Delhi High Court

Anand Prakash vs The Delhi State Co-Operative Bank ... on 20 April, 2011

Author: Rajiv Sahai Endlaw

             *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                            Date of decision: 20th April, 2011

+                           W.P.(C) NO.105/2010

         ANAND PRAKASH                                    ..... Petitioner
                     Through:             Mr. Ram Narayan Singh, Advocate

                                     Versus

         THE DELHI STATE CO-OPERATIVE
         BANK LTD. & ANR.                       ..... Respondents
                      Through: Mr. Anand Yadav, Advocate

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may              Yes.
         be allowed to see the judgment?

2.       To be referred to the reporter or not?             Yes.

3.       Whether the judgment should be reported            Yes.
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The question of maintainability of this writ petition against the

respondent is for consideration.

2. The petitioner claims to have been employed with the respondent,

initially in the year 1993 as a Clerk-cum-Typist and was last working as a

Manager. He was charged with misconduct by way of making payments

against false credit entries, of misuse of his power by way of cash payment

of huge amount, of ignoring of the prescribed banking rules and having

acted in excess of his powers and having not taken care of the interest of

the Bank and having tampered with the record of the Bank. The inquiry

conducted found the petitioner guilty and the competent authority of the

respondent imposed a penalty of compulsory retirement on the petitioner.

The appeal preferred by the petitioner was rejected by the Board of

Directors of the respondent. Aggrieved from the said action of the

respondent, the present writ petition has been filed averring the inquiry and

the proceedings to be violative of the service rules applicable to the staff of

the respondent and seeking quashing of the order of his compulsory

retirement and mandamus against the respondent to reinstate the petitioner

into service.

3. Notice of the petition was issued. The respondent has filed a counter

affidavit inter alia disputing the maintainability of the writ petition. It is

pleaded that the respondent is a Co-operative Society registered under the

Delhi Co-operative Societies Act, 2003, is not an instrumentality of the

State and is not an authority within the meaning of Article 12 of the

Constitution of India; that the service rules governing the conditions of

service of employees of the respondent are framed by the Board of

Directors i.e. the Managing Committee of the Society in exercise of

powers under the bye-laws of the Society and the said service rules / bye-

laws are not statutory and therefore cannot be held to be law or have the

force of law and cannot be enforced through a petition under Article 226.

It is further pleaded that the conditions of service between the respondent

and the petitioner are a matter of contract; that the affairs of the respondent

are administered by the Management in accordance with the

democratically expressed will of the members and under Section 30 of the

Co-operative Societies Act also, the final authority of a Co-operative

Society vests in the General Body of the members. Rejoinder to the

counter affidavit has been filed by the petitioner stating that since the

Registrar of the Co-operative Societies has the control of the respondent

and who in turn is under the Control of the respondent No.2 Government

of National Capital Territory of Delhi, the writ petition is maintainable. It

is further pleaded that under the service rules aforesaid, the punishment of

compulsory retirement could not have been meeted out to the petitioner

without the approval of the Registrar of Co-operative Societies and which

had not been taken. Yet another reason given for maintainability of the

writ petition is the list of judgments adjudicating writ petitions preferred

against the Co-operative Societies. It is further contended that the service

rules and bye-laws of the respondent are statutory in character. Yet another

reason given for maintainability of the writ petition is that since the Central

Civil Services (Conduct) Rules, 1964 and Central Civil Services

(Classification, Control and Appeal) Rules, 1965 have, under the service

rules, been applied to the petitioner, the writ petition would be

maintainable. Yet further it is pleaded that since the Chairman of the

Board of Directors of the respondent is a MLA, an elected member of the

Legislative Assembly of the respondent No.2 Government of NCT of

Delhi, the writ would lie. It is also suggested that the respondent having

been registered under the Co-operative Societies Act, writ would lie

thereagainst. The counsels for the parties have been heard on the aspect

of maintainability of the writ petition.

