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2002 DIGILAW 12 (KER)

Surabhi Employees Trade Union Congress v. Kerala State Handicrafts Apex Co-operative Society Ltd.

2002-01-09

M.R.HARIHARAN NAIR

body2002
Judgment :- M.R. Hariharan Nair, J. All these Original Petitions relate to certain affairs of the Kerala State Handicraft Apex Co-operative Society Ltd., which is the first respondent in all these three cases. Original Petitions involved pose various questions including maintainability of writ petition against the said Apex society and the justification and propriety of granting reliefs against the society in the wake of alternative remedies provided under the Kerala Co-operative Societies Act. 2. In O.P. 9888/95 the challenge is against Ext. P11 order passed by the first respondent regularizing the appointment of the 5th respondent as Commercial Manager. There are other prayers also in the O.P., but at the time of hearing it was submitted by the learned counsel for the petitioner that the relief sought against Ext. P11 order alone is pressed. 3. The first respondent issued a notification inviting applications for direct recruitment as Commercial Manager of the Society. The 5th respondent filed an application pursuant thereto and was selected and appointed in the post vide Ext. P4 order. There was a condition not only in the notification but also in Ext. P4 order that the 5th respondent should undergo one year's training. Petitioners in the O.Ps. are aggrieved that before the training was completed by the 5th respondent, his appointment was regularized vide Ext. P6 order. 4. According to the learned counsel appearing for the first respondent, the O.P. is not maintainable in so far as the first respondent is a cooperative society. Secondly it is pointed out that Ext. P6 is actually culmination of a decision taken by the Board of Directors which resolution itself is not challenged in any O.P. The counsel further submits that in any event such a resolution is subject to challenge under Rule 176 of the Kerala Co-operative Societies Rules and as such there was an alternative remedy available. He would also contend that under Section 69 of the Kerala Cooperative Societies Act an order like Ext. P6 can be effectively challenged and that in these circumstances the O.P. itself is not maintainable. 5. On the merits the first respondent's contention is that administration of the society vests in the Board of Directors and it is for them to take appropriate decisions relating to recruitment, confirmation, promotion etc. P6 can be effectively challenged and that in these circumstances the O.P. itself is not maintainable. 5. On the merits the first respondent's contention is that administration of the society vests in the Board of Directors and it is for them to take appropriate decisions relating to recruitment, confirmation, promotion etc. of its employees and that viewed from this perspective the power to reduce the period of training for regularization also vests in the Board of Directors. 6. I shall first consider the aspect of maintainability. In P. Bhaskaran and Others v. Additional Secretary and others (1987(2) KLT 903) a full Bench of this court held that co-operative societies are not created by Co-operative Societies Act and that they are not statutory bodies. Their functioning on certain matters alone is controlled by the provisions of the Act. These institutions would have legal existence even if the Co-operative Societies Act were not in force. More over the Government have no share in the co-operative societies. There is no deep and pervasive State control over the functioning of the society. The management of the societies does not vest in the Government or in any respresentative of the Government; but is under the effective control of a committee elected by the members of the societies. The statutory regulation or restriction in the functioning of the society does not provide it with an imprint of the state under Article 12 of the Constitution and therefore no writ would lie against a co-operative society governed by the Co-operative Societies Act. 7. It is important to note that the said full bench was not dealing with a society which is similar to the first respondent in the present O.P. The society involved in that case was a primary society in which the Government had neither any investment nor administrative control. There was no nominee appointed by the Government in its Board of Directors. It was in these circumstances that the said observations were made. As far as the present case is concerned the position is entirely different. The first respondent is the apex society of the Industrial Handicraft Cooperative Societies in the State which has got 53 members. Its members are primary handicraft cooperative societies and it has a share capital of Rs. 150 lakhs and the total paid up share capital , according to the petitioner, is Rs. The first respondent is the apex society of the Industrial Handicraft Cooperative Societies in the State which has got 53 members. Its members are primary handicraft cooperative societies and it has a share capital of Rs. 150 lakhs and the total paid up share capital , according to the petitioner, is Rs. 71.95 lakhs, out of which 80% has been contributed by the State and Central Governments. 