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G. Gopinathan Nair and ors. Vs. State of Kerala and ors. - Court Judgment

LegalCrystal Citation
SubjectService;Constitution
CourtKerala High Court
Decided On
Case NumberO.P. Nos. 4420 and 4228 of 1973 and 926 of 1974
Judge
Reported inAIR1977Ker36
ActsKerala Co-op. Societies Act, 1969 - Sections 80; Banking Regulation Act, 1949 - Sections 3; Kerala Co-op. Societies Rules, 1969 - Rules 182 to 200
AppellantG. Gopinathan Nair and ors.
RespondentState of Kerala and ors.
Appellant Advocate K. Chandrasekharan,; K. Vijayan,; K. Velayudhan Nair
Respondent Advocate T.D. Rajalakshmi,; C.M. Kuruvilla, Advs. and;Govt. Pleader
DispositionPetition dismissed
Excerpt:
.....and ensure efficient and proper working - legislative provision empowering framing of common service rules legal and valid. - - according to the learned advocate appearing on behalf of the bank there has not been due advertence by the rule-making authority to the vitally relevant factor concerning the capacity of .the banking societies to meet the additional expenditure that will necessarily result from the re-fixation of the salaries of their employees in accordance with the scales specified in appendix iii and that the failure to make such a realistic approach renders the impugned rules and the pay scales prescribed in appendix iii unreasonable and arbitrary. it is urged that, besides such interference being opposed to the scheme underlying the act it also constitutes an..........the members of the staff of banking institutions. on this basis it is submitted on behalf of the writ petitioners that the impugned rules made by the state government in purported exercise of the powers conferred by section 80 of the act cannot be regarded as constitutionally valid or enforceable. another plea put forward by the co-operative bank which is the writ petitioner in o. p. 4228 of 1973 is that the pay scales specified in appendix iii are wholly arbitrary and that in case the petitioner-bank is compelled to give effect to those scales in respect of its staff it will not be possible for the bank to carry on business as an economically viable unit. according to the learned advocate appearing on behalf of the bank there has not been due advertence by the rule-making authority to.....
Judgment:

Balakrishna Eradi, J.

1. These writ petitions raise common questions concerning the validity of Section 80 of the Kerala Co-operative Societies Act (hereinafter referred to as the Act) and Rules 182 to 200 and Appendix III of the Kerala Co-operative Societies Rules (hereinafter referred to as the Rules) framed under the aforesaid section.

2. The petitioner in O. P. No. 4228 of 1973 is a Co-operative Society carrying on banking business in the name and style the Thiruvalla East Co-operative Bank Limited No. 3260. O. P. No. 926 of 1974 is a writ petition filed by a shareholder of the aforementioned Co-operative Society. The petitioners in O. P. No. 4420 of 1973 are four employees of the Kerala State Co-operative Bank Ltd., Trivan-drum.

3. By the impugned Rules framed under Section 80 of the Act, Government have classified the Co-operative Societies according to their type and financial position in the manner shown in Appendix III, prescribed the staff pattern to be adopted by Societies belonging to the different classes and laid down the conditions of service of officers and servants of the different classes of Societies. The common plea taken in these writ petitions is that neither the State Legislature nor the State Government is competent to prescribe either by Statute or by Rules thestaff-pattern and conditions of service of employees of Co-operative Societies which are engaged in the business of Banking because the said subject-matter is governed exclusively by the provisions of the Banking Regulation Act, 1949 which is a Central enactment dealing inter alia with the subject of staff-pattern and conditions of service of the members of the staff of Banking institutions. On this basis it is submitted on behalf of the writ petitioners that the impugned rules made by the State Government in purported exercise of the powers conferred by Section 80 of the Act cannot be regarded as constitutionally valid or enforceable. Another plea put forward by the Co-operative Bank which is the writ petitioner in O. P. 4228 of 1973 is that the pay scales specified in Appendix III are wholly arbitrary and that in case the petitioner-Bank is compelled to give effect to those scales in respect of its staff it will not be possible for the Bank to carry on business as an economically viable unit. According to the learned advocate appearing on behalf of the Bank there has not been due advertence by the rule-making authority to the vitally relevant factor concerning the capacity of .the Banking Societies to meet the additional expenditure that will necessarily result from the re-fixation of the salaries of their employees in accordance with the scales specified in Appendix III and that the failure to make such a realistic approach renders the impugned rules and the pay scales prescribed in Appendix III unreasonable and arbitrary.

