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2017 DIGILAW 479 (UTT)

State of Uttarakhand v. Dharmanand Uniyal

2017-09-04

ALOK SINGH, K.M.JOSEPH

body2017
JUDGMENT : K. M. Joseph, J. 1. All the appeals raise similar issues, hence, we are disposing of the same by this common judgment. 2. In Special Appeal No. 210 of 2017, appellants who were respondents no. 1, 2 and 3 in writ petition, have called in question the original judgment delivered by learned Single Judge and also the order passed in Review/Recall Application. Other appeals are only directed against original judgment. It appears that no other review petition was filed. 3. All the writ petitioners were appointed as Secretary of the Primary Agriculture Cooperative Credit Societies (hereinafter referred to as “PACS”) in the State of Uttarakhand. On retirement, on not being paid leave encashment, gratuity, benefit of ACP, and difference between 5th and 6th Pay Commission, writ petitions came to be filed. The persons who are arrayed as respondents in the writ petitions are as follows: “1. State of Uttarakhand through Secretary Cooperative Societies, Government of Uttarakhand, Civil Secretariat, Dehradun. 2. Registrar, Cooperative Societies, Government of Uttarakhand, Lower Mall Road, Almora Camp at Dehradun. 3. District Assistant Registrar, Cooperative Societies/Member Secretary, District Administrative Committee, Tehri Garhwal. 4. Secretary/General Manager, Primary Agriculture Society (Centralized Services), District Tehri Garhwal.” 4. In some cases, no doubt, relief appears to be different. The details need not detain us. Suffice it say that appellants, who are respondent nos. 1 to 3 filed counter affidavit in writ petition No. 1903 of 2016. In the counter affidavit filed by appellants no. 2 - Registrar, Cooperative Societies and respondent no. 3 - District Assistant Registrar, Cooperative Societies, the stand taken inter alia is as follows: “5. That it is worth to mention that as per Section 122 A of Uttarakhand Cooperative Societies Act, 2003- “Notwithstanding anything contained in this Act, the State Government may by rules provide for the creation of one or more services of such employees of such co-operative societies or class of a co-operative societies, as the State Government may think fit, common to such Cooperative Societies and prescribe the method of recruitment, appointment, removal and other conditions of service of persons appointed to any such service.” That in conformity to the aforesaid Section the State Government has created a centralized service for the post of secretary of Primary Agriculture Co-operative Credit Societies (hereinafter referred to as PACS) of the State. It is also worth to state that the cadre of the said centralized service is restricted to District level. Therefore, a person who is appointed in the said service is liable to serve in the same District only. Further, it is also pertinent to mention that the said centralized service is created in every District of the State and also that these cadre secretaries are not Government Servants. 6. That the salary and other dues payable to cadre secretaries are paid out from the district cadre fund which is maintained at district level out of the contributions made by district cooperative bank, PACS and state government respectively [revised w.e.f. 1-4-2014] as under- [a] 2% by PACS of total loans extended by them. [b] 25% of annual net profit of Gramin Bachat Kendras run by the PACS with a maximum ceiling 5 lacs per PACS for both [a] and [b]. [c] 1.5% by district cooperative bank of total loans distributed by PACS of the district. [d] Some contribution made by the state government in district plan. It is worth mentioning that since the contribution made in the district cadre fund is directly connected to the business of the PACS, as such, it is apparent that the PACS of Tehri district are not earning enough profits, and as such, the contribution to cadre fund is not enough to meet out the cost of salaries of the cadre secretaries. Therefore, the concerning authorities are not even in a position to pay even the regular salaries to their PACS cadre secretaries. As far as payment of post retirement dues to the cadre secretaries is concerned, the same seems to be very difficult in view of the aforesaid situation. Further, PACS are pure business institutions. According to section 31 of Uttarakhand Cooperative Societies Act, 2003, a secretary is a chief executive officer of society who is fully responsible for managing the affairs of a society. Since the societies have failed to generate profits out of their business, as such, their contribution to the district cadre fund was not sufficient to pay even the regular salary of working PACS cadre secretaries. Due to this only there is problem in paying the retiral and other dues of PACS cadre secretaries including the petitioner. 7. That for this position of cadre fund, PACS cadre secretaries are solely responsible. Due to this only there is problem in paying the retiral and other dues of PACS cadre secretaries including the petitioner. 7. That for this position of cadre fund, PACS cadre secretaries are solely responsible. In those districts where the societies are doing good business, there is no problem of overdraft in cadre fund. In district Tehri there is already an overdraft of 375.16 lakh in district cadre fund which has been kept aside by the bank on the directions of the Registrar Cooperative Societies Uttarkhand. It was also decided that on this amount, the bank will not charge any interest on this. 8. That due to this only the bank is not charging any interest on this amount of huge overdraft and it is also not recovering any amount against this from the cadre fund. 9. That in district Tehri the position of district cadre fund is not good due to which the payment of arrears of some of the dues of petitioners could not be made. 13. That it is pertinent to state that the PACS secretaries of Tehri District have been directed to increase the loan component so as to bridge the gap of deficit in cadre fund. Besides, the concerning authorities are putting all their efforts to get a sanction of funds from district plan also. Furthermore, it is reiterated that PACS cadre secretaries are not government employees. They are chief executives of PACS and as such they must put all their efforts to increase the business of the concerning PACS, the Registrar Cooperative Societies Uttarakhand has recently issued a circular wherein the PACS have been allowed to do multi business activities to achieve maximum profit. 14. That it is also worth mentioning that efforts at senior level are also in process to somehow resolve this issue inasmuch as a meeting Bank officers and senior officers of the department was held to work out a detail plan in this regard. Further the demand for cadre fund in the district plain is now possible in the next financial year and as such the considerable time till be utilized to redress the grievance. However the answering respondent authorities are making concerted efforts to resolve the issue as early as possible. 15. Further the demand for cadre fund in the district plain is now possible in the next financial year and as such the considerable time till be utilized to redress the grievance. However the answering respondent authorities are making concerted efforts to resolve the issue as early as possible. 15. That it is reiterated that PACS are business organizations, and as such, the PACS Secretaries who are Chief Executive of these business organization are liable to increase the business of the Society to meet out its cost of management. Further the deponent has always given his sincerest efforts to motivate PACS Secretaries to diversify their business activities and mode of functioning so as to increase the income of the society. The answering respondent/department is hopeful that the said exercise will also yield positive results. 