JAGDIP MEHTA v. REGISTRAR OF CO-OPERATIVE SOCIETIES
2002-09-25
B.A.KHAN, J.D.KAPOOR
body2002
DigiLaw.ai
J. D. Kapoor ( 1 ). Petitioner was appointed as the General manager by the respondent-society vide appointment letter dated 27. 8. 2001 on a consolidated salary of Rs. 22,000/- per month. As per appointment letter the probation period was fixed as six months. One of the terms of the appointment was that after confirmation services of the petitioner were terminable by one month s notice by either side. However vide letter dated 4th April, 2002 petitioner was suspended as per decision of the Managing committee vide Resolution dated 3rd April, 2002 for financial irregularities. The petitioner was also served with a memo containing the Article of charges. Ms. Nargis Raj Kumar a Member of the Managing Committee who was one of the signatories to the Resolution placing him under suspension was appointed as Inquiry Officer. Petitioner was granted seven days time to file reply. When he applied for certain documents to controvert the charges levelled against him followed by reminders the managing Committee on 24th April, 2002 took a decision to re-organise the management structure of the Society whereby the poet of General Manager was abolished and posts for four Managers and three Assistant Managers were created. In the meeting held on 29th April, 2002 the recommendations for re-organisation of the management structure were approved. On account of the abolition of the post of General Manager, the services of the petitioner were terminated with effect from 29th April, 2002, intimation whereof was given to the petitioner vide letter dated 4th May, 2002. In lieu of one month s notice one month s salary was paid to the petitioner. ( 2 ). According to the petitioner action of Managing committee in terminating the services is malafide and arbitrary and against the principles of natural justice and is also a result of personal vendetta of its President shri Krishan Lal Sehgal as the petitioner had improved the management of the Club and had organised number of competitive and cultural programmes and due to all-round appreciation of his work by the Members of the Club, the president started feeling uneasy and also started finding fault with the working of the petitioner end started insulting him in front of his junior colleagues and staff of the Club.
He further alleges that in the month of november, 2001 the President Shri Krishan Sehgal wanted to get some bills cleared pertaining to M/s Kalpana, a contractor who had done work of renovation in the Club amounting to balance amount of Rs. 81,504/- and when the petitioner objected to clear this amount on the ground that the contractor had not come to do physical verification, the President instructed the Engineer to make the payment to M/s Kalpana without clearance of the bills by the petitioner. When new elections for the post of vice President were held on 31st March, 2002 and Col. Suresh Chand was elected as Vice-president of the society, on the very next day a meeting of the Managing Committee was held wherein the approval to place the petitioner under suspension and also to issue charge sheet was approved. ( 3 ). The petitioner has challenged the impugned action on multifarious grounds. Firstly, that as per bye-law 21 of the Society the General Body is the only competent authority to create post, to fix the programme of activities after obtaining their report from the committee and not the Managing Committee and therefore the abolition of post of General Manager vide resolution dated 29th April, 2002 was illegal and without jurisdiction. Secondly the appointment of Nargis Raj Kumar as an Inquiry officer was illegal as she herself was one of the signatories to the resolution passed in the meeting held on 3rd Aprl, 2002 placing the petitioner under suspension. Thirdly, the action of the respondent-Society is against the principles of natural justice as his services could not have been terminated in the midst of inquiry and the resolution for abolition of the post of general Manager was a device to get rid of the petitioner without waiting for the result of the inquiry. Fourthly the resolution for the appointment of four Managers and three Assistant-Managers on the excuse of reorganisation of the management structure is against the provisions of rule 49 of DCS Rules, 1973 Which reads as under:- 49. Minimum Staff to be Employed 1. Every co-operative society shall from time to time determine at a meeting of the committee the minimum members of paid staff required for its business. The committee shall prescribe their qualifications and experience and the emoluments. The committee shall be competent to appoint, dismiss or remove any paid staff. 2.
