Orissa High Court
Ch. Ajeet Kumar Das And Ors vs Registrar on 31 July, 2024
Author: S.K. Panigrahi
Bench: S.K. Panigrahi
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.18641 of 2020
(In the matter of an application under Articles 226 and 227 of the
Constitution of India, 1950).
Ch. Ajeet Kumar Das and Ors. .... Petitioner(s)
-versus-
Registrar, Co-operative Societies, .... Opposite Party (s)
Odisha and Ors.
Advocates appeared in the case through Hybrid Mode:
For Petitioner(s) : Mr. B. S. Tripathy-1
For Opposite Party (s) : Mr. P. K.Rath, Sr. Adv.
Alongwith
Mr. S. Rath, Adv.
CORAM:
DR. JUSTICE S.K. PANIGRAHI
DATE OF HEARING:-08.05.2024
DATE OF JUDGMENT: -31.07.2024
Dr. S.K. Panigrahi, J.
1. The Petitioners, through this Writ Petition, seek to contest the purported illegal actions and/or irregularities carried out by Opposite Party Nos.1 and 2 in incorporating private Opposite Party Nos.3 to 7, who were on deputation from Urban Cooperative Bank Ltd., Cuttack, into CCC Bank Ltd., Cuttack. This action was communicated via letter No.16438 dated 29.07.2020 by Opposite Party No.1 and was done in disregard of the Signature Not Verified Page 1 of 25 Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 explicit objection submitted by the former President of the Petitioners' Association on 21.07.2020, and in clear and blatant violation of the Central Cooperative Banks of Odisha Staff Service Rules, 2011 (hereafter referred to as the Staff Service Rules, 2011).
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
(i) Cuttack Central Cooperative Bank (hereinafter "CCC Bank/Opp. party No.2") was established in the 1956 and is a major Indian private bank with its headquarters in Cuttack having over 38 branches and ATMs countrywide.
(ii) The tenure of the last Committee of Management of the Opp. party No.2/Bank was expired with effect from 30.04.2020. But during the verge of expiry of their tenure; the former Committee of Management of the Bank made a Resolution on 08.02.2019 to bring staff from Urban Cooperative Bank Ltd., Cuttack on deputation for recovery of its NPA accounts of and communicated the said Resolution to Urban Cooperative Bank Ltd., Cuttack.
(iii) Urban Cooperative Bank Ltd., Cuttack in their Resolution dated 24.09.2019 considered the aforesaid proposal of the Opp. party No.2/Bank and accepted the same permitting 7 of their staffs to go on deputation to the CCC Bank Ltd. for a period of one year. Thereafter, the aforesaid private Opp. Party Nos.3 to 7 with two others have joined CCC Bank Ltd. in its Head Office on deputation with effect from 01.01.2020.
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 2 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13
(iv) Pending joining of those private Opp. Party Nos.3 to 7 with two others in the Opp. Party No.2-Bank on deputation, the Secretary of the Opp. Party No.2-Bank in its letter No.2639 dated 12.12.2019 sought permission of the Registrar, Co-operative Societies, Odisha (hereinafter "Opp. Party No.1") for deputation of those private Opp. Party Nos.3 to 7 with two others in the rank of Assistant Manager.
(v) Thereafter, the Opp. Party No.1 accorded permission vide its letter No.28524 dated 27.12.2019 allowing deputation of the aforesaid private Opp. Party Nos.3 to 7 with two others employees of Urban Cooperative Bank Ltd Cuttack to CCC Bank Ltd. for one year on the Resolution of Urban Cooperative Bank Ltd., Cuttack dated 24.09.2019 and CCC Bank Ltd. Resolution dated 08.02.2019.
(vi) Based on the aforesaid letter dated 27.12.2019 of Opp. party No.1, the Opp. Party No.2-Bank has appointed the private Opp. Party Nos.3 to 7 with two other employees of Urban Cooperative Bank Ltd., Cuttack on deputation and allowed them to work in the rank of Assistant Manager of the Bank with effect from 01.01.2020.
