Andhra HC (Pre-Telangana)
The Krishna District Cooperative ... vs The Commissioner For Cooperation And ... on 6 March, 2002
Equivalent citations: 2002(3)ALD108, 2002(2)ALT658
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
JUDGMENT B. Sudershan Reddy, J.
1. This batch of writ petitions may be disposed of by a common order since the question that falls for consideration requiring adjudication by this court in all these writ petitions is one and the same.
2. The employees working in various Primary Agricultural Credit Societies (PACS) in the State of Andhra Pradesh invoke the extra jurisdiction of this court under Article 226 of the Constitution of India mainly challenging the action of the said PACS in proposing to terminate their services pursuant to the directions issued by the District Cooperative Officers and the Divisional Cooperative Officers concerned. Some of the writ petitions are filed by the employees' unions representing the cause of the employees.
3. The prayer in all the writ petitions filed by the employees' unions is one and the same, which is to the following effect:
"........may be pleased to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the impugned action of the respondents 1 and 2 in not fixing the staffing pattern of the societies in the district as per the present day requires under Section 116C inspite of directions issued by the first respondent in proceedings Rc.No.6093/88 CP (B), dated 21-1-1988 and further action of the respondents in contemplating to terminate the services of the petitioner members union as highly illegal, arbitrary and violative of Article 14 of the Constitution of India apart from contrary to the provisions of the A.P.C.S. Act and consequently direct the respondents herein to fix the staffing pattern of the societies by regularising the services of the petitioner union members........"
4. Similar is the prayer in the writ petitions filed by the individual employees.
Before adverting to the question as to whether the petitioners are entitled for any relief as such, it may be necessary to briefly notice the facts leading to filing of these writ petitions:
It is the case of the employees that they have been appointed by the individual PACS as employees in order to assist the Societies in discharge of its day-to-day affairs and to attend the business activities of the societies. As per the byelaws each of the societies has the power to prescribe the strength of establishment of the society and the scale of each employee, and the said byelaws confer power upon the Managing Committee of each of the societies to appoint its own employees ever since they were formed after the provisions of the Andhra Pradesh Cooperative Societies Act, 1964 (for short 'the Act') have come into force. It is submitted that the activities of the PACS increased by manifold and each of the societies in order to meet the heavy workload in the society made appointment of employees depending upon its own financial resources and other relevant considerations.
It is submitted that the Registrar of Cooperative Societies himself issued proceedings vide Rc.No.6093/88, dated 21-1-1988 specifically directing all the District Cooperative Officers to examine the business turnover of every society and for making concrete suggestions for fixing the staffing pattern to the societies in proportion to their business turnover.
5. It is the case of the employees that each one of them were appointed in the existing vacant post. Some of them were appointed on compassionate grounds. It is also their case that each one of them are fully qualified to hold the post into which they were appointed. Most of them were appointed either as clerks or attenders, as the case may be, against the existing vacancies.
6. The gravamen of the complaint in the instant writ petitions is with regard to the directions purported to have been issued by various District Cooperative Officers and Divisional Cooperative Officers directing the concerned PACS in the State to terminate the services of the employees appointed by them. It is contended that neither the Registrar of Cooperative Societies nor, for that matter, any District Cooperative Officer or Divisional Cooperative Officer has any such authority in law to direct the PACS to terminate the services of the employees working in the PACS.
It is the case of the employees that it is the concerned society, which pays the emoluments and wages to its employees. Each Society is entitled to have its own staff appointed depending upon the requirement and financial viability. The respondents, under no circumstances, are entitled to issue any such directions whatsoever compelling the societies to terminate the services of its employees.
7. It is required to notice that in none of the cases the employees in this batch of writ petitions challenge any termination order as such passed by the Societies except in W.P.Nos.14757 of 2001 and 2680 of 2002. In all other cases the action of the respondents directing the PACS to terminate the services of such of those employees who were appointed after 2-1-1995 and send their compliance report is impugned. These writ petitions are filed seeking appropriate relief from this court even before any termination orders are issued by any of the societies as such.
8. The fact remains that the concerned District Cooperative Officers and the Divisional Cooperative Officers have directed the concerned PACS to terminate the services of such of those employees who were appointed by them after 2-1-1995.
