Patna High Court - Orders
Bihar State Milk Co Operative ... vs The State Of Bihar & Ors on 7 April, 2017
Author: Ahsanuddin Amanullah
Bench: Ahsanuddin Amanullah
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.5204 of 2017
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1. Bihar State Milk Co-Operative Federation Limited through its Managing
Director, Dairy Development Complex, P.O. Bihar Veterinary College, Patna-
800014
2. The Managing Director, Bihar State Milk Co-operative Federation Limited,
Dairy Development Complex, P.O. Bihar Veterinary College, Patna 800014
.... .... Petitioner/s
Versus
1. The State of Bihar through Principal Secretary, Co-operative Department,
Government of Bihar, Patna.
2. The Principal Secretary, Co-operative Department, Government of Bihar, Patna.
3. Nirman Kumar singh, son of Shri Rama Nand Singh, resident of Village
Sikrahata Kala, P.O. Sikrahata, District Bhojpur, presently Member of Board of
Director, Sahabad Dughdha Utpadak Sahkari Sangh, Ltd. Katira, Ara (Bhojpur)
4. Shahabad Dughdha Utpadak Sahkari Sangh, Ltd. Katira, Ara (Bhojpur) through
its Chairman.
.... .... Respondent/s
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Appearance :
For the Petitioners : P. K. Shahi, Sr. Advocate with
Mr. Vikas Kumar and
Mr. Nikesh Kumar, Advocates
For the State : Mr. Syed Iqbal Ahmed, SC 20 with
Mr. Mahendra Prasad Verma, AC to SC 20
For the Respondents No. 3 and 4 : Mr. Y. V. Giri, Sr. Advocate with
Mr. Ashish Giri, Advocate
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CORAM: HONOURABLE MR. JUSTICE AHSANUDDIN AMANULLAH
ORAL ORDER
Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017
2/22
2 07-04-2017Heard Mr. P. K. Shahi, learned senior counsel, assisted by Mr. Vikas Kumar, learned counsel for the petitioners, Mr. Y. V. Giri, learned senior counsel, assisted by Mr. Ashish Giri, learned counsel for the respondents no. 3 and 4 and learned A.C. to S.C. 20 for the State.
2. A detailed counter affidavit has been filed on behalf of respondents no. 3 and 4. Copy of the same has been served on learned counsel for the State and the petitioners today and in that view of the matter, learned counsel for the petitioners submitted that he would require time to reply to the counter affidavit on merits. However, he submitted that he may be heard for the purposes of interim order.
3. The writ petition has been filed by the petitioners for quashing of order contained in Memo No. 38/ML dated 31.03.2017 passed in Supersession Appeal No. 7 of 2016 by which the Appellate Authority under the Bihar Co-operative Societies Act, 1935 (hereinafter referred to as the 'Act') has quashed order no. 5697 dated 09.12.2016 passed by the petitioner no. 2 exercising power under Sections 41 (1) and 41 (3) under the Act dissolving the Board of Directors of the respondent no. 4 Cooperative Society.
4. Learned counsel for the petitioners submitted Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 3/22 that the order dated 09.12.2016 was passed exercising powers conferred under Sections 41 (1) and 41 (3) of the Act for cogent reasons and after following the due procedure prescribed under law. He submitted that twice notice was issued to the Chairman of the respondent no. 4 to explain the position with regard to certain irregularities under letters dated 12.11.2016 and 21.11.2016 and upon consideration of the same, the order of supersession dated 09.12.2016 was passed. It was submitted that the respondent no. 3 had filed appeal before the Appellate Authority against the said order of supersession in which initially the order dated 09.12.2016 was stayed and the matter was fixed for hearing but due to intervention of the Court earlier in C.W.J.C. No. 170 of 2017, the interim order passed by the Appellate Authority was stayed and the main appeal itself was directed to be heard on merits and accordingly, the same has been decided by the order impugned.
