High Court · 2009

The petitioners, employees of the Assam Co-operative Marketing and Consumers’ Federation ( hereinafter referred to as STATFED) are before this Court seeking invocation of its extra-ordinary jurisdiction under Article 226 of the Constitution of India to adjudge the continuation of pending disciplinary proceedings against them to be invalid for want of jurisdiction of the Liquida tor, i.e. Respondent Nos. 2 and 3, as well as for an appropriate direction to r elease the benefits under the Voluntary Retirement Scheme (hereinafter referred to VRS) and other service benefits due to them. The principal legal issue being common in both the writ petitions, they have been heard analogously at the a dmission stage and are being disposed of by this common judgment and order.

2. I have heard Mr. N. Deka, learned counsel for the petitioner in W.P.(C) No. 3848/2008 as well as Mr. A.C. Borborah, learned Sr. counsel for the petition er in W.P.(C) No. 4250/2008. I have also heard Ms. J. Borah, learned counsel for the Liquidator Assam Co-operative Marketing and Consumers’ Federation ( for sho rt referred to as STATFED) as well as Mr. P.J. Ghosh, learned State counsel, A ssam.

3. The pleaded versions of the parties are set out in short to draw the can vas of the controversy. The petitioner in W.P.(C) No. 3848/2008, Shri Niranjan B orah, was initially appointed as Inspector in the STATFED in the year 1974 and w as promoted to the post of Deputy Manager following which he was made the In-Cha rge of Ganeshguri Shopping Corner thereof. As a matter of fact, he had been hol ding this office on the said arrangement as Assistant Manager before such promot ion. The petitioner was placed under suspension pending a departmental proceedin g by order dated 20.09.2003 by the Managing Director, STATFED. The action being challenged in W.P.(C) No. 6318/2004, by the order dated 31.08.2004 the responde nts therein were directed to release the subsistence allowance to the petitioner as per law. According to the petitioner, a part of the subsistence allowance pa yable to him was released to him followed by a show cause notice dated 07.09.2 004 levelling the charges of misappropriation of an amount of Rs. 77,822.62 caus ing loss to the Co-operative society, dereliction of duty and gross misconduct. The petitioner submitted his reply dated 15.09.2004 denying the same. Thereafte r an enquiry was conducted and a report was submitted, but the copy of the same was not furnished to the him. No step or action against the petitioner thereafte r was also taken. The Govt. of Assam in the Department of Public Enterprises mea nwhile had floated a Voluntary Retirement Scheme for the employees of the Stat e Level Public Enterprises of Assam which included the erstwhile employees of th e STATFED. The petitioner accordingly elected to go on voluntary retirement unde r the said scheme.

4. Thereafter another show cause notice dated 03.05.2006 was issued to him by the then Managing Director of the STATFED alleging anomalies of stock worth o f Rs. 3,93,201/-. The petitioner was charged with misconduct, lacking in supervi sion and dereliction of duty resulting in loss to the STATFED. The petitioner in stituted W.P.(C) No. 2630/06 challenging the validity of the said show cause no tice inter alia on the ground of inordinate delay. Meanwhile by notification N o. CSS.I/2006/41 dated 14.06.2006 issued by the Registrar of the Co-operative So cieties, Assam under Section 66 of the Assam Co-operative Societies Act, 1949 (h ereinafter referred to as the Act), the registration of the STATFED was cancelle d and it was decided to be wound up. Following the same, the respondent No. 2 w as appointed as the Liquidator to conduct the liquidation process. By order date d 11.09.2006 in Misc. Case No. 3033 arising out of W.P.(C) No. 6318/2004, the Liquidator was directed to release the subsistence allowance payable to the pet itioner. Thereafter W.P.(C) No. 6318/2004 was also disposed of. By order dated 1 3.09.2006 the petitioner and two others were released from the STATFED. As per n otification dated 14.06.2006 the registration of the corporate body and the empl oyees therein ceased to exist w.e.f. that date. The petitioner and two others we re released from STATFED, Morigaon w.e.f. 14.06.2006. According to the petitione r in the list of eligible employees for voluntary retirement scheme whose cases are under consideration, his name is at serial No. 1353.