8. During hearing the learned counsel for the petitioners placed reliance on an enquiry report prepared pursuant to directions of this court by the Deputy Registrar, District Industries Centre, Ernakulam about which further references would be made later. In this report dated 8.3.96 there is reference to the fact that the authorized share capital of the first respondent is Rs. 150 lakhs; that the paid up share capital from members is Rs. 16.98 lakhs and that the Government of Kerala and the All India Handicraft Board have contributed Rs. 45.1 lakhs and Rs. 31 lakhs respectively towards the funds of the first respondent society. There is also reference in this report that the management of the society is vested in a 14 member Director Board out of which only 11 are elected members are three are Government nominees. Thus here is a society over which the Government exerts control through three of its nominated directors and also has financial interest in the society in so far as it has invested Rs. 45.1 lakhs. It is also pointed out that the Secretary of the society a Joint Director of Co-operative Societies (Industries and Commerce) deputed by the Government. These facts, according to me, reveals that the first respondent society is in an entirely different position vis-a-vis the society involved in the full bench decision. 9. Shri Anadi Mukta Sadguru Shree Kuktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust and others v. V.R. Rudani and others (AIR 1989 SC 1607) went into the question whether writ jurisdiction could be invoked against affiliated colleges. It was held that if the rights are purely of a private character no mandamus can issue; that it can, nevertheless, be issued for the enforcement of any of the fundamental rights and for 'any other purpose' and that the term 'authority' in Article 12 should receive a liberal interpretation and its operation should not be confined only to statutory authorities and instrumentalities of the State. It may cover any other person or body performing public duty as well. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. Such duty must be judged in the light of positive obligation owed by the person or authority to the affected party. If a positive obligation exists mandamus cannot be denied. 10. In Francis John V. The Director of Education and others (AIR 1990 SC 423) the question was whether writ would lie in respect of disciplinary proceedings initiated against a teacher of a private school which receives grant in aid. It was held that any private school which receives aid from the Government in the form of grant which is given not merely for the benefit of the management, but also for the benefit of the employees in the school for whose salary and allowances the Government was contributing from the public funds, cannot escape from the consequences flowing from breach of Rules and that a writ petition would lie against the management of the school. 11. U.P. State Co-operative land Development Bank Ltd. v. Chandra Bhan Dubey and others (AIR 1999 SC 753) considered the question whether a writ would lie against the U.P. Co-operative Land Development Bank which was actually a co-operative society. Considering the fact that the bank had exclusive jurisdiction over the entire state of U.P.; that it could admit as members every land development bank; that it was vested with various powers under the Bank Act which powers were not available to ordinary co-operative societies; that the powers and functions of the trustees were govered by the provisions of the Bank Act and that approval was necessary for some of its dealings; it was found that the Bank, though in fact a Co-operative Society, was an instrumentality of the state and that writ petition would lie against the management of the bank. It is to be noted here that the Managing Director of the said bank also was an official deputed by the Government of the state of U.P. and that as far as the Respondent Bank is concerned, three of its Directors are government nominees. It is to be noted here that the Managing Director of the said bank also was an official deputed by the Government of the state of U.P. and that as far as the Respondent Bank is concerned, three of its Directors are government nominees. When the constitution and functioning of the first respondent society is considered in the background of the above decision I am of the view that it answers the requirement of Section 12 sufficiently well and that the full bench decision mentioned above cannot be applied as against the first respondent bank. I find that the O.P. is maintainable. 12. I shall now take up the contention that the petitioner cannot be granted reliefs in the O.P. as alternative remedies are available, under Section 69(1)(c) of the Kerala Co-operative Societies Act all disputes between the society and its officers are to be settled only through arbitration proceedings. Reghu Nandanan v. Joint Registrar (1998 (2) KLT 337) went into the question whether a decision taken by a cooperative society to cancel a recruitment test can be taken as a dispute for the purpose of Section 69 of the Kerala Co-operative Societies Act. It was held that the process of recruitment does not come within the scope of 'constitution, establishment or management of a society'; and that the decision to cancel a recruitment test would not hence be a dispute touching the business of the society within the meaning of Sections 2(e) and 69 of the Act. The position in the present case is also more or less similar. What is involved is the correctness of an order implementing a Board resolution regularizing the service of an officer of the Society. It does not appear to be a dispute touching the business of the Society. That apart in para 5 of the counter filed in the present case also it is contended that Section 80 of the Kerala Co-operative Societies Act is not made applicable to the first respondent society and that the service conditions of employees of the first respondent are governed by special rules approved by the Registrar of Industrial Cooperative Societies vide Ext. R1 rules. In the circumstances, I do not think that an arbitration suit would be the only or even the proper remedy available for the petitioner. 