5. Learned counsel submitted that the Appellate Authority has gone mainly on the presumption that there has been violation of principles of natural justice as contemplated under Section 41 of the Act as no show cause was given to the respondent no. 4 and further that the main ground for taking such drastic step, being the removal of one Niranjan Kumar Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 4/22 from the post of Managing Director by the petitioner no. 2 not being acted upon and rather he being confirmed by the respondent no. 4 as the Managing Director, was incorrect and that his confirmation on the post of Managing Director by the respondent no. 4 was proper. Learned counsel submitted that the Appellate Authority has misdirected itself and has gone into the validity in the absorption of the service of Niranjan Kumar on the post of Managing Director of the respondent no. 4 whereas the matter before him was challenge to the order passed by the petitioner no. 2 dated 09.12.2016 superseding the Board of Directors of the respondent no. 4. Learned counsel submitted that at best, the Appellate Authority could have interfered in such supersession but deciding the merit and validity of the decision taken by the Board of Directors of the respondent no. 4 by which Niranjan Kumar was absorbed on the post of Managing Director of respondent no. 4, was beyond the jurisdiction.
6. Learned counsel submitted that the Appellate Authority has also misdirected itself by holding that there was violation of principles of natural justice for the reason that in the aforesaid two communications dated 12.11.2016 and 21.11.2016, it was clearly indicated that failure to reply to the Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 5/22 issues raised in those letters would lead to legal consequences by exercise of powers conferred on the petitioner no. 2 of Registrar, Co-operative Societies. Learned counsel submitted that the order of petitioner no. 2 dated 09.12.2016 gives details of various irregularities committed by the Board of Directors of the respondent no. 4, including grant of four extra increments to Niranjan Kumar and one extra increment to various persons including persons who were not even employee of the respondent no. 4. Learned counsel submitted that even the financial condition of the respondent no. 4 was in dire state as there was loss of crores of rupees during the last six months and thus, both on account of financial irregularity and mismanagement as well as the decision taken by the Board, which were inimical to the general and particularly the financial health of the respondent no. 4, the petitioner no. 2 has rightly exercised jurisdiction under Section 41 of the Act, as under
Clause 3.2.7 of the bye-laws of the petitioner no. 1, it is to advise, guide, assist and control the member Milk Unions in all aspects of management, supervision, and audit functions and in terms of which there was a direction for removal of Niranjan Kumar from the post of Managing Director, which despite reminder was not complied with, and rather he was absorbed on Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 6/22 the post.
7. Learned counsel submitted that in the year 2014, Niranjan Kumar, who was a junior officer in the Vaishal Patliputra Milk Union (hereinafter referred to as the 'VPMU') was deputed and posted on the post of Managing Director of respondent no. 4 by the petitioner no. 2 by way of temporary arrangement and later in October, 2016 the services were withdrawn and returned to VPMU, which was not complied with. Learned counsel submitted that the absorption of Niranjan Kumar on the post of Managing Director of the respondent no. 4 was patently illegal as a person on deputation cannot be absorbed unless there is 'No Objection' given by the parent organization i.e., VPMU in the present case, and further such appointment on the post of Managing Director has to be in conformity with the provisions in the bye-laws of the respondent no. 4 itself, especially Clauses 35.2.12 and 35.02.13.
Learned counsel submitted that Niranjan Kumar did not possess such qualification and further, the procedure prescribed of having an Expert Committee to choose such person has also not been followed. Learned counsel submitted that in the present case, only the Chairman of VPMU had initially granted a 'No Objection' in favour of Niranjan Kumar but even the same Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 7/22 clearly stipulated that it was in anticipation of approval by the Board of Directors and later on such 'No Objection' was categorically refused.
8. Learned counsel submitted that once these discrepancies are apparent from the records and are admitted, the Board of Directors of the respondent no. 4 was not only defiant but clearly acting against the interest of the institution and the petitioners would have failed in their duty if they had not intervened to set the matter correct. Learned counsel submitted that the Appellate Authority has not been objective in its consideration of the issue and thus the order impugned requires interference.