5. While the matter rested thus, the respondent No. 2 by an order dated 05. 03.2008 revoked the petitioner’s suspension which was earlier effected by order dated 20.09.2003 reinstated him in service w.e.f. 14.06.2006 and released him from STATFED on the same date. W.P.(C) No. 2630/2006 was disposed of on 08.04.2 008 directing the respondent No. 2 to pass a speaking order on two aspects, name ly (1) whether he had the power to act as disciplinary authority under Sections 65 and 66 of the Act and (2) whether after liquidation of the STATFED, the disc iplinary proceeding against the petitioner could continue or not. By the impugne d order dated 19/21.06.08 respondent No. 2 has answered both the questions in af firmative. The petitioner in W.P.(C) No. 4250/2008 who was at the relevant time se 6. rving as Inspector at the Hojai Branch of STATFED was placed under suspension pe nding drawal of departmental proceeding on 06.10.99. Thereafter, the petitioner was issued a show cause notice dated 29.01.2002/18.03.2002 alleging misappropria tion of stock of rice and sugar at Hojai Branch of STATFED. According to the pet itioner, on the receipt of the memorandum of charges, he prayed for a copy of t he audit report on which the same was based, but the request was declined. His f urther representation dated 04.10.2002 was also not responded to. Thereafter he instituted W.P.(C) No. 7681/2005 challenging the order of suspension and the sho w cause notice and sought a direction to the respondents to release his subsiste nce allowance. On 06.02.2006 the said writ petition was disposed of with a direc tion to the respondents therein to pay the subsistence allowance to the petition er within a time frame fixed by it. The departmental proceeding was also directe d to be completed within a period of five months failing which it was ordered th at the petitioner should be reinstated without prejudice to the pending enquiry. The petitioner accordingly submitted his reply on 08.03.06 denying the charges. The petitioner has stated that by an order dated 25.04.06 issued by the then Ma naging Director of the STATFED the option exercised by him to avail the benefi ts under the voluntary scheme was accepted. According to the petitioner the Reg istrar of the Co-operative Societies, Assam vide communication dated 18.07.2006 addressed to the Commissioner & Secretary to the Govt. of Assam, Co-operation De partment had forwarded the VRS proposal in respect of 211 employees of the STATF ED requisitioning an amount of Rs. 19,95,52,138/- for their dues under the said scheme. The petitioner’s name in the said list appeared at serial No. 43. By ord er dated 11.12.07 the Liquidator revoked the order of suspension of the petition er reinstated him in service of STATFED w.e.f. 14.06.06 and further released h im on the same date holding that the pay and allowances for the said period wou ld be decided later on the conclusion of the departmental proceeding. The petit ioner has approached this Court seeking annulment of the said order dated 11.12. 2007 and for a direction to the respondents to release him an amount of Rs. 11,2 1,296/- as his dues under the VRS.

7. The respondent No. 2 in his affidavit has stated that as the authoritie s who were to dispose of the pending departmental proceedings/appeals have ceas ed to exist with effect from the date of cancellation of the registration of STA TFED, the Liquidator has the power to continue with and deal with the same as it would be necessary for winding up the affairs of the co-operative society invo lved under section 66 of the Act. The answering respondent has reiterated the re asons in support thereof as contained in the impugned order dated 19/12.06.08 pa ssed in compliance of the order dated 08.04.2008 in W.P.(C) No. 2630/2006. Accor ding to the respondent No. 2 pending disposal of the disciplinary proceedings t he petitioners are not entitled to be released the benefits under the VRS which they seek. He has pleaded that with the cessation of registration of STATFED, th e Liquidator has been vested with the power to conduct the affairs relating to l iquidation under Section 66 of the Act.

8. Mr. N. Deka, referring to the Rules 8 and 9 of the Assam Services (Disci pline and Appeal) Rules, 1964 (hereafter for short referred to as the Rules) h as urged that the Liquidator is admittedly not either the disciplinary or the a ppointing authority of the petitioner and therefore in absence of any specific authorization to deal with the pending disciplinary proceedings, he lacks jurisd iction and competence to administer it and thus in the attending facts and cir cumstances of the case, following the cancellation of the registration of the STATFED it is liable to be adjudged as non-existent in law as well as on facts. According to the learned counsel neither Section 66 of the Act nor the notificat ion No. CSS.I/2006/41 dated 14.06.06 whereby the STATFED has been decided to be wound up and its registration cancelled, does either contemplate or entrust the Liquidator to continue with any pending disciplinary proceeding against any ers twhile employee of the Co-operation. In any view of the matter as the respond ent No. 2- the Liquidator not being the disciplinary authority of the petitione r, is not authorized to impose any penalty as contemplated by the Rules, continu ance of the proceeding would be merely an abuse of the process of law. Mr. Deka submitted that the proceeding against the petitioner is liable to be quashed an d an appropriate direction aught to be issued directing the respondents to relea se all his dues under the VRS as well as other service entitlements as may be a dmissible to him.