(vii) While the matter stood thus, after completion of three months of service of those 7 staff brought on deputation from Urban Cooperative Bank Ltd., Cuttack, permanent absorption of the private Opp. parties No.3 to 7 in the Bank in the cadre of Manager was deliberated upon and finally, in their last meeting held on 24.04.2020, the former Committee of Management took up the issue to permanently absorb those private Opp. Party Nos.3 to 7 in the cadre of Manager of the Bank for Signature Notdiscussion.
Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 3 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13
(viii) Upon receipt of the above and responding thereto, the Opp. Party No.1 in its letter No.11228 dated 26.05.2020 requested the secretary of the Opp. Party No.2-Bank to submit Resolution of both the Banks to the Directorate for taking further action at their end.
(ix) During the circumstances as described, Petitioner No.3, the former President of the Petitioners' Association, became aware of the action and subsequently submitted a formal representation on 21.07.2020, criticizing said action.
(x) However, the Committee of Management of the Urban Co-operative Bank vide Resolution dated 22.07.2020 (as communicated through letter No.827 dated 28.07.2020 of CEO, Urban Co-operative Bank) passed the impugned order No.16438 dated 29.07.2020 allowing permanent absorption of those private Opp. Party Nos.3 to 7 in the cadre of Manager subject to the following conditions:-
1) The employees to be absorbed in the cadre of Manager shall be junior most in the cadre
2) Their absorption will be against the vacancies and in consonance with Staff Service Rules of the Bank.
II. SUBMISSIONS ON BEHALF OF THE PETITIONER:
3. Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions:
(i) The issue regarding appointment of 7 staff from Urban Cooperative Bank Ltd., Cuttack was pursued by the former Committee of Management of the Opp. Party No.2 Bank in connivance with its former Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 4 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 Secretary Sri Sadasiba Sadangi and Mr.R.K.Swain, Establishment Officer of the Bank in a clandestine manner and was never made public and was kept secret as such deputation was not authorized as per Rule-
19 of the Staff Service Rules, 2011.
(ii) According to Rule-19 of the Staff Service Rules, 2011, the managing Committee of the Bank may employ a person in the service of the bank on deputation from Government/Orissa State Co-operative Bank/RRBs/NABARD/RBI only. In the present case, Urban Co-operative Bank, Cuttack is not coming under any of the aforesaid categories of institution/Bank authorizing such deputation.
(iii) As per the information received by the Petitioners, there was no consensus between the Directors/Members of Committee of Management. But the former Secretary of the Bank by enclosing a so- called Extract of the Resolution of the Committee of Management, in the letter No.251 dated 27.04.2020, requested the Opp. Party No.1 to accord its approval / permission for absorption of those private Opp. Party Nos.3 to 7 permanently in the cadre of Manager in the Bank.
(iv) The extract of the Resolution dated 24.04.2020 as enclosed by the Opp.
Party No.2 in his letter dated 27.04.2020 would reveal that such extract was only signed by the Secretary Mr. Sadasib Sarangi and Ex-President Mr. B.P.Swain on 27.04.2020. The said so- called extract shall by no stretch of imagination be taken to be the extract of "Resolution of Committee of Management" comprising of 15 members including President, Secretary and DRCS, Cuttack-l. The aforesaid fact would Signature Notreveal that there has been a clandestine move initiated by Mr. Sarangi, Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 5 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 the former Secretary of the Bank in connivance of former President of the Committee of Management through active participation of Mr.R.K.Swain, Establishment Officer of the Bank, to permanently absorb those private Opp. Party Nos.3 to 7, those who were brought on deputation from Urban Cooperative Bank Ltd. with effect from 01.01.2020 in a manner contrary to law and in a manner contrary to Rule-19 of Staff Service Rules, 2011.
