Termination in breach of an interim order restraining adverse action is invalid.

The petitioner’s services with Zila Sahkari Kendriya Bank, Bilaspur, were terminated by order dated 1 September 2018. Before the termination, the Bank had issued him a notice dated 2 August 2018 requiring his personal appearance on 10 August 2018. The petitioner challenged the notice before the Registrar of Co-operative Societies under Section 80-A of the Chhattisgarh Co-operative Societies Act, 1960. On 8 August 2018, the Registrar directed that no adverse order be passed against the petitioner; the order was produced before the Staff Sub-Committee. Despite this, the Sub-Committee decided on 10 August 2018 to terminate the petitioner’s services. The petitioner’s challenge was dismissed on 28 August 2018, following which the Bank formally terminated his services on 1 September 2018

The petitioner raised a service dispute under Section 55(2) of the Act. On 5 December 2019, the Joint Registrar set aside both the Sub-Committee’s decision dated 10 August 2018 and the consequential termination order dated 1 September 2018, holding that the decision had been taken in violation of the Registrar’s interim order. The Joint Registrar also directed the Bank to provide the relevant documents and permitted it to proceed afresh in accordance with Section 49-B of the Act. On the Bank’s appeal, the Chhattisgarh State Co-operative Tribunal set aside the Joint Registrar’s order on 20 February 2020. The petitioner consequently filed the present writ petition

The Court applied Section 80-A of the Chhattisgarh Co-operative Societies Act, 1960, under which the Registrar entertained the petitioner’s challenge to the personal-hearing notice and issued an interim direction restraining the passing of any adverse order.

It applied Section 55(2) of the Act, which empowered the competent co-operative authority to adjudicate the petitioner’s service dispute and examine the legality of the termination.

The Court also referred to Section 49-B, directing that any fresh disciplinary action comply with the statutory procedure and that the Bank provide the documents relied upon in the show-cause notice.

The governing principle applied was that an order passed in violation of a subsisting interim judicial or statutory-authority direction is legally unsustainable, and that, after dismissal of the petitioner’s challenge on 28 August 2018, the proper course was to afford a fresh opportunity of hearing rather than rely on the proceeding conducted during the subsistence of the interim order.

The Court found that the Registrar’s order dated 8 August 2018 expressly prohibited the Bank from passing any adverse order against the petitioner. Since the Staff Sub-Committee had received a copy of that order but nevertheless resolved to terminate the petitioner on 10 August 2018, its decision was taken in direct violation of the subsisting interim direction.

The subsequent dismissal of the petitioner’s application on 28 August 2018 did not retrospectively validate the earlier decision taken on 10 August 2018. The Court therefore upheld the Joint Registrar’s conclusion that both the impugned Sub-Committee decision and the consequential termination order were invalid.

It further held that, after 28 August 2018, the Bank ought to have issued a fresh opportunity of hearing before taking disciplinary action.

As to the alleged proceeding dated 28 February 2018, the Court noted that the Joint Registrar had not conclusively validated it but had merely granted liberty to the Bank to proceed afresh and determine its existence and legality after hearing both parties.

The High Court set aside the Co-operative Tribunal’s order dated 20 February 2020 to the extent that it interfered with the Joint Registrar’s order dated 5 December 2019, thereby sustaining the setting aside of the Staff Sub-Committee’s decision dated 10 August 2018 and the termination order dated 1 September 2018.

The Bank was permitted to proceed afresh in accordance with law, including compliance with Section 49-B and determination of the existence and legality of the alleged proceeding dated 28 February 2018 after giving both parties an opportunity of hearing.

The parties were directed to bear their own costs.