Himachal Pradesh High Court
Shakti Chand Thakur vs State Of H.P. And Others on 5 March, 2015
Author: Tarlok Singh Chauhan
Bench: Tarlok Singh Chauhan
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No. 8435 of 2014 .
Date of decision: 5.3.2015
Shakti Chand Thakur ...Petitioner.
Versus
State of H.P. and others ..Respondents.
Coram
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge.
Whether approved for reporting ?1 Yes For the Petitioner : Mr. Sushant Vir Singh Thakur, Advocate.
For the Respondents : Mr. V.K.Verma , Ms. Meenakshi Sharma and Mr. Rupinder Singh, Addl. Advocate Generals, for respondents No.1 & 2.
Mr. Sunil Mohan Goel, Advocate, for respondents No. 3 and 4.
Tarlok Singh Chauhan, Judge ( Oral ) The petitioner has invoked the writ jurisdiction of this Court under Article 226 of the Constitution of India and has claimed the following substantive relief:
"A) That the writ of certiorari may kindly be issued to quash the impugned order dated 13.01.2014 (Annexure P-1). B) That the writ of mandamus may kindly be issued directing the respondent-Bank to promote the petitioner for the post of Assistant General Manager w.e.f. the juniors are promoted.
2. Indisputedly, the petitioner is an employee of the H.P.State Co-operative Bank Ltd. (for short 'Bank') and working as Senior Manager at Sarkaghat and the relief claimed herein is directed only against the 1 Whether reporters of Local Papers may be allowed to see the Judgment ? yes ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 2 H.P. State Co-operative Bank. Therefore, the preliminary question which requires consideration is as to whether the writ petition against the bank .
is maintainable.
3. This question is no longer res-integra in view of the Division Bench Judgment of this Court in Sanjeev Kumar and others vs. State of H.P. and others Latest HLJ 2014 (HP) 1061, wherein it was held as under:
"2.
The moot question as raised by respondent No. 3 by way of preliminary objection is as to whether the petition is maintainable against the H.P. Cooperative Bank (hereinafter to be referred as Bank) against whom primarily the reliefs have been sought.
3. Notably the Bank in terms of judgment passed by a learned Division Bench of this Court in Chandresh Kumar Malhotra vs. H.P.State Coop. Bank and others 1993(2) Sim.L.C. 243 has not been held to be a "State" within the meaning of Article 12 of the Constitution and has further not been held to fall within the meaning of other authority for the purpose of Article 226 of the Constitution. The judgement in Chandresh Kumar Malhotra's case has since been affirmed by the Hon'ble Full Bench of this Court in Vikram Chauhan vs. The Managing Director and ors. Latest HLJ 2013 (HP) 742 (FB).
4. Yet, the learned counsel for the petitioner would insist that the fact situation in this case was absolutely different as he was not challenging the action of the bank but was seeking to challenge the orders passed by the authorities created under the H.P. Cooperative Societies Act, 1968 (for short, the Act) and H.P. Cooperative Societies Rules, 1971 (for short, Rules).
5. In this background certain essential facts may be noticed. Certain persons filed writ petitions bearing CWP No. 1762 of 2012 and CWP No. 3560 of 2012, which were disposed of by this court directing them to approach the bank. Some of the persons instead of approaching the Bank approached the Registrar, Cooperative Societies by terming the petition to be under section 72 of the Act and the same was disposed of by the Joint Registrar on 18.8.2012. This order was challenged by way of CWP No. 8996 of 2012 and the said petition was disposed of by this court by holding that parties had a statutory remedy under section 94 of the Act by filing a revision petition before the State government. It is thereafter that the State government passed a decision, which has been impugned herein.::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 3
6. In order to justify the maintainability of the petition, the following averments have been set out:-
"That respondents No. 1 & 2 are State and respondent No. 3 is .
