Gujarat High Court
Kunteshbhai Bhaskarbhai Patel vs State Of Gujarat on 6 December, 2018
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/6299/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6299 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
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1 Whether Reporters of Local Papers may be allowed to No
see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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KUNTESHBHAI BHASKARBHAI PATEL
Versus
STATE OF GUJARAT
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Appearance:
HEENA D RANA(8349) for the PETITIONER(s) No. 1
MR DILIP B RANA(691) for the PETITIONER(s) No. 1
GOVERNMENT PLEADER(1) for the RESPONDENT(s) No. 1
MR VC VAGHELA(1720) for the RESPONDENT(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 06/12/2018
ORAL JUDGMENT
1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs;
Page 1 of 30C/SCA/6299/2018 JUDGMENT "(A) The Hon'ble Court be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned decision dated 30.03.2018 issued by the Managing Director of the respondent Sangh and the petitioner be permitted to continue as Director of the respondent Sangh.
(B) Pending hearing and final disposal of this petition, the Hon'ble Court be pleased to stay the execution, operation and implementation of the impugned decision dated 30.03.2018 passed by the respondent no.2-Sangh and further be pleased to restrain the respondent No.2 from filling up the vacant seat of the petitioner as director of the respondent sangh.
(C ) The Hon'ble Court may be pleased to pass such other order or orders as may be deemed just and proper in the circumstances of the case."
2. The case of the writ applicant, in his own words, as pleaded in the writ application, is as under;
"2. By way of this petition, the petitioner is approaching this Hon'ble Court under Article 226 of the Constitution of India for quashing and setting aside the impugned decision dated 30.03.2018 issued by the Managing Director of the respondent Sangh whereby the petitioner is removed as Director of the respondent Sangh mainly on the ground that the petitioner remained absent in the 3 consecutive meetings of the Sangh though the petitioner intimated to the Managing Director about his absence during the said period and as per the provisions of Bye-1aw No. 41 of the respondent Sangh, the Director of the Sangh can be removed from his post by 3/4th majority of the members present in the general meeting but no such procedure is followed by the respondent Sangh before. removing the petitioner as Director of the Sangh. A copy of the impugned decision dated 30.03.2018 issued by the Managing irector of the Sangh is annexed herewith and marked as Annexure-A to this petition.
3.0 FACTS OF THE CASE:Page 2 of 30
C/SCA/6299/2018 JUDGMENT 3.1 The petitioner submits that the petitioner was elected as Director of Bharuch District Co-operative Milk Producers Union Limited (Dudh Dhara Dairy) from Jambusar Voter's Constituency being a Chairman of Gajera Dudh Utpadak Sahkari Mandali Limited pursuant to the general election held on 29.06.2016. It is submitted that the petitioner was elected as Director on 30.06.2015 for a period of 5 years as per the provisions of law.
3.2 The petitioner submits that the Managing Director of the respondent Dairy gave notice dated 14.03.2018 to the petitioner in the form of an order for remaining absent in the meeting of the Sangh and was asked to remain present for explanation on 22.03.2018. A copy of the notice dated 14.03.2018 issued by the respondent Sangh is annexed herewith and marked as Annexure-B to this petition.
3.3 The petitioner submits that the petitioner submitted detail reply dated 21.03.2018 to the notice dated 14.03.2018 and gave explanation for remaining absent in the respective meetings of the Dairy and requested to file the notice considering the reasons stated in the reply. A copy of the reply submitted by the petitioner on 21.03.2018 is annexed herewith and marked as Annexure-C to this petition.
3.4 The petitioner submits that the Managing Director of the Dairy intimated vide letter dated 30.03.2018 about the decision taken by the Dairy about cancellation of his post as Director of the Dairy by not accepting the reasons stated in the reply submitted by the petitioner and relied upon Bye-law No.38 fro taking the decision, which is a subject matter of challenge in the present petition. A copy of relevant portion of bye-laws of the sangh is annexed herewith and marked as Annexure-D to this petition.
