Andhra HC (Pre-Telangana)
Vasavi Co-Operative Urban Bank Limited vs Authority Appointed Under Section ... on 20 December, 2006
Equivalent citations: 2007(2)ALD795, AIRONLINE 2006 AP 15
Author: N.V. Ramana
Bench: N.V. Ramana
ORDER N.V. Ramana, J.
1. The petitioner is the Vasavi Co-operative Urban Bank Limited represented by its Managing Director. This writ petition is filed seeking to call for the records in S.E. No. 5 of 2004 to S.E. No. 39 of 2004, S.E. No. 41 of 2004 to S.E. No. 43 of 2004 and S.E. Nos. 14, 15 and 16 of 2005 and quash the orders passed by the 1st respondent/The Authority Appointed under Section 48(1) of A.P. Shops and Establishments Act, 1988 and Assistant Commissioner of Labour-IV, Hyderabad (for short the 1st respondent authority) dated 30-6-2006 setting aside the termination orders dated 31-8-2004 and directing reinstatement of the petitioners into service with half of the back-wages.
2. The brief facts leading to the filing of the writ petition are:
The petitioner is a Co-operative Urban Bank, registered under the A.P. Co-operative Societies Act, 1964 (for short 'the A.P.C.S. Act') and is governed by the provisions of the said Act. The petitioner bank has been granted licence vide letter of the Reserve Bank of India dated 13-7-1982 to carry on the banking business in terms of Section 22(i) read with Section 56(O) of the Banking Regulation Act, 1949. Petitioner bank went into financial crunch in the year 2002-03 resulting in erosion of net worth at 488.7% and erosion of deposit at 19.9% and the bank has not been complying with Section 11(1) and Section 22(iii)(a) of the Banking Regulations Act, 1949 and it was downgraded to the sick category as on 30-6-2002. In view the financial difficulties 11 out of 12 elected members of the Managing Committee have resigned their posts and there was no Managing Committee to manage the affairs of the petitioner bank. To manage the affairs of the petitioner bank, the Government of A.P. invoking the powers under Section 32(7)(a) of the A.P.C.S. Act, issued orders in G.O. Rt. No. 170, Agriculture and Co-operative Department, dated 6-3-2003 appointing three member Person in-charge Committee for a period of six months or till elections are conducted, whichever is earlier. The Person-in-charge Committee is managing the affairs of the bank, which term is being extended from time to time. Thus from 6-3-2003 the petitioner bank is being managed by the Person In-charge Committee.
3. The Reserve Bank of India, invoking the powers under Section 35-A of the Banking Regulations Act, 1949 gave directions dated 7-3-2003 restraining the bank from incurring any liability or sanctioning/ renewing loans/advances or making payments of discharging any liabilities or obligations except in accordance with the directions contained in the directive No. UBD (SEB/ D-48/12-3-1298/2002-03 dated 7-3-2003 and directed to give the statement of accounts.
4. The Person In-charge Committee constituted by the Government of A.P. constituted a Special Committee on 164-2004 to assess the cadre strength of the staff and to comply with the provisions of Section 116-C of the A.P.C.S. Act. The committee has submitted its report. The Person-in-charge Committee accepted the said report and forwarded the same to the Commissioner for Co-operation and Registrar of Co-operative Societies for approval as required under Section 116-C of the A.P.C.S. Act. The Commissioner and Registrar vide proceedings in Rc. No. 38629/2000 UB-V dated 17-5-2004 approved the strength of the employees. Keeping in view the financial condition of the bank, the directives issued by the Reserve Bank of India and to comply with the provisions of Section 116(c) of the A.P.C.S. Act, the bank has passed a resolution dated 23-8-2004 to retrench the excess staff. In terms of the resolution passed by the bank the services of respondents 2 to 42 were terminated vide proceedings dated 31-8-2004 by paying one month notice pay and gratuity/service compensation. The said amounts were credited to the respective savings accounts of the respondent-workmen.
5. Aggrieved by the said termination/ retrenchment orders, the employees have approached the authorities under Section 48(1) of A.P. Shops and Establishments Act, 1948 (for short 'the A.P.S.E. Act). The 1st respondent authority vide order dated 30-6-2006 set aside the termination orders dated 31 -8-2004 and directed the petitioner-bank to reinstate respondents 2 to 42 herein into service with continuity of service and all attendant benefits with half of the back-wages. The said order is assailed in the present writ petition by the bank.