(v) Assuming, arguendo, without conceding, that the private opposing parties are to be permanently absorbed into CCC Bank Ltd., they should have been integrated into their respective cadres of Senior Assistant and Junior Assistant. They could not have been permanently absorbed into the Manager cadre, as this cadre is two levels higher than their original cadre in the Urban Co-operative Bank.
(vi) Though, the private Opp. Parties have joined in the Bank with effect from 01.01.2020, yet their achievement towards recovery of loan extended by the Bank was meager as against position and to the best of the information of the petitioners' Association the percentage of recovery would be around 0.02% and as such, they are not even efficient to man the Recovery Squad. However, by manipulating facts, the impugned resolution was passed with the malafide intension to allow further benefits to those private Opp. Party Nos.3 to 7 in a clandestine manner, though they are not entitled for the same.
(vii) The impugned order was passed in a most illegal and arbitrary manner by the Opp. Party No.1 and in gross violation of Rule-19 of the Staff Signature NotService VerifiedRules, 2011, which is the only enabling provision for Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 6 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 "Appointment by Deputation to the Bank". Further, there is no provision in the Staff Service Rules, 2011 authorizing the Opp. Party No.1 to pass the impugned order and/or to accord permission for such illegal deputation. The petitioner reasonably apprehends that the impugned order was passed by the Opp. Party No.1, which was just before his retirement was/is an outcome of irrelevant and extraneous considerations. The impugned order was passed by the Opp. Party No.1 in colorable exercise of his power ignoring the provisions of Rule-19 of the Staff Service Rules, 2011.
(viii) The impugned order also suffers from gross non- application of mind as the said Opp. party No.1 has deliberately and willfully ignored the objections raised by the petitioner no.3 in his representation dated 21.07.2020. In that view of such issues, the impugned order is liable to be quashed with a direction to the Opp. Party No.2 to forthwith repatriate the private Opp. Party Nos.3, 4, 8 to their parent bank.
(ix) The impugned decision was taken by the Opp. Party No.1 at the instance of the Opp. Party no.2; ignoring the expressed objections filed by the Petitioner No.3 dated 21.07.2020. As the deputation of those staff from Opp. Party No.3 was/is itself bad, illegal and ab initio void and not permissible under Rule-19 of the Staff Service Rules, 2011. It was taken only with a view to blocking the promotional avenues of the petitioners in the cadre of Banking Assistant and Assistant Manager. Therefore, the impugned order dated 29.07.2020 of the Opp. Party No.1 is liable to be quashed with consequential orders in the manner as prayed for. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 7 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES:
4. Per contra, learned counsel for the Opp. Parties earnestly made the following submissions in support of his contentions:
(i). Cuttack Central Cooperative Bank Ltd. is registered as a central cooperative society duly registered under the provisions of the OCS Act, 1962 and the Rules framed thereunder. It is managed by its own Committee of Management having its own independent legal entity as a body-corporate. It is a creature as per the provisions of the OCS Act, 1962 and therefore Cuttack Central Cooperative Bank Ltd. is not and should not be construed as an instrumentality of the State.
(ii). The petitioners have not availed the alternate remedy available under Section 113 of the OCS Act, 1962 which has not been exhausted. Further, the resolution questioned in this writ petition has not been assailed under the provisions of the OCS Act, 1962. As the writ petitioners have not availed the alternate remedy available under law therefore the present writ petition is not maintainable, rather this writ petition is an abuse of process of law
(iii). The petitioners in the aforesaid writ petition have challenged the absorptions of these opposite parties in the cadre of Manager by the Committee of Management which is competent for such absorptions in view of the provisions contained under Section 28 of the OCS Act, 1962.