9. The short question that falls for consideration is as to whether the respondents, in law, are entitled to issue any such directions to the PACS directing them to terminate the services of such of those employees who were appointed by them after 2-1-1995?
10. Before we proceed further, it may be necessary to notice that all the employees in this batch of writ petitions were admittedly appointed after 2-1-1995. There is no dispute about the same.
11. A detailed counter affidavit has been filed by the respondents explaining as to how and under what circumstances the Registrar of Cooperative Societies intervened in the matter and issued necessary directions to all the concerned including the District Cooperative Officers to take appropriate action against the PACS by issuing necessary directions to the concerned societies to terminate the services of such of those employees who were appointed by the societies after 2-1-1995.
12. It is stated that the PACS in the State of Andhra Pradesh are organised at primary level in rural areas. The required funds are channelled through the A.P. State Cooperative Bank and District Cooperative Central Banks (DCCBs), Intermediary organisation and ultimately through PACS to the members who are all agriculturists. The NABARD is the funding agency of the rural credit. The government is the guarantor for the funds provided by the NABARD. The Government of Andhra Pradesh and A.P. State Cooperative Bank (APCOB) entered into a Memorandum of Understanding with the NABARD on 17th October, 1984 inter alia agreeing to restrain the managements of PACS from making any recruitment of staff. The NABARD has suggested that the cost of establishment and contingencies should be pegged down to 2% of working capital or 30% of the gross income.
13. The Commissioner for Cooperation and Registrar of Cooperative Societies, Andhra Pradesh, Hyderabad issued circular memorandum dated 2-1-1995 pursuant to the Memorandum of Understanding entered with the NABARD by the Government and APCOB on 7th October, 1994. The Circular itself notices that the average cost of management per PACS was Rs.60,000/- as on 31-3-1993 on account of high pay structure of paid secretaries and over staff without reference to the business levels, while the administrative expenditure other than on staff towards travel, maintenance/hiring of vehicles, telephones, printing and stationary etc., was disproportionate in most of the PACS/DCCBs. The Circular Memorandum noticed the suggestions made for reducing the transaction costs by improving the staff productivity and reducing the expenditure.
14. It has come to the notice of the Commissioner that some of the District Cooperative Central Banks were having surplus staff in the lower categories and inspite of the same, the managements were resorting to make further appointments on temporary basis resulting in over staff leading to high cost of management and losses year after year. It is under those circumstances, the Commissioner issued necessary instructions and directions to the District Cooperative Central Banks and PACS not to resort to make any further recruitment of staff until the existing surplus staff are adjusted by improving the business levels and have adequate margin to meet the cost of establishment and contingencies which should be pegged down to 2% of working capital or 30% of the gross income. The Circular Memorandum itself reveals that a task force committee to be constituted to evolve the viability norms for PACS and DCCBs and to suggest for the staff norms for PACS/DCCBs. It has been decided that till the Task Force committee submits its findings no fresh recruitment shall be done in PACS/DCCBs. This is the decision taken by the Commissioner for Cooperation and Registrar of Cooperative Societies pursuant to the Memorandum of
15. Understanding entered by and between the State Government, APCOB and the NABARD referred to hereinabove.
16. Thereafter, the Commissioner for Cooperation and Registrar of Cooperative Societies issued another Circular Memorandum dated 18-11-1995 reminding the managements of PACS about the ban on recruitment of paid secretaries and other employees and requiring them to comply with the same. The managements were cautioned to implement the same as they would be liable for action under Section 21 (AA) (1) and (2) of the Act in case of violation of instructions issued by the Commissioner for Cooperation. The managements were put on clear notice that they shall alone be held responsible for the consequences thereof in case if any appointments are made contrary to the circular instructions issued by the Registrar of Cooperative Societies dated 2-1-1995.
17. In the counter affidavit filed by the respondents it is explained that all those PACS who made the appointment of employees in the societies after 2-1-1995 have violated the circular instructions issued by the Registrar of Cooperative Societies. Such appointments are void in law.
It is also explained that the PACS went on making appointments without having any concern for its own resources and financial viability in the process endangering the very existence of the societies. It is even stated that such recruitment has been made by the Societies violating the general norms of recruitment, i.e. observation of rule of reservation guaranteed by the Constitution of India, recruitment procedures (Appointment through Employment Exchange).