3.5 It is submitted that Managing Director of the Dairy has no such powers to remove the petitioner from the post of Director of the sangh and the petitioner categorically stated in the reply for not being present in the respective meetings referred in the notice as he was out of country for medical treatment for the period Page 3 of 30 C/SCA/6299/2018 JUDGMENT 04.12.2017 to 02.01.2018 which was intimated to MD. It is further submitted that no agenda was served on the petitioner for the meetings scheduled on the respective dates. It is further submitted that Bye-law No. 41 of the Dairy clearly states that the board member of the Dairy can be removed by 3/4th majority of the board members present in the general meeting. In the facts of the present case, no such decision is taken in the general meeting of the sangh and therefore, the decision given by the managing Director of the Dairy is without any authorization which requires to be quash and set aside in the interest of justice.
3.6 Hence, the present petition is preferred under Article 226 of the Constitution of India before this Hon'ble Court for quashing and setting aside the impugned decision dated 30.03.2018 intimated by the Managing Director of the Dairy whereby the petitioner is removed as Director of the Dairy Without following due procedure of law and the impugned decision is Without jurisdiction and under political influence."
3. Thus, it appears that as the writ applicant remained absent in consecutive five General Board Meetings, he ceased to be the Director by virtue of the bye-law No.38 of the Bharuch District Cooperative Milk Producers Union Limited.
4. It appears that on 14th March, 2018, a show-cause notice was served upon the writ applicant, calling upon him to show- cause why he should not be removed as a Director of the Society. Ultimately, by the Resolution No.4 passed by the Society in its meeting dated 22nd March, 2018, it was resolved that the writ applicant no longer remains the Director of the Society in view of the breach of the Bye-law No.38, referred to above. The resolution reads as under;
"Bharuch District Co-operative Milk Producers' Union Limited "Dudhdhara Dairy"
Old Highway No. 8, P.B. No. 29, Bholav, Bharuch Page 4 of 30 C/SCA/6299/2018 JUDGMENT Phone No. (2642) 246033/34/35 Fax:- (02642) 246418 Email:- [email protected]
-------------------------------------------------------------------------------- True copy from the original of Resolution No. 4 of the meeting of Governing Body dated 22/03/2018 Sr. No. 4 Subject:- To take note of action taken against Mr. Kunteshbhai B. Patel u/s 38 of Bye Law.
-:: R E S O L U T I O N ::-
The action taken against Mr. Kunteshbhai Bhaskarbhai Patel u/s 38 of the Bye Law was considered. Mr. Kunteshbhai Bhaskarbhai Patel was informed vide letter no. Board/PKP/3177 dated 14/03/2018 to give explanation before Governing Body at 11 am on 22/03/2018. Accordingly, Mr. Kunteshbhai Bhaskarbhai Patel did not remain present in the meeting of Governing Body. But, his letter dated 21/03/2018 addressed to the Managing Director was perused. He mentioned in the letter that notice is required to be served at his house as per bye law no. 15(56). But, as per the definition of the member mentioned in said section no. 15(56) and bye law no. 4 (A-9), the organization representing the respective Milk Producers' Co-operative Union Limited is considered the Mandali and accordingly, notice was served. In addition to this, Managing Director has taken action under sub rule 9/47(1-19) and as he was administrator of the union, he has done procedure to serve notice. Thus, upon perusal of his aforesaid letter, his representation cannot be accepted. Hence, he has ceased to be a member of the Governing Body of Milk Union. Taking note thereof, the Governing Body declares that henceforth, he will not be able to exercise power as a member of the Governing Body. It is held to approve the said resolution unanimously. The Managing Director is conferred power to take further necessary action. It also includes the engagement of the advocate for legal proceedings. Filing of caveat application has also been taken note of.Page 5 of 30
C/SCA/6299/2018 JUDGMENT
Approved unanimously
True copy from the original
Sd/-(illegible)
(P.K. Patel)
Managing Director"
5. Being dissatisfied with the action of the Society the writ applicant has come up with this writ application under Article 226 of the Constitution of India.
