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Telangana High Court · body

2025 DIGILAW 789 (TS)

Gujja Rajavardhan Reddy v. State of Telangana

2025-06-09

T.MADHAVI DEVI

body2025
ORDER : W.P.Nos.428, 1686 & 6884 of 2023: In all these writ petitions, the petitioners are employees working in various Primary Agricultural Co-operative Societies (PACS) located the Districts of Mahaboobnagar, Ranga Reddy, Nagarkurnool, Siddipet and Narayanpet. The petitioners are working as Chief Executive Officers, Staff Assistance and Clerks, etc. The Government of Telangana has issued G.O.Ms.No.44, Agriculture and Co-operation (Coop-II) Department, dated 17.12.2022 issuing guidelines in the name of uniform Human Resource (HR) Policy for Primary Agricultural Cooperative Societies (PACS) employees, whereunder the Primary Agricultural Cooperative Societies (PACS) have been categorized into A, B, C and D Categories basing on the business level of the respective societies and further mentioned permitted staff structure in respect of the PACS. The said G.O., further imposed restrictions over the powers of PACS in appointment of staff and payment of salaries etc., and separate committees called State Level Committee (SLC) and District Level Committee (DLC) were formed for the said purpose. The above G.O., is thus challenged on the ground that it vitiates the provisions of Section 115(D) of Telangana Cooperative Societies Act , the petitioners have filed the present writ petitions claiming that G.O.Ms.No.44, dated 17.12.2022 is issued in violation of powers vested under Section 131 of Cooperative Societies Act. In addition to the averments made in the respective writ petitions, the learned senior counsel appearing for the petitioners has advanced to the following written arguments: (i) It is submitted that as per Section 115-D of Telangana Co-operative Societies Act, the Primary Agriculture Co- operative Society are having autonomous status, subject to any guidelines issued by the NABARD/RBI. It is submitted that after enactment of above provision 115-C and 115-D, by way of amendment, vide Act No.16/2007, as all the Primary Agriculture Co-operative Society were under financial bankruptcy, the Government of India announced a package for revival of Co- operative Credit structure, aiming to bring the Co-operatives to an acceptable level of health through financial re-structuring. (ii) It is submitted that as part of revival package, MOU executed by the state for autonomy in financial and administrative matters especially staffing, recruitment of staff in the society. (ii) It is submitted that as part of revival package, MOU executed by the state for autonomy in financial and administrative matters especially staffing, recruitment of staff in the society. Further as per MOU entered between Government of India and NABARD, the Registrar of Co-operative Societies may issue guidelines for the benefit of Primary Agriculture Co- operative Society, but there need not be any directions from the State Government and actual staffing and compensation may be decided by the respective cooperatives, on the basis of capacity to pay. While that being the binding terms of understanding. i.e. MOU, the State Government issued impugned G.O.Ms.No.44 Agriculture and Cooperation Department, dated 17-12-2022, usurping the powers and autonomous status of Primary Agriculture Co-operative Society, as powers to recruitment of staff in Primary Agriculture Co-operative Society and other service conditions are now completely put in hands of State Level Committees and District Level Committees. (iii) It is further submitted that Section 115(D) completely gives autonomous status to Primary Agriculture Co-operative Society, however subject to guidelines issued by RBI/NABARD. However, in the instant case there are no such guidelines issued by RBI/NABARD, but the impugned G.O. has been issued, referring to a letter of correspondence addressed by the NABARD vide Ref No.NB.HO.IDD.Coop/1420/V/10(A)/ 2018-19, dated 27- 02-2019. Further in para (2) of impugned G.O., it has been stated that the NABARD, through Letter dated 27-02-2019, under ref.No.(2) in the G.O., "has communicated operational guidelines on HR policy for Primary Agriculture Co-operative Society, recommended by the National Federation of State Co-operative Banks Committee. It is submitted that the Government is referring to a mere correspondence letter, as if it is a communication of operational guidelines. (iv) It is submitted that the NAFSCO is an Association/Federation of State Co-operative Banks, and the same has nothing to do with the powers and functions conferred upon Primary Agriculture Co-operative Society. Therefore the recommendations made by such private forum cannot be construed as guidelines issued under Section 115-D of Telangana Co-operative Societies Act. Therefore the impugned G.O. itself is without jurisdiction and contrary to law, therefore liable to be set aside. Therefore the recommendations made by such private forum cannot be construed as guidelines issued under Section 115-D of Telangana