1. Petitioner is an employee of Charthawal Kisan Sewa Sahkari Samiti Ltd., Charthawal, Muzaffarnagar (hereinafter referred to as the 'Society'), which is a Primary Agricultural Credit Co-operative Society, registered under the provisions of U.P. Co-operative Societies Act, 1965. Petitioner was an Accountant in the society. Disciplinary proceedings were initiated against the petitioner on various charges of remaining unauthorizedly absent, working contrary to the interest of society, failing to deposit Rs.1,41,450.65/- alongwith 18% interest, indicipline, violating orders passed by the authorities etc. An enquiry apparently was conducted in the matter, in which petitioner was found guilty of the charges levelled, and ultimately the society resolved in its meeting dated 16.5.1997 vide agenda no.3 to dismiss petitioner from service, which got communicated vide order dated 19.5.1997, and is assailed in the present writ petition.
2. The order records that Deputy Registrar, Co-operative Societies, Meerut Division, Meerut, vide his letter dated 2nd April, 1997, has approved dismissal of petitioner from service. According to petitioner, approval of Deputy Registrar had been obtained in compliance of the circular issued by the Registrar dated 18.2.1991, providing that no employee of a Primary Agricultural Credit Co-operative Society shall be dismissed without obtaining approval from the Deputy Registrar.
3. The order is challenged on the ground that no approval could have been granted without affording opportunity of hearing to the petitioner, and since petitioner has not been heard before grant of approval by the Deputy Registrar, as such, the order is bad in law. For substantiating such argument, reliance is placed upon a judgment of this Court in Writ Petition No.11195 of 2007 (Umesh Narain Tripathi Vs. State of U.P. and others), dated 22.9.2011, wherein observation made by the Division Bench in Special Appeal No.986 of 2006 (U.P. Upbhokta Sahkari Sangh Ltd. Lucknow through its Managing Director and another Vs. Vijay Shanker Rai) has been relied upon. Relevant observations made in Umesh Narain Tripathi (supra) is reproduced:-
"Further submission of learned counsel for the petitioner is that under the provisions of Regulation-87 of U.P. Co-operative Societies Employees Service Regulations, 1975 before any major penalty could be imposed against the petitioner, prior concurrence ought to have been obtained from the Board and before giving approval of major penalty Board was required to hear the petitioner but no opportunity of hearing has been provided to the petitioner before the Board prior to passing of the impugned order against him. While elaborating his submission he has submitted that the Managing Director has merely issued show cause notice to the petitioner along with copy of inquiry report. On receipt of the same when the petitioner has asked copies of the documents for reply of said show cause notice, instead of furnishing those documents the Managing Director has referred the matter before Board for seeking approval under Regulation 87 of the Regulations and no opportunity of hearing has been provided to the petitioner before any approval given by Board, therefore, the impugned order passed by concerned respondents cannot be sustained.
In support of his submission he has also placed reliance upon two decisions of this court rendered in Vijay Shanker Rai Vs. State of U.P. Through Secretary (Co-operative) Government of U.P., Lucknow and others, 2006 (65) ALR 54, wherein in para 13 of the decision this court observed as under:-
"13. A proper appreciation of Regulation 87 reveals that the word prior approval has been specifically included in the Regulation which can have no other meaning but that before passing any order of major penalty as contemplated under Regulation 84 1 (e) to (g), the Board of Directors has to apply its mind and then only an order imposing a major penalty can be passed. I draw strength from the decision cited by learned Counsel for the petitioner supra and I am in agreement with the said judgment. To my mind, no other interpretation of Regulation 87 can be given. To do so, would render the very purpose of the rule redundant and the purpose for which the rule has been enacted would fail."
The aforesaid judgement rendered by Hon'ble Single Judge has been up-held by Division Bench of this court in Special Appeal No. 986 of 2006, U.P. Upbhokta Sahkari Sangh Ltd. Lucknow Through its Managing Director and another Vs. Vijay Shanker Rai, 2006 (65) ALR 510, wherein the Division Bench of this Court after referring several other decisions in para-8 and 11 of the decision observed as under:-
"8. Moreover, the purpose and object requiring the management to seek prior concurrence of the Board is to protect the employee from any arbitrary and illegal punitive action on the part of the management without strictly observing procedure prescribed in the Regulations. The Board, being an independent statutory body, is expected to scrutinize the matter as to whether the proceedings have been conducted in a fair and impartial manner, consistent with the procedure prescribed under the rules and the employee is not being unduly harassed. Therefore, we are of the view that the, Hon'ble Single Judge has rightly held that without prior concurrence of the Board the order of dismissal passed by the management was unsustainable and the same was liable to be quashed.