18. It is further submitted by the respondents that the appointments so made by the PACS are clearly in contravention of the mandatory provisions of Section 116-C of the Act and all such appointments are void in law.
19. The District Cooperative Officers and Divisional Cooperative Officers are bound to enforce the circular instructions issued by the Commissioner for Cooperation dated 2-1-1995 and 18-11-1995.
20. It is the case of the petitioners that the Registrar of Cooperative Societies issued a circular dated 21-1-1988 fixing the staff pattern and that the appointments made by each one of the societies are in accordance with the staffing pattern so fixed by the Registrar of Cooperative Societies vide circular dated 21-1-1988 and, therefore, such appointments cannot be characterised as illegal and violative of any of the provisions of the Act.
21. The question that falls for consideration is as to whether the Registrar of Cooperative Societies at all fixed any norms and staffing pattern as such as is contended by the learned counsel for the petitioners.
22. Sri G.V. Shivaji, learned counsel for the petitioners invited our attention to the circular dated 21-1-1988 issued by the Registrar of Cooperative Societies. The said circular issued by the Commissioner for Cooperation and Registrar of Cooperative Societies is addressed to all the District Cooperative Officers in the State of Andhra Pradesh and it is self-explanatory. The circular merely takes note of the fact that some suggestions were made to PACS during the discussions held with the Presidents of some Cooperative Central Banks. The District Cooperative Officers were accordingly requested to keep note of the staffing pattern suggested during the discussions held with the Presidents of the Cooperative Central Banks while examining the matter and they were accordingly requested to submit their report making concrete suggestions on the staffing pattern of PACS under single window credit delivery system. The District Cooperative Officers were accordingly requested to obtain the particulars in respect of the PACS in the District and send the report to the Commissioner. A detailed note was enclosed and made part of the circular itself.
23. A plain reading of the circular, as rightly contended by the learned Government Pleader for Cooperation, would make it clear that under the said circular the Registrar of Cooperative Societies did not fix any staffing pattern as such in respect of any of the societies. No doubt, some suggestions were communicated through the circular as to how a PACS has to fix its staffing pattern. It cannot be construed, under any circumstances, as if the Registrar of Cooperative Societies fixed any staffing pattern as such in respect of any of the societies. The District Cooperative Officers were merely directed to make necessary enquiry with reference to each of the PACS and suggest the staffing pattern.
24. At this stage, it would be appropriate to notice the Section116-C of the Act as it exists as on today, which is to the following effect:
116-C. Staffing pattern of societies:- (1) A society shall have power to fix the staffing pattern, qualifications, pay scales and other allowances for its employees with the prior approval of the Registrar of Cooperative Societies subject to the condition that expenditure towards pay and allowances of the employees shall not exceed two per cent of the working capital or thirty per cent of the Gross profit, in terms of actuals in a year whichever is less.
(2) No appointment or removal of a Chief Executive by whatever name called of any society, or class of societies as may be prescribed which are in receipt of financial aid from the Government, shall be made without the prior approval of the Registrar of Co-operative Societies.
25. A plain reading of the provision would make it abundantly clear that the power to fix the staffing pattern, qualifications, pay scales and other allowances for its employees vests in the Society concerned. We do not find any difficulty whatsoever to uphold the contention of the learned counsel for the petitioners that it is the society, which is entrusted with the duty to fix the staffing pattern, qualifications, pay scales and other allowances for its employees. But it is required to notice that prior approval of the Registrar of the Cooperative Societies is required to be obtained for fixation of the staffing pattern, qualifications, pay scales and other allowances for the employees of the Society.
26. That power of the society and approval to be granted by the Registrar of Cooperative Societies itself is subject to the condition that the expenditure towards pay and allowances of the employees shall not exceed two per cent of the working capital or 30 per cent of the gross profit, in terms of actuals in a year whichever is less. Therefore, it is clear that no untrammelled or unlimited power is conferred upon any of the societies to fix the staffing pattern for its employees in accordance with its own choice. The power conferred upon the society is limited in more than one way, viz., such fixation requires prior approval of the Registrar of Cooperative Societies and subject to the condition that the expenditure towards the pay and allowances shall not exceed 2 per cent of the working capital or 30 per cent of the gross profit.