9. Learned counsel contended that the order impugned has also held that all the decisions taken by the Administrator appointed during the interregnum period automatically became illegal, which is totally against the settled principles of law as the Administrator, not only being duly appointed, was functioning pursuant to the interim order passed by this Court earlier in C.W.J.C. No. 170 of 2017 and even in law, on the de facto principle, all actions taken by the Administrator while exercising power under an order which was at the relevant time valid, has to be sustained and just Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 8/22 because of a subsequent decision against the appointment of the person on the said post on which he discharged his duty, will not automatically become illegal. For such proposition, he has relied upon a decision of the Hon'ble Supreme Court in the case of Gokaraju Rangaraju vs. State of Andhra Pradesh reported as (1981) 3 SCC 132.
10. Learned counsel for the respondents no. 3 and 4 submitted that the case be finally decided rather than the Court having to go into the issue relating to any interim order. However, in view of learned counsel for the petitioners praying for interim order, learned counsel for the respondents no. 3 and 4 assisted the Court on merits and submitted that the order impugned is a reasoned and detailed order going into all aspects of the matter and also has considered the issues which have been raised by the petitioners both before the Appellate Authority and even before this Court.
11. Learned counsel submitted that the order of petitioner no. 2 dated 09.12.2016 which was under challenge before the Appellate Authority itself was without jurisdiction, for the power to exercise jurisdiction under Section 41 (1) of the Act is subject to there being a reference by the Registrar of the Co-operative Societies appointed under Section 6 (1) of the Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 9/22 Act. It was submitted that in the present case the petitioner no. 2 was conferred power under Section 6 (2) of the Act and thus, the law contemplates that the petitioner no. 2 is not the Registrar under the Act and thus the exercise of power suo motu under Section 41 of the Act is impermissible as it is the Registrar who has such power and he alone may refer the matter to any other authority including the petitioner no. 2, which has not been done. For such proposition, he referred to a judgment dated 12.02.2016 of a coordinate Bench of this Court in the case of Shamim Tabrej Vs. The State of Bihar and Ors. (CWJC No. 13830 of 2015) and its analogous case.
12. Learned counsel further submitted that the Appellate Authority has gone into the aspect of the validity of absorption of the service of Niranjan Kumar on the post of Managing Director of the respondent no. 4 for the reason that this was primarily the ground taken by the petitioner no. 2 for exercising power under Sections 41 (1) and 41 (3) of the Act for supersession of the Board of Directors of the respondent no.
4. Learned counsel submitted that if the petitioner no. 2 was of the opinion that the absorption of Niranjan Kumar on the post of Managing Director of respondent no. 4 was not proper, the remedy available was to file a petition under Section 48 of the Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 10/22 Act before the Registrar, Co-operative Societies, but she herself could not have intervened directly in the matter. Learned counsel submitted that the Board of Directors of the respondent no. 4 is the competent authority to decide such matters and is fully autonomous to do so without there being any scope of interference from any person, including the petitioners.
13. Learned counsel submitted that the ground taken in the order of supersession dated 09.12.2016 with regard to the objections of the nominees of the petitioner no. 1 and the National Dairy Development Board (NDDB) having dissented to such decision of absorbing the service of Niranjan Kumar on the post of Managing Director is also erroneous for the reason that in terms of the bye-laws of the respondent no. 4, the Board of Directors comprises of the respondent no. 2 and not the nominees and, thus, even if somebody was sent for the meeting as a nominee, no cognizance of such person can be taken.