13. There is yet another aspect to be taken note of. R1 rules. In the circumstances, I do not think that an arbitration suit would be the only or even the proper remedy available for the petitioner. 13. There is yet another aspect to be taken note of. These Original Petitions were filed nearly six years back. An interim order was passed in CMP No. 24563/1995 pursuant to which an enquiry was also conducted, as already mentioned, with regard to the circumstances resulting in Ext. P6 order. A bench of this court in Thressiamma v. Union of India (1999(2) KLT 683) considered the question whether existence of an alternate remedy would be a bar for maintainability of a writ petition. It was held that once and O.P. is admitted, normally, the question of maintainability would not arise in further stages. In that case the O.P. concerned was lying in court for 4 years. If the O.P. is dismissed after a long time that will put the party into difficulty because by the time the O.P. is disposed of the alternate remedy would have become barred. It was held that in such circumstances the O.P. is to be disposed of on its merits though while granting reliefs the court might exercise its discretion considering the question whether any disputed questions of fact arises in the case and that dismissal of an O.P. after a lapse of several years on the ground of alternative remedy would not be proper. 14. In these circumstances I am of the view that this O.P. deserves consideration on the merits notwithstanding the fact that the resolution which resulted in Ext. P6 order could have been got rescinded through involvement of the Registrar of Cooperative societies and notwithstanding the fact that arbitration proceedings also might perhaps have been instituted invoking the provisions of the Kerala Cooperative Societies Act. 15. I shall now come to the merits of the case. As already mentioned the notification dated 5.5.1994 (it was not produced along with the O.P., but copy was made available for perusal during hearing) had specifically mentioned that the candidate selected for appointment as Commercial Manager would have to undergo training for a period of one year. There was no mention therein with regard to the prospect of the training period being reduced at the discretion of the management. Likewise Ext. There was no mention therein with regard to the prospect of the training period being reduced at the discretion of the management. Likewise Ext. P4 order whereby the 5th respondent was appointed also categorically mentioned that he would be on training for a period of one year in different branches of the society. Such being the case there was no question of reducing the period of training so as to regularize the appointment given to the 5th respondent before completion of the minimum training period of one year. 16. What is evident from Exts. P5 and P6 is that even without the inclusion of the question of regularization as an item in the agenda for the meeting held on 22.4.1995, it was taken up for consideration. The items scheduled for consideration in the said meeting of 22.4.1995 were only 12 specific items which are enumerated in Ext. P5. Obviously the question of regularization of the appointment of the 5th respondent did not appear as one of those items. However it is clear from reference second cited in Ext. P6 order that a decision for regularization of the appointment of the 5th respondent was taken as resolution No. 20 in the Board meeting held on 22.4.1995 and it was ordered that the 5th respondent be absorbed in the regular establishment as Commercial Manager with effect from 22.4.95. It is to be mentioned here that as against the training period of one year prescribed in Ext. P4 the regularization tookplace even before completion of half of the said period. In these circumstances, the decision for regularization and the propriety thereof certainly deserve deeper consideration and it was bearing in mind these facts that this court ordered in CMP No. 24563/95 on 29.8.95 that an enquiry should be held in the matter. 17. During hearing the learned counsel for the petitioner has made available for perusal a copy of the relevant enquiry report dated 8.3.96 though the Govt. Pleader failed to produce the same in spite of specific direction given to him to that effect vide order dated 9.2.98 in CMP 1909/98 filed seeking such production. In fact the said order was in consequence of the failure of the respondent to produce the Report as directed in order dt. 20.1.96 passed in the same CMP. Pleader failed to produce the same in spite of specific direction given to him to that effect vide order dated 9.2.98 in CMP 1909/98 filed seeking such production. In fact the said order was in consequence of the failure of the respondent to produce the Report as directed in order dt. 20.1.96 passed in the same CMP. The enquiry officer found in his report that the resolution was too hasty in so far as no reference in the agenda warranting such a decision of regularization had arisen on 22.4.95 from any end. The enquiry officer also noted that the Board had observed that it was satisfied that the incumbent had been acquainted with the business and day to day activities of the society and there was no meaning in continuing the training whereas it was a fact that on 11.12.95 the Secretary of the society had issued a memo to the 5th respondent stating that his performance was far from satisfactory and directing him to improve his performance within three months. 