Andhra HC (Pre-Telangana)
A.P. State Co-Operative Societies ... vs Government Of Andhra Pradesh And Ors. on 12 July, 2002
Equivalent citations: 2002(4)ALD527, 2002(4)ALT352
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
JUDGMENT B. Sudershan Reddy, J.
1. The Andhra Pradesh State Co-operative Societies Secretaries and Employees Union invokes the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India praying to issue a writ of mandamus declaring the action of the respondents in not applying the revision of pay scales with effect from 1-4-1996 on par with the Category-V Supervisors of the District Co-operative Central Banks (DCCBs) and applying the earlier scales of pay to the members of the petitioner union by Memo No. 59283/97/K2, dated 25-9-1997 as arbitrary, illegal, unjust, against the principles of natural justice and opposed to the doctrine of "Equal pay for Equal Work" and violative of the fundamental rights guaranteed under Articles 14, 16 and 21 of the Constitution of India. The petitioner union also prays for issuance of an appropriate writ declaring Sections 5, 8, 12 and 36 of the Administrative Tribunals Act, 1985 (for short 'the Tribunals Act') as unconstitutional and opposed to the Basic Structure of the Constitution of India. The petitioner-union accordingly prays for appropriate further directions directing the respondents to pay the enhanced scales of pay to the members of the petitioner union on par with the Category-V Supervisors of the District Co-operative Central Banks with effect from 1-4-1996 and for grant of all consequential benefits.
2. During the pendency of the writ petition, the petitioner-union filed WPMP No. 387 of 2001 seeking leave of this Court to amend the prayer in the writ petition so as to include a challenge of Section 116-AA of the Andhra Pradesh Co-operative Societies Act, 1964 (for short 'the Act'). The petitioner-union accordingly prays for grant of appropriate declaration declaring Section 116-AA of the Act unconstitutional being violative of Articles 14, 16, 21, 39(a), (b), (c), 41, 42 and 43 of the Constitution of India.
3. The petitioner-union filed yet another WPMP No. 1693 of 2002 challenging the constitutional validity of Sub-section (1) of Section 116-C of the Act as amended by Act 22 of 2001 being violative of Article 14 of the Constitution of India.
4. Before we proceed further to discuss as to whether the petitioner-union is entitled for any relief and as to whether Section 116-AA of the Act suffers from any constitutional infirmities, it may be made clear that during the course of hearing of the writ petition, the learned Senior Counsel appearing on behalf of the petitioner-union did not press the issue relating to the constitutional validity of Sections 5, 8, 12 and 36 of the Tribunals Act. Therefore, there is no need to express any opinion whatsoever with regard to that particular portion of prayer challenging the said provisions of the Tribunals Act. In fact it is not known as to why the petitioner had chosen to challenge the vires of provisions of the Administrative Tribunals Act.
5. The only question that survives for consideration of the Court is as to the constitutional validity of Sections 116-AA and 116-C of the Act and also the issue as to whether the members of the petitioner-union are entitled for revision of pay scales with effect from 1-4-1996 on par with Category-V Supervisors of the District Co-operative Central Banks,
6. The members of the petitioner-union are working as Secretaries in different Primary Agricultural Co-operative Societies (PACSs) in the State of Andhra Pradesh.
7. It is their case that during the year 1973, the Registrar of Co-operative Societies in exercise of the powers under Section 116-A of the Act has constituted a common cadre in respect of the Secretaries of the Societies with a view to provide qualified Secretaries to the Societies under the "half-a-million job" programme of the Central Government. It is stated that under the said programme about 2000 Secretaries were appointed in the year 1973 on a consolidated pay of Rs. 150/- per month. In the year 1977 all the existing societies were reorganised under the viability programme and about 15000 existing societies were brought down to 6562 societies by liquidating the non-viable societies and also by process of amalgamation. In the year 1987, after introduction of Single Window Scheme, the existing 6562 PACS were reduced to 4562 viable Societies,
8. It is the case of the petitioner-union that the duties and responsibilities of the Secretaries have increased since the Societies have undertaken to distribute long term, short term and medium term loans, distribution of fertilizers, essential commodities etc.
9. The Andhra Pradesh State Legislature by way of amendment to the Act introduced Section 116-AA by which the common cadre for all categories of employees other than those specified in Section 116-A of the Act, constituted before the commencement of the Andhra Pradesh Co-operative Societies (Amendment) Act, 1985 and existing at such commencement were abolished. By the said abolition, the Registrar was empowered to allot, subject to such rules as may be made in this behalf, the employees included in the cadre so abolished to Primary Agricultural Co-operative Societies.
10. That some of the members of the petitioner-Union filed WP No. 15506 of 1989 challenging the validity of Section 116-AA of the Act. This Court by its order dated 10-10-1991 upheld the constitutional validity of the said Section and disposed of the writ petition directing the State Government to evolve a scheme for providing a suitable post in case of retrenchment of any of the petitioners therein after they are allotted to various PACS. The said judgment has become final.
11. The Government of Andhra Pradesh having considered the representation of the Paid Secretaries and in view of the fact that the Union went on strike from 10-2-1988 to 7-6-1988 (118) days and 11-3-1991 to 24-4-1991 (45 days) and after a prolonged discussion arrived at an understanding between the representatives of the employees' Union and the Government issued Memo No. 5661/Coop.III/ 2/91-1, dated 14-10-1991 where under the Government inter alia agreed in principle to revise the pay scales of the paid Secretaries so as to bring them on par with the Supervisor-V Cadre of the District Cooperative Central Banks along with Dearness Allowance and other allowances with effect from 1-1-1991 to be paid by the Society concerned as per the norms prescribed by the Registrar of Co-operative Societies. It has been decided to abolish the Cadre Fund and to collect the dues if any and to create a Corpus Fund by raising resources to enable prompt payment of salaries particularly by the financially weak Societies. Mutual transfers of Paid Secretaries were accordingly permitted.
