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Satish Kumar Vs. Punjab State Co-operative Bank Ltd., Chandigarh and ors. - Court Judgment

LegalCrystal Citation
SubjectService;Constitution
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Petn. No. 3495 of 1980
Judge
Reported inAIR1981P& H282; (1981)IILLJ256P& H
ActsPunjab Co-operative Societies Act, 1961; Constitution of India - Article 226
AppellantSatish Kumar
RespondentPunjab State Co-operative Bank Ltd., Chandigarh and ors.
Cases ReferredRamana Dayaram Shetty v. International Airport Authority of India.
Excerpt:
.....an instrumentality or agency of the government on this ground as well. the primary societies enroll members and it is obligatory for them to make deposits or to seek loans from the central societies (like the bank) and the central societies deal with the apex society (the punjab state co-operative bank). the central banks or the apex bank do not have monopoly in the sphere of banking. the fact that the primary societies are enjoined to have dealing with the central banks (like the bank) would not make the bank enjoying state-conferred monopoly status which in turn would make it an instrumentality or agency of the government......by a statute, though its powers and duties are created by an act or the rules. the control which state government and the registrar have over such co-operative societies is one of the main distinguishable features for the maintainability of an application under article 226 of the constitution. in dukhooram gupta v. hari prasad gupta's case (air 1961 madh pra 289)(supra), a division bench held that co-operative society registered under the co-operative society registered under the co-operative societies act, 1912, being an authority or body of persons having the power of framing bye-laws would fall within the definition of state in article 12 of the constitution and as such was amendable to the writ jurisdiction under article 12 of the constitution and as such was amenable to the writ.....
Judgment:
ORDER

1. The Punjab State Co-operative Bank Limited (respondent No. 1) invited applications, vide advertisement (Annexure P. 1) dated 25th November, 1978, for filing some posts of junior clerks in the State /Central Co-operative Banks in the State of Punjab. The posts of clerks were included in the common cadre when the advertisement (Annexure P. 1) was made. Later on, the Board of Directors of the Punjab State Co-operative Bank in its meeting held on 16th of August, 1979, decided to exclude the posts of clerks in the Central Co-operative banks from common cadre. The applications received in response to the advertisement (Annexure P. 1) were consequently sent by the Punjab State Co-operative Bank to the Central Co-operative Banks in various districts after taking the options of the applicants regarding the districts they wished to be considered for appointment. The application of such applicants who opted for appointment in Ludhiana district were sent to the Central Co-operative Bank, Ludhiana, respondent No. 2, (herein after the Bank). The petitioner was one of 788 applicants whose applications were sent to the Bank on 20th November, 1979, by the Punjab State Co-operative Bank (respondent No 1). On 12th January, 1980, the petitioner was issued appointment latter (Annexure P. 2) appointing him as a clerk in the Bank. This appointment letter is signed by the Chairman, Managing Director and Manager of the bank. It was specifically provided therein that the appointment was purely on temporary basis unless the petitioner cleared his probation period of one year successfully. The petitioner joined the bank as a Clerk. The Establishment Officer of the Bank Terminated the services of the petitioner by giving him one month's notice with effect from September 10, 1980, vide letter Annexure P. 3 of the Same date. This letter reads:

'Your appointment having been declared as illegal and void, the board of Director of the bank in their meeting held on 9-9-1980 have unanimously resolved to terminate your services.

Accordingly, therefore, one month's notice of termination of your services, effective from 10-91980, is hereby given to you. You will cease to be an employee of this Bank on the afternoon of 9-10-1980.

You will also be paid a compensation equivalent to 15 days of your salary before you're relieved.'

The petitioner has filed the present writ petition praying that the letter (Annexure P. 3) terminating his services, may be quashed.

