The High Court
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI W. P. (S) No. 6214 of 2012 --- 1. Keska Rajabhitha Primary Agricultural Cooperative Society (PACS), through its Chairman, Dhanbad 2. Tundi Primary Agricultural Cooperative Society (PACS), through its Chairman, Dhanbad … Petitioners Versus 1. State of Jharkhand through Secretary, Department of Cooperative, State of Jharkhand, Ranchi 2. Registrar, Jharkhand Cooperatives Societies, Ranchi 3. Administrator-cum-Deputy Commissioner, the Dhanbad Central Cooperative Bank Limited, Dhanbad 4. National Bank for Agriculture and Rural Development (NABARD) through its Assistant General Manager, Ranchi 5. The Dhanbad Central Cooperative Bank Ltd., Dhanbad represented by its Managing Director ... Respondents with W. P. (S) No. 6674 of 2012 Rakha Mines Large Area Multi Purpose Co-operative Society, through its Chairman, Jamshedpur … Petitioner Versus 1. State of Jharkhand through Secretary, Department of Cooperative, State of Jharkhand, Ranchi 2. Registrar, Jharkhand Cooperatives Societies, Ranchi 3. Administrator, Singhbhum Central Cooperative Bank Limited-cum-Deputy Development Commissioner, West Singhbhum 4. National Bank for Agriculture and Rural Development (NABARD) through its Assistant General Manager, Ranchi 5. The Singhbhum Central Cooperative Bank Ltd., Chaibasa represented by its Managing Director ... Respondents with W. P. (S) No. 6729 of 2012 Uruguttu Large Area Multi Purpose Co-operative Society, through its Chairman, Ranchi … Petitioner Versus 1. State of Jharkhand through Secretary, Department of Cooperative, State of Jharkhand, Ranchi 2. Registrar, Jharkhand Cooperatives Societies, Ranchi 3. Administrator, Ranchi Khunti Central Cooperative Bank Limited-cum-Deputy Development Commissioner, Ranchi 4. National Bank for Agriculture and Rural Development (NABARD) through its Assistant General Manager, Ranchi 2 5. The Ranchi Khunti Central Cooperative Bank Ltd., Ranchi represented by its Managing Director Respondents ... with W. P. (S) No. 6854 of 2012 1. Khora Large Area Multi Purpose Co-operative Society, through its Chairman, Gumla 2. Toto Large Area Multi Purpose Co-operative Society, through its Chairman, Gumla … Petitioners Versus 1. State of Jharkhand through Secretary, Department of Cooperative, State of Jharkhand, Ranchi 2. Registrar, Jharkhand Cooperatives Societies, Ranchi 3. Administrator, Gumla Simdega Central Cooperative Bank Limited-cum-Deputy Commissioner, Gumla 4. National Bank for Agriculture and Rural Development (NABARD) through its Assistant General Manager, Ranchi 5. The Gumla Simdega Central Cooperative Bank Ltd., Gumla represented by its Managing Director ... Respondents with W. P. (S) No. 6879 of 2012 Balnadih Primary Agriculture Co-operative Society, through its Chairman, Deoghar … Petitioner Versus 1. State of Jharkhand through Secretary, Department of Cooperative, State of Jharkhand, Ranchi 2. Registrar, Jharkhand Cooperatives Societies, Ranchi 3. Administrator, Deoghar Jamtara Central Cooperative Bank Limited-cum-Deputy Commissioner, Deoghar 4. National Bank for Agriculture and Rural Development (NABARD) through its Assistant General Manager, Ranchi 5. The Deoghar Jamtar Central Cooperative Bank Ltd., Deoghar represented by its Managing Director Respondents ... ---
Legal Reasoning
CORAM : HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR For the Petitioners For the State For the Respondents --- --- : Mr. Delip Jerath, Advocate Mr. Rakesh Ranjan, Advocate : Mr. Ajit Kumar, A.A.G. :M/s Krishna Murari, Rajesh Lala, M. K. Roy, Advocates 06/26.11.2013 Questioning the competence, jurisdiction and proprietary of the Registrar, Jharkhand Cooperative Societies acting on behalf of 3 the Department of Cooperative, Government of Jharkhand in inviting applications for direct recruitment on various posts in eight District Central Cooperative Banks and the State Cooperative Bank in the State of Jharkhand, batch of writ petitions have been filed.