11. We, therefore, modify the order of the Hon'ble Single Judge and while upholding the judgment under appeal setting aside the dismissal order, modify rest of the directions and and provide that the appellant is at liberty to take further action for seeking prior concurrence of the Board under Regulation 87 in accordance with rules. The Board shall consider the matter after affording opportunity of hearing to both the sides and shall take decision as expeditiously as possible, preferably within a period of three months from the date of receiving proposal, if any, from the appellant along with the certified copy of this order."
The aforesaid decisions are binding upon this court also, therefore, in my opinion, the Board was required to give opportunity to the petitioner to have his say in the matter before approval was granted for imposing major penalty upon him but in fact the Board did not afford any opportunity of hearing to the petitioner before imposing major penalty, as such the impugned order dated 19.9.2006, dismissing the petitioner from service, passed by Managing Director without prior opportunity of hearing provided by the Board, cannot be sustained and the same is hereby quashed."
4. It is also argued that disciplinary proceedings conducted in the matter violated principles of natural justice. Before proceeding further, it would be appropriate to note that while entertaining this writ petition, this Court vide order dated 8.7.1997 had observed that issue of maintainability of writ petition shall be considered at the time of hearing of the writ petition. During the course of hearing of the matter, this issue was again noticed by this Court, and following observations were made on 8.4.2016:-
"This petition is directed against the respondent society. It has not been shown that society is a State within the meaning of Article 12 of the Constitution of India or that the service condition of the employees are governed by any statutory regulations.
While entertaining this matter on 8.7.1997, issue of maintainability of writ petition was directed to be considered at the time of hearing of the writ petition.
Learned counsel for the petitioner submits that the matter be adjourned for the day in order to enable him to make his submissions on this aspect of the matter.
List in the next cause list."
5. Sri Ashok Khare, learned Senior Counsel for the petitioner, has relied upon an adjudication by the Apex Court in Francis John Vs. The Director of Education and others, reported in AIR 1990 SC 423. Paragraph-5 of the judgment, which has been relied upon, reads as under:-
"5. From a reading of the relevant rule of the Grant-in-aid Code which is a part of the Public Law of the land it be- comes obvious that the reference of the dispute between the Management of the school and the appellant to the Dispute Settlement Committee was made by the Director of Education in exercise of the powers confened on him by the Grant-in- aid Code, which is issued by the Government in exercise of its executive power, even though it may not have been done under a statute. The Director of Education who is a public functionary has given his approval to the decision of the Dispute Settlement Committee before it was communicated to the School. While granting his aproval to the decision the Director of Education is discharging a governmental function as an authority constituted for the said purpose by the Government. It is obvious that the Management, in the cir- cumstances could not have terminated the services of the appellant without the communication received by it from the Director of Education. In such circumstances it cannot be said that the decision is that of a just private management governed by private law. It is the part of the process of the public law which affects public exchequer."
6. Learned Senior Counsel for the petitioner further submits that circular dated 18.2.1991 mandates that no order of the nature passed against petitioner could be issued without an approval of the Deputy Registrar, and the Deputy Registrar has in fact granted approval, as such, it is a governmental action, impugned in the writ petition, and consequently, a writ petition would lie. Reliance has also been placed upon a judgment of the Apex Court in V.T. Khanzode and others Vs. Reserve Bank of India and another, reported in (1982) 2 SCC 7. Paragraphs-16 to 26 of the judgment has been relied upon in order to contend that where the statute confers power on the designated authority to make regulations for giving effect to provisions of the Act, the power to provide for service conditions of staff would be incidental to the obligation to carry out the purpose, for which the Bank was constituted. Paragraphs-16 to 18 of the report is reproduced:-
"16. Section 58 (1) of the Act confers power on the Central Board of Directors of the Bank to make regulations in order to provide for all matters for which provisions is necessary or convenient for the purpose of giving effect to the provisions of the Act. It seems to us clear that it is not only convenient but manifestly necessary to provide for the service conditions of the Bank's staff in order to give effect to the provisions of the Act. The Act was passed in order to constitute a Bank for achieving economic purposes of the highest national importance: regulating the issue of Bank notes, keeping reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. It is, in our view, not open to any question either on the basis of reason or authority that the power to provide for service conditions of the staff is at least incidental to the obligation to carry out the purposes for which the Bank was constituted. As observed in Armour v. Liverpool Corporation:
"To assist in removing from the minds of its employees the fear of an unprotected old age, to foster their happiness and contentment and to procure their good and efficient service, these are objects which, even if economic considerations alone count, are incidental, if not vital, to the proper carrying on of any undertaking as well by a municipal as any other corporation."