21. That the contents of Para 12 to 15 of the writ petition are based on record. Hence, need no reply. However it is submitted that the fixation of a petitioner on the basis of 5th pay commission was made w.e.f. 01.01.1996 making the actual benefit available from 01.04.2003 and on the basis of 6th pay commission w.e.f. 01.01.2006 making the actual benefit available from 01.01.2011. Although this benefit was extended w.e.f. 01.10.2013 onwards in regular salary. The arrear corresponding to this period has not been paid so far to anyone in the district due to pitiable position of district cadre fund. 22. That the contents of Para 16 and 17 of the writ petition are not admitted as stated. In reply to this, it is submitted that according to circular dated 04.03.2015 the benefit of ACP on completion of 10, 16 and 26 years of service is extendable to the petitioner but the same will be paid to him along with arrear as soon as the sufficient balance is available in cadre fund. The same could be paid due to the position of huge overdraft and insufficient amount in District Cadre Fund. 23. That the contents of Para 18 to 21 of the writ petition and the various grounds set forth are not admitted in the light of averments made in preceding paragraphs, the contents whereof are reiterated. The dues of the petitioner could not be paid to the lack of sufficient balance in District Cadre fund the sincere efforts for which are being made. For this position of fund, the cadre secretaries are evenly responsible. The dues of the petitioner could not be paid to the lack of sufficient balance in District Cadre fund the sincere efforts for which are being made. For this position of fund, the cadre secretaries are evenly responsible. In the light of this the instant writ petition of the petitioner is liable to be dismissed.” 5. Learned Single Judge, in original judgment, while disposing of the writ petitions noted one of the stand of the appellants that payment could not be made due to paucity of fund. Learned Single Judge disposed of the writ petitions in following manner: “5. Each of the petitioners shall make an individual representation along with copy of the writ petition (including counter affidavit) before the respondent No. 1 – Secretary, Cooperative Societies, Dehradun wherein they shall elaborate their claim as well as the exact outstanding amount against the respondents. The respondent authority shall thereafter calculate and immediately disburse the Leave Encashment as well as Gratuity along with interest of 9% which shall be calculated from the date which is after six months of the date of retirement of each of the petitioners and shall count till the amount is actually release in favour of the petitioners. It is made clear that the same shall be done within a period twelve weeks from the date of production of this order. 6. Apart from the above release of the amount, the respondent authority shall also decide the claim of the petitioners as far as Assured Career Progression and difference of 5th and 6th Pay Commission are concerned by passing speaking order. In case, the respondent authority comes to the conclusion that the petitioners have a claim, the difference of amount shall be given to the petitioners within a period of twelve weeks from the date of production of this order.” 6. As noted above, in one of the cases, the State preferred review/recall application, which was dismissed. The reasons recorded by learned Single Judge are as follows: “5. Now review application has been filed by the State for reviewing the said order. The submission now is that the petitioners are not entitled for their gratuity. As noted above, in one of the cases, the State preferred review/recall application, which was dismissed. The reasons recorded by learned Single Judge are as follows: “5. Now review application has been filed by the State for reviewing the said order. The submission now is that the petitioners are not entitled for their gratuity. This Court had earlier passed its order on the basis of the documents on record and averments in the writ petition, as well as considering annexure No. 10 to the writ petition, which is an order issued by Registrar, Cooperative Societies, Government of Uttarakhand, which says that leave encashment and gratuity was liable to be given to the petitioners. In the counter affidavit, there is no such objection on behalf of the State Government that petitioners are not liable to be given their gratuity or leave encashment. Now the reason assigned in the review petition for not giving gratuity to the petitioners is that they are not Government servants. The only ground taken earlier by the State Government in its counter affidavit, for not paying the gratuity or leave encashment, is the lack of funds. 6. The order dated 10.01.2017 hence does not suffer from any apparent error on the face of record, nor can it be a case that the review applicant has now discovered new and important evidence, which even with due diligence could not be placed earlier. In view of the limited scope under Order XLVII Rule 1 of C.P.C. for review, an interference in a review petition cannot be made in the present case. Accordingly, the review application stands dismissed.” 7. We heard Mr. Paresh Tripathi, Chief Standing Counsel assisted by Mr. Narain Dutt, Brief Holder for the State of Uttarakhand/appellants, Mr. B.M. Pingal, Advocate for writ petitioners and Ms. Seema Sirohi, Advocate for respondent no. 3/4. 8. The contention of Mr. Paresh Tripathi, learned Chief Standing Counsel is essentially that learned Single Judge erred in giving direction, as if the writ petitioners were government servants. The fundamental contention raised before us is that none of the writ petitioners, who were Secretary of PACS, were actually Government Servants, therefore, there is no liability of the appellants to make payment of retiral dues to the writ petitioners, who were appointed by the District Administrative Committee. The fundamental contention raised before us is that none of the writ petitioners, who were Secretary of PACS, were actually Government Servants, therefore, there is no liability of the appellants to make payment of retiral dues to the writ petitioners, who were appointed by the District Administrative Committee. He would submit that matter is actually governed by Section 122A of the Uttarakhand Cooperative Societies Act, which incidentally is pari materia with the self same Section of the Uttar Pradesh Cooperative Societies Act. The latter Act was in fact being followed in the State till the enactment of the Uttarakhand Cooperative Societies Act. He would point out that actually, it is the Committee, which appointed the writ petitioners as Secretary. As far as State is concerned, the State has done what it is bound to do. The case of the appellants is that under prevalent orders, there has to be District Cadre Fund and contributions are to be made. Relevant extract of letter dated 26.02.2009 reads as under: “(A) 1.5 of the loan distributed in the year by the Loan Committee; if no loan has been distributed by any Committee, then 1.5 will be payable of the total loan during the year. Loan means short term loan, mid term loan and other kinds of loans, in which consumption loan will also be included. Loans taken by the Committee against the amount deposited in Mini Bank will not be included. (B) 0.5% of short term, mid term and long term agricultural loan and other loans, which are distributed through the Committees, by