Full Judgment Text
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PETITIONER:
SAHKARI SAMITIYAN VYAVASTHAPAKUNION ETC.
Vs.
RESPONDENT:
STATE OF RAJASTHAN & ORS.
DATE OF JUDGMENT: 01/03/1996
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
G.B. PATTANAIK (J)
CITATION:
JT 1996 (3) 292 1996 SCALE (2)795
ACT:
HEADNOTE:
JUDGMENT:
WITH
CIVIL APPEAL NOS. 4174-75 OF 1996
[Arising out of SLP (C) Nos. 14778-79 of 1995]
J U D G M E N T
K. Ramaswamy,J.
Leave granted in all the special leave petitions.
These appeals arise from the judgment and order dated
May 9, 1991 passed in Writ Petition No.1018-20 of 1979 by a
Division Bench of the Rajasthan High Court. The facts are
fairly not in dispute.
Paid Secretaries were recruited by the Rajasthan Credit
Co-operative Institutions Cadre Authority Limited [for
short, the ’Cadre Authority Society’] constituted under
Section 4 [1] of the Rajasthan Co-operative Societies Act,
1965 [for short, the ’Act’]. They were appointed in the
respective District Co-operative Banks initially under
Recruitment and Service Conditions of the Managers of
Agriculture Credit Cooperative Societies Rules, 1977 [1977
Rules] and thereafter under Agriculture Cooperative Credit
Societies Service Rules, 1969 [for short, the ’1969 Rules’]
by the Managers of the District Cooperative Banks and were
sought to be posted to the Primary Agriculture Credit
Cooperative Societies [for short, the ’PACS’] fastening
liability of their salary on the PACS who have challenged
the validity of the constitution of Cadre Authority Society
and also the power of the Registrar of the Cooperative
Societies [for short, the ’Registrar] to make the rules
calling upon PACS to contribute to the Manager’s Salary Fund
under Central Cooperative Bank Rules, 1969 [for short, the
"Bank Rules"]. The Division Bench has held that the Cadre
Authority Society cannot be registered as a cooperative
society under Section 4 of the Act, the Bank Rules are ultra
vires the powers of the Registrar under Rule 41 of the
Cooperative Societies Rules, 1966 [for short, the "Rules].
S/Shri R.K. Jain, Rajiv Dhavan and Jitendra Sharma,
learned senior counsel appear for these Unions and Managers.
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Pending these appeals, pursuant to the permission granted by
this Court, the Government framed the Conditions of Service
of the Managers/Assistant Managers of the Agricultural
Credit Cooperative Societies Rules, 1995 and placed the same
on record. The appellants are not agreeable to those Rules.
Consequently, the learned counsel have contended that under
Section 4 [1], Cadre Authority Society is a society
regulating facilitation of disbursement of the loans by the
PACS in terms of cooperative movement for which PACS came to
be registered under the Act. The Cadre Authority Society
came to be registered pursuant to the recommendation made by
Datey Committee which has gone into the credit structure and
proper utilization of the loans to the agriculturists made
available by the State Government and distributed through
the State Central Cooperative Credit Bank to the District
Societies who in turn distribute the loans to PACS. For
their coordination, supervision and proper utilization
thereof the Managers\Assistant Managers [hereinafter
referred to as the paid Secretaries] are competent persons
to work as liaison between the PACS and their members and
the District Banks and Central Bank. The Registrar under
Rule 41 of the Rules read with Section 147 [2] and Section
148 [2] (xxx) of the Act is empowered to regulate the
service conditions of paid Secretaries and to prescribe
qualifications. Consequently, the Cadre Authority Society
registered under Section 4(1) of the Act is a valid society.
It is also contended that the 1969 Rules prescribe the mode
of recruitment, method of appointment and control of the
Managers. Bank Rules prescribe the amounts collected from
PACS to pay their salaries. Therefore, the PACS are bound to
contribute towards the salary and allowances of the paid
Secretaries. Shri Jitendra Sharma further contended that
they are the members of the PACS and that, therefore, the
PACS are bound by the Bank Rules. Shri Aruneshwar Gupta,
learned counsel appearing for the State contended that the
Registrar has no power to make Bank Rules nor has he power
to direct the PACS to contribute for the salary and
allowances of the paid Secretaries. The High Court,
therefore, was right in recording the findings in that
behalf.
The question, therefore, is: whether the appellants are
right in their contentions? With a view to appreciate the
contentions, the first question that arises is: whether
Cadre Authority Society could be a cooperative society
registered under Section 4(1) of the Act. Section 4 [1]
reads thus:
"4 [1]. Societies which may be
registered and classified under
this Act: Subject to the provisions
of this Act, a Cooperative Society
which has its objects and
accordance with the cooperative
principles, or a cooperative
society established with the object
of facilitating the operations of
such societies, may be registered
under this Act".