6. Mr. Rana has raised manifold contentions, challenging the legality and validity of the decision of the Society to remove the writ applicant from the post of the Director.
However, on behalf of the Society, a preliminary contention has been raised as regards the maintainability of this writ application under Article 226 of the Constitution of India.
7. Mr. Vaghela, the learned counsel appearing for the Society vehemently submitted that the Society, not being a State within Article 12 of the Constitution of India, no writ can be issued to such a Society. Mr. Vaghela further submitted that the Society cannot be even said to be an instrumentality of the State or authority or person discharging any public duty or public functions. According to Mr. Vaghela, the only alternative for the writ applicant is to question the decision or the action of the Society by filing a suit before the Board of Nominees under section 96 of the Gujarat Cooperative Societies Act.
8. Having regard to the preliminary contention raised by the other side as regards the maintainability of the writ application Page 6 of 30 C/SCA/6299/2018 JUDGMENT and having found substance in such a preliminary contention, this Court seriously called upon Mr. Rana to make good his case as regards the maintainability of this writ application. Mr. Rana, by placing reliance on a decision of this Court in the case of V.J. Patel & Anr. vs. Registrar of Cooperative Societies & Ors., 2010 (1) GLH 633 submitted that the respondent No.2 is one of the specified cooperative societies and although the respondent No.2 may not be a State within the meaning of Article 12 of the Constitution, yet the writ jurisdiction can be invoked in the matter of deciding the legality and validity of the action in the domain of fulfillment of public duty or obligation by the Specific Cooperative Society. He would submit that the respondent No.2 Society has a separate status under the Act and rules and the functioning of such specified cooperative society involves huge public importance. Mr. Rana placed reliance on the following observations made by a learned Single Judge of this Court in the above referred decision;
"7. In order to examine the controversy, the first aspect deserves to be dealt with is about the preliminary contentions raised by the learned counsel for the respondent District Union on the point of maintainability. It is an admitted position that the District Union is a specified Society under the Act. In the case of Ahmedabad District Co-op. Purchase and Sale Union Ltd. Vs. Gujarat State Co-op. Bank Ltd. & Ors. reported at 2006(3) GLH 539, this Court had an occasion to consider more or less similar preliminary objection about the maintainability of the petition against a specified society under Article 226 of the Constitution. It was inter alia observed by this Court in the said decision as under:
14. Second preliminary objection which needs to be disposed of at this stage is with respect to the maintainability of the petition. It is not in doubt that Page 7 of 30 C/SCA/6299/2018 JUDGMENT the petitioner has not laid any foundation to urge that respondents Nos.1 to 4 are State within the meaning of Article 12 of the Constitution. There is no material nor are there any averments to this effect. In that view of the matter, it is necessary for this Court to find out whether a writ would be maintainable in respect of the prayers made in the present petition.