Decision
Since a common question of law has arisen in all the writ petitions therefore, by a common order, I propose to dispose of the present batch of cases. 2. The brief facts are that, the petitioners are Short Term Cooperative Credit Society (STCCS) registered under the Cooperative Societies Act and are governed by the Jharkhand Cooperative Societies Act, 1935 and the Rules framed thereunder. The petitioners have their own Bye-laws and they have their own respective General Bodies which take policy decisions. The Short Term Cooperative Credit Structure Societies operate in three tiers. The 1st tier being Primary cooperative Societies function at the grass root village level. The 2nd tier refers to the Central/Intermediate Level Societies which exist in each District and have the status of Cooperative Banks known as the District Central Cooperative Banks. The District Central Cooperative Banks are affiliated to the State Cooperative Bank which is the Apex Society in the State and which is the 3rd tier, in the Short Term Cooperative Credit Structure Societies. With a view to revive and restructure the Rural Cooperative Credit Structure (CCS) in the country, the Government of India set up a Committee/Task Force headed by Prof. A. Vaidyanathan which is popularly known as 'the Vaidyanathan Committee'. In the State of Jharkhand with a view to implement the recommendations and revival package for the Cooperative Societies, a Memorandum of Understanding (MoU) was signed between the Government of India, the Government of Jharkhand and the National Bank for Agriculture and Rural Development. In the State of Jharkhand, with a view to amend the 4 Jharkhand Cooperative Societies Act, 1935 [adopted], “Jharkhand Cooperative Societies (Amendment) Act, 2011” was passed and notified in the Gazette on 27.08.2011. In the Act of 2011, a new Chapter -VI C and three new Sections namely, Sections 44 AT, 44 AU, 44 AV have been inserted. By the Constitution [Ninety Seventh Amendment] Act, 2011, recommendations of the the Vaidyanathan Committee have been incorporated. 3. The Dhanbad Central Cooperative Bank Limited, Dhanbad is a Short Term Cooperative Credit Society and it also functions as a Cooperative Bank under a banking licence issued by the Reserve Bank of India. The Dhanbad Central Cooperative Bank is a District Level Intermediate/Central Society. The petitioner nos. 1 and 2 in W. P. (S) No. 6214 of 2012 are the shareholders of the Dhanbad Central Cooperative Bank Limited and they are the members of its General Body. The Managing Committee of the Dhanbad Central Cooperative Bank, Dhanbad completed its three years' term on 31.03.2006 and since no election was held thereafter, it was superseded on 31.12.2006 and an Administrator was appointed by order dated 04.01.2007. On 23.09.2012, an advertisement was issued inviting on-line applications for appointment on various posts which has been challenged on various grounds. 4. A counter-affidavit has been filed by the Respondent Nos. 1 and 2 asserting that the State is empowered to set the recruitment process in motion. It is stated that in the last 25-30 years, the Management of the Bank never took any step for regular appointment and all the appointments made were back door appointments. The status report of the Managing Director indicates failure of Cooperative democracy in the Society and mal-administration on all fronts in as much as, there was almost no recovery of disbursed loan money and the account, ledger etc. have not been maintained in the Bank. 5 5. Mr. Delip Jerath, the learned counsel appearing for the petitioners has contended that in view of the provision contained in Section 44 AV (2)(iv) of the Jharkhand Cooperative Societies (Amendment) Act, 2011 and Article 243 ZL of the Constitution of India read with Rule 7 of the Service Rules for the Staff of the Central Cooperative Banks it is clear that the Registrar acting on behalf of the State Government has no power to initiate the process of recruitment for appointment on various posts in the Cooperative Bank. The learned counsel has further relied on a letter dated 26.11.2005 written by the Secretary, Department of Cooperative to contend that the power of the Administrator is confined to routine works in the Bank. The learned counsel has relied on the decision in “A.P. Dairy Development Corpn. Federation Vs. B. Narasimha Reddy & Ors.”, reported in (2011) 9 SCC 286 and contended that the Cooperative movement in the country has been put on a different pedestal and minimum interference by the Government has been the policy of the Government as well as the mandate of law. 6. Per contra, Mr. Ajit Kumar, the learned A.A.G. has contended that the Managing Committee of the Bank was superseded after 31.12.2006 and therefore, the Government has power and jurisdiction to make appointment on various posts in the Bank. Reiterating the stand taken in the counter-affidavit, the learned A.A.G. has submitted that the banks were not properly administered and even the account, ledger etc. were not properly maintained. All the appointments made in the last 25-30 years were back door appointments infested with nepotism and favouritism. 