27. Obviously, there is a laudable purpose and object behind enacting the said provision. The various authorities including the Registrar of Cooperative Societies noticed that the indiscriminate appointments of the employees made by the managements of PACS and DCCBs resulted in a virtual threat to the very existence and survival of the societies. Most of its financial resources were being spent to meet the expenditure in regard to the payment of remuneration, allowances, pay scales etc., to the employees. The cooperative societies are not organised, formed and incorporated for providing any employment as such to the unemployed. Their main purpose is to cater the needs of the agriculturists for whose benefit they are organised and formed. They are meant to look after the welfare and the credit needs of their members. Promotion of economic interest of the agriculturists and rural artisans is the paramount consideration and of importance for which purpose the societies themselves are organised and brought into existence.
28. The circular instructions issued by the Registrar of Cooperative Societies dated 2-1-1995 and 18-11-1995 themselves have taken note of these facts and it is under those relevant circumstances such circular instructions requiring the PACS and District Cooperative Central Banks not to make any further appointments or recruitments of the employees were issued in order to protect the interest of the societies.
29. The question that falls for consideration is as to whether the Registrar of Cooperative Societies has any authority in law as such to issue such circular instructions prohibiting the appointment of employees in the societies?
30. The circular itself is questioned in W.P.Nos.14757 of 2001 and 2680 of 2002. H owever, no grounds as such are stated as to how the circular issued by the Regis trar suffers from any legal infirmities. Section 4 (2) of the Act mandates that every society registered under the provisions of the Act shall function subject to such directions as may be issued by the Registrar, from time to time, in the interests of the Cooperative movement or the public interest or in order to prevent the affairs of the society from being conducted in a manner detrimental to the interest of the members or of the depositors or creditors thereof. The Society is required to comply with such directions issued by the Registrar. We have no doubt whatsoever in our mind to hold that the Registrar of Cooperative Societies issued circular instructions dated 2-1-1995 and 18-11-1995 in the interest of cooperative movement and in order to prevent the affairs of the society from being conducted in a manner detrimental to the interests of the members of the society. After all, the interest of the members of the societies is of paramount importance. The societies exist for the sake of its members and not for providing any employment as such. There cannot be any doubt whatsoever that indiscriminate appointment of employees by the managements of the societies at various levels adversely affects the financial viability of the societies themselves. In order to prevent further erosion of the resources of the societies, the Registrar, obviously, in exercise of the power conferred under Section 4 (2) of the Act issued circular instructions dated 2-1-1995 and 18-11-1995. We have no doubt whatsoever in our mind to hold that the power of the Registrar to issue circular instructions is traceable to Section 4 (2) of the Act. No doubt, the provision of law under which the circular instructions were issued by the Registrar is not stated in the circular. It is well settled that non-mentioning of the provision of law itself would not vitiate any notification, circular or order, provided the power is traceable to correct provision of law. In the circumstances, we are not inclined to agree with the submissions made by the learned counsel for the petitioners that the Registrar has no authority in law to issue the impugned circular.
31. We have already adverted to and noticed Section 116-C of the Act which in turn obligates the societies to obtain the prior approval of the Registrar of the Cooperative Societies to fix the staffing pattern, qualifications, pay scales and other allowances payable to its employees.
32. In the instant case, there is nothing on record to suggest that any of the societies has submitted any such proposal to fix the staffing pattern, pay scales etc., seeking approval of the Registrar of Cooperative Societies. In the absence of fixation of the staffing pattern, pay scales etc., the society is not entitled to make any appointments even on temporary basis. It is not as if the societies have already submitted the proposals and they were kept pending by the Registrar without taking any decision thereon.
33. A combined reading of Sections 4 (2) and 116-C of the Act would make it clear that the societies are not entitled, in law, to make any appointment of employees without fixation of the staffing pattern, pay scales etc., with the prior approval of the Registrar of Cooperative Societies.
