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2016 DIGILAW 55 (KER)

Madhu C. v. State of Kerala

2016-01-15

DAMA SESHADRI NAIDU

body2016
JUDGMENT Dama Seshadri Naidu, J. 1. The petitioner, an employee of the third respondent Company, has a grievance that the Government has issued Exhibit P3 directive to the third respondent to extend financial assistance to the fifth respondent, a Society, though the Government has no such power. 2. The facts in brief are that the fifth respondent is a Co-operative Society having the employees of the third respondent Company as its members; it also functions from the administrative building of the third respondent. With a huge fund basis, the fifth respondent Society has also collected deposits from its members, apart from extending the loans. 3. In the course of time, a couple of employees of the fifth respondent Society, in connivance with certain members of the managing committee, all of them being the employees of the third respondent, have indulged in huge misappropriation of funds running into about thirty one crore rupees, apart from subjecting the Society to maladministration. 4. As the fifth respondent Society reached a stage where it could not repay its depositors, the situation led to the process of inspection and further surcharge proceedings. It is reported that a couple of employees and certain members of the managing committee have been subjected to criminal prosecution in connection with misappropriation of funds. As part of the surcharge proceedings, it is said, already apportionment has taken place among the erring office bearers and employees as regards the misappropriated amount. 5. At any rate, the Society could not repay its depositors, some of whom are the retired employees of the third respondent. The Government, as a result, consulted the Board of Directors of the third respondent and issued Exhibit P3 order requiring the Company to extend a loan of about twelve crore rupees to the fifth respondent Society. Under those circumstances, the petitioner, an Office Attendant in the third respondent, has filed the present writ petition. 6. Sri.T.A. Shaji, the learned Senior Counsel for the petitioner, has strenuously contended that the Company, which is an autonomous corporate entity, cannot be directed, much less forced, by the Government to pay any amount to any third party, including the fifth respondent. He has further submitted that the Memorandum and Articles of Association does not empower the Government to issue Exhibit P3 order. The said order is, therefore, ultra vires of the Government. 7. He has further submitted that the Memorandum and Articles of Association does not empower the Government to issue Exhibit P3 order. The said order is, therefore, ultra vires of the Government. 7. The learned Senior Counsel has eventually submitted that the employees and the Office Bearers of the fifth respondent Society have committed large scale irregularities, including defalcation of amounts running into crores. According to him, instead of bringing those persons to book and realising the amounts from them, the Government has decided to force the third respondent to pay for the misdeeds committed by the office bearers and the staff of the fifth respondent. He has, thus, urged this Court to allow the writ petition interdicting Exhibit P3. 8. The learned Senior Counsel has also contended that most of the claims of refund of deposit are fraudulent. In elaboration, he has submitted that there are no proper checks and balances as to who the actual depositors, and what the amounts to be repaid, are. 9. The learned counsel for the additional eighth respondent has straightaway drawn my attention to Article 32 of Exhibit P4 to hammer home his contention that the third respondent is authorised to lend and advance money or give credit to such companies on such terms as may seem expedient to it. He has further contended that before issuing Exhibit P3 order, the Government did consult all the stakeholders, including the Board of Directors of the third respondent. 10. The learned counsel has eventually submitted that thousands of depositors have been awaiting the release of funds so as to have their deposits repaid by the fifth respondent. Most of them, he avers, are retired employees who have deposited their life time savings with the fifth respondent. 11. The learned counsel has also contended that the petitioners have, in fact, approached this Court based on an apprehension as if the third respondent were extending financial assistance instead of granting a loan. 12. The learned counsel for the fifth respondent Society, on his part, has submitted that the present managing committee took charge only on 16.06.2012, whereas the misappropriation had taken place earlier. He has further submitted that the fifth respondent Society comprised exclusively the employees of the third respondent and that all the loans were extended, in effect, to none other than the employees of the third respondent. 13. He has further submitted that the fifth respondent Society comprised exclusively the employees of the third respondent and that all the loans were extended, in effect, to none other than the employees of the third respondent. 