Minimum Staff to be Employed 1. Every co-operative society shall from time to time determine at a meeting of the committee the minimum members of paid staff required for its business. The committee shall prescribe their qualifications and experience and the emoluments. The committee shall be competent to appoint, dismiss or remove any paid staff. 2. The minimum paid staff for a co-operative bank and any co-operative society with a working capital or annual transactions of rupeesfive lakhs or over shall be:- (i) One Secretary or Manager. (ii) One Accountant. (iii) One Cashier. ( 4 ) NEXT, the action of the respondent society is in complete violation of Rule 50 of the DCS Rules as the managing Committee was required to take approval of the registrar of the Co-operative Society. Relevant extracts of Rule 50 are as under:- "1. In the co-operative societies of all classes including Financing Bank the appointment of paid staff shall be subject to such directions as the Registrar may from time to time issue in regard to their technical and educational qualifications and in regard to their minimum number and pay and allowances, security deposits. 2. No society of the class referred to in sub-rule (1) shall appoint any person as its paid officer or servant in any category of service, unless he possesses the qualifications prescribed by the Registrar from time to time. No society shall retain in service any paid officer or servant if he does not acquire the qualifications within such time as the Registrar may direct. The Registrar may, for special reasons, relax in respect of any paid officer or servant or a class of officer or servants the provisions of the rule in regard to qualifications etc. 3. No near relative of any member of a committee or a member of the committee of financing bank to which the society is indebted shall be appointed as its paid staff. EXPLANATION - "near Relative" includes anyone related to the person concerned or to his wife through a common ancestor not more than a grand-father or any one married to a person so related. " ( 5 ) AS is apparent the contentions that the resolution abolishing the post of Manager is against Rule 49 and that Society has violated the provisions of Rule 50 by not obtaining the prior approval of the Registrar require to be brushed aside at the threshold.
" ( 5 ) AS is apparent the contentions that the resolution abolishing the post of Manager is against Rule 49 and that Society has violated the provisions of Rule 50 by not obtaining the prior approval of the Registrar require to be brushed aside at the threshold. Rule 49 provides for the minimum staff to be employed by the society. It does not include the post of general Manager. Society is obliged to only employ one secretary or Manger, one Accountant and one Cashier. Similarly, Rule 50 prescribes the minimum qualification the paid staff Should possess. ( 6 ). Mr. Gupta s, learned counsel for the respondent society, main challenge is as to the maintainability, of the petition under Article 226 of the Constitution. According to him the respondent society by no stretch of imagination is an instrumentality of the State as contemplated by Article 12 of the Constitution of India nor does it come within the purview of any person or authority envisaged in Article 226 of the Constitution as it does not receive any funds from the Government nor is it in any manner controlled by the Government nor has any public duty been imposed upon it vis-a-vis its employees nor has any fundamental right which ie enforceable under article 226 of the Constitution been violated. ( 7 ). Pitted against this, Mr. R. K. Khanna, learned counsel for the petitioner has taken report to provision of Rules 43 and 50 of the DCS Rule to show that Society is a body upon which not only Public duty to provide shelter is imposed and as such it can be deemed as an instrumentality of a state. ( 8 ) IT is further contended by Mr. Khanna that since certain statutory obligations have been cast upon respondent No. 2 - Society in respect of employment of certain staff, Society is an instrumentality of a state or is an authority as referred in Article 226 and this is further fortified by the fact that the functions of the society are regulated or monitored by the Registrar co-operative Society who is a Government functionary and, therefore, provides, a character of instrumentality of the state to the Society. In support of this interpretation the learned counsel placed reliance upon the judgment of the Division Bench of this Court in Chetan Dass Vs. Dera ghazi Khan Distt.
In support of this interpretation the learned counsel placed reliance upon the judgment of the Division Bench of this Court in Chetan Dass Vs. Dera ghazi Khan Distt. Refugees House Suildins Cooperative society Ltd. and six others 1996 (39) DRJ (DB) wherein housing Societies were deemed as authority or instrumentality of a State which can be subjected to writ jurisdiction under Article 226 as public duty of providing shelters which is a fundamental right of the members is imposed upon such Societies. Relevant observations are as under:- "it cannot be said that no public duty is cast on Housing Societies to nourish, protect and preserve the fundamental right of shelter of each member and, therefore, these societies cannot be allowed to violate fundamental rights of equality by picking and chosing members for allotment on the whims of the office bearers of the society and if they violate fundamental right of shelter enshrined in Article 21 and fundamental right to equality then neither the group housing society nor the office bearers of the society would be allowed to escape the writ juriadiction of the Court. ( 9 ). For the purpose of proper appreciation of rival contentions, relevant extracts of Articles 12, 226 of the constitution need to be reproduced:- article-12 "in this part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of india. "article-226 "226. Power of High Courts to issue certain writs - (1) Notwithstanding anything in Article. 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including (writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari), or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose. " ( 10 ). Bare perusal of these provisions shows that there is conspicuous distinction between Article 12 and article 226 of the Cojnstitution.