the District Cooperative Banks during the year. (C) One percent of the total deposited amount of Mini Bank in the Committee in the end of every financial year, maximum one lac rupee. (D) (1) One percent of the total business, but maximum Rs. 2000/- will be contributed by the Committee doing the fertilizer business of Rs. 50,000/- or more in the Cadre Fund. (2) No contribution will be made by the Committee doing the fertilizer business of 0.50 (fifty) though in the Cadre Fund. (E) The amount received under the District Scheme from the State Government. Every year, the above demand will be made twice, which will be made every year on 1st April and 1st October. (2) No contribution will be made by the Committee doing the fertilizer business of 0.50 (fifty) though in the Cadre Fund. (E) The amount received under the District Scheme from the State Government. Every year, the above demand will be made twice, which will be made every year on 1st April and 1st October. According to the above demand, payment will be made within fifteen days, from the date of demand, by the Committee/Bank, responsibility of which will be of Secretary/General Manager. District Assistant Registrar will ensure that by the date fixed, the entire amount demand is informed to the concerned Institution and the amount is transferred in the Cadre Fund. The Bank/Committee, which does not make payment of the amount demanded above, within the fixed period, recovery will be made from that as land revenue of the balance amount. The amount more than the amount of expected expenses of three months out of the amount deposited as above in every District Level Cadre Fund will be transferred in the State Cadre Fund, responsibility of which would be of Secretary, District Administrative Committee. Calculation of the expected expenses of every three months, in which there will be salary and expenses will be done by the District Administrative Committee. If the fund is not sufficient in the District Level Treasury, then request for compensation of that from the State Level Cadre Fund will be made along with the reason by the District Level Committee.” 9. Learned Chief Standing Counsel also took us to the Uttar Pradesh Primary Agricultural Cooperative Credit Societies Centralized Service Rules, 1976 (hereinafter referred to as the Rules). He drew our attention to Rule 7 which provides for composition of State Cadre Authority, Regional Administrative Committee and District Administrative Committee. It appears that composition of District Administrative Committee has been amended with effect from 07.06.2003. After amendment, District Administrative Committee shall consist of the following: (i). Chairman/Administrator of the Bank of the District Chairman (ii). District Audit Officer of Cooperative and Panchayat Member (iii). Secretary of the Bank Member (iv). District Assistant Registrar Member Secretary 10. It is also pointed out that in fact, post mentioned at serial no. 2 has been abolished, however, amendment to this effect has not been made in the Rules. He would thereafter draw our attention towards Rules 13. It reads as under: “13. Secretary of the Bank Member (iv). District Assistant Registrar Member Secretary 10. It is also pointed out that in fact, post mentioned at serial no. 2 has been abolished, however, amendment to this effect has not been made in the Rules. He would thereafter draw our attention towards Rules 13. It reads as under: “13. Powers and duties of the District Administrative Committee – (1) The District Administrative Committee shall be the appointing authority of the members of the centralized service in the district and subject to the policy laid down and guidelines issued by the Authority, shall be responsible for the supervision and control of the members of the centralized service in the district and shall have also the following duties and responsibilities. (i). To exercise control and supervision over the members of the Centralized Service in the district; (ii). To transfer the members from one place to another within the district. (iii). To ensure recovery of the contribution levied on the society in the district. (iv). To arrange absorption of the existing employees of the societies after their screening in accordance with the instruction issued by the Registrar, Cooperative Societies, U.P. (v). To maintain category-wise correct seniority list of the members of the centralized service and (vi). To perform such other duties and functions as may be entrusted to it by the Authority or Regional Committee. (2) The meeting of the district committee shall be called by the Members/Secretary as and when he deems fit and upon a direction to this effect from the Chairman or the District Assistant Registrar. Such meetings shall be called at least once in three months. The quorum of the meeting shall be 3. (3) The Chairman, when present shall preside over the meeting of District Committee in his absence a member shall be elected by the members present in the meeting to preside over the meeting. (4) The office of the District Committee shall be located in the District Co-operative Bank. The bank will bear all the expenses in respect of the office and staff. The arrangement of the staff shall, in accordance with the direction issued by the Authority and the staff shall be in the sole administrative control of the Member/Secretary of the District Administrative Committee.” 11. There is also Rule 14, which deals with the powers and duties Member/Secretary, which reads as follows: “14. The arrangement of the staff shall, in accordance with the direction issued by the Authority and the staff shall be in the sole administrative control of the Member/Secretary of the District Administrative Committee.” 11. There is also Rule 14, which deals with the powers and duties Member/Secretary, which reads as follows: “14. Powers and duties of the Member/Secretary of the District Committee. - Subject to the control and supervision of the Chairman of the District Committee, the Member/Secretary of the District Committee shall- (i) be responsible for the proper maintenance of the Account Books and other records of the District Committee and for the correct preparation and timely submission of periodical statements and returns to the Regional Committee and the Authority as and when required; (ii) convene meeting of the Committee and maintain proper record of such meetings; (iii) arrange to carry on correspondence on behalf of the District Committee; (iv) ensure effective supervision over the members of the Centralised Service; (v) have power of suspending a member of the Centralised Service with the prior concurrence of Assistant Registrar; (vi) ensure proper and up-to-date maintenance of the service books, character rolls and personal files of the members of the Centralised Service in the district; (vii) ensure speedy disposal of all service matters of the members of the Centralised Service; (viii) arrange disbursement of salaries of the members of the Centralised Service in the district out of contribution made to the Stale Primary Centralised Service Fund created under Rule 15; (ix) ensure proper maintenance of the Office of the District Committee and its smooth functioning; and (x) perform such other duties and exercise such powers as may be imposed or conferred on him by the District Committee.” 12. Finally, we must also refer to Rules 17, 18 and 19 of the Rules, which read as under: “17. The contribution payable by a society under rule 14 may be deposited by the Bank of the district on behalf of the Society concerned and in such event the amount so paid by the Bank shall be debited to the account of the Society concerned. 