. Every State action must be informed by reason and it follows that an act uninformed by reason, is arbitrary. Rule of law contemplates governance by laws and not by humour, whims or caprices of the men to whom the governance is entrusted for the time being. It is trite that be you ever so high, the laws are above you.
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59. In S.G. Jaisinghani v. Union of India, (A.I.R. 1967 S.C. 1427 at p. 1434, the Court indicated the test of arbitrariness and the pitfalls to be avoided in all State actions to prevent that vice, in a passage as under:-
"In this context it is important to emphasize that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizens should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. (See Dicey - "Law of the Constitution" - Tenth Edn., Introduction ex). "Law has reached its finest moments", stated Douglas, J. in United States v. Wunderlick, (1951- 342 US 98 : 96 Law Ed 113),"When it has freed man from the unlimited discretion of some ruler .....where discretion is absolute, man has always suffered". It is in this sense that the rule of law may be said to be the sworn enemy of caprice. Discretion, as Lord Mansfield stated it in classic terms in the case of John Wilkes (1770- 98 E.R. 327), "means should discretion guided by law. It must be governed by rule, not humour: it must not be arbitrary, vague and fanciful."
60. In Liberty Oil Mills v. Union of India, A.I.R. 1984 S.C. 1271, the Supreme Court held that the expression 'without assigning any reason' implied that the decision has to be communicated but reason for the decision has to be stated; but the reason must exist, otherwise the decision would be arbitrary. This decision was relied upon in Shrilekha Vidyarath's case (supra) to reject the argument made on behalf of the State of Uttar Pradesh that in term of Clause 3 of para 7.06 the Page 74 of 77 HC-NIC Page 74 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT services of the Government Pleaders could be terminated at any time without assigning any cause as would appear from the following extract of the decision of Apex Court:-
"The other part of Clause 3 which enables the Government to terminate the appointment at any time without assigning any cause can also not be considered in the manner, suggested by the learned Additional Advocate General. The termination may be made even during the subsistence of the term of appointment and without assigning any cause means without communicating any cause to the appointee whose appointment is terminated. However, without assigning any cause is not to be equated with without existence of any cause. It merely means that the reason for which the termination is made need not to be assigned or communicated to the appointee. It was held in Liberty Oil Mills v. Union of India, A.I.R. 1984 S.C. 1271 that the expression without assigning any reason implies that the decision has to be communicated, but reasons for the decision have not to be stated; but the reasons must exist, otherwise, the decision would be arbitrary. The non-assigning of reasons or the non-communication thereof may be based on public policy, but termination of an appointment without the existence of any cogent reason in furtherance of the object for which the power is given would be arbitrary and, therefore, against public policy. Clause 3 of para 7.06 must, therefore, be understood to mean that the appointment of a District Government Counsel is not to be equated with appointment to a post under the Government in the strict sense, which does not necessarily mean that it results in denuding the office of its public character; and that the appointment may be terminated even during currency of the term by only communicating the decision of termination without communicating the reasons which led to the termination. It does not mean that the appointment is at the sweet will of the Government which can be terminated at any time, even without the existence of any cogent reasons during the subsistence of the term.........................In our opinion, the wide sweep of Article 14 undoubtedly takes within its fold the impugned circular issued by the State of U.P. in exercise of its executive power, irrespective of the precise nature of appointment of the Government counsel in the Page 75 of 77 HC-NIC Page 75 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT districts and the other rights, contractual or statutory, which the appointees may have. It is for this reason that we base our decision on the ground that independent of any statutory right, available to the appointees, and assuming for the purpose of this case that the rights flow only from the contract of appointment, the impugned circular, issued in exercise of the executive power of the State, must satisfy Article 14 of the Constitution and if it is shown to be arbitrary, it must be struck down."
61. In Dwarkadas Marfatia's case (supra), Sabyasachi Mukharji, J. (as he then was), indicated the extent of the power of judicial review by observing as under:-
"......Where there is arbitrariness in State action, Article14 springs in and judicial review strikes such an action down. Every action of the executive authority must be subject to rule of law and must be informed by reason. So, whatever, be the activity of the public authority, it should meet the test of Article 14......"
62. The last question, I need to look into, is what relief should be granted to the writ applicants. It appears that the Bank is on the brink of collapse as pointed out by Mr. Dave. There are hardly nine employees now left in the Bank as on date. Any time, the shutters would be down. It is also true that when the services came to be terminated, a requisite amount was paid to each of the writ applicants towards the retrenchment compensation, although I have taken the view that the termination could not be termed as the retrenchment under the I.D. Act, 1947. Be that as it may, ordering reinstatement in service is not possible after these many years and with the pathetic condition of the Bank. However, the highhanded and arbitrary action should not go unnoticed and punished appropriately. In such circumstances, I am of the view that since it was the action of the State, acting through the Registrar, Co-operative Societies, which led to all this confusion Page 76 of 77 HC-NIC Page 76 of 77 Created On Fri Sep 02 03:27:53 IST 2016 C/SCA/586/2011 JUDGMENT and litigation, the State should pay Rs.3,00,000/- to each of the writ applicants by way of compensation.
63. The amount of compensation shall be paid to each of the writ applicants herein within a period of three months from the date of the receipt of the writ of the order.
64.. With the above, all the writ applications are disposed of. Rule is made absolute to the aforesaid extent.
Direct service is permitted.
(J.B.PARDIWALA, J.) Vahid Page 77 of 77 HC-NIC Page 77 of 77 Created On Fri Sep 02 03:27:53 IST 2016