" ( 10 ). Bare perusal of these provisions shows that there is conspicuous distinction between Article 12 and article 226 of the Cojnstitution. The words any person or authority appearing in Article 226 are not there in article 12 which means a legal, right was also enforceable under Article 226 against "any person or authority", not necessarily statutory authority or instrumentality of the state on whom public duty is cast. The words "any person" or "authority" appearing in Article 226 confer far wider jurisdiction on the High Court to issue a writ against any person or body performing public duty, irrespective of the form of that body. ( 11 ). This distinction between Article 12 and Article 226 of the Constitution is appropriately brought, out by the Supreme Court in Anandi Mukta Sadauru Shree Muktajee vandasjiswami Suverna Jayanti Mahotsav Smarak Trust and ors. Vs. V. R. Rudani and others ( AIR 1989 SC 1607 ). The relevant observations of the Supreme Court are reproduced below:- "the term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights, under article 32. Article 226 confers powers on the high Courts to issue writs for enforcement of fundamental rights as well as non-fundamental rights. The words "any person or authority" used in Article 226 are, therefore, not to be confined only to the statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not much relevant. What is relevant is the nature of the duty imposed on the body. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied". ( 12 ). In Calcutta Gas Company (Proprietary) Ltd. Vs. State of West Bengal and others AIR 1962 SC 1044 it was held that Article 226 confers much wider powrs on the High court to enforce any kind of right. Relevant observations are as under :- "article 226 confers a very wide power on the High Court to issue directions and writs of the nature mentioned therein for the enforcement of any of the rights conferred by part II or for any other purpose.
Relevant observations are as under :- "article 226 confers a very wide power on the High Court to issue directions and writs of the nature mentioned therein for the enforcement of any of the rights conferred by part II or for any other purpose. It is, therefore, clear that persons other than those claiming fundamental rights can also approach the High Court seeking a relief thereunder. " ( 13 ). On the premise of the aforesaid authorities the following essential requirements for subjecting a person or an authority to the writ jurisdiction under Article 226 can be culled out. (i) The words "any person or authority" do not confine the jurisdiction of the High Court to the statutory authorities and instrumentalities of the State alone. They encompass any person or a body upon whom public duty is cast. (ii) It is the nature of duty imposed On such person or the body or the authority which is the determining criteria. (iii) There should exist a positive obligation such person or body to be discharged under law. (iv) There should be a violation in such discharge, be that on account of arbitrariness or malafides. ( 14 ). As has been held by the Division Bench of this court in Chetan Dass s cases (supra) that public duty was cast on housing societies, in preserving and protecting the right of shelter of its members rendering it amenable to writ jurisdiction and even if it was further assumed that writ jurisdiction was available for determination of rights of their employees also, still it would have to be examined whether petitioner could substantiate his case on merits. Now let us dwell at merits of the case of the petitioner. ( 15 ). The petitioner has challenged his termination firstly on the ground that his right of employment with the Society has been violated. Secondly, that the termination order is in violation of the provision of natural justice in as much as he was not afforded an opportunity because of the inquiry proceedings having been scuttled and killed in the midway and thirdly the action of the respondent-Society is illegal and suffers from the vice of malafideness. ( 16 ).
Secondly, that the termination order is in violation of the provision of natural justice in as much as he was not afforded an opportunity because of the inquiry proceedings having been scuttled and killed in the midway and thirdly the action of the respondent-Society is illegal and suffers from the vice of malafideness. ( 16 ). As regards the enforceability of the right of the petitioner we find that one of the terms of the appointment namely that "after confirmation your services are terminable by one month s notice on either side" establishes a relationship of master and servant and, therefore, there is no right of omployment that can be enforced by way of mandamus. ( 17 ). Now, the cemtemtion that after placement of the petitioner under suspension and appointing Inquiry Officer to inquire into the allegations, the services could not have been terminated without giving an opportunity of being heard and without waiting for the result of the inquiry. It is further contended that the act of abolition of the post of General Manager in the midst of inquiry and that too after serving Articles of charges manifestly demonstrates malafideness of the Society Whose president s dictates the petitioner refused to obey. ( 18 ). We are afraid none of the contentions of the learned counsel holds water. Where post is abolished the question of providing an opportunity of hearing or completing the inquiry does not arise. It is a case of abolition of a post though culminating in termination of the services. There is a distinction between termination of the service on the basis of the allegations and the termination of service by way of abolition of a post. It is only by way of inquiry into the allegations that a plea of non-adherence to the principles of natural justice is available. Since no right of the petitioner which was enforceable under any law has been violated the question of violation of principles of natural justice on account of not giving an opportunity of being heard or non-completion of the inquiry does not arise. There is no allegation that after the termination of the services of the petitioner the Society had appointed another General manager in his place. Had it been so the principles of natural justice would have revived. ( 19 ).