4. The grievance that is put forward by the four employees who figure as writ petitioners in O. P. 4420 of 1973 is that under the Bye-laws of the Society in whose service the petitioners are employed, the age of superannuation has been fixed as 60 years. Rule 183 (2) as it stood at the time of the institution of these writ petitions stipulated that no employee shall be eligible to continue in the service of the Society after he attains the age of 55 years. That rule, however, contained a proviso to the effect that the committee of the society may with the previous approval of the Registrar and for reasons to be recorded in writing allow extensions for a period of one year at a time subject to a maximum of three years. By an amendment carried out in Rule 183 (2) during the pendency of this writ petition the said age limit has been enhanced to 58 years. In addition to the plea taken by them in common with the petitioners in the other writ petitions that in respect of Co-operative Societies carrying on the business of banking the terms and conditions of service of the employees cannot be laid down either by an enactment of State Legislature or by Rules framed thereunder, these petitioners also contend that the autonomy of the Co-operative Societies has been seriously interfered with by the impugned rules inasmuch as they compel the societies to alter the provisions contained in their bye-laws regarding the age of superannuation of their employees. It is urged that, besides such interference being opposed to the scheme underlying the Act it also constitutes an illegal infringement of the rights that have already become vested in the employees like the present petitioners who are entitled under the bye-laws of the concerned Societies to be retained in service till they attain the age of 60 years. A further contention raised in O. P. 4420 of 1973 is that at the time when the impugned Rules were brought into force certain proposals were pending with the committee of the Co-operative Society in whose service the writ petitioners are employed for a revision of the pay scales of the staff and the enhanced grades which were proposed to be given to the employees are far higher than those mentioned in Appendix III. As a result of the promulgation of the impugned Rules which make it obligatory for the Societies to adopt and implement the pay structure specified in Appendix III, the petitioners and other employees of the Society are said to have been put to serious prejudice and this circumstance is put forward by them as an additional ground in support of the challenge raised by the petitioners against the validity of the impugned Rules.

5. After hearing both sides we have unhesitatingly come to the conclusion that there is no substance in any of the contentions raised on behalf of the petitioners. Admittedly, the Co-operative Banks with which we are concerned in these writ petitions are Societies registered under the Kerala Co-operative Societies Act. It may be that these societies are engaged in certain types of business which will come generally within the description of Banking business. That fact will not however detract from their character as Co-operative Societies. In fact, it is only because these institutions have been registered as Co-operative Societies under the State enactment that they are enabled to carry on the business of banking without being put to the necessity of strictly complying with any of the provisions contained in the Banking Regulation Act.

6. The power to make laws in respect of Co-operative Societies registered under the Act is within the exclusive domain of the State Legislature since it is a subject covered by Entry 32 of List II in the Seventh Schedule of the Constitution, it was therefore fully open to the State Legislature to enact the provision contained in Section 80 of the Act empowering the State Government to classify co-operative societies according to their type and financial position to specify the staff pattern to be adopted by the different classes of co-operative societies and also to make rules relating to the qualifications, remuneration, allowances and other conditions of service of the officers and servants of the different classes of Co-operative Societies. The contention advanced on behalf of the petitioners is that the rule-making power conferred by Section 80 of the Act encroaches into the field occupied by the provisions relating to the same matters contained in the Banking Regulation Act, 1949. This argument omits to take note of the fact that Section 3 of the Banking Regulation Act specifically lays down that except in the manner and to the extent specified in Part V of the said Act none of the other provisions of the said Act are applicable to Co-operative Societies. Amongst the provisions in the Banking Regulation Act which have been made applicable to Co-operative Societies under Part V of the said Act we have not been shown any section which deals with any of the following matters, namely, (a) the classification of such institutions on the basis of their financial position, (b) staff-pattern by the said institutions or (c) conditions of service of the employees in such institutions. Such being the position, the contention advanced by the petitioners that Co-operative Societies carrying on the business of banking are governed in respect of such matters, only by the provisions contained in the Banking Regulation Act, 1949 is devoid of any substance.