Co-operative Societies Act. Therefore the impugned G.O. itself is without jurisdiction and contrary to law, therefore liable to be set aside. (v) It is submitted that the respondents in their counter affidavit have been asserting that before issuance of impugned G.O., the representatives of employees were provided with opportunity of hearing, which is incorrect, as no employees working in the society were issued with notices, before issuance of the impugned G.O. However, some of the employees, styling themselves as union representatives, who are supporters and close associates of ruling party at the time of issuance of the G.O., seemed to have ascribed the terms of impugned G.O., which is not binding on the Petitioners as well as other employees working in Primary Agriculture Co-operative Society. (vi) It is submitted that the respondents are trying to justify their action, only on the ground that, the President of District Co-operative Central Bank (DCCB) is the Chairman of District Level Committee, who happens to be one of the President of Primary Agricultural Co-operative Credit Societies (PACS), similarly the Chairman of Telangana State Co-operative Bank (TSCOB), happens to be President of Particular Primary Agricultural Co-operative Credit Societies (PACS) involved in discussion. It is submitted that, this would not by itself would amount to providing opportunity to the Primary Agricultural Co- Ooperative Credit Societies (Primary Agriculture Co-Operative Society), throughout the State. (vii) It is submitted that the impugned G.O., contents therein show no involvement of General Body of the respective Primary Agriculture Co-operative Society. Further the ostensible representations of all the societies through the Chairman of DCCB and Chairman of TSCOB, is nothing but otiose, at no point of time, the said Chairman of TSCOB, Chairman of all DCCB'S, have ever informed about the impugned HR Policy to the General Body members of the Primary Agriculture Co-Operative Society, throughout the State. (viii) It is submitted that the whole point to be considered is whether all Managing Committees throughout the State, were informed about the proposed guidelines or whether the real pay masters (i.e.) members of the General Body of all Primary Agriculture Co-Operative Society, are brought to the notice of impugned HR Policy, is the issue to be considered. However in the instant case, no Societies were allowed to communicate their views on impugned Policy. However in the instant case, no Societies were allowed to communicate their views on impugned Policy. On the other hand, clear oppressive method has been chosen by the Respondents, to get concurrence; for their proposed guidelines, by incorporating in para 15 of impugned G.O. that as follows: “It shall be mandatory for all the Primary Agriculture Co- operative Society to abide by the MOU and also the decisions of the DLEC and SLEC. Non-Compliance of these orders shall be treated as negligence in performance of duties in terms of Section 34(1) (b) (i) of the Telangana Co-operative Act, 1964, by the Employees and managements of Primary Agriculture Co-operative Society”. (ix) It is submitted that the above would show that under serious threat of supersession of the Managing Committees of Primary Agriculture Co-operative Society have been insisted to sign on the MOU's and even the language imposed in MOU's would clearly shows arbitrariness. A recent Communication addressed by the District Co-operative officer to the Societies dated: 27-02-2023, is being filed, to show how the societies are being threatened representing character of a British charter, which cannot be allowed in Democracy. Therefore, the Learned Senior Counsel prayed this Court to allow the Writ Petitions and set aside the G.O.Ms.No.44, Agriculture and Cooperation Department, dated 17-12-2022. 2. In W.P.No.4309 of 2023, this writ petition has been filed by the Presidents of various societies in the Jogulamba Gadwal, Ranga Reddy, Nagarkurnool, Mahabubnagar, Wanaparthy, Narayanpet Districts, challenging the G.O.Ms.No.44, dated 17.12.2022 as illegal, arbitrary and against the very spirit of the cooperative movement. In addition to the legal arguments advanced in the above paragraphs, it is further submitted that the ultimate authority of the society is the general body of the society in terms of Section 30 of the Cooperative Societies Act and Section 31 gives power to the general body to constitute the management committee in accordance with its byelaws and Section 116(c) of the Act gives the powers to societies to fix the staffing pattern, qualification, pay scale, and other allowances for the employees with the prior approval of Registrar of Cooperative Societies subject to the conditions that the expenditure towards pay and allowance of the employees shall not exceed 2% of the working capital or 30% of the gross profit in terms of actual in a year whichever is less. It is further submitted that Government of India has declared a cooperative credit revival package to bring the cooperative societies to an acceptable level of health through financial restructuring along with legal and institutional reforms and the letter of NABARD dated 28.01.2009 addressed to the Commissioner for Cooperation, Registrar of Cooperative Societies specifically refers to Clause 9.2(IV) of the MOU executed by the Government of India, State Governments and NABARD which reads that “providing autonomy to CCS in all financial and internal administrative matters especially in the personnel policy, staffing, recruitment, posting and compensation to staff”. 