These opposite parties were absorbed as such in the cadre of Manager considering their earlier position in the establishment of the Cuttack Urban Bank Ltd. and respective pay scales. On the other hand, the Signature Notpresent petitioners are in the cadre of Banking Assistants under Grade -
Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 8 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 VIA being absorbed in the establishment of the opposite party Bank while working in different affiliated primary societies on abolition of Cadre Scheme. Therefore, the petitioners have no cause to challenge the absorptions of these opposite parties in the establishment of this opposite party Bank. The resolution of the Committee of Management and the approval of the Registrar thereon is for the larger interest of the opposite party Bank for reduction in NPA position. Therefore, the petitioners have no valid ground to file this writ petition.
(iv). No illegality has been committed either by the Management of the Opp.
Party No.2 or by the Opp. party No.1 or even by the former Secretary- in-Charge of the Bank Sri Sadasiv Sarangi in absorbing these opposite parties in the establishment of the Bank with an object to mobilize the defaulters and to pursue them for liquidation of their outstanding dues thereby to reduce the NPA position of the Bank
(v). The 'Staff Service Rule 2011' as referred by the Petitioners in this paragraph is otherwise known as 'H.R. Policy- 2011' which is a set of guidelines prepared by the Registrar of Cooperative Societies, Odisha by exercising his power vested under section 33A of the OCS Act, 1962 fixing the service conditions of the employees.
(vi). From the conjoint reading of Clause-19 of the HR Policy-2011 it is very much clear that the employees of the other Cooperative Societies can be brought on deputation and can be appointed on absorptions in the establishment of the Bank. Therefore, the allegation of the petitioners to the extent that the order of the Registrar of Cooperative Societies dated Signature Not29.07.2020 Verified was issued in a clandestine manner, is an allegation in vague. Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 9 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 The petitioners, on the basis of such vague allegation and misleading facts, have filed the present writ petition which is an abuse of process of law and therefore the present writ petition is liable to be dismissed with cost
(vii). The aforesaid decision of the Committee of Management of the Opposite Party Bank is in the interest of the Bank Keeping in view its outstanding loan position and NPA position. Pursuant to such resolution dated 08.02.2019, a proposal / request was submitted before the Cuttack Urban Cooperative Bank Ltd., Cuttack for lending its employees having 15 (fifteen) years of experience in Loan recovery and experience in recovery under the provisions of the SARFAESI Act. Considering the request of the opposite party Bank, the Management of the Cuttack Urban Cooperative Bank Ltd. invited options / applications from its eligible employees who were interested to join in the establishment of the opposite party Bank on deputation. After exercising options by the employees, names of these opposite parties were sponsored by the Urban Cooperative Bank Ltd. to the opposite party Bank. On receipt of the above options, following due procedures, these opposite parties were engaged on deputation with the approval of the Registrar of Cooperative Societies, Odisha. No provision of the H.R. Policy 2011, as alleged by the petitioners, was violated. Similarly, the Registrar of Cooperative Societies, Odisha, who is competent under law, accorded approval by exercising his authority vested under Sec-33A of OCS Act, 1962 for the larger interest of the opposite party Bank. In view Signature NotofVerified the above the allegations of the petitioners in this paragraph -5 are all Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 10 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 baseless and misleading for which the present writ petition is liable to be dismissed by this Court.
IV. COURT'S REASONING AND ANALYSIS:
5. Before adverting on the merits of the instant petition, this Court finds it apposite to discuss the settled law with regards to the maintainability of writ petition pertaining to service matter against the cooperative bank.
6. The short question for adjudication in the instant petition is that whether the Opp. Party No.2/bank is amenable to the writ jurisdiction of Court in the instant writ petition which involves a service dispute.
7. Article 12 of the Constitution of India has defined the term "State" as follows:
"12. Definition.--In this Part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India."
8. The constitutional history reveals that the term "other authorities" as referenced in Article 12 has been the subject of extensive judicial examination. This examination has led to the establishment of a comprehensive body of jurisprudence dedicated to its interpretation. The evolution of this legal framework highlights the significance of "other authorities" in defining the scope of constitutional rights and governmental powers.