7. We do not also find any merit in the plea put forward by the writ petitioners in O. P. Nos. 4228 of 1973 and 926 of 1974 that the pay structure specified in Appendix III of the impugned rules isarbitrary and unreasonable. A mere reference to the scales of pay specified in Appendix III is sufficient to show how shallow this contention is. The highest starting pay specified even in respect of employees oi Societies having a working capital exceeding Rs. 50 lakhs is only Rs. 400/- and the starting pay for the lower grade posts in Societies belonging to that category is only Rs. 85/-. In the context of the present day conditions the scales fixed in Appendix III cannot be said to be arbitrary or excessive. We may also observe that the petitioners have not placed before this Court any material whatever in support of their contention that the pay scales specified in Appendix III of the impugned rules are unreasonable.

8. Coming now to the contentions raised by the petitioners in O. P. 4420 of 1973 we see no merit in the argument advanced on behalf of the writ petitioners that they had acquired a vested right in regard to the duration of their tenure in service under the bye-laws of the Cooperative Societies in question and that the said right is not liable to be interfered with by the making of common service rules for different classes of societies in purported exercise of the powers conferred by Section 80 of the Act. The obvious intendment of Section 80 is that the employees working under the different classes of Co-operative Societies (the classification of societies being one based on their financial position and the nature of the business carried on by the societies) should be ensured uniform conditions of service as that would conduce to the efficient working of the Societies in general by building up a contented service protected from arbitrary treatment at the hands of the employers. There . may be rare instances in which the introduction of such uniform conditions of service may temporarily give rise to hardships, but that will be no ground for invalidating the prescription of common service conditions made under Section 80. Considerations of individual hardships will have to subserve more important consideration relating to the attainment of the common welfare of the larger body of employees of the different classes at co-operative societies in general.

9. We do not also find any substance in the plea put forward by the writ petitioners that Section 80 and the impugned rules constitute an infringement of the principle of autonomy of the co-operative societies. The provisions of the Act do not disclose the existence of eny such underlying principle of vesting complete autonomy in the co-operative societies; on the other hand, the act contains several provisions imposing restrictions and controls on the functioning of the Societies with a view to obviate mis-mangement and to ensure their efficient and proper working. It is in furtherance of the legislative intent of securing the efficient functioning of co-operative so-cieties that power has been conferred on. the Government by Section 80 to make rules for regulating the conditions of service of the officers and servants of the different classes of societies in order to ensure uniformity of service conditions and protect the employees from arbitrary treatment at the hands of individual employers like the Societies. The attack levelled by the petitioners in O. P. 4420 of 1973 against the provisions of Section 80 and the Rules on the aforementioned ground has also to fail.

10. What has been stated above applies equally to the contention put forward by the petitioners that by reason of the introduction of the impugned rule their prospects of obtaining better scales of pay in implementation of certain proposals which were pending consideration before the committee of the Society have been prejudicially affected. As observed by us already, it may be that in certain cases the provisions contained in the Rules or in Appendix III may prove to be temporarily disadvantageous to the employees working under any particular Society, Such hardships are bound to be there whenever any uniform set of rules relating to conditions of service is brought into force. Such a circumstance even if found to exist will be no ground for invalidating the rules framed under the Statute, once it is found that the legislative provision empowering the framing of such common service rules is perfectly legal and valid.

In the light of the preceding discussion it follows that these writ petitions have only to be dismissed. We do so, but in the circumstances there will be no order as to costs.


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