State being "other authority" as per Article 12 of the Constitution of India. Be it stated here that respondents No. 1 & 2 have got deep and pervasive control upon respondent No.3, which is a society registered under the H.P. Cooperative Societies Act and Rules. Respondent No. 3 is functioning strictly in accordance with Act, Rules and Bye-Laws framed and approved by respondent No.2. It is submitted, subject to correction, that State has got more than 55% share capital in respondent No.3 bank. As per provisions of the Act and Rules, respondent No.3 cannot move an inch for any of its functions without approval of the Registrar Cooperative Societies, respondent No.2. It is submitted that as per section 35-B of the Act, Managing Director of respondent No.3 is always from Himachal Pradesh Administrative Services (HPAS) and as per section 35 of the Act, three nominations to the Board of Directors of respondent No. 3 are made by the Government. As per rule 56(3) of 1971 Rules, no employee or salaried officer or servant can be employed by the society, whose remuneration is exceeding Rs.1,000/- without the previous permission of the Registrar. Registrar Cooperative Societies under section 35-A of the Act has got powers to constitute new Committee. Government has got powers as per section 37 to supersede the Managing Committee and as per section 38, possession of the records can be secured. Society is bound to comply with all directions as may be issued by the State Government. The Board of Directors, which is incharge of general superintendence/ direction and control of the powers of the society and all its income and property, is also largely controlled by the nominees of the State. Thus, the State Government, by reason of the provision of approval stated supra, has got full deep and pervasive control of the working of the society, thus, respondent No. 3 is State within the meaning of Article 12 of the Constitution of India. It is submitted that representations filed by petitioners on the basis of directions issued by this Hon'ble Court now having been decided as per statute by the Joint Registrar Cooperative Societies, H.P., Shimla, vide orders dated 18.8.2012, and the dispute between petitioners and respondent No. 3 having been decided vide statutory orders passed, stated supra, thus now gives jurisdiction to assail the same by invoking powers as vested in this Hon'ble Court under Articles 226 and 227 of the Constitution of India, respondents are amenable to the writ jurisdiction of this Hon'ble Court. Further, as per judgement of the Full Bench of this Hon'ble Court, statutory orders of the authorities are being assailed, thus, also this Hon'ble Court has the jurisdiction."
7. It is on the strength of such pleadings that writ jurisdiction of this court has been sought to be invoked.
8. We are afraid that we cannot agree with the submissions of the petitioners because all these contentions have already been dealt with and discussed in detail by the learned Division Bench in Chandresh Kumar Malhotra's case (supra) and it is after taking into consideration the entire facts and law that this court held as follows:-
"98. Consequently, we have no hesitation in holding that the three Societies, namely, The Himachal Pradesh State Co-operative Bank Ltd; The Kangra Central Co-operative Bank Ltd,, and the Himachal Pradesh State Co operative Marketing and Development Federation Ltd , are not 'other authorities' and, as such, cannot be characterised as ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 4 'State' when the meaning of Art. 12 of the Constitution and the same are also not authority within the meaning and for the purpose of Article 226 of the Constitution, Order passed by the Societies under their respective service regulations against its employees, as such, or in connection With employment cannot be corrected by way of writ .
petitions. The petitions also would not be maintainable in order to challenge the action of the Registrar since the same is not an exercise of statutory power conferred upon him under the provisions of the Act or the Rules but an exercise of powers by him under service regulations framed under Bye-laws having no force of law. The writ petition also will not be maintainable since none of the three Societies are discharging any public functions."
9. Faced with such situation, the petitioners would then contend that the orders passed by the Registrar and thereafter by the State government were statutory and therefore, a writ against an order passed by the statutory authority was maintainable.
10. There would have been no dispute in case the orders impugned herein could be termed to have been passed by the statutory authority in exercise of powers conferred upon it by the Act and Rules, because in that event undisputedly the writ petition would be maintainable before this court. However, the moot question again herein is as to whether the orders passed by the respondents i.e. Registrar and the State Government can be termed to be statutory orders.
11. Admittedly, the dispute raised by the petitioners pertained to a service matter and therefore, even if this court had relegated the petitioners to the Registrar/ State government, could the orders be termed to be in exercise of the statutory powers? The obvious answer is no, for more than one reasons.
Firstly, the dispute of an employee and employer relationship is not a dispute, which touches the constitution, management or business of the cooperative societies and therefore, is not amenable to the jurisdiction of the Registrar under section 72 of the Act [Re: Morinda Coop. Sugar Mills Ltd. Vs. Morinda Coop.Sugar Mills Workers' Union (2006) 6 SCC 80]. Secondly even if this court had relegated the petitioners before the Registrar/ State government, the orders passed by them would not clothe the orders so passed with statutory colour, as the same are not in exercise of statutory powers conferred upon them under the provisions of the Act and Rules as held in Chandresh Kumar Malhotra (supra).
12. The petitioners would then contend that Cooperative bank is subject to the control of the statutory authorities like the Registrar, Joint Registrar, the government and therefore, amenable to the writ jurisdiction of this court.