4. I may in this regard at the outset notice that the Apex Court in

Supriyo Basu Vs. West Bengal Housing Board (2005) 6 SCC 289 held

that a Co-operative Society is constituted on agreement between members

thereof who had agreed to abide by the provisions of the Co-operative

Societies Act and the Rules framed thereunder or the bye-laws framed by

the Society; that where the society is not a department of the State and is

also not a creature of a statute but merely governed by a statute, only if it is

established that the mandatory provision of a statute has been violated,

would a writ petition be maintainable thereagainst. Referring to U.P. State

Co-operative Land Development Bank Ltd. Vs. Chandra Bhan Dubey

(1999) 1 SCC 741, it was held that the question to be considered in

determining whether a writ petition would lie against a Co-operative

Society is, what is the nature of the statutory duty placed on it and the

Court is to enforce such statutory public duty.

5. Reference may also be made to S.S. Rana Vs. Registrar, Co-

operative Societies (2006) 11 SCC 634 which was also a case of

termination by Kangra Central Co-operative Bank Ltd. constituted under

the Himachal Pradesh Co-operative Societies Act, 1968 of the services of

its Branch Manager. The contention of the Branch Manager in that case

was that the activities of the Co-operative Society being to lend money to

the agriculturists, the same would come within the purview of Pradeep

Kumar Biswas Vs. Indian Institute of Chemical Biology

MANU/SC/0330/2002 and the writ petition alleging the termination to be

contrary to rules, bye-laws and principles of natural justice would be

maintainable. The Supreme Court held that where a Society has not been

constituted under an Act and functions like any other Co-operative Society

and is merely regulated by the Co-operative Societies Act and where the

State has no say in the functions of the Society, and where the

membership, acquisition of shares and all other matters are governed by

the bye-laws framed under the Act and the State is not the majority

shareholder of the Society and does not exercise any direct or indirect

control over the affairs of the Society for deep and pervasive control and

the State has only to nominate one Director, it could not be said that the

State exercises any functional control over the affairs of the Society. It

was further held that several other relevant questions required to be

considered in deciding whether writ would lie against the Society are, (i)

How the Society was created; (ii) Whether it enjoys any monopoly

character; (iii) Do the functions of the Society partake to statutory

functions or public functions; and (iv) Can it be characterized as public

Authority. The Kangra Central Co-operative Bank Ltd. was held to be not

answering any of the aforesaid tests. It was held that general regulations

like the 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

and the purpose of the provisions of the Companies Act or the Co-

operative Societies Act is only to ensure proper functioning of the Society

and the State or the statutory authorities as the Registrar Co-operative

Societies would have nothing to do with the day-to-day functioning of the

Society.

6. I may notice that the writ petition as filed does not contain any

pleadings whatsoever as to the nature, character or constitution of the

respondent or as to the maintainability of the writ petition against the

respondent and presumes the writ petition to be maintainable. Upon

objection being taken in the counter affidavit, in rejoinder also, the

maintainability of the writ petition is justified only for the reason of the

control exercised by the Registrar Co-operative Societies under the Co-

operative Societies Act qua the respondent and the Chairman of the Board

of Directors of the Society being an MLA and the service Rules of the

respondent providing for the applicability of CCS/CCA Rules to

employees of the Society. In view of the aforesaid dicta of the Supreme

Court, the reasons given in rejoinder do not justify the maintainability of

the writ petition.

7. The counsel for the petitioner during the hearing has referred to:

(i) W.B. State Co-operative Bank Ltd. Vs. Paritosh Bagchi (1995) 6

SCC 562.

(ii) Deokinandan Prashar Vs. The Agra District Co-operative Bank

AIR 1972 SC 2497.

to contend that in those cases writ petitions against the Co-operative Banks

were maintained. However, neither of the two judgments is found to

contain any discussion on the maintainability of the writ petition. The

Supreme Court in the judgment cited by me above has not ruled out the

possibility of maintainability of a writ petition against a Co-operative

Society but has laid down the tests therefor. It may be that the Co-

operative Banks in the judgments cited by the counsel for the petitioner

satisfied the said tests and thus the issue of maintainability of the writ

petition was not raised. However, merely because writ petitions against

another Co-operative Bank were entertained, would still not justify the

maintainability of the present writ petition without the petitioner

establishing before this Court that the tests are satisfied qua the respondent

and which has not been done by the petitioner inspite of opportunity.