14.1 By virtue of the areas and the importance of activities that certain cooperative societies have undertaken over a period of time, they have achieved considerable importance. To regulate some of the aspects of management of such societies, certain special provisions have been made in the said Act. Such societies which are referred to as specified cooperative societies under the provisions of the said Act are governed by special provisions made in the said Act. In particular section 74C of the Act and Chapter XI-A of the said Act provide that election to the members of the managing committee of such society shall be governed by the said provisions. In Chapter XI-A of the said Act, elaborate provisions have been made for conduct of elections to the members of managing committee of such societies. These provisions are substantially pari-materia with the provisions contained in the legislation governing election of State Legislatures. Detailed and elaborate provisions have been made for preparation of electoral rolls, for filing of nominations, for holding of elections, for counting of the ballots and for declaration of the results of the elections. The provisions are also made for the purpose of resolving election disputes. Special machinery is created to hear any complaint about the election mal-practices and other election disputes. The provisions contained in Chapter XI-A also provide for offences and penalties. It can thus be seen that in a limited sphere of constitution of managing committees of the specified cooperative societies, in view of the considerable importance that such societies enjoy, it is no longer a matter of mere contract between the parties. The Legislature has intercepted and made detailed provisions to ensure that election of the committees of such Page 8 of 30 C/SCA/6299/2018 JUDGMENT societies are held in a free and fair manner. In the case of Daman Singh v. State of Punjab, (1985) 2 SCC 670 also, the Hon'ble Supreme Court recognized the concept of statutory interference with the composition of cooperative societies. In para 9 of the said decision, it is observed that in the cases before us we are concerned with cooperative societies which from the inception are governed by statute. They are created by statute, they are controlled by statute and so, there can be no objection to statutory interference with their composition on the ground of contravention of the individual right of freedom of association. It can thus be seen that such societies hold considerable importance in so far its constitution and management is concerned. It is in this regard, that the provisions contained in section 74-C (3) provide that notwithstanding anything contained in the bye-
laws of any such society, the committee of management shall be elected by the general body of members of the society and all other committees authorized by or under the bye-laws may be constituted by electing or appointing persons from among the persons who are members of the committee of management. In the present petition, the petitioner has sought implementation of the said statutory provision. In the case of A.M. Bhutaiya v. Amreli Dist. Central Coop. Bank Ltd., 1998 (2) GLR 1740, learned single Judge of this Court observed that whether a cooperative society is an instrumentality of the State or not would depend on the nature of functions and duties of the society, Government financing and extent of Government control and in that case, the Court found that the Amreli District Cooperative Bank is not State within the meaning of Article 12 of the Constitution of India. It was, however, held that writ jurisdiction of the High Court can be invoked as a public law remedy for fulfillment of public duty or obligation.
15. In view of the above discussion, I find that the petition cannot be rejected only on the ground of not being maintainable. There is yet another aspect of this issue. Respondents Nos.5 & 6 are the official respondents, i.e. the Registrar of Cooperative Page 9 of 30 C/SCA/6299/2018 JUDGMENT Societies and the Department of the State Government who are entrusted with the duty of ensuring that the provisions contained in the said Act are implemented and corresponding powers are also available with the authorities particularly in section 82 and section 160 of the said Act. Such powers have been recognized by this Court in the case of A.M.Bhutaiya v. Amreli District Central Coop. Bank Ltd (supra) as well in the case case of Jain Merchants Cooperative Housing Society Ltd v. HUF of Manubhai Shah, (1995) 1 GLR 19 wherein the Bench was pleased to note the observations made in para 55 of the decision in the case of Amreli District Cooperative Sale and Purchase Union (supra) to the following effect:
In any case, an aggrieved person has always a right to move the Courts by seeking appropriate remedies by regular civil action in Civil Court or before Registrar by invoking his special jurisdiction where the membership is refused on flimsy and trivial grounds.
15.1 Under section 82 of the said Act, the Registrar has power to enforce performance of obligation of a society. It provides, inter alia, that where any society is required to take any action under the Act, the rules or the bye-laws and such action is not taken within the time provided in the Act or rules or the bye-laws or where no such time is provided, within such time as the Registrar may specify by notice in writing, the Registrar may himself or through a person authorized by him, take such action at the expense of the society. Under the provisions of section 160 of the said Act, the Registrar enjoys certain powers to give directions to the co-operative societies. The prayers made by the petitioner also include prayers for direction to respondents Nos. 5 & 6 to ensure that the provisions contained in section 74C particularly sub-
section (3) thereof are properly implemented. Surely, such directions are not out of the purview of writ jurisdiction of this Court under Article 226 of the Constitution of India. Merely on the ground of maintainability, I do not find that this petition can Page 10 of 30 C/SCA/6299/2018 JUDGMENT be rejected.