13. Even this submission of the petitioners cannot be accepted, firstly because of the decision of this court in Chandresh Kumar Malhotra's case (supra), wherein this court had held:-
::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 5"......The petitions also would not be maintainable in order to challenge the action of the Registrar since the same is not an exercise of statutory power conferred upon him under the provisions of the Act or the Rules but an exercise .
of powers by him under service regulations framed under Bye-laws having no force of law..."
And, secondly, on account of all these submissions having already been considered by the Hon'ble Supreme Court in S.S.Rana vs. Registrar, Co-operative Societies and another (2006) 11 SCC 634, wherein the provisions of H.P. Cooperative Societies Act and Rules have been considered and it has been held that general regulations under an Act like the Companies Act or the Cooperative Societies Act would not render the activities of the Company or Societies as subject to control of the State. It has further been observed that such control was only in terms of the provisions of the Act and was meant to ensure proper functioning of the society and the State or statutory authority would have nothing to do with its day-to-day functions.
14 The petitioners would then urge that this court in Vikram Chauhan case (supra) has clearly held that a writ would lie against the cooperative bank if the facts and circumstances so warrant despite it not being a State within the meaning of Article 12 of the Constitution in exercise of the powers under Article 226 of the Constitution and relied upon the following observations:
"15. For the view taken by us on both facts of the referred questions, we proceed to answer the Reference as under:
(1) ...........
(2) ...........
(3) ...........
(4) As regards the second part of the question as to whether a writ
would lie against the stated Cooperative Banks, we hold that it is not appropriate to give a definite answer to this question. For, it would depend on several attending factors. Further, even if the said Banks were held to be not a State within the meaning of Article 12, the High Court in exercise of powers under Article 226 of the Constitution of India, can certainly issue a writ or order in the nature of writ even against any person or Authority, if the fact situation of the case so warrants. In other words, writ can lie even against a Corporative Society. Whether the same should be issued by the High Court would depend on the facts of each case."
15. We are afraid that even this submission is without merit. This court in Chandresh Kumar Malhotra's case has clearly held the respondent- bank not to be a "State" within the meaning of Article 12 of the Constitution and also not an authority within the meaning and for the purpose of Article 226 of the ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 6 Constitution. (Referred: para-98, quoted above), which judgement has been affirmed by the Hon'ble Full Bench.
16. Further, it would be seen that the learned Division Bench of this court .
while hearing CWP No. 3634 of 2012 vide its order dated 20.7.2012 referred the following question for consideration by the Full Bench:-
"Whether the Kangra Central Co-operative Bank, the Himachal Pradesh State Co-operative Bank Ltd. And the Jogindra Central Co-operative Bank, are `State' within the meaning of Article 12 of the Constitution of India and whether a writ would lie against them?"
17. The Hon'ble Full Bench while proceeding to answer the question observed that question as formulated raised two independent issues. Firstly, whether the stated Cooperative Banks are "State" within the meaning of Article 12 of the Constitution and the second which was held to be independent of the first question was whether a writ would lie against those cooperative banks. It is in this background that this court while answering the second question held as follows:-
"12. That takes us to the second part of the question formulated by the Division Bench, as to whether a writ would lie against the stated Cooperative Banks? This question, essentially, touches upon the scope of power of the High Courts to issue certain writs as predicated in Article 226 of the Constitution of India. This is completely independent issue. In a given case, in spite of the opinion recorded by the Court that the respondent concerned in a writ petition, filed under Article 226 of the Constitution of India, is not a State within the meaning of Article 12 of the Constitution of India. Even then, the High Court can exercise jurisdiction over such respondent in view of the expansive width of Article 226 of the Constitution of India. It is well established position that the power of the High Courts under Article 226 is as wide as the amplitude of the language used therein, which can affect any person - even a private individual - and be available for any other purpose - even one for which another remedy may exist (Rohtas Industries Ltd. and another vs. Rohtas Industries Staff Union and others) (1976) 2 SCC 82. In the case of Engineering Mazdoor Sabha and another vs. Hind Cycles Ltd. AIR 1963 SC 874, the Court opined that even if the Arbitrator appointed under Section 10-A is not a Tribunal for the purpose of Article 136 of the Constitution in a proper case, a writ may lie against his Award under Article 226 of the Constitution. In