3. According to the learned senior counsel, NABARD may issue only guidelines for establishment expenditure vis-a-visa business and viabilities, suggestions of staff size, qualifications, etc., but the actual staffing and composition has to be decided by the respective cooperatives on the basis of their capacity to pay. 4. Learned Senior Counsel also refers to the Section 115(D)(2) to submit that there is autonomy to the cooperative credit societies in all financial and internal administrative matters subject to the guidelines of RBI (NABARD) in certain areas and some of the cooperative societies have adopted the scales of pay and other allowances etc., given in G.O.Ms.No.151, dated 22.06.2009 and some of the cooperative societies which have capacity to pay more than what have been suggested in G.O.Ms.No.151, dated 22.06.2009, have been making payment of salaries at much higher rate as well. 5. It is submitted that G.OMs.No.44, dated 17.12.2022 refers to operational guidelines on HR policy for PACS recommended by the National Federation of State Cooperative Banks (NAFSCOB) and the said guidelines were communicated by NABARD to the State by a letter dated 27.02.2019, requiring the PACS in the States to pass a resolution in their management committee authorizing the President and Secretary, PACS to sign the Memorandum of Understanding (MOU) annexed thereto and through the said notification directions were given to the RCS for implementation of the uniform human resource policy to the PACS employees. 6. According to the learned senior counsel appearing for the petitioners, the G.O.Ms.No.44 scuttles, abrogates and takes away the autonomy of the PACS which was zealously protected by the MOU entered by the State during 2008, which has neither been terminated nor lapsed and therefore, the G.O.Ms.No.44 is in violation of the earlier MOU. 6. According to the learned senior counsel appearing for the petitioners, the G.O.Ms.No.44 scuttles, abrogates and takes away the autonomy of the PACS which was zealously protected by the MOU entered by the State during 2008, which has neither been terminated nor lapsed and therefore, the G.O.Ms.No.44 is in violation of the earlier MOU. It is submitted that any interference with the autonomy of the PACS, runs contrary to the cooperative movement and the purpose for which cooperative institutions came into bring under Section 30 of the Act, and that the ultimate authority of a society vests in the general body of the society subject to the byelaws and the provisions of the Act and the consequences of mal administration, inefficient administration are taken care of by various provisions of the Act of 1964 such as Sections 32, 34, 50, 51, 52 and other sections in Chapter 7 of the Act. It is submitted that the State Government is not vested with any power to issue notification in the present form under Section 131(1) of the Act, whereunder the State Government can issue only such orders or directions which are in accordance with the provisions of the Act and in the interest of cooperative movement in the State, but does not have unlimited power to issue directions to the registrar compelling him to interfere in the day to day affairs of the societies. Thus, challenging the power of the Government to issue G.O.Ms.No.44, dated 17.12.2022, the present writ petition has been filed. 7. Subsequent to the filing of these writ petitions, the petitioners have filed a memo enclosing therewith the copy of the letter issued by the NABARD i.e., respondent No.3 in W.P.No.6884 of 2023, dated 04.07.2011, clarifying that the advise about the human resource policy formulated by NABARD is only suggestive and indicative in nature and it is up to the concerned bank to take a decision in this regard with necessary modifications to suit bank’s requirements. Further vide Memo dated 24.06.2024, the petitioners have enclosed therewith a copy of the circular dated 13.04.2023, whereunder there was a direction to stop finance to PACS by DCCB, if the PACS has not entered into MOU and has not adopted the G.O.Ms.No.44, dated 17.12.2022. Further vide Memo dated 24.06.2024, the petitioners have enclosed therewith a copy of the circular dated 13.04.2023, whereunder there was a direction to stop finance to PACS by DCCB, if the PACS has not entered into MOU and has not adopted the G.O.Ms.No.44, dated 17.12.2022. The copy of the letter dated 06.01.2023 was issued to the Presidents of PACS to adopt the uniform human resource policy and the letter dated 14.06.2023 for implementation of the uniform human resource for PACS and instructions for stopping of the refinance to PACS, who have not adopted the G.O.Ms.No.44, dated 17.12.2022 and further a copy of the letter dated 27.02.2023 for implementation of directions issued under G.O.Ms.No.44, dated 17.12.2022 has been issued. Both the memos have been considered and the documents have taken on record. 