12. The Commissioner for Cooperation and Registrar of Co-operative Societies by proceedings dated 14-2-1992 directed all the District Co-operative Officers to await further instructions in respect of the implementation of the decisions of Government contained in Memo dated 14-10-1991 referred to hereinabove for the reason that the Government have been working out the modalities to create a Corpus Fund to meet the financial requirements arising out of the implementation of the said Memo.
13. The petitioner union challenged the said proceedings issued by the Registrar of Co-operative Societies in WP No. 16558 of 1992 and Batch. A Division Bench of this Court by its order dated 13-8-1996 disposed of WP No. 16558 of 1992 and Batch directing the Government to constitute a Committee to consider the pay scales of the petitioners and allotment of the petitioners to the Societies after taking into consideration the views of the representatives of the A.P. State Co-operative Bank, District Co-operative Central Banks, Primary Agricultural Co-operative Societies and petitioners' Unions and take decision in accordance with the provisions of the A.P. Co-operative Societies Act and the Rules made there under within six months from the date of receipt of the order. This Court, however, directed that the interim order granted by the Court to continue until such decision is taken by the Government.
14. It is required to notice that the Court did not express any opinion whatsoever about the validity of the circulars of Commissioner for Co-operation and Registrar of Co-operative Societies dated 14-2-1992 and 23-11-1992 which were issued directing all the concerned to keep the Government Memo dated 14-10-1991 in abeyance.
15. The Registrar of Co-operative Societies by the proceedings dated 18-6-1997 introduced the revision of pay scales to the employees working in the District Cooperative Central Banks in the State of Andhra Pradesh with effect from 1-4-1996 under the settlement dated 16-6-1997 entered into with the employees of the District Co-operative Central Banks. The Registrar accordingly permitted the banks to revise pay scales of employees of District Co-operative Central Banks. It is the case of the members of the petitioner-union that the posts held by their members are equivalent to the post of Category-V Supervisors in District Co-operative Central Banks. Reliance in this regard is placed upon the Government Memo dated 14-10-1991 referred to hereinabove. The grievance of the petitioner-Union is that the present revision of pay scales has been denied to the members of the petitioner-Union. The action of the respondents in refusing to confer the same benefit upon the members of the petitioner Union and denying them the benefit of the revised pay scales is arbitrary, illegal and unconstitutional. This is the sum and substance of petitioners case.
16. The Registrar of Co-operative Societies by the proceedings dated 25-9-1997 directed all the District Co-operative Officers to recover from the salaries of the members of the petitioner Union the amounts which were earlier paid to them on par with category-V Supervisors of the District Co-operative Central Banks. In the said Memo, it is inter alia observed that the drawing of salaries and other allowances by the paid Secretaries of PACSs on par with the Category-V employees of the District Co-operative Central Banks in the revised scales of District Co-operative Central Banks' employees is highly irregular.
17. The said action of the respondents is challenged as arbitrary and irrational. It is submitted that the members of the petitioner-Union are entitled for pay scales on par with the Supervisors in Category-V working in the District Co-operative Central Banks in terms of the Government's decision vide Memo dated 14-10-1991. That is the main prayer in the writ petition.
18. It is the case of the respondents that the posts held by the members of the petitioner-Union as Paid Secretaries in various PACS are not equivalent to the post of the Supervisors of District Cooperative Central Banks. The establishment and service regulations of Cadre-V employees of the District Co-operative Central Bank are different from that of the paid Secretaries of PACSs. It is submitted that the pay scales of the employees of the District Co-operative Central Banks were approved by the Commissioner for Co-operation and Registrar of Co-operative Societies in exercise of the powers vested under Section 116-C of the Act.
19. It is also submitted that the members of the petitioner-Union are not entitled to draw the salary on par with the Cadre-V DCCB employees. It is submitted that unless the pay scales of the Paid Secretaries of PACSs are approved by the Registrar as per Section 116-C of the Act and unless such a decision has been taken by the Registrar fixing the pay scales on par with the Cadre-V Supervisors of DCCBs no such pay scales can be drawn by them from the concerned societies.
20. It is further contended that the Paid Secretaries of the PACS are the employees of the concerned societies for all intents and purposes. They are appointed by the PACSs and their salaries are paid by the said societies. The fixation of pay scales has to be done by the societies with the concurrence of the Registrar of the Co-operative Societies. The Societies are autonomous and entitled to fix the salary of its employees including that of Paid Secretaries.
21. It is further stated in the counter-affidavit filed by the Secretary to Government that out of 4610 PACSs in the State only about 1000 to 1500 PACSs are either running on profits or on no profit no loss basis. The remaining PACSs are completely running in loss. The Paid Secretaries and other staff of the Societies are drawing the salaries on an average irrespective of the margin of interest available to the PACSs to meet the said expenditure. The high incidence, on account of establishment charges of the PACSs, of an amount of more than Rs. 42 crores is incurred per month leading to heavy imbalances in the societies every year. On account of this heavy imbalance, the very existence of the societies has become doubtful. It is submitted that if the Paid Secretaries of the Societies are allowed to draw their pay and allowances on par with Cadre-V employees of the District Co-operative Central Banks in revised pay scales, which were approved by the Commissioner for Co-operation and Registrar of Co-operative Societies under Section 116-C of the Act, the Societies would have to bear the additional burden of Rs. 500/- to Rs. 800/- every month. On account of the same, the estimated imbalance of Rs. 42 crores per annum may escalate further threatening their very existence.