the case of Praga Tools Corporation vs. C.A. Imanual and others 1969 (1) SCC 585 the Apex Court held that it as not necessary that the person or the Authority on whom the statutory duty is imposed need be a public official or an official body. That a mandamus can be issued even to an official or a Society to compel him to carry out the terms of the statute under or by which the Society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorizing their undertakings. Further, a mandamus would lie against a Company constituted by a statute for the purposes of fulfilling public responsibilities. In the same decision, the Apex Court examined the amplitude of the term "Authority" used in Article 226 of the Constitution. The Court opined that it must receive liberal meaning unlike the term in Article 12 of the Constitution. It went to observe that the words "any person or authority"
used in Article 226 cannot be confined only to statutory authorities and instrumentalities of the State. It may cover any other person or body performing public duty irrespective of the form of the body concerned. It is emphasized that what is relevant for exercising power is the nature of the duty imposed on the body which must be a positive obligation owned by the person or Authority. Depending on that finding, the Court may invoke its authority to issue writ of mandamus. In the case of Life Insurance Corporation of India vs. Escorts Ltd. and others 1986 (1) SCC 264 the Constitution Bench opined that the question ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 7 must be "decided in each case" with reference to particular action, the activity in which the State or the instrumentality of the State is enacted when performing the action, the public law or private law, character of the Constitution and most of the other relevant circumstances. In a given case, it may be possible to issue writ of mandamus for enforcement of public duty .
which need not necessarily 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, as noted by Professor de Smith, which exposition has found favour with the Apex Court.
13. The Apex Court after referring to catena of decisions and authorities in the case of UP State Cooperative Land Development Bank Ltd . Vs. Chandra Bhan Dubey and others (1999) 1 SCC 741 has succinctly delineated the scope of authority under Article 226 of the Constitution. In para 27 of this decision, the Court opined that Article 226 while empowering the High Court for issue of orders or direction to any Authority or person does not make any difference between public functions or private functions, but did not go to elaborate that question in the fact situation of that case. It is unnecessary to multiply the authorities on the point except to observe that a writ would lie against even a Cooperative Society or Company. But that does not mean that the Court is bound to issue such a writ. It is the prerogative of the High Court to issue writ to any person or authority, which is not a State or an instrumentality of the State. The Court would do so with circumspection and keeping in mind the well defined parameters. Whether in the fact situation of a given case, the Court ought to exercise its authority to issue writ or order in the nature of writ under Article 226 of the Constitution, will have to be answered on the basis of the settled principles, on case to case basis. Thus, it will be inapposite to put it in a straight jacket manner that every writ petition filed against the Cooperative Banks must be dismissed as not maintainable or otherwise.
14. Counsel appearing for the parties invited our attention to several other decisions. However, we do not intend to dilate on all those authorities any further, except to mention the same. Counsel appearing for the Kangra Bank had relied on two Judges Bench decision in the case of Zorastrian Cooperative Housing Society Ltd. and another vs. District Registrar, Cooperative Societies (Urban and others) (2005) 5 SCC 632 (para 32), which took the view that a Cooperative Society cannot be treated as State unless it fulfills the tests spelt out in Ajay Hasia's case by the Constitution Bench of the Apex Court, followed in the case Praga Tools (supra). Reference was also made to the seven Judges Bench of the Apex Court in the case of Pradeep Kumar Biswas vs. Indian Institutes of Chemical Biology and others (2002) 5 SCC 111 (paras 1 to 4 and 40) and another decision in the case of Bhadra Shahakari S.K. Niyamita vs. Chitradurga Mazdoor Sangh and others ( 2006) 8 SCC 552 (para 3), which deals with the question as to whether the appellant, Cooperative Society can be treated as State within the meaning of Article 12 of the Constitution. The learned Senior counsel for the H.P. Cooperative Society invited our attention to the decision of two Judges Bench of the Apex Court in General Manager, Kishan Sahkari Chini Mills Ltd. Sultanpur, UP vs. Satrughan Nishad and others (2003) 8 SCC 639 (paras 6 to 8), to contend that even if it is a case of nominated Directors of Society that does not presuppose that the State has perennial control over the Society. Reliance is also placed on the another decision of the Apex Court in the case of Shri Anadi Mukta Sadguru S.M.V.S.J.M.S. Trust vs. V.R. Rudani and others AIR 1989 SC 1607 (paras 14 to 16 and 19 to 21) and in case of Zee Telefilms Ltd. and another vs. Union of India and others (2005) 4 SCC 649 (paras 8,9 and 35)."