9. Mr. A.C. Borborah, learned Sr. counsel for the petitioner in W.P.(C) No. 4250/2008 has urged that in absence of implied or explicit nexus between the d isciplinary proceeding and the winding up the process, the authority of the Liq uidator to conduct such proceeding is lacking. Drawing the attention to Sectio n 71 of the Act, the learned Sr. counsel has argued that though the same contem plates a report to be made by the liquidator in course of winding up proceeding , of the registered society, on which the Registrar of the Cooperative Societie s if satisfied may take further action as contemplated therein, he is critical of the interpretation provided by the respondent/Liquidator holding it permissib le for him to continue the disciplinary proceeding. He has urged that the petiti oner in law is entitled to all the benefits under the VRS and the same cannot be denied on the basis of the purported disciplinary proceeding which is non est as on date. Mr. Borborah further urged that even assuming that the continuance o f the disciplinary proceeding is permissible denial of the arrear pay of the p etitioners as well as provisional pension is without any justification and is li able to be adjudged illegal, arbitrary and discriminatory.

10. Ms. J. Borah has maintained that Section 66 (3) (a) of the Act authoriz es the respondent Liquidator to conclude the disciplinary proceeding which is in the nature nature of a legal proceeding. Contending that cancellation of the r egistration of the STATFED per se did not tantamount to liquidation in law she has argued that claim of the petitioners for annulment of the disciplinary proce edings and for release of their benefits under the VRS is misconceived.

11. The pleadings and the arguments on the basis thereof have been cautiousl y evaluated. Admittedly the disciplinary proceedings had been initiated against the petitioners while they were in the service of the STATFED. Rule 9 lays down the procedure for imposing penalties by way of disciplinary measure. Rule 8 of the said Rules mandates that any one or more of the penalties specified in Rule 7 may be imposed on a member of the State Service by the Appointing Authority or by any other authority empowered in this behalf by a general or special order of the Governor. Rule 8 (3) provides that no penalty shall be imposed by an aut hority lower than the Appointing Authority. Reference to word (cid:28)State Service (cid:29) is understandable as the Rules are contemplated to apply to the Govt. service. Axi omatically the terms (cid:28)disciplinary authority (cid:29) and (cid:28)appointing authority (cid:29) appeari ng in Rules 8 and 9 have to be contemplated in terms of the hierarchical set u p of the STATFED. It is not the case of the respondent No. 2 that he had been or is either the appointing authority or the disciplinary authority of the petitio ners. The Scheme of the Rules in Part -IV (cid:28)Discipline (cid:29) does not envisage any r ole of any authority other than those referred to therein.

12. A disciplinary proceeding in law is to be possessed of certain basic cha racteristics. This is moreso if the initiation and conduct thereof is professed to be governed by any law enacted therefor. The same is then to be initiated an d continued by the authorities determined thereby by observing the procedure l aid down therefor.. It is an admitted fact that for all practical purposes the p etitioners ceased to be the employees of the STATFED on and from 14.06.06. Even if the departmental proceeding is allowed to continue, having regard to the nat ure of the charges leveled against them, the penalty of recovery under rule 7 (i ii) is the only punishment that can be imposed on them in the attending facts and circumstances of the case. In other words, in the present state of affairs, no effective order of dismissal/removal or any other penalty of the like is f easible.

13. The other aspect which cannot be overlooked is that on and from 14.06.0 6 in terms of the notification of that date, the registration of STATFED was c ancelled and that a skeletal staff therefor was retained only for the purpose f or facilitating the exercise of winding up the affairs thereof and thus finalize its assets and liabilities in an orderly manner so as to avoid any future hassl es. The fact situation is obviously different from one where a person in an ex isting and surviving organization public or private, is deemed to continue in service even after his actual retirement for the purpose of completion of discip linary proceeding initiated against him or before such an eventuality. Whereas i n the instant case, the establishment for all practical purposes has ceased to e xist w.e.f. 14.06.06, it would not be so in case where the organization remain, but the incumbent concerned after his retirement is deemed to continue in servi ce only for the purpose of completion of a disciplinary proceeding which had bee n initiated against him while in service. No analogy between the two is possi ble or conceivable. Noticeably inspite of the above, the petitioners who had been released from the service of the STATFED were deemed to be continuing in service for the purpose of the disciplinary proceedings. In the opinion of this court, having regard to the fact that on and from 14.06.06 the STATFED had been for all practical purpose dissolved and its registration cancelled, the contin uation of the departmental proceedings against the petitioners by the responden t No. 2 cannot be upheld as legally tenable.