22. It is under those circumstances, the Registrar of Co-operative Societies issued instructions in Circular dated 25-9-1997 prohibiting PACSs and their Paid Secretaries from drawing their pay and allowances in the revised pay scales of Cadre-V DCCB Employees. This is the sum and substance of the defence of the respondents.
23. As is evident from the pleadings, the whole of the claim of the petitioner-Union is obviously based upon the Government Memo No. 5661/Coop.III/2/91-1, dated 14-10-1991 where under an understanding was reached between the representatives of the employees' union and the Government to revise the pay scales of Paid Secretaries so as to bring them on par with Category-V Supervisors of DCCBs, i.e., 264-11/2-286-13/2-312-18/4-384-22/4-472-26/4-576-33/4-708 along with Dearness Allowance and other allowances with effect from 1-1-1991. It may have to be noticed that the said Memo itself in categorical terms states that the pay scales to be so revised are to be paid by the society concerned as per the norms prescribed by the registrar of Co-operative Societies. The said Memo also provides for abolition of the Cadre Fund and to collect the dues if any; and to create a Corpus Fund by raising resources to enable prompt payment of salaries particularly by the financially weak societies. The said Memo at the most reflects some understanding reached in principle between the Unions whose members were on strike for a very long time during that period and the Secretary to Government, Food and Agriculture Department representing the Government. It is not as if the Government intended to pay the revised salaries on par with the Category-V Supervisors of DCCBs to the Paid Secretaries of PACSs. The revised pay scales are required to be paid by the societies concerned. It is difficult to discern as to how such a decision involving far reaching financial implications imposing heavy liability upon the PACSs could have been taken at all by the Government.
24. The question inevitably falls for consideration is as to whether the said Memorandum confers any enforceable right upon the Paid Secretaries of the Societies and whether they are entitled to demand for payment of pay scales on par with Category-V Supervisors of DCCBs?
25. This question has to be necessarily gone into by this Court since the whole of the case of the petitioner-Union is based on the said Memorandum.
26. Obviously, some rethinking appears to have gone into the matter and the same was not given effect by all the concerned to which has resulted in filing of spate of writ petitions - some by Unions and some by the individual Paid Secretaries. Various types of interim orders wore passed by this Court fastening the liability upon the Societies.
27. The Paid Secretaries have started demanding for payment of pay scales on par with Category-V Supervisors of DCCBs, which were subsequently revised after the said Memo was issued by the Government. It is at that stage, the Commissioner for Co-operation and Registrar of Co-operative Societies issued the circulars dated 14-2-1992 and 23-11-1992.
28. The said circulars were challenged in WP No. 16558 of 1992 and Batch. A Division Bench of this Court by its order dated 13-8-1996 disposed of the said Batch of writ petitions in the following manner:
"....... instead of going into the merits of these cases. We think it just and proper to direct the Government represented by the Secretary, Agricultural and Co-operation to constitute a Committee to consider the pay scales of the petitioners and allotment of the petitioners to the Societies after taking into consideration the views of the representatives of the A.P. State Co-operative Bank, District Co-operative Central Banks, Primary Agricultural Co-operative Societies and Petitioners' Unions and take decision in accordance with the provisions of the A.P. Co-operative Societies Act and the Rules made there under within six months from the date of receipt of this order.
Until the Government takes the decision, the interim orders granted by this Court in these cases will continue."
29. It is evident from the order passed by the Division Bench that the A.P. State Co-operative Bank and all the District Co-operative Central Banks opposed the claim of the employees and inter alia contending that as per Section 116-C of the Act and Rule 72(b) of the A.P. Co-operative Societies Rules, the Co-operative Society itself has to fix the service conditions including the pay scales of the employees with the approval of the Registrar and the Government has no power to fix them. In effect, it was contended that the said Memo issued by the Government dated 14-10-1991 was unenforceable and they were not bound by the same.
30. Be it be noted that in pursuance of the order of this Court in WP No. 16558 of 1992 and Batch, dated 13-8-1996 referred to hereinabove, the Government constituted a Committee of officials with Principal secretary, Agriculture and Co-operation vide G.O. Ms. No. 1338, dated 23-12-1996 to study the whole matter and to make recommendations after ascertaining the views of the representatives of the A.P. Co-operative Bank/District Co-operative Central Banks/Primary Agricultural Cooperative Societies and the Unions of the employees. The said Committee has submitted its report to the Government. The Government after careful examination of the report of the Committee of officials referred the matter to the Cabinet Sub-Committee constituted for further examination of the issue. The Cabinet Sub-Committee after a detailed discussion with all the representatives and Unions of Paid Secretaries have formulated its recommendations. The Government having regard to the magnitude of the problem and the complications involved have referred the matter further to another Cabinet Sub-Committee constituted by the Government vide G.O. Ms. No. 71, Agriculture and Co-operation Department, dated 25-3-2000 to go into the general working of Co-operatives and suggest measures to make the Co-operatives viable, self-reliant, effective and accountable to members. The Cabinet Sub-Committee after due deliberations and consultations with a cross section of people connected with the Cooperative movement in the State has formulated its recommendations.