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 11 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13
9. In the case of Ajay Hasia and others v. Khalid Mujib,1 a Constitution Bench of the Supreme Court, while approving the tests laid down in the case of Ramana Dayaram Shetty v. International Airport Authority of India & Ors.,2 as to when a corporation can be said to be an instrumentality or agency of the government, observed which runs thus:-
"The tests for determining as to when a corporation can be said to be an instrumentality or agency of government may now be culled out from the judgment in the International Airport Authority case. These tests are not conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression "other authorities", it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the government within the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. We may summarise the relevant tests gathered from the decision in the International Airport Authority case as follows:
(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government ;
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character;
(3) It may also be a relevant factorwhether the corporation enjoys monopoly status which is State conferred or State protected;
1
(1981 ) 1 SCC 722 Signature Not2(1979) Verified 3 SCC 489 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 12 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 (4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality ;
(5) If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government ;
(6) "Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference" of the corporation being an instrumentality or agency of Government.
If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of government, it would, as pointed out in the International Airport Authority case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Article 12."
10. Then, in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and Others,3 a seven-judge Bench of the Apex Court, meticulously examined and endorsed the criteria established in the RD Shetty (supra) and reaffirmed in the Ajay Hasia(supra) for determining when a corporation can be classified as an "instrumentality" or "agency" of the government, thereby falling within the scope of the term 'authority' as defined in Article 12 of the Constitution. The Bench referenced the case of Chander Mohan Khanna v. NCERT,4 wherein the Apex Court, after evaluating the memorandum of association and operational rules, concluded that the NCERT was primarily an autonomous entity. It was determined that its functions were not exclusively governmental, and government oversight was limited to 3 (2002) 5 SCC 111 Signature Not4(1991) Verified 4 SCC 578 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 13 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 ensuring proper utilization of grants. Since its funding was not entirely derived from government sources, it did not meet the criteria of a State instrumentality under Article 12. Additionally, the Bench cited the decision in Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers' Association,5 where it was established that the company qualified as an authority under Article 12. This conclusion was based on the fact that the company was substantially funded and financially controlled by the government, operated under a Board of Directors appointed and removable by the government, and undertook functions of significant public interest under governmental oversight.
11. The evolving landscape of state control and the increasing involvement of private entities in what is termed as "public functions" have prompted the Supreme Court to address the issue of liability for such private actors. A "public function" refers to a role traditionally reserved for governmental authorities. Private sector individuals or entities are deemed to be executing a public function when they undertake responsibilities historically associated with government entities.
12. In Anandi Mukta & Others v. V.R. Rudani& Others,6 the Supreme Court clarified that the phrase "any person or authority" under Article 226 of the Constitution is not confined to statutory bodies and government instrumentalities. Instead, it extends to any individual or entity engaged in performing a public function. Then, in Zee Telefilms Ltd. & Others v. Union of India,7 the Supreme Court delineated the 5 (2002) 2 SCC 167 6 1989 (2) SCC 691 Signature Not7(2005) Verified 4 SCC 649 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 14 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 scope of "other authorities" under Article 12 of the Constitution. This category includes state-created corporations and societies engaged in trading, bodies involved in research and development related to government functions, and private entities performing public duties or undertaking activities similar to those of government entities. Additionally, in Janet Jeyapaul v. SRM University & Others,8 the Court found that SRM University was engaged in a public function through its educational activities.
13. The aforementioned decisions clarify that the precise type of entity--be it a society, cooperative society, or company--does not solely determine its status. What is essential is the degree of governmental control over the entity and its operationality in a manner similar to a "public function." The tests described must be collectively applied and assessed. There is no fixed formula for this determination; instead, various factors may become significant in different factual scenarios to establish whether the entity qualifies as an authority under Article 12 of the Constitution.