18. The "District Primary Centralised Service Fund" shall be maintained in a separate account of the District Co-operative Bank of the district and shall be operated under the Joint Signatures of the Member-Secretary and the Chairman of the District Administrative Committee. 19. 18. The "District Primary Centralised Service Fund" shall be maintained in a separate account of the District Co-operative Bank of the district and shall be operated under the Joint Signatures of the Member-Secretary and the Chairman of the District Administrative Committee. 19. (1) If the contribution made by the societies to the "District Primary Centralised Service Fund" falls short of the cost of maintenance of the Centralised Service, in a Co-operative year, the deficit shall be met out of the grants from the "State Primary Centralised Service Fund" which shall be maintained at the State Level by the Authority. (2) The "State Primary Centralised Service Fund" shall be maintained in a separate account of the Uttar Pradesh Co- operative Bank Ltd, Lucknow and shall be operated by the Member, Secretary, Authority or Officer authorized by him in accordance with the instructions of the Registrar, Cooperative Societies, issued from time to time. (3) All the outright grants and subsidies from the Central/State Government, and other sources if any, shall be deposited by the Authority in the "State Primary Centralised Service Fund". Besides, the Registrar may direct the Uttar Pradesh Co-operative Bank, the other apex co-operative institutions and the District Central Co-operative Banks to make contributions towards the aforesaid fund for meeting deficit arising out of contributions falling short of the cost of maintenance of Centralised Service in the "District Primary Centralised Service Fund", in a Co- operative Year, at a rate determined by him for the purpose, from time to time. (4) It shall be within the competence of the Authority to direct the District/Central Co-operative Bank to transfer the excess amount of contribution received from the societies towards the cost of maintenance of the Centralised Service, in a Co-operative year, to the Authority for crediting to the "State Primary Centralised Service Fund.” 13. Therefore, he would contend that as long as appellants are not employer of the writ petitioners, therefore, nothing warranted the learned Single Judge to issue direction to make payment to writ petitioners, as they are Government Servants, which they are not. 14. During the course of hearing of appeals on earlier occasion, a question arose whether the State Government is fulfilling its obligations, even as per the contention of the appellants. An affidavit was called for from the appellants. Such an affidavit has been filed. 14. During the course of hearing of appeals on earlier occasion, a question arose whether the State Government is fulfilling its obligations, even as per the contention of the appellants. An affidavit was called for from the appellants. Such an affidavit has been filed. Relevant extract of the supplementary affidavit filed by the appellants reads as under: “2. That this Hon’ble Court vide order dated 19.07.2017 was pleased to direct the appellants to file an affidavit, thereby giving details of the outright grants and subsidies from the Central Government and State Government, if any, as provide in rule 19 (3) of the Rules, and the details of the payment made by the State Government as provided in the order of the Registrar dated 26.02.2019 (i.e. the contribution of the State Government under the District Plan). 3. That in that regard it is submitted that Rule-19 of the Uttar Pradesh Primary Agricultural Co-operative Credit Society Centralized Service (as applicable in the State of Uttarakhand) Rules, 1976 refers to the grants and in furtherance thereof only, the Registrar issued the order dated 26.02.2009 wherein it has been provided that funds shall be generated from the contribution made through different sources, including the amount provided by the Government under the District Plan. It is submitted that except the said amount no other grant is permissible inasmuch as the Societies are independent business entities, which are working for their own interest only. 4. That it is submitted that the details of contribution so made by the State Government for the period 1-1-2009 to 31-12-2016 as supplied by the Secretary/General Manager District Cooperative Bank, Tehri Garhwal is Annexed herewith and marked as Annexure SA-1 to this affidavit. 5. That the perusal of the aforesaid documents, clearly establishes that the State Government is providing its contribution in the cadre fund under the District Level Cadre Fund regularly. It is submitted that the fund allocated under District Plan is made, keeping in view the responsibilities and liabilities of the State Government for the works and functions being discharged by the various organizations in the district, despite the fact, that these societies are business entities, performing for themselves only and are the members of the District Cooperative Bank, yet the State Government is making contribution of funds from the District Funds, as per its own capacities. 6. 6. That it is submitted that in view of the fact that the petitioners are the employees of the Primary Agricultural Co-operative Credit Society the District Administrative Committee, Tehri Garhwal, are not at all under the control of the State Government, except the little, which is provided under the law, however, no financial liability, be it of payment of salary or retirement dues etc. can be fastened on the State Government and its authorities i.e. Registrar Cooperative Societies and District Assistant Registrar, Cooperative Societies. 7. That it is further submitted that the State Government cannot increase their funds, which would result into the decrease the funds of the inline and the Development Department of the Government, which are working under the Government and for the Government only. 8. That it is also worth mentioning here that the orders being relied upon by the petitioners are in the advisory capacity and issued by the General Manager/Secretary of the District Cooperative Societies and Member Secretary of District Administrative Committee, and the Registrar has tried to help the petitioners by issuing certain remedial measures which cannot be contended as admission of liability by the Registrar of the State Government. 9. That it is also worth mentioning here that even Rule 19 (3) of the Rules does not cast any liability, duty or responsibility on the State Government to provide any grant, as a matter of right to the District Cadre funds, yet the State Government has been providing the considerable fund, as per its own capacity despite the fact, that the said fund, which is being given to the District Cadre fund, which is not even under the control of the Government by curtailing the demand made from other Government Organizations. 10. That it is submitted that, admittedly, the petitioners are the employees of the District Administrative Committee, which alone has the power to appointment, to take disciplinary action as well as to pass punishment orders and even appellate power is not vested in the State Government, consequently, the District Administrative Committee alone can be fastened with the liability of the payment of the dues of the petitioners, but no such liability can be fastened on the State Government or Registrar or District Assistant Registrar and as such the impugned judgment, which fastens the liability on the appellants, is liable to be set aside.” 