The doctrine of ultra vires in relation to the powers of a statutory corporation has to be understood reasonably and so understood, "whatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorised ought not (unless expressly prohibited) to be held by judicial construction, to be ultra vires." (See Attorney-General v. Great Eastern Ry. Co.) The Central Board has, therefore, the power to make service regulations under section 58 (1) of the Act.
17. Shri Nariman pleads for such a power but his purpose in doing so is to urge that section 58 (7) is the sole repository of the power of the Central Board to provide for the conditions of service of the Bank's staff. He contends that statutory corporations like the Reserve Bank of India have no inherent or residuary powers and that they must seek and find their powers and obligations in the Charter of their creation Therefore, the argument proceeds, it is imperative that regulations governing terms and conditions of service of the Bank's staff must be framed under section 58 (1) only and cannot be framed by administrative circulars issued in the exercise of any non-statutory power authority.
18. In support of this submission, reliance is placed by the learned counsel on the statement of law contained in paragraphs 1326 and 1333 (pages 775 and 779) of Halsbury's Laws of England, Fourth edition. In paragraph 1326 it is stated that:
"Corporations may be either statutory or non- statutory and a fundamental distinction exists between the powers and liabilities of the two classes. Statutory corporations have such rights and can do such acts only as are authorised directly or indirectly by the statutes creating them; non-statutory corporations, speaking generally, can do everything that an ordinary individual can do unless restricted directly or indirectly by statute".
Paragraph 1333 says that:
"The powers of a corporation created by statute are limited and circumscribed by the statutes which regulate it, and extend no further than is expressly stated therein, or is necessarily and properly required for carrying into effect the purposes of its incorporation, or may be fairly regarded as incidental to, or consequential upon, these things which the legislature has authorised. What the statute does not expressly or impliedly authorise is to be taken to be prohibited."
There is no doubt that a statutory corporation can do only such acts as are authorised by the statute creating it and that, the powers of such a corporation cannot extend beyond what the statute provides expressly or by necessary implication. If an act is neither expressly or impliedly authorised by the statute which creates the corporation, it must be taken to be prohibited. This cannot, however, produce the result for which Shri Nariman contends. His contention is not that the Central Board has no power to frame staff regulations but that it must do so under section 58 (1) only. On that argument, it is material to note that section 58 (1) is in the nature of an enabling provision under which the Central Board "may" make regulations in order to provide for all matters for which it is necessary or convenient to make provision for the purpose of giving effect to the provisions of the Act. This provision does not justify the argument that staff regulations must be framed under it or not at all. The substance of the matter is that the Central Board has the power to frame regulations relating to the conditions of service of the Bank's staff. If it has that power, it may exercise it either in accordance with section 58 (1) or by acting appropriately in the exercise of its general power of administration and superintendence."
7. Sri Khare, on the strength of arguments, noticed above, contends that the writ petition is maintainable, and that the order is liable to be set aside.
8. The petition is opposed by Sri Vinod Sinha, as well as learned Standing Counsel for the respondents, by contending that a writ petition would not lie against an order of dismissal from service passed by the Co-operative Society, which is purely a private person. It is further submitted that circular of the Registrar has no statutory backing and is at best a surplusage, inasmuch as it has not been issued in exercise of any jurisdiction conferred under the statute, and the mere fact that approval has been granted by the Deputy Registrar, would not alter the status of respondent society from that of a private person to a State, so as to maintain a writ petition against it.
9. The issue as to whether a writ petition would lie at the instance of an employee of a Co-operative Society against its employer has been considered by a Full Bench of this Court in Vijay Bihari Srivastava Vs. U.P. Postal Primary Co-operative Bank Ltd., reported in (2003) 1 UPLBEC 1. The principles, which have been culled out in Para-35 of the report is reproduced:-
"35. In the light of foregoing discussions, we answer question as to whether a writ petition in the nature of certiorari will lie against a Co-operative Society or it comes within the meaning of the words 'other Authority' occurring in Article 226 of the Constitution, as follows:
The writ petition in the nature of certiorari will lie against a Co-operative Society only when such Society has ingredient of an 'Authority' within the meaning of Article 226 of the Constitution and not otherwise. The following guidelines are culled out from the various decisions of the Supreme Court, referred to above :-
1. The constitution of the Managing Body/Committee constitutes the functionaries of the Government.
2. There is an existence of deep and pervasive control of the management and policies of the Co-operative Society by the Government.