There is no allegation that after the termination of the services of the petitioner the Society had appointed another General manager in his place. Had it been so the principles of natural justice would have revived. ( 19 ). Next question is whether during the pendency of the inquiry proceedings the respondent-Society was competent to terminate the services of the petitioner under the garb of abolition of post. The committee has been defined in Section 2 (d) of DCS Act, 1972 as the general Body of the Co-operative Societies by whatever name called to which the management of the affairs of the society is entrusted. Section 28 of the Act vests the final authority of the Society in the General Body of members:- section 28 (1) The final authority of a co-operative society shall vest in the general body of members; provided that where the bye-laws of a co-operative society provided for the constitution of a smaller body consisting of delegates of members of the society elected or selected in accordance with such bye-laws the smaller body small exercise such powers of a general body as may be prescribed or as may be specified in the bye-laws of the society. (2) Notwithstanding anything contained in sub-section (2) of Section 24 each delegate shall have one vote in the affairs of the society. " bye-law 31 of the Society provides as under:- "the Committee shall from time to time determine the number of the paid staff required for its business. The Committee shall prescribe their qualifications, experience and emoluments. The Committee shall be competent to appoint, dismiss or remove any paid staff". ( 20 ). Bare reading of Section 28, Rule 49, 50, bye-law 31 (supra) alongwith Section 2 (b) of the DCSA shows that it was well within the power of the Managing Committee to abolish the post. The only obligation cast by Rules 49 and 50 upon the Society is employ the minimum staff with the qualifications that may be prescribed by the Registrar. To appreciate the allegation of violation of principles of natural justice and malafides the background leading to the abolition of the post of General Manager needs to be culled out in brief:- ( 21 ). After the appointment of the petitioner the managing Committee of the Society noticed several financial irregularities allegedly being committed by the petitioner.
To appreciate the allegation of violation of principles of natural justice and malafides the background leading to the abolition of the post of General Manager needs to be culled out in brief:- ( 21 ). After the appointment of the petitioner the managing Committee of the Society noticed several financial irregularities allegedly being committed by the petitioner. In its meeting held on 19th January, 2002 it was decided to refer the matter to the Finance and administrative sub-Committee of the Society. Further in order to improve the management the efficiency of the administration another sub-Committee was set up to study the management structure of the Society and to make suggestions for improvement of the same. The said Finance and Administrative sub-Committee took up the matter with the petitioner and called upon him to submit the explanation with respect to the allegations. Inspite of opportunities the petitioner failed to putforth any explanation and this fact was noted in its meeting held on 26th March, 2002, On 3rd April, 2002 the Managing committee held another meeting and approved the charges against the petitioner and took a decision to suspend him and institute an inquiry. Inquiry Officer was appointed. However in the meanwhile the sub-Committee set up to study the organisational structure recommended several changes. The recommendations of the sub-Committee were placed before the Managing Committee on 24th April, 2002. The managing Committee approved the same. It was on 29th april, 2002 that the Managing Committee in its meeting approved the re-organisation of the management structure and as a new management structure the new set up did not propose or envisage the post of General Manager and accordingly the post was abolished. ( 22 ). Since the Post of General Manager was no more in existence no useful purpose was going to be served by continuing with the inquiry. Mere circumstance that the inquiry was being conducted against the petitioner did not preclude the Managing Committee to appoint sub-Committee to recommend the measures to improve the efficiency of administration and to study the management structure and make suggestions and, therefore, there was nothing wrong or malafide on the part of the Society to accept the recommendations of the sub-Committee which included the abolition of the post of the General Manager. May be that the said post was considered as top heavy post causing financial stringencies. ( 23 ).
May be that the said post was considered as top heavy post causing financial stringencies. ( 23 ). Let us assume that the termination of the petitioner by way of abolition of the post was a result of animus of the President towards the petitioner or an attempt to get rid of him. If at all the petitioner was having any grievance against the President of the Society nothing prevented him from making representation in this regard to the Managing Committee of the Society and more so when he was called upon to submit explanation with regard to the articles of charges and allegations. Thus to impute malafides subsequently is an after-thought or an attempt by a drowning person to clutch a flimsy straw. ( 24 ). Last but not the least the services of the petitioner were even otherwise terminable without any inquiry into the allegations by one month s notice. As referred above the appointment letter contained a clause that after confirmation services of petitioner were terminable by one month s notice on either side. The society has terminated the services of the petitioner by giving one month s salary in lieu of one month s notice as a consequence of which the services of the petitioner automatically stood terminated. Such termination by no stretch of imagination can be deemed in breach of the terms of the appointment. ( 25 ). Thus from any angle we may test the case of the petitioner either on the anvil of violation of enforceable right or principles of natural justice or on the anvil of malafideness it cannot withstand it. In the result the petition proves damp squib and is hereby dismissed being wholly devoid of merits.