31. The Government having considered the various representations including the recommendations made by the Cabinet Sub-Committee have come to the view that the Paid Secretaries should be treated as employees, of the concerned Co-operative Societies only and their pay and service conditions shall be determined by the Societies themselves after taking prior approval of the Registrar of the Co-operative Societies as provided for in the Act and the Rules.
32. The Government accordingly issued G.O. Ms. No. 314, Agriculture and Co-operation (Co-op.III) Department, dated 26-12-2000 ultimately cancelling the Memo No. 5661/Co-op.III/l/91-l, dated 14-10-1991 issued by the Government.
33. The said G.O. issued by the Government is self-explanatory. It is clear from a bare reading of the said G.O. that a lot of thinking has gone into the matter and the Government ultimately and rightly realised that it had unnecessarily interfered in the functioning of PACSs in the State and imposed burden upon them by compelling them and other DCCBs to pay the salary and other emoluments to the Paid Secretaries on par with the Category-V Supervisors of DCCBs. The Government realised that the Paid Secretaries are the employees of the concerned societies. All of them were appointed by the PACSs and their pay and remuneration is required to be fixed by the societies in accordance with the provisions of the Act and the Rules made there under. The Government also realised that such a far-reaching decision as the one taken by it vide Memo dated 14-10-1991 ought not to have been taken without consulting the effected parties, viz,, District Co-operative Central Banks and Primary Agricultural Co-operative Societies upon whom heavy burden was imposed upon by the Government.
34. The Government in the very said G.O. referred to various interim and as well as final orders passed by this Court in the matter of payment of pay scales to the Paid Secretaries and having noticed the genesis of the whole problem and with a view to finally settle the issue, carefully considered the various issues and implications in the matter, viz.,--
(a) Section 116-AA of the Andhra Pradesh Co-operative Societies Act, 1964 as inserted by an amendment Act, 1985 abolished the common cadre for all categories of employees of PACSs.
(b) These amendments made in the main Act by A.P Act 21/85 have received judicial approval in 1987 (1) ALT 24 (NRC) Division Bench.
(c) Consequently with effect from 25-4-85, the power to fix the staffing pattern, qualification, pay scales and other allowances for employees of the society vests with Primary Agricultural Cooperative Credit Societies under Section 116-C of the Act, 1964 with the prior approval of the Registrar of Co-operative Societies. Therefore, the Registrar comes into picture only for giving approval in respect of proposals received from a society (PACS) not on his own or suo-motu.
(d) Though the Government have the power to give directions generally or particularly to the Registrar, who shall give effect to such orders or directions under Section 131 of the Act, 1964, it is a moot question whether the Registrar, under guise of exercising power under Section 116-C or under any other provision of the Act or Rules can impose uniform pay scales and allowances for all the PACSs in the State irrespective of the volume of business/activity and the paying capacity depending on financial capability of the society concerned;
And whereas a memo was issued by the Government in 1991 to revise the pay scales of Paid Secretaries to be brought on par with Cadre-V employees of DCCBs with a qualification that the D.A. and other allowances to be paid by the society concerned should be as per the norms prescribed by the Registrar of Co-operative Societies, And whereas, the Government have taken into account the unbearable burden that may be imposed on the Primary Agricultural Co-operative Credit Societies on account of fixing pay scales, considering the resources available with the societies and all other relevant factors including the interests of the employees, and therefore, suggest that suitable pay scales may be considered for adoption by the societies based on a broad classification of societies based on volume of business turnover, margin available and such like, and leave the matter to the societies to exercise their powers under Section 116-C of the Andhra Pradesh Co-operative Societies Act, 1964.
35. Thereafter, taking into consideration the recommendations of the Committee of Officials, and the recommendations of the Cabinet Sub-Committee, as well as the provisions of Andhra Pradesh Co-operative Societies Act, 1964 and the rules made there under, and the interests of the Paid Secretaries and other employees of PACS vis-a-vis the paying capacity and the financial condition of PACS with reference to their level of business and income and with the intent of development and viability of PACS and the need to strengthen the credit structure to benefit the farmers in the State, the Government have decided that the matter of fixing up of strength of the establishment, staffing pattern and scales of pay and other allowances of employees should be left to be decided by the Primary Agricultural Co-operative Credit Societies with the prior approval of the Registrar of Co-operative Societies as laid down under the provisions of Section 116-C of the Act and the Rules made there under.
36. The Government, in the circumstances, accordingly cancelled the Memo dated 14-10-1991.
37. In the normal course, the said G.O. ought to have put an end to the whole controversy relating to the pay scales of the Paid Secretaries. But the Paid Secretaries did not allow the matter to be rested. They have promptly filed W.P. No. 21488 of 2000 and Batch challenging the validity of G.O.Ms. No. 314, Agriculture and Co-operation (Co-op.III) Department, dated 26-12-2000. The said G.O. was kept under suspension by the interim order dated 3-1-2001 passed by a learned single Judge of this Court, against which WA Nos.424 and 425 of 2001 were filed by the State. The said Writ Appeals and a batch of writ petitions were heard by a Division Bench of this Court and disposed of the same by order dated 16-10-2001 allowing the writ appeals preferred by the State and dismissing the writ petitions filed by the individuals. The G.O. is accordingly held valid. This Court in categorical terms declared that "the financial burden was thrust upon the societies and the Banks, although they did not want the same and thus the State could not have asked the society to pay the salaries at higher rates to the Paid Secretaries contrary to their financial state of affairs and contrary to the statutory regulations. Financial health of the society must be taken into consideration. Therefore, the financial burden cannot be imposed on it."