3. The function of the Co-operative Society is of public importance and closely related to the Governmental functions.
4. The financial control is by the Government or it provides financial aid controlling its affairs.
5. The violation of statutory rules applicable to the Society in regard to the service matters of its employees, and
6. Statutory violations or non-compliance of it by an authority under the Act."
10. It is not in dispute that service conditions of the employees of the society are not governed by any statutory service regulations. It is also admitted to the petitioner in Para-2 that State Government is a mere share holder, and the share held by it is less than 50%. It is, however, submitted that society is engaged in discharge of public functions on behalf of State Government, inasmuch as the society is engaged in distribution of fertilizer, disbursement of loan, distribution of seeds and other essential items, purchase and storage of wheat etc. It is also contended in para-4 that by virtue of circular issued by the Registrar dated 18.2.1991, since approval of Deputy Registrar is required before removing an employee, and such approval has been granted, therefore, a writ petition would lie.
11. Following the guidelines laid in Para-35 of Vijay Bihari Srivastava (supra), a subsequent Full Bench of this Court in Anil Kumar Pandey and others Vs. State of U.P. and others, in Writ Petition 60557 of 2015, decided on 2.2.2016, observed as under:-
"The Court held that there was no straight jacket formula to determine as to when a cooperative society is an authority within the meaning of Article 226, but it has to be considered in the light of factors enumerated in the decisions of the Supreme Court. Moreover, it was held that it is not necessary that all the tests which have been enumerated above, should simultaneously exist to determine that an authority is an authority within the meaning of Article 226. Moreover, a mere regulatory provision under which a cooperative society is regulated by the Registrar or any other authority, shall not render it as an authority for the purpose of Article 226 of the Constitution. Finally, it was observed that even if a writ petition is maintainable, the Court may, in a given case, decline to entertain if it finds that an alternate remedy is available to the petitioner to ventilate the grievances which are raised."
12. So far as the maintainability of the writ petition on the ground of State being a share holder in the society is concerned, the issue has been considered by the Apex Court in General Manager, Kisan Sahkari Chini Mills Ltd. Vs. Satrughan Nishad, reported in (2003) 8 SCC 639, wherein following observations have been made in Para-8 of the judgment:-
"8. From the decisions referred to above, it would be clear that the form in which the body is constituted, namely, whether it is a society or cooperative society or a company, is not decisive. The real status of the body with respect to the control of government would have to be looked into. The various tests, as indicated above, would have to be applied and considered cumulatively. There can be no hard-and-fast formula and in different facts/situations, different factors may be found to be overwhelming and indicating that the body is an authority under Article 12 of the Constitution. In this context, bye-laws of the Mill would have to be seen. In the instant case, in one of the writ applications filed before the High Court, it was asserted that the Government of Uttar Pradesh held 50% shares in the Mill which fact was denied in the counter affidavit filed on behalf of the State and it was averred that majority of the shares were held by cane growers. Of course, it was not said that the Government of Uttar Pradesh did not hold any share. Before this Court, it was stated on behalf of the contesting respondents in the counter affidavit that the Government of Uttar Pradesh held 50% shares in the Mill which was not denied on behalf of the Mill. Therefore, even if it is taken to be admitted due to non-traverse, the share of the State Government would be only 50% and not entire. Thus, the first test laid down is not fulfilled by the Mill. It has been stated on behalf of the contesting respondents that the Mill used to receive some financial assistance from the Government. According to the Mill, the Government had advanced some loans to the Mill. It has no where been stated that the State used to meet any expenditure of the Mill much less almost the entire one, but, as a matter of fact, it operates on the basis of self-generated finances. There is nothing to show that the Mill enjoys monopoly status in the matter of production of sugar. A perusal of bye-laws of the Mill would show that its membership is open to cane growers, other societies, Gram Sabha, State Government, etc. and under Bye-law 52, a Committee of Management consisting of fifteen members is constituted, out of whom, five members are required to be elected by the representatives of individual members, three out of the cooperative society and other institutions and two representatives of financial institutions besides five members who are required to be nominated by the State Government which shall be inclusive of the Chairman and Administrator. Thus, the ratio of the nominees of State Government in the Committee is only 1/3rd and the management of the Committee is dominated by 2/3rd non-government members. Under the bye-laws, the State Government can neither issue any direction to the Mill nor determine its policy as it is an autonomous body. The State has no control at all in the functioning of the Mill much less a deep and pervasive one. The role of the Federation, which is the apex body and whose ex-officio Chairman-cum-Managing Director is the Secretary, Department of Sugar Industry and Cane, Government of Uttar Pradesh, is only advisory and to guide its members. The letter sent by the Managing Director of the Federation on 22-11-1999 was merely by way of an advice and was in the nature of a suggestion to the Mill in view of its deteriorating financial condition. From the said letter, which is in the advisory capacity, it cannot be inferred that the State had any deep and pervasive control over the Mill. Thus, we find none of the indicia exists in the case of the Mill, as such the same being neither an instrumentality nor an agency of the Government cannot be said to be an authority and, therefore, it is not State within the meaning of Article 12 of the Constitution."