18. In these circumstances, it is certainly necessary to pursue further action based on the said report. Prayer (d) in the O.P. seeks direction to the third respondent to conduct enquiry into the allegations. Now that stage is over, there will be a direction to the third respondent to consider the aforesaid enquiry report and to take appropriate action to ensure that the irregularities, if any, in the matter of regularizing the appointment of the 5th respondent are set right through appropriate measures. 19. There is further prayer in the O.P. for a direction to the first respondent to consider the question of framing guidelines for transfer raised by the first petitioner in Ext. P12 charter of demands and also for a direction to revise pay of its employees as assured in Ext. P14. It is pointed out by the learned counsel for the first respondent that the service rules and staff pattern have since been formulated by the Board of Directors and got approved by the Registrar of Industrial Co-operative societies. It is also pointed out that in the meeting held on 5.9.94 the union agreed to prepare and submit draft proposals prescribing norms for transfer; but that did not materialize. It is also pointed out that in the meeting held on 5.9.94 the union agreed to prepare and submit draft proposals prescribing norms for transfer; but that did not materialize. It is also seen that a petition submitted to the District Labour Officer is still pending disposal and final decision has not been issued by any authority on the demands of the union. In view of the said developments it may not be appropriate for this court to intervene in the matter presently pending before the labour authorities. The prayer to give direction on the above aspect is hence rejected. 20. In the result O.P. No. 9888/95 is disposed of with direction to the third respondent to pursue action on the enquiry report as mentioned supra. This will be done within a period of 4 months from the day on which a copy of this order is produced before the first respondent. 21. O.P. 17588/95 is filed by the Finance Officer of the aforesaid society. The contention is that instead of going in for direct recruitment by notification dated 5.5.94 the Board should have proceeded to promote this petitioner as the Commercial Manager. While admitting the fact that the petitioner is not in possession of the qualifications prescribed for promotion to the post of Commercial Manager as contained in Ext. R2(a) special rules, her contention is that he was formerly working in another society and that under clause 17(b) of the bye laws of the apex society the existing staff of the Cochin Central Cooperative Handicraft Society (Petitioner included) would be deemed to be employees of the handicraft apex society on their present emoluments and service conditions which would not be less advantageous to them than those in force on the day of formulation of the handicraft apex society. 22. The qualifications required for promotion as Commercial Manager under Ext. R2(a) special rules are graduation with cooperative training or B.Com. (With cooperation) with minimum 5 years' experience in the feeder category. The feeder categories are Finance Officer and craft development officer. Though the petitioner was a Finance Officer, she was not a graduate. Nor does she have the other qualifications mentioned above. If the petitioner has a case that Ext. R2(a) rules have been framed violating the provilsion in Clause 17(b) aforementioned it was for her to challenge the same in appropriate proceedings. Though the petitioner was a Finance Officer, she was not a graduate. Nor does she have the other qualifications mentioned above. If the petitioner has a case that Ext. R2(a) rules have been framed violating the provilsion in Clause 17(b) aforementioned it was for her to challenge the same in appropriate proceedings. It is to be mentioned here that the petitioner did not even choose to challenge the order of appointment given to the 5th respondent (Ext. P4 in O.P. 9888/95). It is only the order of regularization that is challenged in this O.P. I am of the view that the above lapse stand in the way of the petitioner getting any relief in the present O.P. In this connection it is also to be mentioned that the petitioner has already retired in the year 1999 and the grant of notional promotion which is pressed during hearing today is not going to help her in any manner in so far as she could never work in the post of Commercial Manager or equivalent post during her tenure of office under the first respondent. This O.P. is hence dismissed. In O.P. 7836/95 filed by the Handicraft Apex Society employees union the prayers are for quashing Ext. P4 order regularizing the service of the 5th respondent. While disposing of O.P. 9888/95 necessary relief in the matter has already been granted. There is no need to provide any further relief in this O.P. It is accordingly closed.