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1973 DIGILAW 98 (CAL)

Borjahan Khan v. 24-Parganas Southern Co Operative Bank

1973-03-27

DEBI PRASAD PAL

body1973
JUDGMENT 1. The question as to whether a Co-operative Bank is amenable to the writ jurisdiction of the High Court has beers the principal contention raised in this application. 2. The petitioner was appointed as a Supervisor, 24-Parganas Southern central Co-operative Bank Ltd. (hereinafter referred to as the Bank) in terms of proviso to Rule 6 of the Service rules of the Bank. The Bank is a cooperative Society registered under the Bengal Co-operative Societies Act, 1940 (hereinafter referred to as the Act. The Bank has its area of operation in the whole of sub-division of Sadar and diamond Harbour of the 24-Parganas district. On 2nd of March, 1968, the secretary of the Bank issued a charge sheet calling upon the petitioner to show cause why his service shall not be terminated. The charges framed were of different kinds and included, inter alia, frequent unauthorized absence from headquarter, receiving money from the society by issuing kancha receipts or without receipts, defalcation of money collected from different societies named in the said charge-sheet and also tampering of records of the Society, etc. The petitioner also by that notice was placed under suspension with effect from 1.3.1968. An explanation was submitted by the petitioner in reply to the said show cause notice. Thereafter by an order date 7.10.68 the petitioner's services were terminated with effect from 1st march, 1968, as it was alleged that he had been found guilty of gross negligence of duties and he acted in a manner which was prejudicial to the interest of the Bank. The petitioner thereafter has come up against the said order of termination of the service dated 7. 8. 68 and has obtained a rule nisi. The main contention made in this application is that the impugned order of punishment has been made in contravention of Rule 20 (c) of the Service rules framed by the Bank. Under rule 20 (c) of the said Rules, the petitioner's complaint is that he was not afforded an opportunity and all facilities including a personal hearing to defend himself and hence the said order of termination was illegal and void as it was in contravention of the aforesaid rule. Mr. Mazumdar, Counsel for the respondent No. 2, does not dispute that the said order of termination is violative of the aforesaid rule. 3. Mr. Mazumdar, Counsel for the respondent No. 2, does not dispute that the said order of termination is violative of the aforesaid rule. 3. The learned Council for the respondents has raised a preliminary objection that no writ of certiorari or mandamus lies against the Bank and in any event the rules framed by the bank regarding the conditions of service of its employees do not constitute a statutory restriction as to the kind of contract which the Bank can make with its servants or the grounds on which it can terminate them. Hence it is contended that even if the order of termination is in breach of the Rules framed by the Bank, the petitioner is not entitled to a declaration that his dismissal is null and void in a proceeding under Art. 226 of the Constitution of India. 4. EACH of the two contentions raised on behalf of the respondents deserves a careful consideration. Dealing with the first contention, viz. whether a writ of certiorari or mandamus lies against the Bank, it is necessary to start with an analysis of the various provisions of the Act and the Rules framed there under. The Act makes provision for the formation and working of cooperative Societies A Co-operative society under Section 2 (f) of the Act means a Society registered or deemed to be registered under the Art. A "financing Bank" under Section 2 (k) of the Act means a Co-operative Society, the objects of which include the creation of fund to be lent to other cooperative Societies. The Bank in the present case would satisfy the definition of a "financing bank" within the meaning of Section 2 (k) of the Act. Under section 13 of the Act, an application for registration of a Society is made to the registrar in the prescribed manner and shall be accompanied by a copy of the proposed bye-laws, and shall furnish such information in regard to the society as the Registrar may require. If the Registrar is satisfied that the application complies with the provisions of the Act and the Rules and that the proposed bye-laws are not contrary thereto, he shall register the Society and its bye-laws. If the registration is refused by him, the reasons for such refusal should be recorded in writing. If the Registrar is satisfied that the application complies with the provisions of the Act and the Rules and that the proposed bye-laws are not contrary thereto, he shall register the Society and its bye-laws. If the registration is refused by him, the reasons for such refusal should be recorded in writing. A certificate of registration under section 16 of the Act is a conclusive evidence that the Co-operative Society mentioned therein is duly registered tinder the Act, and that its bye-laws are as attached to the certificate. The registration of a co-operative society renders it a body corporate by the name under which it is registered. The management of every Co-operative society under Sec. 23 of the Act is vested in a Managing Committee which is to be constituted in accordance with miles and bye-laws. Such Managing committee shall exercise the powers and duties as may be conferred or imposed respectively by the Act, the rules and the Bye-Laws. Mr. Dutt, appearing for the petitioner relying upon Section 23 of the Act has strenuously contended that the Managing committee of the Bank is a public body vested with duties which are of a public character and hence is amenable to the writ jurisdiction of this Court. In support of his contention he has also referred to Section 140 (2) (xiv) of the Act which provides for the rules which the said Bank may make for the constitution of the Managing Committee. Reliance also has been placed upon rule 43 of the Bengal Co-operative societies Rules, 1942 (hereinafter referred to as the Rules) under which the managing Committee of a Co-operative society can exercise any of the powers provided in the bye-laws. Clause (d) of Rule 43 specifically refers to the appointment of salaried or non-salaried officers for conducting the business of the Society and to carry their duties. He has also referred to Rule 12 of the rules which authorizes every cooperative Society to make bye-laws in respective of mode of payment