18. It was on the basis of the aforesaid reasoning that the principle in paragraph-15(4) was laid down by the Hon'ble Full Bench which have been completely read out of context by the petitioners. The fact situation in the present case does not attract the applicability of the principles laid down therein. This is not a case where the respondents have been imposed with the public duty, as already held by this court in Chandresh Kumar Malhotra's ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 8 case (supra). Moreover, it is settled law that it is neither desirable nor permissible to pick out a word or a sentence from the judgment, divorced from the context of the question under consideration and treat it to be the complete .
`law' declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of the Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by the Court, to support their reasoning. (See: Commissioner of Income Tax vs. Sun Engineering Works (P) Ltd. (1992) 4 SCC 363. Likewise, it is also to be borne in mind that the observations in the judgement cannot be read like a text of a statute or out of context. [See:
Hindustan Steel Works Construction Ltd. Vs. Tarapore & Co. and another (1996) 5 SCC 34].
19. The preliminary objection raised by respondent No. 3 is required to be upheld for yet another reason, which is on account of the recent judgement rendered by the Hon'ble Supreme Court in Thalappalam Ser. Co-op. Bank Ltd. and others vs. State of Kerala and others 2013 AIR SCW 5683. No doubt, the primary issue in this case pertained to the applicability of the provisions of Right to Information Act to the Cooperative society and also the Registrar. However, one of the issues therein also related to the question as to whether the cooperative society was a "State" within the meaning of Article 12 of the Constitution. The Hon'ble Supreme Court after discussing the entire law on the subject has come to a categorical finding that the cooperative societies which were the subject matter of the lis do not fall within the expression "State" or an "instrumentality of the State" within the meaning of Article 12 of the Constitution and were therefore, not subject to all constitutional limitations as enshrined in Part-III of the Constitution. The relevant finding of the Hon'ble Supreme Court is as follows:-
"Co-operative Societies and Article 12 of the Constitution:
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 Co-operative 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 ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 9 Bank are controlled by the State Government though it is functioning as a co-operative 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 r 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 Co-
operative 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.::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 10
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 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. Above principle has been approved by this Court in S.S. Rana v. Registrar, Co- operative Societies and another (2006) 11 SCC 634. In that case this Court was dealing with the maintainability of the writ petition against the Kangra Central Co- operative Society Bank Limited, a society registered under the provisions of the Himachal Pradesh Co-operative Societies Act, 1968. After examining various provisions of the H.P. Co-operative Societies Act this Court held as follows Para 9 of AIR SCW):
"9. It is not in dispute that the Society has not been constituted under an Act. Its functions like any other cooperative 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 cooperative 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 was the Society 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 characterised as public authority?
11. Respondent 2, the 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 v. Khalid Mujib Sehravardi.::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 11
[See Zoroastrian Coop. Housing Society Ltd. v. Distt. Registrar, Coop. Societies (Urban) (2005 AIR SCW 2317)]
12. It is well settled that general regulations under an Act, like .
the Companies Act or the Cooperative 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."
18. We have, on facts, found that the Co-operative Societies, with which we are concerned in these appeals, will not fall within the expression "State" or "instrumentalities of the State" within the meaning of Article 12 of the Constitution and hence not subject to all constitutional limitations as enshrined in Part III of the Constitution. We may, however, come across situations where a body or organization though not a State or instrumentality of the State, may still satisfy the definition of public authority within the meaning of Section 2(h) of the Act, an aspect which we may discuss in the later part of this Judgment."
20. In view of the aforesaid clear exposition of law not only of this court but also the Hon'ble Supreme Court, we find merit in the preliminary objection raised by respondent No. 3 regarding the maintainability of the petition against the H.P. State Cooperative Bank and uphold the same and accordingly declare this petition to be not maintainable against the H.P. State Cooperative Bank. Since the relief in this petition is primarily claimed against the said bank, therefore, the petition itself is not maintainable and accordingly the same is dismissed leaving the parties to bear their own costs."