34. However, the learned counsel for the petitioners would place reliance upon the judgment of a Division Bench of this court in V.V.S.S.V. Prasada Rao V. Cooperative Central Bank Ltd.,1 in support of his submission that the Registrar of Cooperative Societies has no authority in law to issue such circulars as the one issued by him on 2-1-1995 and 18-11-1995. In the said case, the circular dated 15-3-1979 issued by the Registrar of Cooperative Societies, dealing with the subject of reorganisation of staffing pattern and its implementation and also further instructions relating to the Cooperative Central Banks prescribing the educational qualifications for different posts and the manner in which the promotions and direct recruits are to be made, was impugned. This court observed:
"To our pointed question and even after grant of adjournment for the purpose, Mr. K.Narasimham, learned counsel appearing for the writ petitioners and Mr. K.Palaksha Reddy, learned counsel appearing for the respondent-Bank, are unable to bring to our notice any provision in the Cooperative Societies Act or the Rules under which power is reserved for the Registrar to lay down the staffing pattern or the mode of recruitment to the different posts in a Cooperative Society. Learned Government Pleader for Cooperation brings to our notice Section 116-A, (1), inserted by Act X of 1970. That section, which is extracted below, deal with only constitution of a common cadre of employees for certain societies."
35. In the circumstances, the Division Bench held that "the conditions laid down by the Registrar in the impugned circular and the proceedings were not issued under any statutory power and it is conceded that he does not have any statutory or executive power to lay down the conditions. That being so, the empanelment of the appellant and the respondent No.3 could not be said to be in violation of any statutory provision ............." Obviously, section 116-C of the Act was not brought to the notice of the court. The decision, perhaps, would have been different had the Section 116-C was brought to the notice of the court. The decision of the Division Bench holding that the Registrar of Cooperative Societies has no jurisdiction and authority in law in the matter of fixation of staffing pattern, pay scales and other conditions etc., is per incurium since the same has been rendered in ignorance of Section 116-C of the Act. The decision, therefore, would not support the case of the petitioners.
36. What remains to consider is as to whether the impugned instructions issued by the various District Cooperative Officers and Divisional Cooperative Officers suffer from any legal infirmities?
37. The District Cooperative Officers and Divisional Cooperative Officers merely issued necessary instructions to the societies concerned to take appropriate action in accordance with law and to terminate the services of those employees appointed after 2-1-1995 contrary to the circular instructions of the Registrar. The officers concerned were merely taking consequential steps pursuant to the circular instructions issued by the Registrar dated 2-1-1995 and18-11-1995. Such instructions were obviously issued in order to implement the directions of the Registrar.
38. The learned counsel for the petitioners, however, would place reliance upon the judgment of this court dated 15-12-2000 in W.P.No.11347 of 1996 in support of his submission that the societies cannot be reduced to the level of satellites of the Cooperative Departments. It was a case where the President of a PACS issued a show cause notice dated 14-6-1996 to the petitioner therein to show cause as to why he should not be reverted as an Accountant from the post of Secretary in view of the directions issued by the Divisional Cooperative Officer concerned. In the circumstances, this court observed that any such direction, if at all, could have been issued by the Registrar in purported exercise of the power under Section 4 of the Act and not by the Divisional Cooperative Officer. The question as to whether the appointment of the petitioner therein itself was contrary to the staffing pattern as such did not arise for consideration. In the circumstances, we are of the considered opinion that the said judgment upon which reliance is placed by the learned counsel for the petitioners would not render any assistance to the case of the petitioners.
39. On the other hand, one of us (V.Eswaraiah, J) had an occasion to consider the validity of an order passed by the Divisional Cooperative Officer, Kurnool directing the President, Done Primary Agricultural Cooperative Credit Society to terminate the services of a clerk working in the society on the ground that he was appointed in the year 1995 violating Section 116-C of the Act, in W.P.No.4213 of 1999. The court after an elaborate consideration of the matter upheld the order passed by the Divisional Cooperative Officer as the same was found to be in consonance with Section 116-C of the Act. The court noticed that the resolution of the Society appointing the petitioner therein did not contain any particulars of qualification, pay scale and other allowances and the Society has not obtained prior approval of the Registrar for appointing the petitioner therein. The court accordingly upheld the order passed by the Divisional Cooperative Officer directing the society concerned to terminate the services of the petitioner therein. A Division Bench of this court in W.A.No.1043 of 2000 confirmed the said order and dismissed the Writ Appeal holding that the appointment of the appellant therein "has been made in violation of the mandatory provisions of Section 116-C of the Andhra Pradesh Cooperative Societies Act, 1964." We do not find any reason or justification to take a different view other than the one taken by the court in the said decision.