and removal of the Directors and Officers of the Society. It is his contention that the Service Rules which have been framed under Clause 26 of the Bye-laws framed by the Bank are statutory rules, the breach of which may call for interference by this Court exercising its constitutional writ jurisdiction. The contention of Mr. It is his contention that the Service Rules which have been framed under Clause 26 of the Bye-laws framed by the Bank are statutory rules, the breach of which may call for interference by this Court exercising its constitutional writ jurisdiction. The contention of Mr. Dutt on this point has an attractive appearance but does not stand a closer scrutiny. It is now well established in England that the bodies to which in modern time the remedies of the prerogative writ have been applied are all statutory bodies on whom Parliament has conferred statutory powers and duties, exercise of which may lead to the detriment of subject. (See observation of Lord goddard C. J. in (1) R. v. Dispute committee of Dental Technicians, (1953)1 All. E.R. 327. The same principle has been embodied in Art.12 of the constitution. In the case of (2) Rajasthan state Electricity Board v. Mohanlal and ors (A.I.R. 1967 S.C. 1857) the supreme Court interpreting the expression "other authorities" appearing in art. 12 of the Constitution held that the expression "other authorities" is wide enough to include all constitutional or statutory authorities on whom powers are conferred by law. It is therefore necessary to consider whether a Co-operative Society under the Act is a statutory authority on whom powers are conferred under the law. It is true that under the provision of the Act a co-operative Society when registered has a power to make bye-laws. Such power has been conferred under Rule 12 of the Rules framed under the Act. In my opinion a Co-operative Society is not a statutory authority in the sense that it is a body created or set up by the provision of any Statute. A Society when registered under the Act is invested with a corporate personality and has certain rights and privileges under the Act and is also subject to certain obligations. This, in my opinion, does not make it a statutory body vested with certain statutory powers. A Co-operative society is not an authority which is constituted under an Act, it is only registered under the Act. The bye-laws framed by the Society, in my opinion, may have a statutory flavor but in reality do not possess any statutory character. If by mere registration, a Society converts itself into a statutory body, a company registered under the Companies Act also acquires the same character. The bye-laws framed by the Society, in my opinion, may have a statutory flavor but in reality do not possess any statutory character. If by mere registration, a Society converts itself into a statutory body, a company registered under the Companies Act also acquires the same character. In these days of statutory regulations and control there may be bodies which are licensed under a particular statute or given registration for the purpose of that Act. Such an authority or a body simply because is subject to statutory rules and control does not ipso facto acquire the quality and the character of a statutory body or authority. The real test is whether such an authority has been constituted under a statute. The distinction is a real one when one bears in mind the limits of interference by a Court exercising its constitutional writ jurisdiction. The view I am taking is supported by the decision of the Madras High Court in the case of (3) K. Ramraj v. Srivilliputhur co operative Spinning Mills ltd. A.I.R. (1971) Mad. 315 and also in the case of (4) Arumugham v. Kadalundy co-operative Urban Bank and A.I.R. (1951) Kerala 123. 5. The bye-laws framed by the bank, in my opinion, are not of a statutory character. The word 'bye-law' is used in more than one sense. It is sometime used to connote regulation made by statutory bodies. In modern times wide power of legislation for incidental and minor matters are conferred upon local authorities, by numerous statutes which empower them to make bye laws. Such bye-laws have a statutory character. In (5) Kruse v. Johnson (1898) 2 Q. B. 91 Lord Russell while considering validity of a bye-law made by a County Council described a by-law having the force of law as one affecting the public, or some section of the public, imposed by some authority clothed with statutory powers ordering something to be done or not to be done, and accompanied by same sanction or penalty for its non-observation. A bye-law of such a character, has the force of law within this sphere of its legitimate operation. The function of such a byelaw is to supplement the general law by which the Registrar delegates its own power to make them. A bye-law of such a character, has the force of law within this sphere of its legitimate operation. The function of such a byelaw is to supplement the general law by which the Registrar delegates its own power to make them. The expression 'bye-law' is sometime used in a wider sense so as to include regulations framed by companies or co operative societies for regulating their internal or domestic administration. These are really in the nature of contractual obligations intended to regulate internal or domestic administration. It is in the first sense that bye-laws which are framed on the authority of law and answer the test of statutory laws stand on the same footing as statutory rules but the same test cannot be applied in the case of the second category, where the regulations, although called bye-laws are of a contractual character. 6. The second question raised on behalf of the Counsel for the respondents is that even if the order of termination is in violation of the rules framed by the Bank these rules have no statutory force. These rules are in the nature of regulations which contain the terms and conditions which govern the relationship between the bank and its employees. Though the rules have been made under the bye laws they merely include the terms and conditions of service in the bank. Hence even if there is a violation of these rules, this does not entitle the petitioner to claim any relief under Art. 226 of the constitution. As I have already held that the bye-laws framed by the Bank do not possess the characteristics of statutory rules which have the force of law, it is not necessary for me to examine this question at length. As the preliminary objection regarding the jurisdiction succeeds, this rule is discharged. There will be no order as to costs.