13. In other words, it is the specific contention of the learned counsel for the fifth respondent that if the third respondent lends money to the fifth respondent, of course, to tide over its temporary financial crisis, the third respondent has an efficacious method of recovering the said amounts from the society's borrowers, who are also the employees drawing salary from the third respondent. 14. The learned counsel for the sixth respondent, who is a depositor, has, apart from adopting the submissions of the other learned counsel, strenuously contended that the very fifth respondent Society carries its own operations from the administrative building of the third respondent. Most of the depositors have never maintained any distinction between the Society and the Company; they felt that the Company has been dealing with the affairs of the Society, too, submits the learned counsel. 15. Sri.Bobby Mathew, the learned Government Pleader, in his characteristically diligent, expressive way, has made elaborate submissions. He has initially drawn my attention to Article 38 of Exhibit P4 to substantiate his contention that the Government may from time to time issue directions and instructions as it thinks fit in regard to the conduct of business and affairs of the third respondent. To further underline the Government's persuasive control over the third respondent, the learned Government Pleader has referred to various other provisions including Article 37 thereof. The gravamen of his submissions is that the Government has the absolute control over the third respondent and its directives squarely bind the said company. 16. The learned Government Pleader has drawn my attention to paragraph 13 of the counter affidavit filed by the Government to hammer home his contention that the Government did consult all the stakeholders including the Board of Directors of the third respondent before issuing Exhibit P3. It is the learned Government Pleader's specific contention that what is ordered by the Government in Exhibit P3 is only a loan facility to be extended by the third respondent to the fifth respondent. 17. It is the learned Government Pleader's specific contention that what is ordered by the Government in Exhibit P3 is only a loan facility to be extended by the third respondent to the fifth respondent. 17. In support of his submission that the third respondent is bound to act on the directive of the Government, the learned Government Pleader has placed reliance on Management of the Fertilizer Corporation of India Ltd. v. The Workmen, AIR 1970 SC 867 . Further, in a welfare state, the Government acting in the capacity of parens patriae steps in, in the public interest, to ameliorate any situation, especially the gullible public, say the depositors, who are made to suffer on account of unscrupulous, fraudulent exploits by those at the helm of the affairs of the society. In support of his submissions, he has placed reliance on K.K.Bhaskaran v. State represented by its Secretary, Tamil Nadu and Others, (2011) 3 SCC 793 . 18. Heard the learned counsel for the petitioner and the learned counsel for the respondents, as well as the learned Government Pleader, apart from perusing the record. 19. At the outset, it is apposite to address the issue of the petitioner's locus. All the learned counsel for the respondents have in unison attacked the petitioner's standing to file the present writ petition. All of them, in that context, have contended that the petitioner, being an employee, more particularly in the rank of an Office Attendant, has no locus to file the present writ petition. 20. I am afraid, this contention is perhaps a relic of the past. In the course of time, there has been much change in the judicial thinking on the aspect of standing, beginning, at least, with S.P.Gupta v. Union of India, AIR 1982 SC 149 . The courts have made very significant strides in that respect. It is appropriate to observe that the employer and the employee enjoy a symbiotic relationship. The welfare, even the very survival, of one depends on the other. 21. Very recently the Hon'ble Supreme Court in Vijay Shankar Pandey v. Union of India, (2014) 10 SCC 589 has observed in paragraphs 49 and 50 that the Constitution declares that India is a sovereign democratic republic. The requirement of such democratic republic is that every action of the State is to be informed with reason. 21. Very recently the Hon'ble Supreme Court in Vijay Shankar Pandey v. Union of India, (2014) 10 SCC 589 has observed in paragraphs 49 and 50 that the Constitution declares that India is a sovereign democratic republic. The requirement of such democratic republic is that every action of the State is to be informed with reason. State is not a hierarchy of regressively genuflecting coterie of bureaucracy. The right to judicial remedies for the redressal of either personal or public grievances is a constitutional right of the subjects (both citizens and non-citizens) of this country. Employees of the State cannot become members of a different and inferior class to whom such right is not available. The respondents consider that a complaint to this Court of executive malfeasance causing debilitating economic and security concerns for the country amounts to inappropriate conduct for a civil servant is astounding. 