4. Confronted with this situation, learned counsel for the petitioner would then contend that the matter may be remitted for decision to the Registrar, Co-operative Societies. Section 72 of the H.P. Co-operative Societies Act, 1968 (for short 'Act') reads thus:
"72. Dispute which may be referred to arbitration :--
(1) Notwithstanding anything contained in any law for the time being in force, if any, dispute touching the constitution, management, or the business of a Co-operative society arises--
(a) among members, past members, and persons claiming through members, past members, and deceased members ; or
(b) between a member, past member or person claiming through a member, past member, or deceased member and the society, its committee or any officer, agent or employee of the society or liquidator, past or present; or ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 12
(c) between the society, or its committee and any past committee, any officer, agent or employee, or any past officer, past agent or past employee or the nominee, heirs or legal representatives of any .
deceased officer, deceased agent, or deceased employee of the society;
(d) between the society and any other Co-operative society, between a society and liquidator of another society or between the liquidator of one society and the liquidator of another society; or
(e) 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 58 whether such surety is or is not a member of the society;
such dispute shall be referred to the Registrar for decision and no court shall have jurisdiction to entertain by suit or other proceeding in respect of such dispute.
(2) For the purpose of sub-section (1), the following shall be deemed to be disputes touching the constitution, management, or the business of a Co-operative society, namely;--
(a) a claim by the society for any debt or demand due to it from a member or any employee, or the nominee, heir or legal representatives of a deceased member or an employee, whether such debt or demand be admitted or not;
(b) a claim by a against the principal debtor where the society has recovered from a surety any amount in respect of any debt or demand due to it from the Principal debtor as a result of default of the principal debtor, whether such debt or demand is admitted or not;
(c) any dispute arising in connection with the election of any officer of the society.
(3) if any question arises whether a dispute referred to the Registrar under this section is or is not a dispute touching the constitution, management or the business of a Co-operative society, decision, thereon, of the Registrar shall be final and shall not be called in question in any court.
The section lays down provision regarding settlement of disputes in co-operative societies by reference to arbitration by the Registrar. Settlement of disputes by co-operative societies through arbitration only is essential to save them from prolonged and expensive litigation, in civil Courts. As such, it is specifically provided that no court has jurisdiction to entertain any suit or other proceedings in respect of any dispute, ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 13 touching the constitution, management or the business of the co- operative societies.
The Registrar has been vested with the power to decide whether .
any dispute is a dispute falling within the purview of this section or not.
His ruling is final in such issues."
5. Now, the question would arise as to whether the dispute raised by the petitioner touches the constitution, management or the business of the Co-operative Societies because it is only on satisfaction of any one of the aforesaid conditions that the Registrar will be vested and conferred jurisdiction to adjudicate. This very question fell for consideration before the Hon'ble Supreme Court in Morinda Coop.
Sugar Mills Ltd. vs. Morinda Coop. Sugar Mills Workers' Union (2006) 6 SCC 80 and while construing pari-materia provision of the Punjab Co-operative Societies Act, it was held as under:
"6. Per contra learned counsel for the respondent submitted that the High Court has analysed the legal position, the objects and has come to the right conclusion by upholding the judgment and decree of the first appellate court.
7.Sections 55 and 79 of the Act read as follows :
"55. Disputes which may be referred to arbitration. - (1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a cooperative society arises -
(a) among members, past members and persons claiming through members, past members and deceased members ; or
(b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society or liquidator, past or present; or
(c) between the society or its committee and past committee, any officer, agent or employee, or any past officer, agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the society; or ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 14
(d) between the society and any other co- operative society, between a society and liquidator of another society or between the liquidator of one society and the liquidator of another society, .
such disputes shall be referred to the Registrar for decision and no Court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute.
2. For the purposes of sub-section (1), the following be deemed to be disputes touching the constitution, management or the business of co-operative society, namely-
(a) a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not:
(b) a claim by a society against the principal debtor where the society has recovered from the surety any amount in r respect of any debt or demand due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or demand is admitted or not:
(c) any dispute arising in connection with the election of any officer of the society.
3. If any question arises whether a dispute referred to the Registrar under this Section is or not a dispute touching the constitution, management or the business of a co-operative society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court.
* * *
79. Notice necessary in suits.- No suit shall be instituted against a co-operative society or any of its officers in respect of any act touching the business of the society until the expiration of three months next after notice in writing has been delivered to the Registrar or left at his office stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint, shall contain a statement that such notice has been so delivered or left."