14. Chapter-XI of the Act which deals with the dissolution of a Society regi stered under it requires that on the cancellation of its registration the order to that effect shall be published in the official Gazette by a notice relating t hereto. The notice shall contain the name of the Liquidator appointed under Sect ion 65 who shall take full charge of the society within two months of the public ation thereof. All liabilities recorded in the account books of the society sha ll be deemed ipso facto to have been claimed. Sub-Section 4 of Section 65 while mandates that when cancellation of the registration of a society takes effect, t he society shall cease to exist as a corporate body, it shall vest in the Liquid ator. Section 66 (2) of the Act defines the power of the Liquidator to take imme diate possession of all assets, properties, effects and actionable claims of th e society or to which the society is entitled and of all books, records, cash an d other documents pertaining to the business of the society and in the interest of the society to hold charge of the society. The Liquidator under Section 66 (3) shall under the general control of the Registrar, have power, so far as is necessary for the winding up of the society, on behalf of the society to carry o n the business thereof and to do all acts and execute all documents necessary to such winding up. The powers of the Liquidator in particular are specified in th e Sub-clauses of Section 66 (3). Under Sub-clause (3) (a) the Liquidator has the power to institute, compromise and defend suits and other legal proceedings on behalf of the society by his name or office.

15. Under Section 71 of the Act, the Registrar of the Co-operative Societies , Assam if satisfied on a report of the Liquidator made in course of winding up of a registered society that any past or present employee at any time within a period of four years prior to the date of such audit, inspection, injury or repo rt as the case may had been grossly negligent in respect of any loss or deficien cy, he may enquire into such conduct and after affording him an opportunity of b eing heard take necessary steps to recover the amount involved.

16. Noticeably both Section 66 and the notification dated 14.06.06 are consp icuously silent about the role or the power of the Liquidator vis-à-vis a discip linary proceeding pending on the date of cancellation of registration of the soc iety. According to the Liquidator, as expressed in the impugned order dated 19/ 21.06.08, he was authorized to continue with the disciplinary proceeding in te rms of Sections 66 (3) (a) as the same is a legal proceeding. Further though on and after 14.06.06 the STATFED had been dissolved, he has the power to do all a cts and to execute the documents in connection with such winding up proceeding a nd that he thus retains the jurisdiction to administer such disciplinary procee ding. To start with, the presupposition that the disciplinary proceeding is 17. a legal proceeding is apparently erroneous. A disciplinary proceeding though has to be informed with a fair procedure cannot be equated with a legal proceedin g which synonimises a judicial proceeding. The distinction in this regard is l aid bare amongst others in Rule 21 and 22 of the Assam Services (Pension) Rule s, 1969 from where it is apparent that a departmental proceeding is not a jud icial proceeding. Having regard to the set up in which the Liquidator is install ed to maintain the affairs relating to the winding up of the society dissolved u nder the Act, the equation of disciplinary proceeding with a legal proceeding do es not appear to be in the comprehension of the law makers. This plea of the res pondent No. 2/ Liquidator therefore cannot be sustained. The legislative intendm ent contained in Section 66 (4) of the Act conveys that the cancellation of the registration of the society would render it non-existent as a corporate body bu t vest the Liquidator with the power to do all necessary acts which are essen tial for winding up thereof. Though a very remote and distant nexus between a pending disciplinary proceeding and the winding up process is not imperceptib le, ipso facto thereby it is difficult to infer the empowerment of the Liquidat or to administer such proceeding as a disciplinary authority. This is more so, a s indicated hereinabove that having regard to the fact that the petitioners for all practical purpose have ceased to be in the service of the STATFED, the only penalty for the charges levelled if proved would be recovery for financial los s suffered by the society.

18. This determination has a reference to the course of action available to the Registrar of the Co-operative Societies, Assam under Section 71 of the Act w hereunder on the basis of the report made even by Liquidator against past and p resent employees and a proper enquiry conducted by him, if so satisfied the same can be resorted to. In other words, the Act provides a clear course of action u nder Section 71 vis-à-vis an eventuality where a past or present employee is fo und to be negligent in respect of loss or deficiency to the Society. The jurisdi ction of a Liquidator to continue with a pending disciplinary proceeding, thus seems to be discordant with the scheme of the Act. To acknowledge and approve the power of Liquidator in absence of any provision in the Act entitling him to conduct a pending disciplinary proceeding against the petitioners would thus a mount to superseding the relevant provisions thereof. Such an interpretation ou ght to be eschewed. In the opinion of this Court therefore, the order dated 19/

21.06.08 of the Liquidator cannot be sustained and is therefore interfered with. Consequently, the pending disciplinary proceedings pending against the petition ers are set aside.

19. The petitioners would be entitled to the benefits under the VRS and oth er arrears which they have claimed for the service rendered by them during the e xistence of the STATFED if there is no other impediment in law. It would be ope n for the respondents, if so advised, to contemplate and take action under Secti on 71 of the Act, however, strictly in accordance with law.

20. as to costs. The petitions stand allowed in the above terms. There will be no order