6. This Court while admitting the writ petition, vide order dated 4-8-2006 in W.P.M.P. No. 19791 of 2006 grated interim suspension of the order of the respondent authority dated 30-6-2006. The respondents-workmen filed vacate stay petition in W.V.M.P. No. 2023 of 2006 seeking vacation of the orders dated 4-8-2006 passed in W.P.M.P. No. 19791 of 2006.
7. Learned Counsel for petitioner bank Sri G. Vidyasagar submitted that the Government of Andhra Pradesh by G.O. Rt. No. 170 dated 6-5-2003 in exercise of the powers conferred under Section 32(7)(a) of A.P.C.S. Act, took control of the bank and appointed Person in-charge to look-after the affairs of the bank. It is also submitted that the Reserve Bank of India under Section 35-A of the Banking Regulation Act, 1949 by letter dated 7th March, 2003 issued certain directives. Thus, it is contended that the petitioner bank is under the control of State Government and Reserve Bank of India, and as such, is exempted under Section 73(i)(b) of the A.P.S.E. Act, and the Authority under A.P.S.E. Act, has no jurisdiction to entertain and adjudicate the claims made by the respondents-workmen. In support of his contentions, he relied upon the judgment of the Supreme Court in C.V. Raman v. Management of Bank of India .
8. Learned Counsel further submitted that keeping in view the financial position of the bank, and in terms of the staffing pattern fixed by the Commissioner and Registrar of Co-operative Societies and in compliance with Section 116-C of the A.P.C.S. Act, the termination orders were passed and the amounts to which the workmen are entitled to were credited to their respective Savings Bank Accounts. He further submitted that the bank has become defunct and virtually no banking activities are going on except collecting the dues from the loanees and distributing the same to the depositors. He further submitted that though an alternative remedy of appeal is provided under Section 48(3) of the A.P.S.E. Act, yet availability of the alternative remedy is not a bar for the petitioner to invoke extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. It is also contended that for preferring an appeal, the petitioner bank has to deposit the entire amount awarded by the Authority under A.P.S.E. Act and the bank is not in a position to comply with the said condition, and as such it is left with no option but to invoke the jurisdiction of this Court under Article 226 of the Constitution of India.
9. While concluding the arguments, learned Counsel for petitioner submitted that there is no scope of revival of the bank and no banking activities are being undertaken and the bank has become defunct, and as such it will not be in a position to reinstate the workmen/respondents herein.
10. Per contra, Shri S. Ramachandra Rao, learned Senior Counsel appearing for the respondents/ workmen submitted that the workmen were terminated on 31 -8-2004 without following the due procedure contemplated under the law and are virtually on the streets, for no fault on their part. It is further submitted that Section 77 of the A.P.S.E. Act is specific that notwithstanding anything in the A.P.C.S. Act provisions of this Act shall apply to the Co-operative Societies and the petitioner bank having been registered under the Co-operative Societies Act, 1964 the provisions of A.P.S.E. Act are applicable to the petitioner bank. Learned Counsel further would contend that in fact the judgment of the Apex Court in C.V. Raman's case (supra), has no applicability to the case on hand, inasmuch as the petitioner bank is not a nationalized bank. It is further submitted that the Government of A.P., has only nominated a Person In-charge Committee for a specified period, which is being extended from time to time, and the Reserve Bank of India, keeping in view the public interest issued certain directives in terms of Section 3 5-A of the Banking Regulations Act, which cannot be termed as if the bank is being controlled and run by the State Government and the Reserve Bank of India.
11. Heard the learned Counsel for petitioner Mr. G. Vidyasagar and learned Senior Counsel Mr. S. Ramachandra Rao, representing Mr. K.R. Prabhakar, at length. Also heard Mr. V. Mallik Mr. S. Prasada Rao, Mr. K. Ravinder Gound, Mr. Rajkumar Rudra, Mr. R. Ratnakar Rao and Mr. G. Ravi Mohan for the respondents-workmen.
12. The main contention of the learned Counsel for petitioner is that in view of G.O. Ms. No. 170 Agriculture and Cooperative (Co-op.III) Department dated 6-3-2003 and the directives of Reserve Bank of India vide its letter dated 7-3-2003, the petitioner bank is not amenable to the provisions of A.P.S.E. Act and the Authority under A.P.S.E. Act has no jurisdiction to entertain the claims.