14. It is a settled position of law that for any "other authority" to fall within the domain of the writ jurisdiction it should be discharging a "public duty" and the dispute between the parties shall persist regarding the non- performing of such public duty or function. It is pertinent to note that the Supreme Court has time and again reiterated that when the dispute pertains to the service matters and there is no element of public Signature Not82015 Verified (16) SCC 530 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 15 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 duty involved in it, then the dispute falls within the domain of private dispute and is not amenable to the jurisdiction of the writ Court.
15. It is not in dispute that the Society has not been constituted under an Act. It functions like any other Co-operative Society but mainly regulated in terms of the provisions of the Orissa Cooperative Societies Act, except as provided in the bye-laws of the Society. The State has no say in the functions of the Society. Membership, acquisition of shares and all other matters are governed by the bye-laws framed under the Act. The terms and conditions of an officer of the Co-operative Society, indisputably, are governed by the Rules.
16. It has not been shown before this Court that the State exercises any direct or indirect control over the affairs of the Society for deep and pervasive control. It cannot, thus, be said that the State exercises any functional control over the affairs of the Society.
17. In S.S. Rana v. Registrar, Co-Operative Societies,9 the Supreme Court dealt with the question of amenability of non-statutory cooperative societies under Art. 226 of the Constitution. The relevant excerpt is produced hereinbelow:
"The respondent No.1-Society does not answer any of the afore- mentioned tests. In the case of a non-statutory society, the control thereover would mean that the same satisfies the tests laid down by this Court in Ajay Hasia vs. Khalid MujibSehravardi [(1981) 1 SCC 722]. [See Zoroastrian Coop. Housing Society Ltd. vs. District Registrar, Coop. Societies (Urban) &Ors. reported in 2005 (5) SCC632.] It is well settled that general regulations under an Act, like Signature Not92006 Verified (11) SCC 634 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 16 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 Companies Act or the Co-operative Societies Act, would not render the activities of a company or a society as subject to control of the State. Such control in terms of the provisions of the Act are meant to ensure proper functioning of the Society and the State or statutory authorities would have nothing to do with its day-to-
day functions." (Emphasis Supplied)
18. In Krishna Mohan v. State of U.P.,10 the Allahabad High Court has held that supervisory or general regulation under the statute or by any state authority over cooperative societies, which are body corporates, does not make their activities subject to such control by the State that they would be considered an extension or instrumentality of the State. The relevant portion is produced hereinbelow:
"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:
Signature Not10WRIT(A) VerifiedNo. - 2329 of 2019; All HC Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 17 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 "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 characterized 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 MujibSehravardi. [See Zoroastrian Coop. Housing Society Ltd. v. Distt.Registrar, Coop. Societies (Urban).]
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 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 18 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 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."The fact that cooperative societies are subject to the control of statutory authorities such as the Registrar, Joint Registrar, and the Government does not imply that the State exercises direct or indirect control over the society's affairs in a manner that is deep and all-pervasive."
19. Then, in Anand Prakash v. The Delhi State Co-Operative Bank Ltd.
&Anr.,11 the Delhi High Court held that the writ petition against cooperative bank may not be maintainable just because it is performing a banking function. The relevant excerpt is produced hereinbelow:
"10. I have put to the counsel for the petitioner whether, if a private company instead of framing its own rules adopts the rules aforesaid applicable to the government servants to its employees, a writ petition would lie against the private company also. The counsel for the petitioner has fairly stated that it would not be. Similarly, merely because a Society adopts the rules applicable to Government servants to its own employees would not convert the said Co- operative Society into Government. The said contention of the petitioner is thus rejected.
11. Similarly, merely because the respondent is performing banking function would also not make the writ petition maintainable. It is not shown that the function so performed by the respondent is monopolistic. According to the document handed over by the petitioner himself there are as many as 32 Co-operative Societies in Delhi performing the banking functions. This is besides the other banks operating in Delhi. Thus the said ground for maintainability of the writ petition is also rejected."