The marginal note indicates that the classified
societies are to be registered under the Act. Subject to the
provisions of the Act, a cooperative society which has its
object the promotion of the economic interests of "its
members" in accordance with the cooperative principles, or a
cooperative society established with the object of
"facilitating the operations of such societies", may be
registered under the Act. The Cadre Authority Society,
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admittedly, does not come under the first limb of Section 4
[1]. The contention is that since the object of the Cadre
Authority Society is to facilitate the operations of the
PACS, it is a cooperative society egistered under the Act.
In support thereof, Sri Jain placed the model bye-laws as
part of the record. The model bye-laws would indicate that
membership of a society consists of A Class members, viz.,
individuals who are above the age of 18 years and B Class
members, viz., institutions who are admitted as members of
the society. The institutions are lending societies. One of
the objects is to recruit paid Secretaries to the District
Cooperative Societies. At this stage, it is necessary to
mention that the cooperative structure is built upon three-
tier system, viz., PACS consisting of individual members, at
the grass-root level within the area of operation of that
society, the District Cooperative Societies and the Central
Cooperative Bank. It is not in dispute that the District
Cooperative Societies and the Central Cooperative Bank got
the Cadre Authority Society which is not a lending
institution, registered and the paid Secretaries, who are
otherwise a third agency, recruited by it. They are
appointed by the Managers of the District Cooperative
Societies and are transferred by them to the PACS within the
area of the operation of the District Bank. It would,
therefore, be clear that it does not come as a society to
facilitate the PACS in funding them for disbursement of loan
to the members of PACS.
The question is: whether the PACS are bound to take the
services of the paid Secretaries? Rule 41 of the Rules reads
thus:
"41. Officers and employees of
cooperative societies. - [1]
Notwithstanding anything contained
in the bye-laws of society no
Cooperative society shall appoint
any person as its paid officer or
employee in any category of
service, unless he possess the
qualifications and furnishes the
security if so specified by the
Registrar from time to time, for
such category of service an the
society, or for the class of
society to which it belongs. The
conditions of service of the
employees of the societies shall be
as specified by the Registrar.
[2] No co-operative society shall
retain in service any paid officer
or employees, if he does not
acquire the qualifications or
furnish the security as is referred
to in sub-rule [1] within such time
as the Registrar may direct.
[3] The Registrar may for special
reasons, relax in respect of any
paid officer or employee, the
provisions of this rule in regard
to the qualifications he should
possess or the security he should
furnish.
[4] Where in the course of an audit
under Sec.68 or an inquiry under
Sec.70 or an inspection under 71 or
Section 72 it is brought to the
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notice of the Registrar that a paid
officer or servant of a Society has
committed or has been otherwise
responsible for misappropriation,
breach of trust or other offence,
in relation to the society, the
Registrar may, if in his opinion,
there is prima facie evidence
against such paid officer or
servant and the suspension of such
paid officer or servant is
necessary on the interest of the
society direct the committee of the
society pending the investigation
and disposal of the matter, to
place or cause to be placed such
paid officer or servant under
suspension from such date and for
such period as may be specified by
him.
[5] On receipt of a direction from
the Registrar under sub-rule [4],
the committee of the society shall,
notwithstanding any provision to
the Contrary in the bye-laws, place
or cause to be placed the paid
officer or servant under suspension
forthwith.
[6] The Registrar may direct the
committee to extend from time to
time the period of suspension and
the paid officer or servant
suspended shall not be reinstated
except with the previous sanction
of the Registrar whose decision
thereon shall be final.
[7] If the committee fails to
comply with the direction issued
under servant under suspension from
such date and for such period as he
may specify in the order and
thereupon the paid officer or
servant, as the case may be, shall
be under suspension."
It would thus be clear that notwithstanding anything
contained in the bye-laws of the Society, PACS shall not
appoint any person as its paid officer or employee in any of
the categories of service unless the concerned
officer/employee is possessed of the prescribed
qualifications and security specified by the Registrar is
furnished in that behalf to the Society. The conditions of
the service of the employees of the Society shall be
specified by the Register. The Society would retain the paid
officers or employees only on fulfillment of the conditions
prescribed by the Registrar. The paid officers or employees
are the employees governed by the Act, Rules and the bye-
laws of the Society over which the Society has had
disciplinary power and jurisdiction, subject to the control,
supervision and directions of the Registrar.