13. The operative portion of G.O. Ms. No. 170 dated 6-3-2003 reads as under:
In the reference cited above the CC & RCS has informed that 11 out of 12 elected members of the Managing Committee of the Vasavi Co-operative Urban Bank Ltd., have resigned from their posts, thereby creating a situation where there is no existence of a Managing Committee and has therefore requested the Government to issue orders for appointment of a Committee of Person In-charge to manage the affairs of the bank.
The Government after examination of the matter and in view of the fact, that since the majority of the Managing Committee members have resigned rendering the Managing Committee non-functional and since it is not possible to conduct a general body meeting for the purpose of conducting elections of members of the Managing Committee immediately; and in order to ensure the Management of the bank in the interim period before conduct of elections, the Government in exercise of the powers conferred under Section 32(7Xa) of the APCS Act, 1964 hereby appoint the following persons to manage the affairs of the Vasavi Co-op Urban Bank Ltd. for a period of 6 months or till elections are conducted, whichever is earlier.
14. The relevant portion of letter dated 7th March, 2003 in Lr. No. (SC)/305/1203/1298/2002-03 of the Reserve Bank of India issuing directions under Section 35-A of the Banking Regulations Act 1949 reads as under:
The Reserve Bank of India is satisfied that in the public interest it is necessary to issue certain directions to Vasavi Co-operative Urban Bank Ltd., Hyderabad. Accordingly, the Reserve Bank of India in exercise of the powers vested in it under Sub-section (1) of Section 35-A of the Banking Regulations Act 1949 (As applicable to Co-operative Schemes) read with Section 56 of the Banking Regulation Act 1949 hereby directs that Vasavi Co-operative Urban Bank Ltd., Hyderabad from close of business on 7th March, 2003 shall not without prior approval in writing from the Reserve Bank of India grant or renew any loans and advances, make any investment incur any liability including borrowal of funds and acceptance of fresh deposits to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise either into any compromise of arrangements and sell transfer or otherwise dispose of any of its properties or assets except to the extent and in the manner provided hereunder.
(i)...
(v) Incurring any expenditure that may be required to be met by the bank in respect of following terms:
(a) salaries of employees.
15. From the above, it is clear that the Government in exercise of the power vested in them under Section 32(7)(a) of the APCS Act, have issued G.O. Ms. No. 170 dated 6-3-2003, appointing Person-In-charge Committee to manage the affairs of the bank. The Reserve Bank of India also to secure proper management of the bank has issued certain directives in terms of Section 35-A of the Banking Regulation Act, 1949, which are general in nature. Further a reading of the orders issued by the Government in G.O. Ms. No. 170, dated 6-3-2003 and the directives issued by the Reserve Bank of India in their letter dated 7-3-2003 would nowhere indicate that the bank was taken over either by the Government or by the Reserve Bank of India. The Government Order dated 6-3-2003 clearly indicates that it was issued keeping in view the fact that majority of the Managing Committee Members have resigned rendering the Managing Committee non-functional and in order to ensure the Management of the bank, the Government has nominated persons to manage the affairs for a limited period of six months or till the elections are conducted, which ever is earlier. By appointing Person-in-charge Committee and by issuance of certain directives for proper management of the bank, neither the Government nor the Reserve Bank of India, can be said to have taken over the affairs of the petitioner bank, and moreso when the Government had appointed the Person-in-charge Committee for a period of six months or till the elections are conducted, whichever is earlier. The above proceedings were issued only to regulate the affairs of the petitioner bank and to protect the public interest, and this is evident from the fact that the Reserve Bank of India while issuing the directives has granted liberty to the petitioner bank to incur expenditure towards the salaries of the employees.
16. It is the contention of the petitionerbank that the provisions of the A.P.S.E. Act, having regard to Section 73(1)(b) is exempted from the purview of the Act. Section 73 of the A.P.S.E. Act deals with exemptions. Section 73(1)(b) reads thus:
Establishment under the Central and State Governments, Local Authorities, the Reserve Bank of India, a Railway Administration operating any railway as defined in Clause 20 of Article 66 of the Constitution and Cantonment Authorities.
17. Whether or not the petitioner is exempted from the purview of the A.P.S.E. Act, has to be examined in the light of the judgment of the Apex Court in C.V. Raman's, case. In the said case, the apex Court considered whether the State Bank of India and other nationalized banks are entitled for exemption from the purview of the provisions of the Tamil Nadu Shops and Establishments Act, 1947. Having considered the said issue, the Apex Court held that the organization claiming exemption from the purview of the Tamil Nadu Shops and Establishments Act, 1947 must satisfy that the State Government had deep and pervasive control.