38. The Court having noticed the Sections 116-AA and 116-C of the Act observed:
"By reason of Sections 116-AA and 116-C, the service conditions of all the Paid Secretaries are affected. Expressly or by necessary implication, the conditions of service of the existing Paid Secretaries are also effected. It will, therefore, not be correct to contend that the said provisions would only apply to the Paid Secretaries, who were to be appointed in future. It is not that the societies cannot appoint the Paid Secretaries, but the matters relating fixation of staffing pattern of the society, prescription of qualifications and determination of pay scales and other allowances for its employees have to be left to the concerned society itself inasmuch as it is the society which, keeping in view its size, volume of work and its resources, could pragmatically manage its affairs.
G.O. Ms.No. 314, dated 26-12-2000 has been issued in terms of the provisions of Section 116-C of the Act. The same, thus, cannot be permitted to be assailed on a ground, which would indirectly invalidate a statute.
It must be borne in mind that by reason of Section 116-AA the common cadre has been abolished and the validity of Section 116-AA has been upheld by this Court."
39. The Court having noticed the history of the litigation observed that "payments to the Paid Secretaries at par with Supervisor Category-V of District Co-operative Central Bank, as also the revised pay scales, were being made only pursuant to the orders of this Court and not by reason of any policy decision, except the said purported understanding dated 14-10-1991."
40. We are in complete agreement with the view taken by the Division Bench. It is brought to our notice that the said judgment of the Division Bench has received the approval of the Apex Court inasmuch as the Special Leave Petition preferred against the same is stated to have been dismissed.
41. A Division Bench of this Court in M.S. Prasad and Ors. v. The Government of A.P. and Ors., WP No. 26961 of 1999 and Batch, dated 14-3-2002, while adverting to the very issue as to whether the Paid Secretaries are entitled for same pay scales on par with Category-V Supervisors of DCCBs observed:
The whole genesis of the problem is on account of frequent and uncalled for interference on the part of the Government and the Registrar of Co-operative Societies from time to time in the management of affairs of the societies. The chronology of events and the developments that have taken place in unmistakable terms reveal that the Government as well as the Registrar subjected themselves to various pulls and pressures from time to time exerted upon them mainly from the employees representing their own interest. None of them even thought it fit to consider as to whether such interference would adversely effect the interest of the societies and the District Co-operative Central Banks. They have proceeded on the assumption and misconception as if the Primary Co-operative Societies and the District Co-operative Banks were part of the Co-operative Department. Basic issues were ignored. Norms were thrown to winds. In the process an ugly situation is created resulting in a serious threat to the existence of very institutions. The societies are made to bear the unbearable burden of expenditure towards payment of emoluments to its employees. In the process many of them perished."
42. We have already noticed that the said Memo dated 14-10-1991 is not in force as on today as the same has been cancelled by the Government under G.O. Ms. No. 314, dated 26-12-2000 and the validity of the said G.O. has been upheld by this Court. The very claim of the petitioners is based upon the said Memo which is not in existence as on today. Even otherwise the said Memo does not confer any enforceable rights upon the Paid Secretaries for making any claim demanding pay scales at par with category V Supervisors working in the District Co-operative Central Banks. The societies are not bound by the understanding reached between the Government and employees Union behind their back and without involving them in the decision making process in any manner whatsoever. Neither the Registrar nor the Government in law entitled to impose such heavy financial burden upon Societies. The Government in our considered opinion rightly retraced its steps in order to keep itself away and not to meddle in the affairs of the Societies. The Government's decision is not only legal and correct but a laudable one. The Government is entitled to correct its own mistakes.
43. In our considered opinion none of the impugned circulars issued by the Commissioner for Co-operation and Registrar of Co-operative Societies directing all the concerned not to pay the pay scales/ revised pay scales to the Paid Secretaries at par with Category-V Supervisors of DCCBs suffer from any legal infirmity. Therefore, the members of the petitioner-Union have no right whatsoever to demand the revised pay scales or for that matter the pay scales on par with Category-V Supervisors of DCCBs. The petitioners are not entitled for any relief. The Memo No. 59283/97/K2, dated 25-9-1997 is accordingly upheld.
44. Perhaps having realised the difficulty in their way to get the said Memo enforced and also in view of the subsequent developments, the petitioner-Union filed two applications seeking leave of this Court to amend the prayer in the writ petition by raising certain additional grounds. The petitioner-Union accordingly challenged the constitutional validity of Sections 116-AA and 116-C of the Act.
45. Sri S. Ramachander Rao, learned Senior Counsel appearing on behalf of the petitioner-Union, made elaborate submissions contending that both the provisions suffer from constitutional infirmities being violative of Articles 14, 16 and 21 of the Constitution of India.
46. Sri D. Prakash Reddy, learned Additional Advocate-General contends that the said provisions do not suffer from any constitutional infirmities. It is contended that the constitutional validity of Section 116-AA of the Act has been repeatedly upheld by this Court. The petitioner-Union cannot be permitted to re-agitate the same on and off.
47. We have already noticed that a learned single Judge of this Court in WP No. 15506 of 1989 filed by the very petitioner-Union upheld the constitutional validity of Section 116-AA of the Act, by the judgment dated 10-10-1991, and the same has become final.
48. The very petitioner employees' association, Nizamabad unit filed WP No. 5431 of 1990 seeking declaration that Section 116-AA of the Act is arbitrary, illegal, unconstitutional and violative of Articles 14, 21, 39, 41, 42 and 43 of the Constitution of India. The prayer in the instant writ petition is exactly the same as the one made in the said writ petition. A Division Bench of this Court by its judgment dated 19th October, 2001 in W.A.No. 464 of 2001 (reported in A.P. State Co-op. Societies, S&E Association, Nizamabad v. State of A.P., (DB), having considered the issue relating to the constitutional validity of both the Sections 116-AA and 116-C as amended by Act 22 of 2001 held that the said provisions do not suffer from any constitutional infirmities.