8. It may also be recorded that in the matter of action of the District Cooperative Bank brought under challenge in a petition under Article 226 of the Constitution, this Court in the case of Arvindbhai Mulubhai Bhutaiya & Ors. Vs. Amreli District Central Co-op Bank Ltd. & Anr reported at 1998(2) GLR 1740 found that even if it is not a State within the meaning of the Article 12 of the Constitution, the writ jurisdiction can be invoked as a public law remedy for fulfillment of the public duty and obligation. In the said decision, after recording the conclusion that the District Bank would not be said to be a State within the meaning of Article 12 of the Constitution, it was further observed by the Court at para 22 as under:
22. However, the matter does not end here.
The question still remains as to whether in the facts and circumstances of the case, any writ,order or direction can be issued against the respondent - Bank under Article 226 of the Constitution of India. Mr. Jayant Patel appearing on behalf of the petitioners has resolutely argued that the scope of Article 226 is wider than that of Article 32 of the Constitution of India.
The jurisdiction of the Supreme Court under Article 32 can be invoked only in cases where there is a breach of the fundamental right and fundamental rights can be enforced only against those bodies which are covered by Article 12 of the Constitution of India. But so far as Article 226 is concerned, the writ can be issued even for the purpose of rights, which are not fundamental, and as has been provided in Article 226 it is to any person and for any other purpose. Therefore, Article 226 is couched in a large and wider terminology and it has been so considered, construed and explained in various decisions and even after holding that a particular body is not covered by the term 'State' or 'other authority' or an Page 11 of 30 C/SCA/6299/2018 JUDGMENT agency' or 'instrumentality' within the scope of Article 12,the writs have been issued when the Court has found that such body has failed to discharge the duty cast upon it under any statute and such writs, orders or directions in the nature of writ have been issued by this Court itself. Mr. Patel has placed strong reliance on the five decisions; three of which have been rendered by the Supreme Court, one by Andhra Pradesh High Court and one by our own High Court.
Reference has already been made to the aforesaid decisions in the earlier part of this order. I have considered the aforesaid submissions made by Mr. Patel on the question of the scope of Article 226 and find that this submission made by Mr. Patel is not without force. In Shri Anadi Mukta's case (Supra), the case went to the Supreme Court from our own High Court. It has been clearly ruled by the Supreme Court that the issue of the writ of mandamus under Article 226 is not confined to statutory authorities and instrumentalities of the State only and further that it can be issued to any other person or authority performing public duty and that such duty need not be imposed by the State Government. Para 19 of Shri Anadi Mukta's case (Supra) is reproduced as under:-
The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Art.32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-
fundamental rights. The words "Any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned Page 12 of 30 C/SCA/6299/2018 JUDGMENT is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied."
Hence as a principle the issue of any order or direction in the nature of mandamus cannot be denied on the ground that the body against which the writ is sought to be issued is not an 'authority' or 'agency' or 'instrumentality' of the State under Article 12 nor it can be denied on the ground that the duty to be enforced is not imposed by the statute. The following quotation on the development of this law by Professor De Smith has been referred by the Supreme Court in Para 21 of the judgment as under:-
To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter. common law, custom or even contract."
(Judicial Review of Administrative Action 4th Ex.p.540).
The Supreme Court has shared this view and has opined that the judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available 'to reach injustice wherever it is found' and technicalities should not come in the way of granting that relief under Article 226 and the objection about the maintainability of the writ petition was rejected by the Supreme Court in this case. In AIR 1993 Page 13 of 30 C/SCA/6299/2018 JUDGMENT SC 2178 (Supra) the dictum laid down in Shri Anadi Mukta's case has been followed;
scope of Article 226 has been further explained vis a vis the issue of prerogative writ in England and while referring to the Supreme Court decision rendered in Dwarkanath v. I.T.O. i.e. AIR 1966 SC 81 it has been held that Article 226 is couched in comprehensive phraseology and it ex facie confers a wide power on the High Courts to reach injustice wherever it is found and that Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non- fundamental rights and the words 'any person or authority' used in Article 226 are not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. What is relevant is the nature of the duty imposed on the body and the duty must be judged in the light of positive obligation owed by the person or authority to the affected party.