8. Learned counsel appearing for the respondents No.1 and 2 has relied upon the averments in the counter affidavit wherein it is stated that the Government has issued G.O.Ms.No.44, dated 17.12.2022 on uniform human resource policy to the PACS employees in the Telangana State and was communicated to the DCOs in the State for taking further necessary action in the matter. It is stated that the said G.O., has been issued by the respondent No.1 on the basis of recommendations of the NABARD strictly in conformity with Section 115-D(2) of TCS Act, 1964 and that the said recommendations were issued on the basis of the report of the seven member committee of National Federation of State Cooperative Banks (NAFSCOB), appointed by high level committee headed by the Chief Secretary to monitor the health of the Cooperative Credit Societies in the country. In response to the specific grievances of the petitioners in the writ petitions, it is admitted that special byelaws/service byelaws framed by the respondent No.2 would govern the service conditions of the petitioners in W.P.Nos.428, 1686 and 6884 of 2023 and that the impugned G.O., clearly specifies that the respondent No.2 shall separately issue the uniform service regulation for adaptation by the PACS. 9. As regards the contentions that the PACS’s autonomy under Section 115(D) has been interfered with, it is stated that said autonomy is subject to the guidelines of NABARD issued from time to time and that G.O.Ms.No.44, dated 17.12.2022 is issued on the recommendations of the NABARD and is only in compliance of Section 115(D)(2) of the Act. 9. As regards the contentions that the PACS’s autonomy under Section 115(D) has been interfered with, it is stated that said autonomy is subject to the guidelines of NABARD issued from time to time and that G.O.Ms.No.44, dated 17.12.2022 is issued on the recommendations of the NABARD and is only in compliance of Section 115(D)(2) of the Act. In respect of Section 115(D)(3)(b), it is stated that there shall be no Government nominees being included in the managing committee of PACS and therefore, there is no violation of the said provision. As regards the transfer policy sought to be introduced in the uniform human resource policy, it is stated that it is meant to circulate the human resources both in horizontal and in vertical plane in the 3-tier cooperative credit structure and the said policy is based on the cardinal principle of “Right person in the Right job at the Right place” and it is meant to strengthen the human resource base of the 3-tier cooperative structure. It is submitted that the PACS are well represented in the District Level and State Level Committees which are constituted under the impugned G.O.Ms.No.44, dated 17.12.2022. It is stated that the President of the DCCB is the Chairman of the District Level Committee, who is originally President of a PACS and similarly the State Level Committee is headed by the Chairman of the Telangana State Cooperative Apex Bank, who also happens to be from the Presidents of PACS and therefore, there is involvement of the PACS in the constitution of the State and District Level Committees. It is stated that G.O.Ms.No.44 has been issued under Section 131 of the Cooperative Societies Act and hence is valid. 10. As regards the petitioners contentions that the pay scales proposed under the uniform human resource policy are to their disadvantage, it is submitted that such an argument is only their apprehension and there is no ground to believe that the petitioners will be put to loss and that no powers of PACS are taken away as all orders affecting the appointment, transfer, promotion, sanction of increment of the employees of PACS are to be issued by the President/Managing Committee of the PACS only. It is stated that higher education qualification is prescribed for different cadres of the PACS keeping in view the new business activity being taken up by the PACS and also keeping in view the computerized environment in which the PACS are functioning now and that there is no change in the designation of the petitioners herein. 