49. It is also required to notice that the very same question relating to the constitutional validity of Section 116-A and un-amended Section 116-C of the Act fell for consideration in a batch of writ petitions, i.e., WP No. 4266 of 1984 and Batch. Justice M. Jagannadha Rao as he Lordship then was) speaking for the Division Bench upheld the constitutional validity of both the provisions and held them not violative of Articles 14, 19 (1)(c) and 19(1)(g) of the Constitution of India. Yet, the same issue is sought to be re-agitated.
50. The whole of the claim of the petitioner-Union is based upon the assertion that the Paid Secretaries were selected and appointed by an appointment Committee under 'half a million job scheme, 1973' and were allotted to various PACSs. It is presumed for themselves that they were appointed by the Government under the said Scheme and allotted to various Co-operative societies in the State. They have gone to the extent of contending that their legal status is on par with Government employees. On account of their de-caderisation under the impugned Section 116-AA their service conditions were being altered to their disadvantage is the submission. It is contended that the de-caderisation is per se removal of employees from service and as such it is unconstitutional and illegal. The members of the petitioner-Union equate themselves to the level of public servants and contend that statutory rights accrued in their favour cannot be abrogated by a Legislation when there is no abolition of posts or when the posts are very much in existence. The move on the part of the respondents to de-caderise affects the security of tenure, emoluments and to the detriment of the employees and, therefore, the provision is hit by Article 14 of the Constitution of India, it is also contended that even the legislature cannot amend any provision of the Act so as to effect or impair the 'vested right'. Even the vested rights cannot be taken away by the statute.
51. Before adverting to the question as to whether the impugned provisions suffer from any constitutional infirmities on the stated grounds, it may be necessary to notice the relevant provisions:
116-AA. Abolition of Centralised services for certain categories of employees :-- The common cadre for all categories of employees other than those specified in Section 116-A, constituted before the commencement of the Andhra Pradesh Co-operative Societies (Amendment) Act, 1985 and existing at such commencement shall stand abolished with effect on and from the commencement, and upon such abolition, it shall be lawful for the Registrar, to allot, subject to such rules as may be made in this behalf, the employees included in the cadre so abolished to such Primary Agricultural Credit Societies as he may deem fit.
Provided that until they are allotted as aforesaid they shall continue in the posts in which they are working at the commencement of the said Act.
116-C. Staffing pattern of societies :-- (1) A society shall have power to fix the staffing pattern, qualifications, pay scales and other allowances for its employees with the prior approval of the Registrar of Co-operative Societies subject to the condition that expenditure towards pay and allowances of the employees shall not exceed two per cent of the working capital or thirty per cent of the gross profit, in tenns of actuals in a year whichever is less.
(2) No appointment or removal of a Chief Executive by whatever name called of any society, or class of societies as may be prescribed which are in receipt of financial aid from the Government, shall be made without the prior approval of the Registrar of Co-operative Societies.
52. Prior to amendment in 1985, the position under Section 116-A was that where the Registrar, in the interest of the Cooperative movement, considers that the creation of a common cadre of employees for any class of societies is necessary, he may, constitute an appointment committee or authorise one or more federal societies to which such class of societies is affiliated, to exercise the power of appointment, transfer and disciplinary action in respect of such categories of employees of that class of societies as may be specified by him and make such regulations as may be necessary for carrying out the said purpose. Where such appointment committee is constituted or federal society is authorised by the Registrar, the affiliated societies shall not have powers to deal with such categories of employees except to the extent the regulation may permit.
53. After the amendment by Act 21 of 1985 it was provided that in respect of four classes of societies, viz., (a) Co-operative Banks; (b) Andhra Pradesh Co-operative Dairy Development Federation; (c) Spinning Mills; and (d) Sugar Factories, the Registrar shall have the power to constitute a common cadre for a specified class of senior posts, such as General Manager, Deputy General Managers, Executive Directors, Cost Accounts Officers, Works Managers, Managing Directors, Chief Engineers etc.
54. Sub-section (2) of Section 116-A of the Act provides that the Registrar has to frame regulations for classification, methods of recruitment, conditions of service, pay and allowances and discipline and conduct of the officers etc,
55. It is true that a common cadre had been created for the Paid Secretaries of PACSs and separate appointment committees had been constituted for the societies in the area of each Co-operative Central Banks to enable them to exercise the power of appointment, transfer and disciplinary action. The Government issued orders vide G.O. Ms. No. 198, Food and Agriculture (Co-op.IV) Department, dated 28-3-1978 creating a common cadre fund to meet the cost of Paid Secretaries of Primary Agricultural Co-operative Credit Societies out of contribution from Co-operative Institutions. A State Cadre Fund Committee had also been constituted for administration of Cadre Fund. An Appointment Committee has also been constituted at district level for recruitment of Paid Secretaries and to deal with allied matters.
56. The creation of a Common Cadre for the Paid Secretaries of PACSs and constitution of separate appointment Committees had resulted in a major problem of accountability of the Paid Secretaries. There were general complaints from the elected Presidents of PACSs to the effect that the Paid Secretaries were not evincing interest in the upkeep of books of accounts and disbursement and recovery of loans from the farmers who are the members of the Society, since they were not totally under the control of the Elected Committees.