14. Learned counsel submitted that the power conferred on the petitioner no. 2 under Section 6 (2) of the Act on 31.10.1996 has since been followed by three other notifications. Learned counsel submitted that initially the notification dated 31.10.1996 conferred the power under Sections 11(1), 11( 2), 41 42 and 44 of the Act as well as the Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 11/22 connected provisions of the Bihar Cooperative Societies Rules, 1959 (hereinafter referred to as the 'Rules') and later on by notification dated 21.02.2002 the power under Section 11 and related powers under the Rules were conferred and thereafter by notification dated 27.03.2009 the power under Section 14 (10) and the relevant provisions of the Rules were conferred. Learned counsel submitted that after that, as by notification dated 31.03.2010, power under Section 11 (A) of the Act has been confirmed on the petitioner no. 2. Learned counsel submitted that the power conferred under notification dated 31.10.1996 was being retained and even the notification dated 27.03.2009 mentions that the power conferred under notification dated 31.10.1996 as well as 21.02.2002 had been retained whereas the notification dated 31.03.2010 does not mention of the earlier delegation of power being retained by the petitioner no. 2. Learned counsel submitted that once specific clause has been inserted in the subsequent notifications dated 21.02.2002 and 27.03.2009 retaining the power conferred by the notification dated 31.10.1996, but the notification dated 31.03.2010 not stating the same, the intent of the State government was clear that the power under Section 41 and another Sections under the Act, which was conferred under Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 12/22 notification dated 31.10.1996, would not be retained by the petitioner no. 2 and, thus, after the notification dated 31.03.2010, the same could not be exercised, as has been done by the petitioner no. 2.
15. On the issue of interim order, learned counsel submitted that because Niranjan Kumar, the Managing Director, who has been restored to the post by the order impugned and subsequently the respondent no. 4 has also asked him to join, no interim order be passed without making him party. It was submitted that the respondent no. 4 cannot work in the absence of the Managing Director as he is the Chief Executive Officer through whom all works are done. Learned counsel further submitted that the Courts have held that interim order which in fact amounts to allowing the main writ application, should not be passed. For such proposition, he has relied upon an order dated 14.05.2013 of a Division Bench of this Court in L.P.A. No. 385 of 2013 (Bharat Petroleum Corporation Limited & Anr. Vs. M/s Yashodo Gas, Ekma, Saran & Ors.). Learned counsel submitted that under the Multi State Cooperative Societies Act, 2002, there are no registered bye laws of the petitioner no. 1 in terms of Section 3 (c) of the aforesaid Act. Learned counsel further submitted that as far as Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 13/22 the question of the impugned order declaring all action taken by the Administrator to be null and void, the order impugned can be sustained on the principle of severability. He submitted that even if that portion is accepted to be not proper, without that also the main order can be sustained.
16. Learned counsel submitted that the respondent no. 4 is not subordinate to the petitioner no. 1 and is independent in taking its own decision and there is no power of supersession vested in the petitioner no. 1. Learned counsel submitted that the petitioner no. 2 having already referred the matter relating to alleged financial irregularities against the respondent no. 4 to the Registrar, Co-operative Societies under Section 40 of the Act, the same cannot be a ground for exercising power under Section 41 of the Act for supersession of the Board of Director of the respondent no. 4. Learned counsel submitted that the Registrar, Co-operative Societies has already got an enquiry done on such complaint and has not found any financial irregularity.
17. Learned counsel for the petitioners, by way of reply, submitted that the petitioners are compelled to seek interim relief for the reason that Niranjan Kumar, after passing of the interim order of this Court in the earlier round of Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 14/22 litigation, had gone on leave and immediately, upon passing of the order impugned by the Appellate Authority, he has not only joined but has also sanctioned and taken payment of all his due salary by passing order to this effect himself, which clearly shows the mala fide and misconduct as also mismanagement of the respondent no. 4 by Niranjan Kumar in the capacity of the Managing Director. Learned counsel submitted that as far as the objection of learned counsel for the respondents no. 3 and 4 as to Niranjan Kumar not being made a party, the same is erroneous for the reason that it was respondent no. 3, who had filed the appeal before the Appellate Authority and there Niranjan Kumar was not made a party and thus, it was not incumbent on the petitioners or required of them, in law, to make Niranjan Kumar a party, and in any case, not making him a party would not make the writ petition not maintainable. He further submitted that in the registered bye-laws of the respondent no. 4, Clause 29 (a) (4) a person representing the petitioner no. 1 is a member of the Board of Directors and thus the contention of learned counsel for the respondents no. 3 and 4 that only the Managing Director of petitioner no. 1, that is, the petitioner no. 2, is a member and can attend the meeting of the Board of Directors of respondent no. 4, is misconceived and Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 15/22 erroneous. Learned counsel drew the attention of the Court to a judgment of the Division Bench of this Court dated 08.01.2016 in L.P.A. No. 378 of 2014 in the case of Ram Sanjivan Prasad Yadav Vs. The State of Bihar & Ors. for the proposition that the power under Section 41 of the Act could be exercised by the petitioner no. 2 with regard to Cooperative Societies registered under the Act. Learned counsel further submitted that in the case of Shamim Tabrej (supra) the Court was considering the power of the petitioner no. 2 with reference to Section 48 of the Act and not Section 41 of the Act, as is the case in the present writ application.