11. In reply to the counter filed by the respondents No.1 and 2, the petitioners have filed a reply affidavit stating that the letter of NABARD dated 27.02.2019 is only a recommendation by the National Federation of State Cooperative Banks Committee, which is neither a registered body nor a recognized legal entity and also that it is only an internal communication between NABARD and respondent No.2 and therefore, it has no legal recognition and cannot be termed as guidelines issued within the meaning of Section 115-D(2) of Telangana State Cooperative Societies Act. It is further submitted that Section 115(D) specifically contemplates issuance of guidelines either by the RBI or NABARD and it never speaks about the recommendations and therefore, as there are no guidelines issued by the RBI or NABARD, the contents of the letter dated 27.02.2019 cannot be considered as guidelines and that it is only a recommendation of the committee. In response to the counter affidavit that the State and District Level Committees consist of member of PACS, it is stated that their inclusion itself would not amount to providing opportunity to the PACS whose staff is being transferred. According to the learned senior counsel that the said G.O., is issued in utter violation of the provisions of the Act and in violation of principals of natural justice and hence has to be set aside. 12. The learned counsel appearing for the respondent No.3 in W.P.No.428 of 2023 i.e., The Telangana State Cooperative Bank, has reiterated the stand taken by the respondents No.1 and 2 and in addition to the above arguments, stated that up to 21.02.2023 in compliance with G.O.Ms.No.44, dated 17.12.2022, 769 PACS out of total 826 PACS affiliated to 9 DCCBs in the State have so far resolved to implement for the said uniform human resource policy for PACS employees. It is admitted that the common cadre of employees in PACS, was abolished by insertion of Section 116(AA) and thereafter, an amendment vide Act No.16 of 2007 was made to the effect that the society shall have autonomy under Section 115(D) of the Telangana Cooperative Societies Act , subject to the guidelines of RBI/NABARD in the matters of personnel policy, staffing, recruitment, posting, and compensation to the staff and thereafter the process of affecting transfers has become part of the human resource policy recommended by NABARD for implementation by the State Governments and that the PACS have to abide by the uniform human resource policy recommended by NABARD. Along with counter affidavit is annexed the copy of the letter dated 27.02.2019 issued by NABARD on the basis of which, the impugned G.O.Ms.No.44, dated 17.12.2022 has been issued. 13. The learned counsel appearing for the respondent No.4 in W.P.No.428 of 2023 i.e., DCCB, Mahabubnagar, also relied on the averments in the counter affidavit filed by respondent No.4, reiterating the stand taken by the respondents No.1 to 3. Similar counter affidavits have been filed in other writ petitions as well. 14. In W.P.No.4309 of 2023, a counter affidavit has been filed by the respondents No.1 and 2 raising similar contentions. 15. There was no interim order passed by this Court suspending the operation of G.O.Ms.No.44, dated 17.12.2022. This Court had required the response of NABARD (which is the respondent No.3 in W.P.No.6884 of 2023) on this issue and in the counter affidavit filed by NABARD, it is stated that the NABARD has no control directly or indirectly on PACS and that the Government of Telangana (Cooperative Department) is the sole authority for issuing directives/instructions to PACS and further stated that NABARD has only communicated the committee report of human resources policy for PACS recommended by the committee set up by the National Federation of State Cooperative Banks (NAFSCOB) and that NABARD had requested the Registrar of Cooperative Societies of all the States to consider the recommendations of the policy with suitable modifications as per their requirements for adoption in PACS in their respective States. It is further stated that NABARD is not an Apex Bank and has no regulatory or supervisory control directly or indirectly on the affairs of the PACS and that the NABARD had requested the Registrar of Cooperative Societies of all States to consider the recommendations of the policy with suitable modifications as per their requirements for adaptation by PACS in respective States and it is further stated that NABARD is only a pro-forma party and that no relief is sought against NABARD in these writ petitions. 16. Having regard to the rival contentions and the material on record, this Court finds that the basic and first and foremost ground of challenge to G.O.Ms.No.44, dated 17.12.2022 is that it is in violation of Section 115(D) of the Telangana Cooperative Societies Act and further that it is in violation of principals of natural justice as mandated under Section 131 of the Cooperative Societies Act. The stand of the Government has now all along been that it is on the directions of the NABARD under Section 115(D) of the Act, 1964 and that G.O.Ms.No.44 has been issued under Section 131 of Telangana Cooperative Societies Act and it has to be mandatorily followed. 