57. The Government of Andhra Pradesh having noticed the difficulties of the elected Managing Committees of the PACSs appointed a one-man committee of Sri D.S. Iyer, Special Secretary, Finance and Planning and the said Committee after an in-depth analysis made its recommendations to the following effect:
(i) The system of common cadre of secretaries of Primary Agricultural Cooperative Credit Societies be abolished and the Secretaries be made the employees of the Primary Agricultural Co-operative Credit Societies and their Board of Management shall have administrative control over their functioning.
(ii) Consequent on the abolition of common cadre there shall be no retrenchment of Cadre Secretaries and they shall be posted to the Primary Agricultural Co-operative Credit Societies.
(iii) The existing emoluments of the Secretaries should be protected.
(iv) There is no need to revise the existing scales of pay of the Cadre Secretaries. However, after the cadre is abolished. They may be paid incentive allowances.
(v) Similar were the views expressed by a four-men committee constituted by the Commissioner for Co-operation and Registrar of Co-operative Societies vide Procgs.Rc.No. 62738/89/PACS/Cr-2, dated 21-1-91 to study the problems of Paid Secretaries of Primary Agricultural Co-operative Credit Societies.
58. It is under those circumstances, necessary amendments to the provisions of the Act were introduced by Act 21 of 1985 with effect from 22nd April, 1985. Section 116-AA has been introduced abolishing the common cadre for all categories of employees other than those specified in Section 116-A constituted before the amendment. It is declared that after the commencement of the amendment, the common cadre shall stand abolished with effect on and from the commencement, and upon such abolition, the Registrar shall empower to allot the employees included in the cadre so abolished to such Primary Agricultural Credit Societies as he may deem fit and subject to such rules as may be made in that behalf.
59. This has led to a situation where the orders were issued abolishing the common cadre thereby making the Paid Secretaries as full-fledged employees of PACSs. Under Section 116-C of the Act the Society is vested with the power to fix the staffing pattern, qualifications, pay scales and other allowances for its employees with the prior approval of the Registrar of Cooperative Societies.
60. It is not necessary to go into the controversy as to whether the process of allotment of the Paid Secretaries into various societies after the abolition of common cadre has been completed or not.
61. Suffice it to notice that Section 116-AA has been inserted providing for the abolition of common cadre for all categories of employees by Act 21 of 1985 with effect from 22-4-1985. The provision is in force for a period of more than 17 long years. Not a single instance has been placed before this Court that in the process of implementation of abolition of common cadre and empowerment of Registrar to allot the paid secretaries to the various Co-operative Societies in the State had resulted in any removal of the Paid Secretaries. In our considered opinion, there is no basis whatsoever to contend that allotment of the Paid Secretaries to various Co-operative Societies would amount to retrenchment or removal per se. The de-caderisation had already been taken place under Section 116-A of the Act. As has been observed by the Division Bench in A.P. State Co-op. Societies, S&E Association (supra) it is too late in the day to contend that by reason of the said provision, the effect of the said provisions would amount to retrenchment. The decisions in R.S. Ajara v. State of Gujarat, , Chairman, Railway Board v. C. R, Rangadhamaiah, , and Moti Ram Deka v. N.E. Fronter Railway, , had no application to the fact situation on hand. The whole of the argument proceeds on the assumption as if the de-caderisation per se would result in termination or removal of Paid Secretaries from the service. It has not resulted in any removal or termination and no such removal or termination order is under challenge in this writ petition. In the circumstances, there is no need to make any elaborate reference to the said decisions. They are referred to as a matter of Courtesy to the learned Senior Counsel who cited them across the Bar.
62. It is also not necessary to refer the decisions in P.D. Agarwal v. State of U.P. , and Subash Chand Jain v. 1st Addl. District and Sessions Judge, , since no vested rights of any member of the petitioner Union are sought to be taken away on account of the de-caderisation. Those decisions lay down the principle to the effect that the vested rights cannot be taken away by the statute with retrospective effect.
63. In our considered opinion, Section 116-AA of the Act does not suffer from any constitutional infirmity. The provisions cannot be said to be irrational. Nor they can be characterised as discriminatory in their nature.
64. We have already observed that the whole of the argument proceeds on the assumption as if the Paid Secretaries were appointed under 'half a million job' scheme by the Government or the Registrar, as the case may be. There is no basis or foundation for making such an allegation. The Government merely provided some financial assistance to the societies concerned under the said Scheme enabling them to make the appointments of Secretaries. They were at all points of time were the employees of the concerned societies and continued to be so. Even after the constitution of common cadre their status did not get altered. A common fund to meet the cost of the Paid Secretaries of PACSs was created, no doubt, after a common cadre had been created for the Paid Secretaries. The contributions were required to be made by the Co-operative Institutions for constituting the common fund. That itself has not altered the status of the Paid Secretaries and they did not cease to be the employees of the Society.
65. An attempt was made to contend as if the Registrar had appointed all the Paid Secretaries in the State in purported exercise of the power under Section 116 of the Act. The submission is totally misconceived and untenable. Section 116 of the Act empowers the Registrar to appoint staff "to exercise supervision over, and to assist in the working of any society or class of societies subject to such terms and conditions as may be prescribed." The persons so appointed are entitled to exercise such powers as may be prescribed and shall have free access to the books, accounts, documents, securities, records etc., and were also entitled to call for such information, statements and returns as may be necessary. A plain reading of Section 116 would make it clear that the said section empowers the Registrar to appoint supervisory staff to inspect and audit the accounts of the societies etc. We accordingly reject the contention.