18. Having considered the matter, to be fair to learned counsel for the petitioners, he has to be given reasonable opportunity to take instructions on the counter affidavit filed on behalf of respondents no. 3 and 4 and the same running into 185 pages and copy being served on learned counsel for the petitioners today, the matter for final hearing is required to be adjourned for a reasonable period.
19. The Court is in agreement with the contention of learned counsel for the respondents no. 3 and 4 that no interim order should be passed which would amount to allowing of the writ petition. But, in the present case, the Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 16/22 interim order which the Court proposes to pass cannot be said to allowing the writ petition, for the reason that the writ petition is against the order impugned by which the supersession of the respondent no. 4 has been set aside and the Board of Governors of the respondent no. 4 has been restored. Thus, the Court, at the present juncture, without giving full opportunity of hearing to the parties, does not propose to interfere with the issue of supersession.
20. However, in view of the fact that the Managing Director is a key person and what has been brought on record and submitted before the Court, in the tentative view of the Court, absorption of Mr. Niranjan Kumar as Managing Director in the respondent no. 4 does not appear to be legally tenable. The law relating to deputation stands settled. The deputationist does not have a right of being either absorbed or regularized in the organization to which he is deputed, without following the due procedure of law. The first and foremost requirement is that the parent department from which he has been deputed has to grant its 'No Objection' or in the alternative, if a person wants to overcome that hurdle, he has to resign from his position/post in the parent organization and that has to be followed by acceptance of his resignation, before he is free to Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 17/22 offer his service for appointment or regularization or absorption in any other organization. In the present case, it is an admitted position that the parent organization of Niranjan Kumar i.e., VPMU, has not approved his services to be given for absorption in respondent no. 4. At this juncture, Mr. Y.V. Giri, learned counsel for the respondents no. 3 and 4, interjected and said that the same was not admitted. On a query of the Court as to where was the order giving such 'No Objection' by the Board of Directors of VPMU or his resignation being accepted by VPMU, he neither has any document to show nor is there any averment made to this effect in the counter affidavit filed on behalf of respondents no. 3 and 4. Thus, the Court finds that such objection of Mr. Y.V. Giri, learned counsel, is untenable and the position stands admitted on the basis of records and the pleadings, as of today. Further, in view of the provisions in the bye-laws of the respondent no. 4 relating to appointment of the Managing Director, Clauses 35.2.12 and 35.2.13 clearly stipulate that an Expert Committee for choosing the Managing Director has to give its recommendation after considering persons both on the basis of eligibility, suitability, etc., but in the present case, such requirement has not been complied with. In view thereof, the absorption of Niranjan Kumar on the post Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 18/22 of Managing Director of the respondent no. 4 is a backdoor arrangement, without following the due procedure in law, as neither is there any recommendation of any Expert Committee nor anybody else has been considered and straight away a person has been absorbed on the post of Managing Director, which is unknown to law and, thus, impermissible. Further, once Niranjan Kumar was deputed to the respondent no. 4 by the order of the petitioner no. 2, it becomes an acceptable position in law that the person who has sent Niranjan Kumar on deputation to respondent no. 4, is also competent to revoke such deputation and return the services of Niranjan Kumar to the parent department. It is not a case that Niranjan Kumar was independently appointed or made to function as the Managing Director by the Board of Directors of respondent no. 4, in which case, the mater would have been totally different. In the present case, it is admitted position that the petitioner no. 2 had sent Niranjan Kumar as Managing Director to respondent no. 4 on deputation only and further that he was an employee of VPMU in substantive capacity and is still maintaining his lien to the post in VPMU. Once such lien exists, without there being legal termination of such lien, for all practical purposes, the relationship of master and servant exists between the VPMU Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 19/22 and Niranjan Kumar. Thus, without severance of master- servant relationship between VPMU and Niranjan Kumar, which was existing since prior to his joining the post of Managing Director under respondent no. 4, no fresh master- servant relationship can be created, much less that between the respondent no. 4 and Niranjan Kumar.