2. The writ has been contested by the bank (respondent No. 1). A preliminary objection has been raised that the writ is liable to be dismissed in view of a Full Bench decision of this Court in Ajmer Singh v. The Registrar Co-operative Societies, Punjab 1980 Pun LJ 589 : (AIR 1981 Punj & Har 107), that a society registered under the Punjab Co-operative Societies Act, 1961(hereinafter the Act) is not amendable to the writ jurisdiction under Article 226 of the Constitution of India, On merit the case of the Bank is that the Selection committee consisting of five Directors, Deputy Registrar and the Assistant Registrar, interviewed the candidates on December 22 and 24, 1979. On December 25, 1979, only three out of five Directors were present but later on the proceedings were interpolated and the names of other two directors who were absent were also included and shown to be present. No record of the performance (merit list) of the candidates in the interview was maintained. After the interviews were over, the Selection Committee did not meet to select the candidates. The Deputy Registrar and the Assistant Registrar who were the Government nominees on the Selection Committee were not associated for the finalization of the list of the selected candidates. On January 14, 1980, the Deputy Registrar wrote to the Manager of the Bank not to make appointments as no selection had been made. No appointment had been made till January 14, 1980. On the receipt of the letter the appointments of clerks, including that of the petitioner were made by issuing letters with back date showing January 12, 1980, as the date of the issue of the appointment letter. Some persons who had not been interviewed by the Committee were issued appointment letters. The appointment of the petitioner was thus illegal. The petitioner's appointment was temporary for a period of one yea as per terms contained in the appointment letter issued to him. The petitioner was issued appointment letter on January 12, 1980, and his service were terminated vide letter dated September 10, 1980, by the board of Directors on the ground that his appointment was illegal.

3. The Punjab State Co-operative bank and the Ludhiana Central Co-operative Bank are admittedly registered under the Act. The provision of the Act are thus applicable to both. The services of the petitioner have been terminated by the bank vide letter Annexure P. 3. It has been held by a Full Bench of this Court in Ajmer Singh's case (supra) that a writ petition under Article 226 of the constitution against a Co-operative Society registered under the Act is not maintainable as it is not an authority within the meaning of Article 12 of the Constitution. The preliminary objection raised by the contesting respondents is, therefore, of paramount importance.

4. The learned counsel for the petitioner has argued that a Society registered under the Act is an authority within the meaning of Article of 12 of the constitution and in view of the decision of their Lordship of the Supreme Court in Ajay Hasis v. Khalid Mujib Sehravardi, AIR 1981 SC 487, the Full Bench view expressed in Ajmer Singh; case (AIR 1981 Punj & Har 107)(supra) is not a good law. Reliance has been placed on Madan Mohan Sen Gupta v. State of West Bengal, AIR 1966 Cal 23 and Dukhooram Gupta v. Co-operative Agricultural Association Ltd., AIR 1961 Madh Pra 289, as well.

5. The contention of the learned counsel for the respondent is that only such a society will be an authority within he meaning of Article 12 of the constitution in terms of the rule laid down in Ajay Hasia's case (supra), which is an instrumentality or agency of the State and the bank is not an authority under Article 12 of the Constitution. It is, therefore, not amenable to writ jurisdiction under Article 226 of the Constitution,

6. In Madan Mohan Sen Gupta's case (AIR 1966 Cal 23)(supra), the learned single judge held that Co-operative Society registered under the Bengal Co-operative Societies Act, 1940, or its managing Committee is amenable to the writ jurisdiction of high Court. It was further held that the management of the affairs of the activities of such societies are entirely controlled by the Registrar of the Co-operative society who is a public authority, Such affairs cannot be private affairs. It is not necessary that a body, in order to be a public body, must always be constituted by a Statute, though its powers and duties are created by an Act or the Rules. The control which state Government and the Registrar have over such Co-operative Societies is one of the main distinguishable features for the maintainability of an application under Article 226 of the constitution. In Dukhooram Gupta v. Hari Prasad Gupta's case (AIR 1961 Madh Pra 289)(supra), a Division bench held that Co-operative Society registered under the Co-operative Society registered under the Co-operative societies Act, 1912, being an authority or body of persons having the power of framing bye-laws would fall within the definition of State in Article 12 of the Constitution and as such was amendable to the writ jurisdiction under Article 12 of the Constitution and as such was amenable to the writ jurisdiction under Article 226 of the constitution. As observed above, a Full Bench of this Court has taken a different view in Ajmer Singh's case (AIR 1981 Punj & Har)(supra). The matter has how ever been settled by their Lordships of the Supreme Court in Ajay Hasia's Case (AIR 1981 SC 48)(supra) wherein it has been held that where a corporation is a instrumentality or agency of the Government, it must be held to be an authority within the meaning of Article 12 and hence subject to the same basic obligation to obey the Fundamental Rights as the Government. In this context, it is immaterial, whether the Corporation is created by a Statute or under a Statute, the test is whether it is an instrumentality or agency of Government and not as to how it is created. The injury has to be not as to how the juristic person is horn but why it has been brought into existence. The Corporation may be a statutory corporation created by a Statute or it may be a Government Company or a company formed under the Companies Act or it may be a society registered under the societies Registration Act or any other similar Statute. Whatever, be its genetical origin it would be an 'authority ' within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a Statute but is equally applicable to a Company or Society, and in a given case it would have to be decided, on a consideration of the relevant factors, whether the company or society is an instrumentality of agency of the Government so as to come within the meaning of the expression 'authority' in Article 12 of the Constitution.