40. The learned counsel for the petitioners, however, would rely upon the judgment of the Supreme Court in Basudeo Tiwary V. Sido Kanhu University2 in support of his submission that the order of the societies terminating the services of its employees is in violation of principles of natural justice and the termination cannot take place without making any enquiry and putting the concerned on notice. We have already noticed that except in W.P.Nos.14757 of 2001 and 2680 of 2002 there is no order of termination as such yet passed by the societies concerned. Therefore, we do not propose to express any opinion whatsoever on the said question raised by the petitioners.
41. In the circumstances, we do not find any merit whatsoever in any of the contentions advanced by the learned counsel for the petitioners.
42. W.P.Nos.21494, 25006 of 2000; 4076, 8084 and 9819 of 2001 deserve dismissal for one more reason, since they are filed by the Union espousing the cause of the employees and not by the employees themselves.
43. The learned Government Pleader placed reliance upon the judgment of the Supreme Court in T.N. Civil Supplies Corporation Workers' Union V. T.N. Civil Supplies Corporation Ltd.,3 in which the Supreme Court upheld the view of the Madras High Court in W.A.No.512 of 1997, dated 14-10-1997 holding that "it was for the employees to seek their remedies in a manner known to law. The employees concerned and not the Union could seek the appropriate relief from the court."
44. W.P.Nos.14757 of 2001 and 2680 of 2002, in which the Circular itself is questioned, also deserve dismissal in view of our decision upholding the circular instructions of the Registrar of Cooperative Societies referred to hereinabove and no relief as such could be granted since the societies concerned merely implemented the directions of the officers concerned who in turn acted under the circular instructions dated 2-1-1995 and 18-11-1995.
45. However, the learned counsel for the petitioners submits that even at this stage the societies are entitled to submit their proposals to the Registrar and seek his approval as provided for under Section 116-C of the Act in order to fix the staffing pattern, qualification, pay scales and other allowances for its employees. We do not find any legal impediment whatsoever in this regard for the societies and it shall always be open to the societies concerned to approach the Registrar and seek his approval as is required under Section 116-C of the Act. We also make it clear that if any such proposals were already submitted by any of the societies in the State, the same shall receive the attention of the Registrar of the Cooperative Societies and he shall pass appropriate orders in accordance with law.
46. It is submitted by the learned counsel for the petitioners that most of the societies in the State are under the management of the person-in-charge committees and no steps are taken to submit the proposals with regard to the staffing pattern, pay scales, etc., as is required under Section 116-C of the Act for the approval of the Registrar. It is submitted that inspite of the circular instructions dated 21-1-1988 issued by the Registrar, the District Cooperative Officers in the State did not obtain any particulars in respect of the PACS and submit their reports to the Commissioner of Cooperation and Registrar of Cooperative Societies.
47. The Commissioner of Cooperation and Registrar of Cooperative Societies shall consider as to the need and desirability of issuing any fresh instructions in order to enforce the circular instructions issued in Rc.No.6093/88 CP (B), dated 21-1-1988, particularly in view of the fact that most of the societies are stated to be under the management of the officers who are appointed as person-in-charge of the societies to manage their affairs. The learned Government Pleader for Cooperation, however, submits that the elections are likely to be held shortly and it shall always be open to the concerned elected Managing Committees to move the Registrar and seek his prior approval as is required in law to fix the staffing pattern, pay scales etc.
48. Having regard to the facts and circumstances of the case, we consider it appropriate to direct the Registrar of Cooperative Societies to consider as to whether any further directions in this regard are required to be issued to put an end to this controversy. An appropriate decision in this regard shall be taken by the Registrar as expeditiously as possible.
49. It is needless to observe that any further directions or instructions to be issued by the Commissioner shall have to be in accordance with the amended provision of Section 116-C of the Act.
50. For the aforesaid reasons, we are not inclined to grant any relief to the petitioners as prayed for by them.
The writ petitions are accordingly disposed of with the observations as above. There shall be no order as to costs.