15. Pursuant to the order passed by us, Bank had also filed an affidavit, as contention was raised by Mr. Paresh Tripathi, CSC that the Banks, which are responsible for making contribution based on burrowing and loans, are not fulfilling their obligations. Bank had filed affidavit, relevant paragraphs whereof read as under: “5. That salary of PACS Secretary is paid through Cadre Fund A/C is which contribution is made by PACS, Bank and some amount is granted by District Administration but the total Contribution is nominal. A true copy of the Chart of Contribution is annexed here with the marked as Annexure-1 to the affidavit. 6. That it is pertinent to mention here that the bank are regularly contributing their share in the Cadre Fund and has already paid the excess amount to the Cadre Fund with the impression that the excess fund will be refunded back to the bank but till date no excess amount has been refund to the bank and there is an over dues of Rs. 368.76/- (Three crore sixty eight lakh and seventy six thousand) upon PACS Cadre Fund towards District Cooperative Bank. 7. That the responsibility of payment of salary of PACS Secretary is paid through Cadre Fund Account in which contribution is made by PACS Banks and some amount is granted by District Cadre Fund. The volume of business of Society is determining factor of the contribution to District Cadre Fund but the total Contribution is nominal. It is further stated that the monthly salaries of the PACS Secretaries of District Tehri Garhwal are drawn through overdraft in the Cadre Fund account and there is already an overdraft of Rs more than 4 crore in the said account which is increasing every month in absence of in-sufficient contribution. It is necessary to mention here that at present the bank is not able to pay more fund in absence of insufficient fund as deponent’s bank is regularly paying their contribution to the District Cadre Fund. 8. That the services of PACS Cadre Secretaries are regulated by U.P. Primary Agriculture Co-operative Centralized Service Rules, 1976. The said rules provide for constitution of a District Administrative Committee in every District which is the appointing authority of PACS Cadre Secretaries. The said rules provide for creation of fund under the name of District Primary Centralized Service Fund in every District. The said rules provide for constitution of a District Administrative Committee in every District which is the appointing authority of PACS Cadre Secretaries. The said rules provide for creation of fund under the name of District Primary Centralized Service Fund in every District. The fund is raised by contribution of share, the salaries post retiral dues etc of PACS Secretaries are paid from the aforesaid fund. The contribution made in the aforesaid fund depend upon the business (Loan disbursement) of the PACS and it is stated that the PACS are business organizations and are liable to enhance their business so as to meet out the cost of management of the Society. It further stated that if the business of PACS is sound and they are earning profits, then they shall be in a position to contribute the required amount in the said fund where only the salary and other emoluments and the retirement dues are paid to the PACS Secretaries.” 16. We must further make reference to Section 121A. It is pursuant to the same, Rules have been made. Rule 3 provides that Centralized Service shall comprise the post of Managing Directors of the Farmers Service Cooperative Societies and Secretaries of the Primary Agricultural Credit Societies, if annual lending of the Society is not less than Rs. 3,00,000/- on 31.03.1998. Rule 4 deals with Scales of Pay. Rule 5 deals with qualifications. Rule 6 deals with strength of service. Rule 7, as already noted above, deals with Executive Authorities. The State Cadre Authority shall consist of the following: (i). Chairman/Administrator, Uttar Pradesh Cooperative Bank Chairman (ii). A Chairman of a Bank nominated by the State Government Member (iii). A Chairman of a society nominated by the Registrar Co operative Societies. Member (iv). Additional Registrar (Banking) Cooperative Societies, U.P. Member (v). A nominee of Principal Secretary (Finance) to Government of U.P. Member (vi). Managing Director of U.P. Cooperative Bank Ltd. Member Secretary 17. Thereafter, Rule provides for Regional Administrative Committee and we need not be detained by the same. Thereafter, Rules provide for District Administrative Committee in each District. We have already referred the amended composition of same. Rule 8 deals with powers and duties of the State Cadre Authority. It appears to be the apex body. Rule 8 reads as follows: “8. (1) The authority shall be the Chief Policy making body for Centralised Services. Thereafter, Rules provide for District Administrative Committee in each District. We have already referred the amended composition of same. Rule 8 deals with powers and duties of the State Cadre Authority. It appears to be the apex body. Rule 8 reads as follows: “8. (1) The authority shall be the Chief Policy making body for Centralised Services. The Authority shall have the following power and duties and responsibilities: - (i) To exercise general control and supervision over the Regional and District Administrative Committee; (ii) To lay down the duties and responsibilities of the members of Centralised Service; (iii) To issue directions and to provide guidance to the Regional and District Administrative Committee in respect of policy matters only for their proper functioning; (iv) To determine the rate of contribution payable by the societies on the basis of direction given by the Registrar from time to time and pass the Divisional budget: Provided that the rates of contribution once fixed shall not ordinarily be changed before the expiry of three co-operative years; (v) To advise the State Government and the Registrar, Co-operative Societies, U.P. on matters of policy relating to the Centralised Service; (vi) To approve the annual budget prepared by the Regional Committee; and (vii) To delegate such powers of the Authority to the Member Secretary as deems fit. (viii) To prepare policy regarding transfer of the member of Centralized Service from one region to another. (ix) To perform such other duties and functions as may be entrusted to it by State Government or the Registrar. (x) The meeting of the Authority shall be called by the Member/Secretary as and when he deems fit and upon a direction to this effect from the Chairman. Such meeting shall be called at least once in a year. months. The quorum of the meeting shall be 3. (3) The Chairman, when present, shall preside over the meeting of the Authority. In his absence a member shall be elected by the members present in the meeting to presiding over the meeting.” 18. Rule 9 deals with powers and duties of the Member/Secretary of the Authority and Rule 15 provides for District Primary Centralized Service Fund. Rule 9 and 15 read as under: “9. Power and duties of the Member/Secretary of the Authority. Rule 9 deals with powers and duties of the Member/Secretary of the Authority and Rule 15 provides for District Primary Centralized Service Fund. Rule 9 and 15 read as under: “9. Power and duties of the Member/Secretary of the Authority. - The Member/Secretary of the Authority shall be the Chief Executive Officer of the Authority and subject to its control and supervision, he shall- (i) be responsible for the proper maintenance of account books a record of the Authority and for the correct preparation and timely submission of periodical statements and returns to the Registrar and the State Government as and when required; (ii) convene meetings of the Authority and maintain proper records of such meetings; (iii) arrange to carry on correspondence on behalf of the Authority; (iv) perform such other duties and exercise such other powers as may be imposed or conferred on him by the Authority. 