18. The Apex Court while considering the question whether the State Bank of India and the nationalized banks are establishments under the Central Government quoted the observations made in its earlier judgment in Ajay Hasia v. Khalid Mujib Sehravardi , which read as under:
...It is undoubtedly true that the corporation is a distinct juristic entity with a corporate structure of its own and it carries on its functions on business principles with a certain amount of autonomy which is necessary as well as useful from the point of view of effective business management, but behind the formal ownership which is cast in the corporate mould, the reality is very much the deeply pervasive presence of the Government. It is really the Government which acts through the instrumentality or agency of the corporation and the juristic veil of corporate personality worn for the purpose of convenience of management and administration cannot be allowed to obliterate the true nature of the reality behind which is the Government.
19. In the present case, the material placed before this Court does not show that either the State Government or the Reserve Bank of India by issuing directions, as referred to above, sought to exercise deep and pervasive control over the affairs of the petitioner-bank. The orders passed by the State Government and the Reserve Bank of India not being with a view to takeover the administration of the petitioner-bank nor to have a deep and pervasive control over its affairs, the claim of the petitioner-bank that it is entitled to be exempted from the purview of the A.P.S.E. Act, having regard to the provisions of Section 73(1)(b) cannot be accepted.
20. The petitioner-bank is not entitled to exemption from the provisions of the A.P.S.E. Act for one other reason also. Section 77 of the A.P.S.E. Act in clear terms states that the Act is applicable to Co-operative Societies. Admittedly, the petitioner-bank was established under the provisions of the A.P. Co-operative Societies Act. The petitioner-bank having been established under the provisions of the A.P.C.S. Act, having regard to provisions of Section 77 of the A.P.S.E. Act, cannot be allowed to contend that it is exempted from the provisions of the A.P.S.E. Act nor the same is not made applicable to it.
21. Insofar as the aspect of jurisdiction is concerned, the petitioner bank has contested the matter before the primary authority under A.P.S.E. Act, and admittedly, it has not raised the issue relating to jurisdiction before the primary authority, and the plea of jurisdiction is taken for the first time in the present writ petition. It is pertinent to note that the bank having contested the matter also filed a detailed counter. In the said counter-affidavit, the petitioner bank at Para 10 it took a stand that the other provisions of the I.D. Act do not apply to a termination order made under the provisions of A.P.S.E. Act. The relevant portion reads as under:
...There is no provision under ID Act or APSE Act making the other provisions of the ID Act making it applicable to APSE Act, 1988. Therefore, the other provisions of the ID Act, does not apply to a termination order made under the provisions of APSE Act, 1988. The provisions of the APSE Act, 1988 being a self contained code, explicitly overtides the provisions of the ID Act, excepting those saved by Section 25-J. of the ID Act, which is not contrary to the provisions of APSE Act, 1988.
22. In view of the above stand taken by the petitioner bank in its counter before the Authority under A.P.S.E. Act, it cannot now be permitted to contend that the Authority under A.P.S.E Act has no jurisdiction to adjudicate the claim.
23. The contention of the learned Counsel for petitioner that the petitioner bank is facing severe financial constraints and is not in a position to comply the precondition for entertaining the appeal under Section 48 of the A.P.S.E. Act, is no ground for entertaining the present writ petition. The petitioner has an efficacious alternative remedy by way of second appeal under Section 48(3) of the Act, but the petitioner without availing the said remedy, has filed this writ petition. The petitioner can well raise all the grounds available to it against the impugned order in the second appeal. I am unable to accept the contention of the learned Counsel for petitioner that despite existence of alternative remedy, it is entitled to file the writ petition. There is no doubt that existence of alternative remedy is not a bar to the maintainability of the writ petition. But, a writ petition, despite existence of alternative remedy, can be entertained only if it is filed for enforcement of any of the fundamental right or where there has been a violation of the principles of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged See Whirlpool Corporation v. Registrar of Trade Marks . In any event, the jurisdiction of this Court under Article 226 of the Constitution of India being a discretionary one, 1 see no reason whatsoever to exercise the discretionary jurisdiction in favour of the petitioner and entertain the writ petition, filed assailing the impugned order, against which there exists an effective alternative remedy of appeal under Section 48 of the A.P.S.E. Act.
24. For the foregoing reasons, the writ petition is devoid of any merits and is liable to be dismissed and accordingly dismissed. However, in the circumstances of the case, no costs.