8. The object of Section 55 of the Act is clear. If any dispute touches the constitution, management or business of any cooperative society arising between specified category of members has to be referred to arbitration. Similarly no cooperative society or its officers should be dragged to litigation before the Civil Court in respect of any act touching the business of such a society unless notice required to be given in writing as has been issued to the Registrar of the society. Bye law No. 5 of the Bye Laws of the Appellant, so far as relevant, reads as follows:
"Objects ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 15 The objects of the Mills shall be to promote the economic interest of its members and for this purpose to carry on the manufacture of sugar, sugar products and other ancillary products and to make arrangements for their sale and also to take necessary .
steps and measure for the development of sugarcane and sugar beet. For the purpose of attaining the aforesaid objects, it shall be competent for the Mills :-
**** **** **** "(d) To Purchase sugarcane of sugar beet preferably from grower members and others and to sell the finished products so manufactured.
**** **** ****
(j) To install plant and Machinery for utilization of ancillary/bye products and bury raw materials for the same and sell finished products in the course of the r utilizing and marketing of the ancillary/bye products.
**** **** ****
(p) To do such other things as are incidental or conductive to the attainment of all or any of the above objects."
The emphasis made by learned counsel for the appellant is that when the object is to promote the economic interest, any thing which has link with the economic interest has to be, per force, taken as touching the business of the society.
9. This Court in O.N. Bhatnagar v. Smt. Rukibai Narsindas and Others (AIR 1982 SC 1097) observed inter alia as follows: (SCC pp. 255-56, para 20) "20. In the present case the society is a tenant co- partnership type housing society formed with the object of providing residential accommodation to its co-partner tenant members. Now, the nature of business which a society carries on has necessarily to be ascertained from the object for which the society is constituted, and it logically follows that whatever the society does in the normal course of its activities such as by initiating proceedings for removing an act of trespass by a stranger, from a flat allotted to one of its members, cannot but be part of its business. It is as much the concern of the society formed with the object of providing residential accommodation to its members, which normally is its business, to ensure that the flats are in occupation of its members, in accordance with the bye-laws framed by it, rather than of a person in an unauthorized occupation, as it is the concern of the member, who lets it out to another under an agreement of leave and licence and wants to secure possession of the premises for his own use after the termination of the licence. It must, therefore, follow that a claim by the society together with such member for ejectment of a person who was permitted to occupy having become a nominal ::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 16 member thereof, upon revocation of licence, is a dispute falling with the purview of Section 91(1) of the Act."
10. In Deccan Merchants Co-operative Bank Ltd. v. M/s. Dalichand .
Jugraj Jain (1969 (1) SCR 887) it was held as follows : (SCR p. 896 A-
C) "Five kinds of disputes are mentioned in sub- section (1): first disputes touching the constitution of a society: secondly, disputes touching election of the office bearers of a society:
thirdly, disputes touching the conduct of general meeting of a society: fourthly, disputes touching the management of a society:
and fifthly disputes touching the business of a society. It is clear that the word "business" in this context does not mean affairs of a society because election of office-bearers, conduct of general meetings and management of a society would be treated as affairs of a society. In this sub-section 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 r which the society is authorized to enter into under the Act and the Rules and its bye-laws."
11. In Co-operative Central Bank Ltd. and others etc. v. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad and others etc. (1969) 2 SCC 43, it was held that alteration of the conditions of the service of the workman would not be covered by the expression "touching the business of the society". It was held inter alia as follows : (SCC p.51, para 7) "7. Applying these tests, we have no doubt at all that the dispute covered by the first issue referred to the Industrial Tribunal in the present cases could not possibly be referred to decision to the Registrar under Section 61 of the Act. The dispute related to alterations of a number of conditions of service of the workmen which relief could only be granted by an Industrial Tribunal dealing with an industrial dispute. The Registrar, it is clear from the provisions of the Act, could not possibly have granted the reliefs claimed under this issue because of the limitations placed on his powers in the Act itself. It is true that Section 61 by itself does not contain any clear indication that the Registrar cannot entertain a dispute relating to alteration of conditions of service of the employees of a registered society: 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 alteration of conditions of service can be held to be covered 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 service of its employees, can be sad 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."
::: Downloaded on - 15/04/2017 17:43:19 :::HCHP 176. In view of the aforesaid discussion, it can safely be concluded that the present petition under Article 226 of the Constitution is .
not maintainable against the H.P. State Co-operative Bank Ltd. and even the Registrar has no power to adjudicate such kinds of disputes as the same do not touch the constitution, management or business of the Co-
operative Societies.
Accordingly, the present petition is dismissed, leaving the petitioner to avail of any other remedy which may be available to him under the law. Costs easy.
March 5, 2015 ( Tarlok Singh Chauhan),
(GR) Judge
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