13. The mere fact that society is engaged in the task of distribution of fertilizer, disbursement of loan, distribution of seeds and other essential items, purchase and storage of wheat etc., is concerned, these are all ordinary commercial activities, which are performed by any other private body as well, and it cannot be termed to be performance of any public duty. The respondent society does not enjoy any monopoly status, either. The contention, therefore, that society is State on account of share holding of the State, or that it performs public functions cannot be accepted. The judgment relied upon in Francis John (supra) is clearly distinguishable on facts inasmuch as institution concerned was on grant-in-aid, and otherwise related to an educational institution, which was performing a public duty.
14. Adverting to the circular dated 18.2.1991, issued by the Registrar, as well as grant of approval to the dismissal order by Deputy Registrar, suffice it to say that circular of the Registrar does not refer to any specific provision contained in the U.P. Co-operative Societies Act, whereunder it has been issued. The power of Registrar to deal with employees of a Co-operative Society can be traced to Section 121 of the U.P. Co-operative Societies Act, which reads as under:-
"121. Power of registrar to determine terms of employment of society.-(1) The Registrar may, from time to time frame regulation to regulate the emoluments and other conditions of service including the disciplinary control of employees in a co-operative society or a class of co-operative societies and any society to which such terms are applicable, shall comply with those regulations and with any orders of the Registrar, issued to secure such compliance.
(2) The regulations framed under sub-section (1) shall be published in the Gazette and take effect from the date of such publication."
15. The statute confers jurisdiction upon the Registrar to frame regulation to regulate the emoluments and other conditions of service, including the disciplinary control of employees in a Co-operative Society, and the society shall comply with those regulations, and also comply with any orders of the Registrar issued to secure such compliance. Sub-section (2) of Section 121 makes it mandatory for such regulations to be published in Gazette, and it shall take effect from the date of such publication. Admittedly, no regulations in terms of Section 121 have been framed in respect of the employees of society. No other statutory provision has been shown authorizing Registrar to issue the circular in question. The Registrar can exercise his authority only in the manner specified in the statute. The circular dated 18th February, 1991, therefore, cannot draw its source of power from Section 121 of the Act, nor any other statutory provision has been shown for the purpose.
16. The judgment relied upon by the petitioners in V.T. Khanzode (supra) as well as observations made in Para-16 thereof do not come to petitioner's rescue, inasmuch as the language of Section 58 to provide for all matters, for which provision is necessary or convenient for the purpose of giving effect to provisions of the Act was held to be wide enough, so as to include power to provide service regulations, as it was held to be incidental to the obligation to carry out the purposes, for which the Bank was constituted. The question therein was as to whether regulations could be made under Section 58(1)? It was observed that the Central Government had the power to frame regulations relating to conditions of service for Bank Staff, and it could exercise it either in accordance with Section 58(1), or by acting appropriately in exercise of general power of administration and superintendence. The judgment, therefore, has no application on the facts of the present case, as the only power conferred upon the Registrar is to regulate conditions of service by framing regulations, which is required to be published in gazette, and has to take effect from the date of such publication.
17. This Court is of the opinion that exercise of power under Section 121 of the Act has to be in accordance with the statute, and the Registrar can proceed only in the manner specified in the statute. It is settled that when a procedure has been laid down, the authority must act strictly inn terms thereof (see Taylar Vs. Taylar, (1875) LR (1) CH-D-426; Nazir Ahmed Vs. King Emperor, (1935-36) L.R. 63 I.A. 372; Deep Chand Vs. State of Rajasthan, AIR 1961 SC 1527; & J. Jayalalithaa Vs State of Karnataka, (2014) 2 SCC 401). The circular since has not been issued in exercise of any provision or authority under the statute, the obtaining of approval by the Deputy Registrar was wholly uncalled for. Any error in exercise of grant of approval, therefore, would not render the writ petition maintainable, when the writ petition does not lie otherwise. For the reasons disclosed above, this Court is of the opinion that the writ petition is not liable to be entertained, for the reason that approval has been granted to the order of punishment by the Deputy Registrar.
18. For the reasons aforesaid, the present writ petition is held not to be maintainable before this Court, and is consequently dismissed.
Order Date :- 17.5.2016 Anil