Section 147 [2] of the Act empowers the Government to
authorise the Registrar to exercise their power under the
Act subject to such conditions, if any, as may be specified
in that behalf in the notification. By virtue thereof, sub-
section [2] of Section 148 gives power to the Registrar to
make rules. Clause [xxx] of the said sub-section [2] gives
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power to the Registrar to prescribe qualifications of a
Manager, Secretary, Accountant or any other officer or an
employees of the society and the conditions of their service
including discipline and control. It would thus be clear
that the Manager, Secretary, Accountant or any other officer
or employee shall be of the Society; the conditions of
service including discipline and control shall be in
accordance with the rules made by the Registrar under Rule
41 of the Rules. In other words, the Registrar, as a
delegate of the Government is empowered to prescribe
qualifications of the officers or employees of the Society,
viz., PACS, District Cooperative Societies or the Central
Cooperative Bank, as the case may be, and the respective
Societies require them to appoint the officers or employees,
i.e., Manager, Secretary, Accountant or any other officer or
employee over whom they have disciplinary and controlling
power. Under its own bye-laws, the respective Societies have
the power to make appointment under the rules made by the
Registrar in that behalf.
The question, therefore, emerges: whether the paid
Secretaries appointed by the District Cooperative Societies,
recruited and controlled by the Cadre Authority Society are
the officers or employees of the Society, i.e., PACS? It is
seen that there is a dichotomy in the operational structure.
The Society is a unit by itself with its members managed by
the committee elected under the provisions of the Act, the
Rules and the bye-laws for specified period. It is
empowered to have control and to maintain discipline over
its officers and employees. The paid Secretaries are
admittedly not the officers appointed to the Society and by
the Society. They are officers appointed by the District
Cooperative Society by its Manager, ’Manager’ is defined
under the 1969 Rules to mean "the manager appointed under
these rules and who shall be Chief Executive and paid
employee of the society. Manager shall have no relation
with the services of the Bank employees. Due to getting
salary from the Managerial fund at Bank level he shall not
be entitled for any benefits which are being given to Bank
employees. And Society shall not appoint any person as
Manager". A paid Secretary is not, therefore, a Manager
appointed by the PACS. It is seen that the structure of the
employees is indicated in Section 148 [2] (xxx) as Manager,
Secretary, Accountant or any other officer or employee of
the society. Therefore, in addition to the said
establishment, there cannot be any paid Secretary to the
Society i.e., PAC. Obviously, therefore, the Societies have
objected that they cannot be fastened with the liability to
contribute fund under Bank Rules for payment of the salary
of Surveillance Officer appointed by the District
Cooperative Society and to be controlled by the Cadre
Authority society. lt would, therefore, be clear that they
are outside the scope of the Cadre of PACS.
The question, then is: whether the Registrar as a
delegate of the Government, can make rules in that behalf or
create a fund under the Bank Rules? It is seen that the
power under Rule 41 is limited only to prescribing the
qualifications and conditions of service of the officers and
employees enumerated in clause (xxx) of sub-section [2] of
Section 148. He, therefore, has no power to make rules
governing appointment of paid Secretaries and to create a
fund under Bank Rules for payment of salaries to them and to
fasten the liability on the PACS. The Registrar travelled
beyond the power delegated to him under the Act. We have
come across Section 69A of the Maharashtra Cooperative
Societies Act which, as amended by the statute, gives such a
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power for creation of a Society as recruitment agency to
make appointment of such recruited candidates to the Primary
Cooperative Societies and posting them to the primary
societies. Statute also fastened the liability on the
primary societies to contribute certain percentage towards
salary and allowances of such paid Secretaries. Making the
Bank Rules or the creation of a fund would, therefore, be
beyond the powers of the Registrar under Rule 41 read with
Section 148 [2] (xxx) of the Act. The High Court, therefore,
was clearly right in its findings that Cadre Authority
Society is not a society registrable under Section 4 [1] of
the Act and that the Registrar has no power under Rule 41 to
make Bank Rules.
The contention of Shri Jitendra Sharma that they are
members of PACS under 1977 Rules cannot be given countenance
for the reason that 1977 Rules stood superseded by 1969
Rules. Admittedly, they are not members nor are they
appointed as officers or employees of the PACS. When we
called upon the counsel to produce any order of appointment
given to the paid Secretaries by any of the PACS, he
conceded that he did not have any such letters. Therefore,
they cannot be declared to be members or officers or
employees of the PACS. Thus considered, we are of the firm
opinion that the view taken by the High Court is not
vitiated by any error of law.
The appeals are accordingly dismissed but in the
circumstances, without costs.