Signature Not112011 Verified SCC OnLine Del 1841 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 19 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13
20. Based on the aforementioned, it is now well established that a cooperative society or its associated bank does not fall within the purview of Article 12 of the Constitution solely by virtue of being under the supervisory jurisdiction of the Registrar of Cooperative Societies or due to its engagement in banking functions. Nonetheless, I shall now deal with the amenability of service matters of the Cooperative Societies to the jurisdiction of Article 226.
21. In Kulchhinder Singh v. Hardayal Singh Brar,12the Supreme Court adjudicated upon the fact whether a writ pertaining to service matters can be entertained against the cooperative society. The relevant portion of the judgment is reproduced herein below:
"8. The question as to whether a cooperative society is a public authority has fallen for judicial notice and Amir Jamia [ILR 1969 Del 202] contains an elaborate discussion of the controversial topic covering decisions, English and Indian. It is also true that at least Madhya Pradesh (Dukhooram [Dukhooram Gupta v. Cooperative Agricultural Association Ltd., AIR 1961 MP 289] ) and Calcutta (Madan Mohan [Madan Mohan Sen Gupta v. State of W.B., AIR 1966 Cal 23] ) have considered whether a writ will issue against a cooperative society, simpliciter. Kumkum Khanna [ILR (1976) 1 Del 31] deals with a private college governed by a university ordinance.
9. Many other rulings have also been brought to our notice, but we do not think it necessary elaborately to investigate these issues notwithstanding the fact that Shri Gupta, appearing for the contesting respondent, challenged each one of the grounds stabilising his submission on rulings of this Court, of the High Courts and the English courts.
Signature Not12AIR Verified 1976 SC 2216 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 20 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13
10. The reason why we are not inclined to add to the enormous erudition on the point already accumulated in case law is that a close perusal of the writ petition will disclose that essentially the appellant is seeking merely to enforce an agreement entered into between the employees and the cooperative bank.
11. There is no doubt that some of the legal problems argued by Sri Ramamurthy deserve in an appropriate case jurisprudential study in depth, although much of it is covered by authority. But assuming, for argument's sake, that what he urges has validity, the present case meets with its instant funeral from one fatal circumstance. The writ petition, stripped of embroidery and legalistics, stands naked as a simple contract between the staff and the society agreeing upon a certain percentage of promotions to various posts or an omnibus, all-embracing promise to give a quota to the existing employees. At its best, the writ petition seeks enforcement of a binding contract but the neat and necessary repellant is that the remedy of Article 226 is unavailable to enforce a contract qua contract. We fail to see how a supplier of chalk to a government school or cheese to a government hospital can ask for a constitutional remedy under Article 226 in the event of a breach of a contract, bypassing the normal channels of civil litigation. We are not convinced that a mere contract agreeing to a quota of promotions can be exalted into a service rule or statutory duty. What is immediately relevant is not whether the respondent is State or public authority but whether what is enforced is a statutory duty or sovereign obligation or public function of a public authority. Private law may involve a State, a statutory body, or a public body in contractual or tortious actions. But they cannot be siphoned off into the writ jurisdiction.Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 21 of 25 Reason: Authentication
Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13
12. The controversy before us in substance will turn on the construction and scope of the agreement when the claim to a quota as founded cannot be decided in writ jurisdiction without going back on well-settled guidelines and even subverting the normal processual law -- except perhaps in extreme cases which shock the conscience of the Court or other extraordinary situation, an aspect we are not called upon to explore here. We are aware of the wide amplitude of Article 226 and its potent use to correct manifest injustice but cannot agree that contractual obligations in the ordinary course, without even statutory complexion, can be enforced by his short, though, wrong cut." (Emphasis supplied)
22. The Delhi High Court in Satyapal Singh v. The Delhi State Cooperative Bank13 relied on Kulchhinder Singh (supra) and held that the service matters of the cooperative society are not amenable to the writ jurisdiction since, there is no element of public duty involved. Such kinds of disputes are of private nature and do not fall within the ambit of the writ jurisdiction.