7. The contention of the learned counsel for the petitioner is that the rule laid down in Ajay Hasia's case (AIR 1981 SC 487)(supra) has impliedly upheld the view expressed in Madan Mohan Sen Gupta's case (AIR 1966 Cal 23)(supra) and Dhukhooram Gupta's case (AIR 1961 Madh Pra 289)(supra) that a society registered under the Act per se is an authority within the meaning of Art. 12 of the Constitution and is amenable to the writ jurisdiction under Article 226. I am not impressed by this contention. In Ajay Hasia's case (supra), the definition of 'authority' in terms of Article 12 of the Constitution has been extended to such societies which are instrumentalities or Agencies of the Government and not those which are not instrumentalities or Agencies of the Government. In this view of the matter, a Society registered under the Act per se cannot be treated an authority within the meaning or Article 12 of the Constitution.

8. The next important point which needs consideration is if the bank is an instrumentality or agency of the Government. If it is so, it is understood, it would be amenable to the writ jurisdiction under Article 236 f the Constitution otherwise not. The question as to when a Corporation can be regarded as an authority within the meaning of Article 12, arose for consideration before the Supreme Court in Ramana Dayaram Shetty v. International Airport Authority of India. AIR 1979 SC 1628. The rule laid down by their Lordship I that case was approved by them in Ajay Hasia's case (AIR 1981 SC 487 at p. 496) and has been summarised as under:--

'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's case (AIR 1979 SC 1628.) These tests are not conclusive or cinching, but they are merely indicative 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 realized that it should not be stretched so far as to bring in every autonomous body which has some nexus with the government with 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's 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. Whether 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 Government character.

3. It may also be a relevant factor.... Whether the Corporation enjoys monopoly status which is the State conferred or State protected.

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 Government 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's case, be an 'authority' and, therefore, a 'State' within the meaning of expression in Article 12.'

Applying the tests to the case under discussion before their Lordships, it was further held (at pp. 497, 498):-

'It is in the light of this discussion that are must now proceed to examine whether the Society in the present case is an 'authority' falling with the definition of State in Article 12. Is it an instrumentality or agency of the Government? The answer must obviously be in the affirmative if we have regard to the Memorandum of Association and the Rules of the Society. The composition of the Society is dominated by the representatives appointed by the Central Government and the government of Jammu and Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of the Central Government. The monies required for running the college are provided entirely by the central Government and the Government of Jammu and Kashmir and even if any other monies are to be received by the society, it can be done only with the approval of the State and the Central Government. The rules to be made by the Society are also required to have the prior approval of the State and the Central Governments and the accounts of the Society have also to be submitted to both the Government for their scrutiny and satisfaction. The Society is also to comply with all such direction as may be issued by the State Government with the approval of the Central Government in respect of any matters dealt with in the report of the Reviewing committee. The control of the State and the Central Government is indeed so deep and pervasive that no immovable property of the Society can be disposed of in any manner without the approval of both the government. The State and the Central Government have even the power to appoint any other person or persons to be members of the Society and any members of the Society other than a member representing the State or Central Government can be removed from the membership of the Society by the State Government with the approval of the Central government. The Board of Governors, which is in-charge of general superintendence direction and control of the affairs of Society and of its income and property is also largely controlled by nominees of the State and the Central Government. It will thus be seen that the State Government and be reason of the provision for approval, the Central Government also have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Government and to use the words of Ray, C. J., in Sukhdev Singh's case (AIR 1975 SC 1331)(supra) the voice is that of the State and the Central Government and the hands are also of the State and the Central government. We must therefore hold that the society is an instrumentality or the agency of the State and the Central Government and it is an 'authority' within the meaning of Article 12.'

9. It is evident that if the bank is a projection of the State, it shall be an authority within the meaning of Article 12 amenable to writ jurisdiction under Article 226 of the Constitution. The assessment in this regard is to be made keeping in view the various tests detailed in Ramana Dayaram Shetty's case (AIR 1979 SC 1628)(supra) and summarised in Ajay Hasia's case (AIR 1981 SC 487)(Supra) as also other relevant circumstances, if any and available.