No matter by what means the duty is
imposed, if a positive obligation exists
mandamus cannot be denied. In K.
Krishnamacharyulu's case (Supra) the
significant observation made by the Supreme Court in Para 4 is that, "When an element of public interest is created and the institution is catering to that element, the teacher, being the arm of the institution, is also entitled to avail of the remedy provided under Article 226." When the State launches a co-operative movement and the Government and its agencies introduced several Schemes for the benefit of public at large and such Schemes are sought to be implemented through the co-operative society like the respondent - Bank, it can safely be said that the element of public interest is created and such bodies do cater to that element of public interest and the Page 14 of 30 C/SCA/6299/2018 JUDGMENT employees of such Society are certainly the arms of such Co-operative Societies, through which the co-operative movement is taken care of and in such cases it cannot be said that there is no creation of the element of public interest. Reference has also been made to Vazir Sultan Tobacco Company Ltd.'s case (Supra), a Division Bench decision rendered by the Andhra Pradesh High Court, in which the reasoning given in the aforesaid Supreme Court decisions has been summarised as has already been quoted in the earlier part of this order. And the last but not the least case cited by Mr. Patel in this regard is a Division Bench decision of our own High Court reported in 1992(2) GLR 1065 (Supra), which has also been discussed in the earlier part of this order and in view of the authoritative pronouncements by the Division bench of this Court in this Misc.Mazdoor Sabha's case, this Court has no hesitation in holding that in a given case a writ order or direction can be issued against a co-operative society like the respondent - Bank even if it is not an authority' or an 'agency' or 'instrumentality' of the State under Article 12 of the Constitution of India, in the writ jurisdiction of this court in the nature of public law remedy. The only rider is that it can not be invoked for enforcement of any private right against such body. The only question, therefore, now remains is as to whether there was ny statutory obligation on the respondent Bank as an employer in the nature of public duty or obligation and not private duty and obligation and this aspect of the matter has to be dealt with now so as to adjudicate as to whether the petitioners are entitled to the issue of such an order or direction in the nature of writ in their favour vis a vis the respondent - Bank and which is that statutory obligation on the respondent - Bank as an employer in the nature of public duty or obligation, which it has failed to discharge. This aspect is to be dealt with in later part of this order while considering the merits.
This Court in the said decision inter alia at para 30, Page 15 of 30 C/SCA/6299/2018 JUDGMENT further observed thus-
I also find that such writ also could be issued on failure of public duty under charter, common law, custom or even contract as per the quotation of Professor De Smith, to which reference has been made hereinabove and this view of Prof. De Smith, had been shared by the Supreme Court, as mentioned in para 21 of Shri Anadi Mukta's case (Supra). By no stretch of imagination the Standing orders framed under the Bombay Industrial Relations Act can be treated at a pedestal lower than a charter or common law or custom or even contract. It may be further mentioned that under the common law and custom also the respondent - Bank was under an obligation to follow the principles of natural justice before passing the orders and appraise the concerned petitioners as to on what ground their services were sought to be terminated. In Praga Tools Corporation v. Shri C.A. Imanual reported in AIR 1969 SC 1306 the Supreme Court has observed that the writ could be issued against a person or body to carry out the duties placed on them by the Statutes even though they are not public officials or statutory body and according to the observations of Subba Rao, J in Dwarkanath v. Income Tax Officer, reported in AIR 1966 SC 81, Article 226 confers a wide power on the High Courts to reach injustice wherever it is found.