21. Niranjan Kumar having been absorbed on the post in a manner stated above, at the cost of repetition, in the tentative view of the Court, is totally impermissible in law. Further, the order of the petitioner no. 2 recalling the services of Niranjan Kumar from respondent no. 4 is sound in law as the petitioner no. 2 has the legal authority to pass such an order, since it was the petitioner no. 2 who had in the year 2014 posted Niranjan Kumar, by way of deputation only, as Managing Director of respondent no. 4. Thus, Niranjan Kumar, was obliged to comply with the order passed by the petitioner no. 2 recalling his services from respondent no. 4 and the respondent no. 4 did not have the jurisdiction to retain him in service without 'No Objection' from VPMU and Niranjan Kumar being free to be so absorbed on the post of Managing Director under the respondent no. 4.
22. In the aforesaid background, and taking an Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 20/22 overall view, without staying the main order where supersession of the Board of Directors of the respondent no. 4 has been set aside, this Court, taking judicial note of the legal and factual position, as has been enumerated in the foregoing paragraphs, having come to a prima facie conclusion that the service of Niranjan Kumar could not have been absorbed in the manner so done by the respondent no. 4 on the post of Managing Director and the order to repatriate him to his parent organization i.e., VPMU is valid and further that Niranjan Kumar cannot continue as Managing Director under the respondent no. 4 as he is still, in the eyes of law, a servant of VPMU and also there being a valid order of repatriation of Niranjan Kumar to VPMU, passed by the petitioner no. 2, who was also the person who had initially sent him as Managing Director, on deputation, to respondent no. 4, this Court by way of an ad interim measure directs that Niranjan Kumar shall not function on the post of Managing Director under respondent no. 4, until further orders.
23. Further, as has also not been seriously contested by Mr. Y. V. Giri, learned counsel for the respondents no. 3 and 4, the last portion of the order impugned, by which all decisions taken by the Administrator appointed Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 21/22 during the interregnum period has been held to be void, is stayed.
24. In view of the prayer of Mr. Y.V. Giri, learned counsel, seeking clarification, the Court would only observe that the impugned order having interfered with the supersession of the Board of Directors of the respondent no. 4, and the same having been restored, it is free to continue to function and discharge its duties, in accordance with law.
25. The matter be listed on 28th April, 2017, among the top five cases. However, learned counsel for the petitioners shall serve a copy of their rejoinder, if any, on learned counsel for the respondents no. 3 and 4, latest by 24th April, 2017.
26. In view of the Court taking judicial note of the manner and mode by which Niranjan Kumar has been absorbed on the post of Managing Director under the respondent no. 4, let Niranjan Kumar be impleaded as respondent no. 5 in the present proceeding and notice be issued to him, both under registered cover with A.D. as well as ordinary process. Necessary correction be made by learned counsel for the petitioners by 10th April, 2017 and requisites be filed by 11th April, 2017.
27. Registry shall issue notice latest by 12th April, Patna High Court CWJC No.5204 of 2017 (2) dt.07-04-2017 22/22 2017 indicating the next date fixed in the case.
(Ahsanuddin Amanullah, J) Anjani/-
AFR/NAFR AFR U