10. The learned counsel for the Bank has stated during arguments that its working capital is Rs. 2,342,91 lakhs. The total subscribed share capital is Rs. 264.05 lakhs out of which the Government subscription is Rs. 82.83 lakhs. The learned counsel has argued that Government neither own the entire nor major share capital of the Bank. Therefrom it cannot be treated as an instrumentality or agency of the Government on this ground. I agree with the learned counsel for the respondent.

11. The learned counsel for the respondent has contended that Government does not spend any money on the working of the bank. This contention has not been controverted by the learned counsel for the petitioner. The Bank cannot be treated as an instrumentality or agency of the Government on this ground as well.

12. The next contention of the learned counsel for the respondent is that the Bank is not enjoying State-conferred or State-protected monopoly status. The learned counsel for the petitioner has argued that the bank is enjoying State protected or State-conferred monopoly status inasmuch as it is incumbent for all the primary societies to make deposits with the Bank. I do not agree with the learned counsel for the petitioner. Under the Co-operative Societies scheme there are three types of Societies namely Primary Societies Central Societies and Apex society. The Primary Societies enroll members and it is obligatory for them to make deposits or to seek loans from the Central Societies (like the bank) and the Central Societies deal with the Apex Society (The Punjab State Co-operative Bank). The Central Banks or the Apex Bank do not have monopoly in the sphere of banking. There are many other Banks in the State doing banking business. The fact that the primary societies are enjoined to have dealing with the Central Banks (like the Bank) would not make the Bank enjoying State-conferred monopoly status which in turn would make it an instrumentality or agency of the Government.

13. The argument of the learned counsel for the respondent is that the government has no control on day-to-day working of the bank. The learned counsel for the petitioner has contended that the Registrar appointed under the Act has vast powers and he can interfere in the working of the Bank at his discretion. The Registrar is an organ of the State. It is therefore fallacious to say that the Government has not control on the day-to-day working of the bank Rather the State through the Registrar has deep pervasive control over the bank. I do not agree with the contention of the learned counsel for the petitioner. It is true that the Registrar has vase powers which he can exercise at his discretion. The Registrar is a functionary appointed under the Statue to supervise and control the working the Societies including the bank. He cannot be treated as an organ of the State. The control of the Registrar cannot be treated as that of the State, under by-law No. 36 of the Bank, its control vests in the Board of Directors and under by law No. 30, the Board is constituted in the following manner:--

(i) 9 Directors to be elected out of member societies

(ii) 3 Directors to be nominated by the Government or the Punjab State Co-operative bank whosoever is the share-holder.

(iii) 1 Director for every 50 individual share-holder to be elected out of individual share-holders subject to a maximum of 3 so lone as the shares of the individual members are not fully retired.

The nominees of the Government in the Board are in minority and cannot possibly have the last word in the matter of control. It is thus obvious that the State does not exercise deep pervasive control over the Bank.

14. The primary function of the bank is banking. The learned counsel for the respondent has argued that this function is neither of public importance nor closely related to Government functions. The learned counsel for the petitioner has contended that it is so and has relied on the objections of the bank, contained in by-law No. 4 of the bank, which reads:--

'The objects of the Bank are to facilitate the operation the affiliated Co-operative Societies. In pursuance of this object, the Bank may undertake the following activities.

(i) To carry on banking and credit business;

(ii) To provide credit facilities to its members on convenient and easy terms as practicable,

(iii) To encourage thrift and saving amongst its members by offering suitable facilities.

(iv) To make arrangement for supervision and inspection of its affiliated co-operative societies; and.

(v) To undertake such measures as are conducive to the spread of Co-operative education and training.'

The contention of the learned counsel for the petitioner has no force.Some of the objects of the bank may be of relative public importance but its primary function is banking which cannot be termed of public importance so as to make it an instrumentality or agency of the State. It is significant that a large number of Scheduled and Non-Scheduled Banks are admittedly performing the same function of banking in the State.

15. It is not disputed that no department of the government or its working has been transferred to the bank since its inception.

16. No other relevant circumstance has been put forth by the learned counsel for the petitioner which can be helpful in concluding that the Bank is an instrumentality or agency of Government.

17. In view of discussion above, I hold that the bank (Ludhiana Central Co-operative bank) is not an instrumentality or agency of the State nor us it its projection. It is, therefore, not an authority within the meaning of Art. 12 of the Constitution, amenable to writ jurisdiction under Article 226 f the constitution.

18. The writ, therefore, fails and is dismissed with no order as to costs.

19. Petition dismissed.


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