66. A word about Section 116-C of the Act: It has been noticed that unbearable burden has been imposed upon the PACSs on account of fixation of pay scales without any due regard to the resources available with the societies and all other relevant factors. The business turnover, the margin available and the financial resources of the societies have never been taken into consideration while fixing the pay scales of the Paid Secretaries. The situation inevitably led to stifling the growth and development of Co-operatives as viable self-serving unit. Attempts appear to have been made indiscriminately to fix pay scales of employees without any due regard to the financial viability and resources of the PACSs. It is under those circumstances, the legislature has stepped in and suitably amended Section 116-C of the Act by substituting the earlier provision by Act 22 of 2001 with effect from 25-4-2001. Under the new provision, the power to fix the staffing pattern, qualifications, pay scales and other allowances of the employees shall not exceed two per cent of the working capital or thirty per cent of the gross profit, in terms of actuals in a year whichever is less. Obviously, the said provision appears to have been made in order to protect the financial viability of the societies. The pre-existing rights of the Societies to fix the pay scales and other allowances remains unaltered.
67. It is needless to reiterate that the Societies are formed by the people themselves on the principle that 'all for one and one for all'. The societies are organised and registered under the provisions of the Act and meant to cater the needs of its members. The societies are not meant for providing any employment to the unemployed. It is neither the function nor the duty of the societies to provide any job or employment to the unemployed. The society is bound to keep its financial status and availability of resources in view while making the appointment as well as fixing the staffing pattern, pay scales and other allowances for its employees. The societies cannot be permitted to indiscriminately appoint the employees and fix their pay scales and other allowances without having any due regard to its financial resources. Having regard to the experience that some societies have altogether vanished into thin air on account of such indiscriminate appointments and fixation of pay scales and other allowances, the Legislature has stepped in and put an embargo upon the societies not to incur expenditure towards the pay and allowances of the employees exceeding two per cent of the working capital or 30 per cent of the gross profit, in terms of actuals in a year whichever is less. The object is a laudable one. The provision is obviously amended in order to protect the interest of the societies and to save them from further financial ruination.
68. A society which has, as its main object, the promotion of the economic interests of its members in accordance with the Co-operative principles, as may be prescribed or a society established with the object of facilitating the operation of such a society, alone can be registered under the provisions of the Act. Every such society so registered is bound to function subject to such directions as may be issued by the Registrar, from time to time, in the interests of the Co-operative movement or the public interest or in order to prevent the affairs of the society from being conducted in a manner detrimental to the interests of the members or of the deposits or creditors thereof. The registration of a society makes it a body corporate by the name under which it is registered having perpetual succession and a common seal. Every such society so registered is entitled to acquire, hold and dispose of property and to enter into contracts on its behalf. The rights and liabilities of its members are prescribed by the provisions of the Act. The management of the affairs of the society ultimately vests in the general body. However, day-to-day management of affairs of the society are entrusted to a committee elected for the purpose. This bird's eye view of the provisions of Act would make it clear that the Co-operative societies registered under the provisions of the Act are not the satellites of the Government or the Registrar of the Co-operative Societies. The Government and the Registrar of the Co-operative Societies are entitled to issue such orders and directions in accordance with the provisions of the Act only and in the interest of the Co-operative movement in the State or public interest or in the interest of the members of the society itself. Except to that extent, neither the Government nor the Registrar of the Co-operative Societies has any power or authority to interfere in the day-to-day management and affairs of the society. The Government, obviously, appears to have realised its limitations and mistakes it had committed by unnecessarily interfering in the affairs of Societies, more particularly in the matter of fixation of pay scales and other allowances of the Paid Secretaries and accordingly issued G.O. Ms. No. 314, dated 26-12-2000 which has received the approval of this Court. In the same process, steps were taken to substitute Section 116-C of the Act in order to protect the interest of the societies and its members and to prevent the societies from indulging in extravagant expenditure towards the salaries and other allowances payable to its employees. By no stretch of imagination, the provision could be characterised as an irrational one.
69. Mere characterisation of an enactment as an arbitrary one itself is not enough to strike down the same as violative of Article 14 of the Constitution of India. Some or other constitutional infirmity has to be found before invalidating an enactment. The Courts perception that an enactment is an unjustified one itself is not a ground for striking down the enactment. The Court may strike down a provision only on two grounds, viz., (a) lack of legislative competency; and (b) inconsistency with or derogation of fundamental rights guaranteed by the Constitution or of any other constitutional provision. It is very well settled that an enactment can be struck down as violative of Article 14 of the Constitution of India only if it is found that it is violative of equality clause/equal protection clause enshrined therein. Only such provisions are liable to be declared void.
70. The petitioner-Union did not make out any case whatsoever for declaring the said provisions unconstitutional. It may be noted that none of the societies questioned the constitutional validity of these provisions. They are not aggrieved in any manner whatsoever. The petitioner miserably failed to make out any case whatsoever for striking down the provisions.
71. We accordingly hold that the members of the petitioner-Union arc not entitled for any pay scales/revised pay scales on par with Category-V Supervisors of the DCCBs. They cannot equate themselves with any other employees including Category-V Supervisors of the DCCBs. The Paid Secretaries are the employees of the concerned society. The society with the prior approval of the Registrar is empowered and entitled to fix the staffing pattern, qualifications, pay scales and other allowances for its employees subject to the condition that the expenditure towards pay and allowances of the employees shall not exceed two per cent of the working capital or 30 per cent of the gross profit, in terms of actuals in a year whichever is less.
72. The writ petition fails and shall accordingly stand dismissed. In the circumstances, there shall be no order as to costs.