15. Every Society shall contribute to the fund named as "District Primary Centralised Service Fund" at a rate and in the manner laid down by the Authority from time to time with the prior approval of the Registrar, Co-operative Societies, Uttar Pradesh. Provided that the contribution shall be levied on the total borrowing of the Society from the District Co-operative Bank or the Commercial Bank in the previous Co-operative Year and where the said borrowing is nil, the contribution shall be levied on the amount of total loan outstanding against the members of the society at the close, of the previous Co-operative Year: Provided further that so long as the staff of the societies other their Managing Directors/Secretaries are not included in the Centralised Service, the rate of contribution shall not exceed 1.5 per cent of the total borrowing or the total loan outstanding.” 19. We have already referred to Rule 14, as it deals with powers and duties of Member Secretary of the District Committee. Rule 16 provides for contribution, which reads as under: “16. The contribution levied in accordance with rule 15 shall be payable by a Society in two equal instalments on the first day of the months of July and January every year. It shall be a first charge on the assets of the Society concerned. Rule 16 provides for contribution, which reads as under: “16. The contribution levied in accordance with rule 15 shall be payable by a Society in two equal instalments on the first day of the months of July and January every year. It shall be a first charge on the assets of the Society concerned. In the event of failure of any Society to pay such contribution by the prescribed dates, it shall be recoverable as arrears of land revenue on the certificate issued by the District Assistant Registrar, Co-operative Societies, to this effect.” 20. We have adverted to Rule 17, 18 and 19. It may also be necessary to refer Rule 30, which comes under the heading “Miscellaneous”. Rule 30 reads as under: “30. Miscellaneous. - (1) Subject to the provisions of these rules, the Authority shall frame regulation with the prior approval of the Registrar, Co-operative Societies, U.P. for the members of Centralised Service on their service matters which may, inter alia include: - (i) Method of promotion, appointment, probation, confirmation and termination; (ii) Service records, seniority, reversion, retrenchment and resignation; (iii) Pay scales, allowances, increment, joining time, leave, efficiency bar, etc.; (iv) Conduct and discipline, penalties, disciplinary proceeding and appeals; (v) Provident fund, gratuity, security and advance. (2) So long as the regulations referred to in sub-rule (1) are not framed, all or any matters referred therein shall be governed by such orders or directions as may be issued by the Authority with the approval of the Registrar. (3) Any matter not covered in these rules, shall be governed by such directions as may be issued by the Authority with the approval of the Registrar. (4) If any doubt or dispute arises in the application of these rules, the reference shall be made to the Registrar whose decision shall be final and binding on all concerned.” 21. The first question, we must pose and decide is whether the writ petitioners could be treated as Government Servants and therefore, direction of learned Single Judge can be sustained on that basis. No case, in fact, is set up by the writ petitioners that they are government servants. There is no privity of employment between writ petitioners and Government. We may at this juncture notice the case of the respondent Bank. No case, in fact, is set up by the writ petitioners that they are government servants. There is no privity of employment between writ petitioners and Government. We may at this juncture notice the case of the respondent Bank. The case of the respondent Bank is that petitioners are employees of District Administrative Committee, in fact, there is no dispute also on the part of the writ petitioners themselves and Mr. B.M. Pingal, Advocate for the writ petitioners would submit that they are to be treated as employees of the District Administrative Committee, therefore, we can safely hold that writ petitioners cannot be treated as Government Servant. 22. The next question is - what is the liability of the appellants. The Appellants, as we noted, are State of Uttarakhand through Secretary, Cooperative Societies, Registrar and District Assistant Registrar. As far as third appellant namely District Assistant Registrar is concerned, no doubt he is Member Secretary of the District Administrative Committee. It is relevant to notice at this stage that Rule 14 provides for powers and duties of the Member/Secretary of the District Committee namely the third appellant in this case. Learned CSC would in fact point out that duties, which we have already referred to by extracting the provisions, are subject to control and supervision of the Committee. No doubt it is his duty and power of the Member/Secretary to ensure speedy disposal of all service matters of Members of Centralized Service. Does this mean that there is duty cast on the Member Secretary or rather, the District Assistant Registrar is responsible to make payment of the all dues. If he has to ensure payment, then what would be the source of funds? Will the amount be paid from State coffers or from consolidated fund or from contingency fund or from any other funds. Answer to this question would in our view is the ultimate solution to issue raised. We must notice in this regard Rule 15. Rule 15 contemplates that every Society shall contribute to the District Primary Centralized Service Fund in short we may call it district fund. Contribution is to be at a rate and manner to be laid down by the Authority from time to time. This must also have prior approval of the Registrar of the Cooperative Societies, U.P. which after State Re-Organization Act is to be read as Registrar Cooperative Societies, Uttarakhand. Contribution is to be at a rate and manner to be laid down by the Authority from time to time. This must also have prior approval of the Registrar of the Cooperative Societies, U.P. which after State Re-Organization Act is to be read as Registrar Cooperative Societies, Uttarakhand. The proviso contemplates that the contribution shall be levied on the total burrowing of the Society from District Cooperative Bank or the Commercial Bank in the previous cooperative year and where said borrowing is nil, contribution shall be levied on the total amount of the loan outstanding against Members of the Society on the closure of previous cooperative year. It is further provided by the second proviso that so long as staff of the Societies other than Managing Directors/Secretaries are not included in the Centralized Service, the rate of contribution shall not exceed 1.5 per cent of the total burrowing or the total loan outstanding. We may demystify this second proviso by stating that as long as members of staff other than Managing Directors, Secretaries are not included the rate is not to exceed their limit. Thereafter, Rule 16 provides for contribution under Rule 15 which is payable by Society in two equal installments on the first day of months of July and January every year. The contribution is to be first charge on the assets of the Society. It is recoverable as arrears of land revenue in case of default of payment. Rule 17 provides that contribution payable on Society under Rule 14 may be deposited by the Bank on behalf of the Society concerned and in such event, amount so paid shall be debited to account of Society concerned. Rule 18 contemplates that District fund shall be