17. This Court finds that (i) Section 115(C)(a) defines a “Co-operative Credit Society” to mean the State Co-operative Bank, the District Co-operative Central Bank (DCCB) and that the Primary Agricultural Co-operative Credit Society (PACS), which includes Farmers Service Co-operative Society (FSCS), Co-operative Rural Bank (CRB), Large Sized Co-operative Society (LSCS) or any other Co-operative Credit Society primarily dealing with agricultural credit at primary level included under the Revival Package and other similar relief measures offered by the Government of India from time to time. (ii) that Section 115(D) prescribes special provisions applicable to Cooperative Credit Societies and Sub-Section (2) thereof provides that the Co-operative Credit Society shall have autonomy in all financial and internal administrative matters, subject to the guidelines of Reserve Bank of India/National Bank for Agriculture and Rural Development in the areas of:- (i) *** (ii) *** (iii) *** (iv) Personnel policy, staffing, recruitment, posting, and compensation to staff; (v) Internal control systems, appointment of auditors and compensation for the audit. (iii) that Sub-Section (3)(b) provides that there shall be only Government nominee on the managing committee of the State Co-operative Bank/District Co-operative Central Bank as long as the equity of Government continues and there shall be no Government nominee in the managing committee of a Primary Agricultural Co-operative Credit Society. (iv) Section 116(A)(A) was omitted vide G.O.Ms.No.53, dated 20.05.2016 abolishing the centralized services for certain categories of employees. (v) Section 116(C) provides for staffing pattern of societies and that the society shall have power to fix the staffing pattern, qualifications, pay scales and other allowances for its employees with the prior approval of the Registrar of Cooperative Societies subject to the condition that expenditure towards pay and allowances of the employees shall not exceed two percent of the working capital or thirty percent of the gross profit, in terms of actuals in a year whichever is less. (vi) Section 131 gives power to the Government to give directions generally or in any particular matter in accordance with the provisions of this Act and in the interest of co-operative movement in the State. 18. In view of the above provisions of the Act, it is clear that the Cooperative Societies in the State of Andhra Pradesh and as adopted by the State of Telangana has autonomy in respect of its staffing pattern subject to the guidelines of the RBI/NABARD. The stand of the respondents has been that it is on the directions of NABARD that uniform human resource policy has been issued under the impugned G.O.Ms.No.44. However, in the counter filed by the NABARD in W.P.No.6884 of 2023 it is stated that they are not guidelines, but are only recommendations of the seven member committee of the NAFSCOB, which has been forwarded for adoption subject to the suitable modifications by the PACS as per their requirements for adoption in their respective States. Therefore, it is clear that these are not the directions of NABARD under Section 115D of the Act, and therefore, they are not mandatorily to be followed. The power of the Government to issue directions under Section 131 of the Cooperative Societies Act is not challenged in these writ petitions. Therefore, it is clear that these are not the directions of NABARD under Section 115D of the Act, and therefore, they are not mandatorily to be followed. The power of the Government to issue directions under Section 131 of the Cooperative Societies Act is not challenged in these writ petitions. However, such a direction cannot be arbitrary, but has to be in accordance with the provisions of the Act and further, it also requires that the person likely to be affected by such order, has to be given an opportunity of making his representation. In this case, vide impugned G.O.Ms.No.44, there is change in the staffing pattern and there is a likelihood of the service conditions of the employees being affected as the payment of salaries is dependent on their financial health. Therefore, before issuance of the G.O., even if the directions of G.O.Ms.No.44 are presumed to have been issued under Section 131 of the Telangana Cooperative Societies Act , the affected parties have not been given sufficient opportunity of making their submissions. In view thereof, the impugned G.O.Ms.No.44 is liable to be set aside. 19. However, in the counter filed by the respondent No.3 in W.P.No.428 of 2023, it is stated that out of total 826 PACS, 769 PACS have already adopted the said G.O., and that the balance of the PACS have to take a decision, this Court deems it fit and proper to direct the respondents to call for the objections of the parties who have not yet joined or who still have grievances with regard to their service conditions and thereafter take a decision on the same. It is made clear that the change in the cadre or the transfer of the employees shall not have the affect of altering or modifying their service conditions to the detriment of their earlier service conditions. The employees so transferred shall have the very same service conditions, if the modified service conditions are not favourable to them and if the modified service conditions are found to be favourable, then such modified service conditions shall be applied to them. 20. With these directions, all the writ petitions are disposed of. There shall be no order as to costs. 21. Miscellaneous petitions, if any, pending in these writ petitions, shall stand closed.