22. In other words, merely because a person becomes an employee, he does not bargain away his fundamental or any statutory rights. The Apex Court has specifically observed that when there is maladministration or malpractice in an organisation, even an employee is entitled to raise his voice. The contention of the learned counsel for the respondents that the petitioner lacks the locus is rejected. 23. Much turns upon the legality and validity of Exhibit P3. To be fair to the Government, this Court is inclined to observe that Exhibit P3 is a speaking order reflecting that much though has gone into its making. 24. As has been rightly contended by the learned counsel for the respondents, especially the learned Government Pleader, and also as has been reflected in paragraph 13 of the counter affidavit, it can be seen that the Government convened a meeting of the Additional Chief Secretary (Home and Vigilance), ADGP (Crimes), Additional Secretary (Taxes Department), Special Secretary (Co- operation Department), Registrar of Co-operative Societies, Joint Registrar of Co-operative Societies (General), the Managing Director (KSFE), the President, and Secretary of the fifth respondent Society. It has eventually taken a decision to issue Exhibit P3 directive to the third respondent. It has also meticulously calculated the amounts due to and from the fifth respondent Society. Be that as it may, the question still remains whether the Government is justified in issuing Exhibit P3 order. 25. It has eventually taken a decision to issue Exhibit P3 directive to the third respondent. It has also meticulously calculated the amounts due to and from the fifth respondent Society. Be that as it may, the question still remains whether the Government is justified in issuing Exhibit P3 order. 25. Indeed, it is evident from Article 38 of Exhibit P4 that the Government directives do bind the fifth respondent, over which the Government has an all pervasive administrative control, as it is a fully owned public sector undertaking. In Management of the Fertilizer Corporation of India Ltd. (supra), the Apex Court has observed that once the Government has control over an entity, though it is an autonomous one, the said entity has no other option than complying with the directives issued by the Government from time to time. 26. Further, it has been held in K.K.Bhaskaran (supra) that in a welfare state, Government acts parens patriae. In that case, the State of Tamil Nadu has brought into existence an enactment providing summary procedure to realise the amounts from the persons who had been facing the charge of large scale misappropriation of public money. When the vires of the State Enactment was questioned, the Hon'ble Supreme Court has observed that the State, being the custodian of the citizen's welfare parens patriae, cannot be a silent spectator without finding a solution for the malady of financial frauds or irregularities. 27. The Apex Court has further observed that the financial swindlers, who are nothing but cheats and charlatans having no social responsibility, but only a lust for easy money. They have to be dealt with strongly. Indeed, the facts of K.K.Bhaskaran (supra) may not have any relevance to the facts on hand. At any rate, the ratio as regards the role being played by the Government parens patriae, especially in public interest, can be a guiding factor for deciding the present case as well. 28. In the end, I cannot but uphold Exhibit P3, which seems to have been issued by the Government in terms of Article 38 of Exhibit P4. Further, as has been contended by the learned Government Pleader, the third respondent is required to grant a loan to the fifth respondent, which has as its members only the employees of the third respondent. 29. Further, as has been contended by the learned Government Pleader, the third respondent is required to grant a loan to the fifth respondent, which has as its members only the employees of the third respondent. 29. Even as regards the recovery prospects, it can be seen that the fifth respondent has extended loans to the employees of the third respondent, and, as such, the third respondent, to a great extent, has been secured. At any rate, while considering Exhibit P3, the Board of Directors of the third respondent should take into account all relevant aspects, especially as regards the recovery prospects and extend the loan to the fifth respondent as has been directed by the Government. 30. In this context, though not entirely germane, this Court expects the Government to pursue, with unremitting diligence, the case of the enquiry proceedings pending against certain employees and former members of the managing committee of the fifth respondent and ensure that the amounts are realised from them at the earliest. 31. In the light of the apprehension expressed by the learned Senior Counsel that some of the claims are fraudulent, it is incumbent on the present managing committee of the fifth respondent and also the third respondent Company to ensure that only genuine depositors are repaid. With the above observations, the writ petition is disposed of. No order as to costs.