maintained in a separate account of the District Cooperative Bank. It is to be operated under the joint signatures of Member Secretary (third appellant here) and the Chairman of the District Administrative Committee. Thereafter, Rule 19 proceeds to give articulation to the Rule makers’ contemplation that contribution made by the Society may fall short in the maintenance of the Centralized Service. It is sought to be redressed by declaring that if the contribution made by the Society to the District fund falls short on cost of maintenance of centralized service in a cooperative year, the deficit shall be met out of the grants from State Primary Centralised Service Fund. It is sought to be redressed by declaring that if the contribution made by the Society to the District fund falls short on cost of maintenance of centralized service in a cooperative year, the deficit shall be met out of the grants from State Primary Centralised Service Fund. This Central fund is to be maintained at the State level by the Authority. Sub-Rule 2 of Rule 19 provides the manner of operating it. It also contemplates the instructions to be issued by the Registrar Cooperative Societies from time to time in the matter to operate the fund. Rule 19 (3) further reflects the anxiety of Rule-makers to ensure that members of the Centralized Service are not left high and dry in the matter of payment of amount due to them. In the first place it declares that all the out right grants and subsidies from Central/State Government and other sources, if any, shall be deposited by the Authority in the State Fund. It is here that the contents of supplementary affidavit filed by the appellants assume significance. According to the appellants, they have deposited all the grants with the State fund. 23. Learned CSC would also emphasize the word “if any”. He would submit that if there is grant, then they are bound to make deposit. Thereafter, Sub-Rule 3 proceeds with words that besides, Registrar may direct Uttar Pradesh Cooperative Bank, the other Apex cooperative institutions and District Central Cooperative Bank to make contributions towards the aforesaid fund for meeting the deficit arising out of the contributions, which falling short of the cost of maintenance centralized service in the district fund in a cooperative year. Such contributions are to be made at a rate which is to be determined by the Registrar for the purpose from time to time. A conjoint reading of Rules 15, 18 and 19 would yield following result. Under the Rule 15 every Society is obliged to make contribution to the District fund. It may so happen that contribution may fall short of actual requirement. In unambiguous terms, the Rule maker has declared that in such an event deficit shall be met from grants from State fund. State fund is to consist of all the out right grants and subsidies from Central/State Government. It may so happen that contribution may fall short of actual requirement. In unambiguous terms, the Rule maker has declared that in such an event deficit shall be met from grants from State fund. State fund is to consist of all the out right grants and subsidies from Central/State Government. It is thereafter that the Rule maker has provided that Registrar may give direction to institutions, which we have already referred to meet the deficit which arises on the contribution for each cooperative year. Thus, the purpose of Rules would appear to be that members of Centralized Service in this case Secretaries would be ensured that they receive the benefits, for which they are entitled under the law from out of the District fund, as replenished by contribution from the State fund. 24. Here, we must deal with two contentions raised by learned CSC. He would submit that employment of word ‘may’ in Rule 19 (3) vests only discretionary power with the Registrar. He would also point that the word ‘cooperative year’ as used in Rule 19 (3) besides in Rule 19 (1) and (3) relates to one financial year but in these cases, this period exceeds more than a year and it is nearly a decade. 25. Now, we will deal with the employment of the word ‘may’ in the said Rule. The question as to whether a mandatory duty is cast or there is only directory duty on the part of State/authority, in this regard, we may profitably refer to Justice G. P. Singh on principles of statutory interpretation, 8th Edition where it is inter alia stated as follow: “The study of numerous cases on this topic does not lead to formulation of any universal rule except this that language alone most often is not decisive and regard must be had to the context, subject-matter and object of the statutory provision in question, in determining whether the same is mandatory or directory. In an oft-quoted passage Lord Campbell said: “No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. In an oft-quoted passage Lord Campbell said: “No universal rule can be laid down as to whether mandatory enactments shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Court of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be considered.” As approved by the Supreme Court: “The question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. The meaning and intention of the Legislature must govern, and these are to be ascertained not only from the phraseology of the provision, but also by considering its nature, its design and the consequences which would follow from construing it the one way or the other” “For ascertaining the real intention of the Legislature” points out Subbarao, J “the court may consider inter alia the nature and design of the statute, and the consequences which would follow from construing it the one way or the other; the impact of other provisions whereby the necessity of complying with the provisions in question is avoided; the circumstances, namely, that the statute provides for a contingency of the non compliance with the provisions; the fact that the non compliance with the provisions is or is not visited by some penalty; the serious or the trivial consequence, that flow therefrom; and above all, whether the object of the legislation will be defeated or furthered. If object of the enactment will be defeated by holding the same directory, it will be construed as mandatory.” 26. Therefore, the Court must perform their judicial function enjoined upon it to ascertain intention of the Legislature and give effect to the same. This statement, however, gives rise to complex issues where it comes to actual ascertainment of the intention. Intention of Legislature is to be primarily gathered from the words used. There are various intrinsic and extrinsic aids for interpretation of statute. However, the theory which must be given predominance is the purpose test. In deciding whether the word ‘may’ should be interpreted as ‘shall’ also, the purpose test must be upper most in the mind of the court. Intention of Legislature is to be primarily gathered from the words used. There are various intrinsic and extrinsic aids for interpretation of statute. However, the theory which must be given predominance is the purpose test. In deciding whether the word ‘may’ should be interpreted as ‘shall’ also, the purpose test must be upper most in the mind of the court. No doubt, as held by Hon’ble Apex Court in the case AIR 1962 SC page 113, the Court has also to see nature and design of statute, the consequences which will follow from construing it one way or other, the impact of other provisions, whether non compliance is visited with the penalty, a serious or trivial consequences that will flow there from. It may be true that provision does not contemplate any penalty for not issuing direction. We may also take into consideration the stand of the learned CSC that directions would be issued to the persons named in Rules 19 (3) the question may arise about its enforcement. He would in fact draw our attention towards the constitutional amendment giving constitutional position to the cooperative societies, which would not brook interference by action of the Registrar. As was laid down by the Hon. Apex Court, let us apply the principle that the Court must bear in mind consequences that would follow from construing it one way or the other. 