8. The counsel for the petitioner has also handed over another list

which appears to have been prepared by the Office of the Registrar of Co-

operative Societies, New Delhi of the 32 Societies found in the Bank Zone.

He has also handed over the Account Opening Form of the respondent

Bank. I fail to see as to how the same can justify the maintainability of the

writ petition. Similarly the counsel has handed over copy of order dated

29th October, 2010 issuing notice of W.P.(C) No.296/2010 preferred by

one Shikha Verma against the respondent. However merely because notice

has been issued in another writ petition preferred against the respondent

would still not make the present petition maintainable. The counsel for the

respondent clarifies that the objection to maintainability is also taken in

other writ petitions preferred against the respondent. He further states that

the West Bengal State Co-operative Bank Ltd. and The Agra District Co-

operative Bank subject matter of the judgments cited by the petitioner must

be controlled by the respective State Governments and which is not the

case over here. He has rather argued and which has not been controverted

by the counsel for the petitioner that the respondent Bank was not created

by the Government.

9. As far as the argument of the petitioner of the applicability of CCS

/CCA Rules to the employees of the respondent is concerned, Rule 3.1(a)

under Chapter III titled "Conduct, Discipline, Punishment and Appeals" of

the Service Rules aforesaid of the respondent provides that the Central

Civil Services (Conduct) Rules, 1964 and Central Civil Services

(Classification, Control and Appeal) Rules, 1965 shall mutatis mutandis be

applicable to the respondent.

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.

12. It is fair to refer to the judgments cited by the counsel for the

respondent also in this regard. He has relied on:

(i) Co-operative Central Bank Ltd. Vs. Additional Industrial

Tribunal, Andhra Pradesh, Hyderabad AIR 1970 SC 245 laying

down that bye-laws of Co-operative Societies framed in pursuance

to provisions of the Co-operative Societies Act cannot be said to

have force of law.

(ii) Sri Konaseema Co-operative Central Bank Ltd. Vs. N. Seetharama

Raju AIR 1990 AP 171 laying down the obligations of a Co-

operative Society qua its employees are contractual and which

cannot be enforced by way of writ petition; that mandamus,

certiorari and prohibition are public law remedies and not available

to enforce private law rights.

(iii) Jagjit Singh Sangwan Vs. Union of India 1996 (36) DRJ

(DB) where a Division Bench of this Court also held that the

bye-laws of a Co-operative Society do not have force of law

and are meant for internal management of the Society and

merely because the bye-laws have the approval of Central

Government would not make any difference and breach of the

bye-laws cannot be enforced in exercise of writ jurisdiction by

the High Court.

(iv) The Bihar State Co-operative Bank Ltd. Vs. The Registrar,

Co-operative Societies, Bihar AIR 1975 Patna 187 also laying

down that the bye-laws of a Co-operative Society have no

force of law or statute.

(v) Kulchhinder Singh Vs. Hardayal Singh Biar AIR 1976 SC

2216 laying down that the remedy of Article 226 is not

available to enforce a contract.

(vi) The Nayagarh Co-operative Central Bank Ltd. Vs. Narayan

Rath AIR 1977 SC 112 though observing a writ petition to be

not maintainable against Co-operative Society, but left the

question open.

(vi) P. Bhaskaran Vs. Additional Secretary, Agricultural (Co-

operation) Department, Trivendrum AIR 1988 Kerala 75

where a Full Bench of that High Court also held that Co-

operative Societies are not created by the Co-operative

Societies Act and are not statutory bodies and where

Government has no shares in the Co-operative Society or deep

and pervasive control over its management and affairs, no writ

will lie against such society.

(vii) The Shamrao Vithal Co-operative Bank Ltd. Vs. Padubidri

Pattabhiram Bhat AIR 1993 Bombay 91 where a Full Bench

of that High Court also held the Multi-state Co-operative

Bank registered under the Maharashtra Co-operative Societies

Act, 1960 to be not a State within the meaning of Article 12

even though governed by the Banking Regulation Act, 1949

and performing public function and held writ against it to be

not maintainable.

(viii) Mohinder Singh Vs. D.P. Khatri 51 (1993) DLT 592 holding

the Co-operative Society to be a private body and a writ to be

not maintainable against it even though governed by the

provisions of the statue.