23. In Konaseema Co-operative Central Bank Ltd. v. N. Seetharama Raju,14 the Andhra Pradesh High Court contributed to the narrative and held that bye-laws made by co-operative societies do not have the force of law. They are in the nature of contract, terms of contract, between the Society and its employees, or between the Society and its members. The relevant excerpt is produced hereinbelow:
"The bye-laws made by a co-operative society registered under the A.P. Co-operative Societies Act do not have the force of law. They are in the nature of contract, terms of contract, 13 W.P.(C) 7462/2022; Del HC Signature Not14AIR Verified 1990 Andhra Pradesh 171 Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 22 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 between the Society and its employees, or between the Society and its members, as the case may be. Hence, where a Society cannot be characterized as a 'State', the service conditions of its employees, governed by bye-laws, cannot be enforced through a writ petition. However, in the matter of termination of service of the employees of a co-operative society, Section 47 of the A.P. Shops and Establishments Act provides a certain protection, and since the said protection is based upon public policy, it will be enforced, in an appropriate case, by this Court under Article 226 of the Constitution. Ordinarily, of course, an employee has to follow the remedies provided by the A.P. Shops and Establishment Act; but, in an appropriate case, this Court will interfere under Article 226, if the violation of a statutory public duty is established. It is immaterial which Act of Rule casts such a statutory public duty. Mandamus, certiorari, and prohibition are public law remedies. They are not available to enforce private law rights. Every act of a society which may be a 'State' within the meaning of Article 12, does not necessarily belong to public law field. A society, which is a 'State', may have its private law rights just like a Government. A contractual obligations, which is not statutory, cannot be enforced by way of a writ petition under Article 226 of the Constitution. Prior to entering into contract, however. Article 14 operates, as explained by the Supreme Court in E.E. & C. Ltd. v. State of West Bengal, AIR 1975 SC 226 and Ramana Dayaram Shetty, (1979) 3 SCC 489 : AIR 1979 SC 1628."
24. From the aforementioned discussion, it has been established that, for an organization to be deemed as performing a public function, such function must be inherently associated with those performed by the State in its sovereign capacity.
25. Taking a cue from the preceding discussion, there is no evidence on record to suggest that the Respondent/Bank undertakes functions Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 23 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 comparable to those exclusively carried out by State authorities. The Respondent/Bank is a non-statutory entity that does not perform any public function, as banking services are provided by both private and State entities. Moreover, the Respondent/Bank does not hold any monopoly status conferred or mandated by law. Although the State may promote such entities as part of its social policy or economic development initiatives, this encouragement does not equate to the performance of a "public function".
26. In the present case, the lack of State control over the management of the Respondent/Bank significantly influences the conclusion that the Respondent/Bank does not fall within the definition of a public authority. The deputation of employees from another bank and their subsequent absorption by the Respondent/Bank does not imply that it has undertaken a public function. The Respondent/Bank operates under democratic control, and the ultimate authority regarding the service conditions of its employees lies with the management of the Respondent/Bank.
27. Therefore, in this petition, the Respondent/Bank does not qualify as a "State" or "instrumentality of the State" within the meaning of Article 12 of the Constitution and is thus not subject to the jurisdiction of Article 226.
V. CONCLUSION:
28. In light of the comprehensive exposition of the law provided above, and given the absence of any pleadings by the Petitioners to substantiate Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 24 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13 that the Opposite Party/bank qualify as a State instrumentality, it is deemed unnecessary to make any further observations on this matter.
29. The Writ Petition is dismissed as not maintainable.
30. Interim order passed earlier stands vacated.
(Dr.S.K. Panigrahi) Judge Orissa High Court, Cuttack, Dated the 31stJuly, 2024/ Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Page 25 of 25 Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Aug-2024 16:08:13