Ultimately, the decision for termination of the 45 employees of the Bank was set aside by the Court.'
9. Mr. Vaghela, the learned counsel appearing for the Society submitted that the decision of this Court in the case of V.J. Patel (supra) cannot be said to be good law in the wake of the decision of the Supreme Court in the case of Thalappalam Ser. Coop. Bank Ltd. & Ors. vs. State of Kerala & Ors., 2013 (3) GLH 591.
10. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the Page 16 of 30 C/SCA/6299/2018 JUDGMENT only question that falls for my consideration is whether this writ application under Article 226 of the Constitution of India against a specified cooperative society is maintainable in law.
11. 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.
12. 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) 13 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;
14. 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 instrumentality or agency of Government.
Page 17 of 30C/SCA/6299/2018 JUDGMENT (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.
15. 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 autonomy which is necessary as well as useful from the point of view of effective business management but behind the Page 18 of 30 C/SCA/6299/2018 JUDGMENT 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 and they must be put into effective action by a meaningful and purposeful interpretation. Therefore, it was observed that if a Page 19 of 30 C/SCA/6299/2018 JUDGMENT 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.
16. 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.
17. Even according to Mr. Rana, the learned counsel appearing for the writ applicant, the Society is not an "authority" or "agency" or "instrumentality" of a State. However, according to him, the Society was under an obligation to follow the bye-laws framed by the Society. According to Mr. Rana, the bye-laws have statutory force and, therefore, are binding to the Society. In short, the contention of Mr. Rana is that if a specified cooperative society has violated any mandatory provisions of the Act or rules framed thereunder or the bye-laws, then his client is entitled to invoke the writ jurisdiction of this Court under Article 226 of the Page 20 of 30 C/SCA/6299/2018 JUDGMENT Constitution of India and pray for a writ of certiorari as well as mandamus. This submissions of Mr. Rana is sought to be fortified by the decision of this Court in the case of V.J. Patel (supra) and one another decision rendered by a learned Single Judge in the case of Arvindbhai Mulubhai Bhutaiya (supra), referred to in the case of V.J. Patel (supra). 18 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:
(1) The employment of a permanent employee or Page 21 of 30 C/SCA/6299/2018 JUDGMENT 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 22 of 30 C/SCA/6299/2018 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."
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19. The bye-laws of a co-operative society framed by the society under the Gujarat Co-operative Societies Act 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 the society and its members, as the case may be.
20. 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.
21. 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 Page 24 of 30 C/SCA/6299/2018 JUDGMENT 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 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, Page 25 of 30 C/SCA/6299/2018 JUDGMENT 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 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.Page 26 of 30
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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 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.
22. 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 Page 27 of 30 C/SCA/6299/2018 JUDGMENT 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 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 Page 28 of 30 C/SCA/6299/2018 JUDGMENT 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 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,"
23. Thus, it is clear from the above referred decision that the bye-laws of a Society or articles of association of a Company do not have force of a statute and they constitute a contract between the parties.
24. So far as the case on hand is concerned, the Society could not be said to have been constituted under the Act. In that regard, the Society herein cannot be called a public body. It has no duty towards the 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 its employees. 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 an executive power of the State.
25. In view of the aforesaid discussion, and more particularly, having regard to the decision of the Supreme Court in the case of Thalappalam Ser. Co.op. Bank Ltd (supra), I am of the view that this writ application against a cooperative Society is not Page 29 of 30 C/SCA/6299/2018 JUDGMENT maintainable in law. The only remedy available to the writ applicant is to question the decision or the action of the Society before the Board of Nominees by filing an appropriate suit under section 96 of the Act.
26. in the result, this application fails and is hereby rejected only on the ground of its maintainability. It shall be open for the writ applicant to avail appropriate legal remedy before the appropriate forum in accordance with law. Rule is discharged. Interim order, earlier granted, stands vacated.
(J.B.PARDIWALA, J) Vahid Page 30 of 30