27. Let us construe the word “may” as “may”. This means that the Registrar would be at his discretion to issue the direction, as contemplated in Rule 19 (3). If it is left to his sweet will and discretion, we must further pose a question what would be the consequence of it. As noticed earlier, writ petitioners are not government servants and therefore, the Government has no liability to shoulder any liability as such. There is also no dispute that writ petitioners are employees of District Administrative Committee. Secretaries and Managing Director, who are members of the Centralized Service, are to be paid from District fund is a matter, which is not in dispute. The fund, as we have noticed, is to be made up from contribution. It is at this juncture notice communication addressed by the Registrar dated 26.02.2009 relevant portion whereof we have already extracted above, may assume significance. 28. According to the appellants, appellants have complied with the requirement. The fund, as we have noticed, is to be made up from contribution. It is at this juncture notice communication addressed by the Registrar dated 26.02.2009 relevant portion whereof we have already extracted above, may assume significance. 28. According to the appellants, appellants have complied with the requirement. In our view the result of interpreting the word “may” is that the amount standing to the credit of the district fund in many a year may fall short of the demands to be met from funds. What are those demands? They are the demands for payment of the legitimate dues of the employees, who have contributed their life time in the service of cooperative societies. Are they to be left high and dry or be paid their terminal benefits? Can we brush aside their claim considering it as of trivial nature? We are of the clear view that having regard to the effect of Rule 19 (1) which makes it clear that deficit shall be met from State fund, interpretation sought to be placed on the word “may” that it is discretionary and when discretion would have very serious consequence on the employees concerned resulting in deprival of their right to retirement benefits it should not be accepted. The State washes its hands off any liability by saying that they are not government servants, which we have accepted. The bank would say that they are not their employees and it is not disputed that they are employees of the District Committee. As far as the Fund from which benefit due to the employees is to be paid, it is only the district fund. Rule 19 (1) categorically provides for meeting the deficit which contemplates that if there being deficit despite contribution, then deficit shall be met from the available Central fund. Having regard to the principle also that Court when interpreting the Statue must look into the neighbourhood and if need be, must read whole of the Act and not only look the isolated provision, we are fortified by having regard to mandatory nature of declaration contained in Rule 19 (1) as to how deficit has to be redressed. Having regard to the principle also that Court when interpreting the Statue must look into the neighbourhood and if need be, must read whole of the Act and not only look the isolated provision, we are fortified by having regard to mandatory nature of declaration contained in Rule 19 (1) as to how deficit has to be redressed. Therefore, we are of the view that it is duty of the Registrar to apply his mind to the amount standing to the credit of District fund, the demand which would arise during the year and to issue appropriate directions as contemplated under Rule 19 (3). We may in this connection profitably notice that Rule 30 (4) of the self same Rule provides that any dispute arises in the application of this Rules, the reference is to be made to Registrar whose decision is final and binding on all concerned. 29. The next contention raised by Mr. Paresh Tripathi, CSC is that word used is ‘cooperative year’. We would think that the employment of word ‘cooperative year’ cannot detract us from our accepting the view we have already taken. The dues to an employee would necessarily arise with reference to particular point of time. If an employee is to retire ordinarily the Authority would definitely know well before hand the date of his retirement barring completely unforeseen contingencies. The fate of each employee is known before hand. It is therefore, Rule 19 (1) and (3) contemplates that the matter to be decided with reference to cooperative year and therefore, they are obliged to make arrangements. Cooperative year is defined as year commencing on the 1st day of April and ending at 31st March of next year. Therefore, the Rulemaker is clear that with reference to the cooperative year, the fund must be determined and shortage is to be made good in the cooperative year. Therefore, matter is to be worked out with reference to cooperative year. As we have already explained as and when dues arise the Authorities are expected to see that funds are made available for the payment of dues to the employees. 30. Learned CSC would have contention that Rules were made at the time when State was undivided in the year 1976. As we have already explained as and when dues arise the Authorities are expected to see that funds are made available for the payment of dues to the employees. 30. Learned CSC would have contention that Rules were made at the time when State was undivided in the year 1976. In newly carved out State of Uttarakhand there may be thousands such employees and State cannot be directed to shoulder the responsibility particularly when as in these cases the problem arises on account of cooperative institutions, which are private institution not doing enough work to generate sufficient income. 31. We must make it clear that Rules would not show that State is as such bound to make available money ordinarily to pay employees under the Rules. Manner of payment is provided in Rule 15 read with Rule 19 but appellant no. 3 in this case is Member Secretary of the District Administrative Committee and Registrar who is the second appellant both cannot absolve themselves from their responsibility. 32. Learned counsel for the writ petitioners drew our attention to the resolution/communication dated 24.02.2011 where reference is made as to how gratuity and leave encashment will be calculated. 33. It may be true that communication dated 24.02.2011 detailed about grant of benefit of gratuity at the time of superannuation. It provides for the method of calculating the gratuity but question is who should pay it. It is addressed to Member Secretary of the District Administrative Committee. Having regard to the fact that it relates to the earlier years, we think that interest of justice would be sub served, if we direct the appellant no. 2 to consider the case of the writ petitioners, having regard to the conspectus of the Act, Rules and also observations which we have made. A decision will be taken within three months from the date of production of certified copy of this judgment. He must ensure that petitioners are paid amount that is legally due to them. 34. Judgment of the learned Single Judge will stand modified to the above extent and all the appeals stand allowed, as above.