7. Article 243 ZL of the Constitution of India deals with supersession and suspension of power and interim management. It provides that except in certain situations, no Board shall be 6 superseded or kept under suspension for a period exceeding six months. It further provides that in case of supersession of a Board, the Administrator appointed to manage the affairs of such Cooperative Societies shall arrange for conduct of elections within the period and handover the management to the elected body. The learned counsel appearing for the petitioners has submitted that even after six years, no election has been conducted and the Managing Committee of the Bank has been kept suspended illegally. I am of the view that the contention raised by the learned counsel for the petitioners is not relevant for deciding the issue involved in the present writ petitions. The only issue raised by the petitioners is, 'whether the Administrator has power to issue advertisement for making appointment in the Bank'. 8. Referring to the provisions in the Jharkhand Cooperative Societies Act, I find that Section 14 provides for a Managing Committee and Section 14(3) lays down powers and functions of an officer deputed in the registered society. Section 66-B deals with the power of the State Government to determine the nature and number of posts to be created and the mode of recruitment of personnel by Cooperative Societies. Relying on these provisions, the learned counsel for the petitioners has submitted that the State Government would have no power to make appointment on the various posts in the Cooperative Bank, particularly when the Managing Committee of the Society has not been dissolved. Section 14(3) and Section 66-B of the Jharkhand Cooperative Societies Act, 1935 are extracted below:- 14(3). “An officer of the State Government if deputed to a registered society either as a Managing Director, Executive Officer or in similar position shall be the Chief Executive thereof and subject to general direction and control of the Managing Committee, shall have the following powers and functions- 7 (i) to have general control over the administration of the registered society; (ii) to convene meetings of the Managing Committee; (iii) to receive all moneys and securities on behalf of the registered society and to make arrangement for the proper maintenance and custody of cash balances and other properties of the registered society; (iv) to endorse and transfer promissory notes, Government and other Securities and to endorse, sign and negotiate negotiable cheques instrument on behalf of the registered society; and other (v) to be responsible for the general conduct,supervision and management to the day-to-day business and affairs of the registered society; (vi) to sign all deposits, receipts and operate the accounts of the registered society with Bank; (vii) to sign all bonds and agreements on behalf of the registered society; (viii) to determine the powers, duties and responsibilities of the employees of the registered society; (ix) to appoint, promote, transfer, punish, suspend, remove or dismiss any paid employee of the registered society except to the extent of the powers vested in the Managing Committee under the bye-laws of the registered society; (x) to institute, conduct, defend, compound or to withdraw any suit or other legal proceedings for or against the registered 8 society and also to compound and allow time for payment to satisfaction of any claims; (xi) to delegate all or any of the powers to an employee or employees of the registered society subject to his control and supervision.” 66-B. “(1) Notwithstanding anything contained in this Act or the Rules and bye-laws made thereunder, the State Government may, from time to time, by special or general order, determine the nature and number of posts to be created and the mode of recruitment of personnel by Co-operative Societies and prescribe among other things- (1) the qualifications, age and experience, (2) the pay scale and other emoluments, (3) the method of recruitment, (4) the conditions of service, and (5) the disciplinary procedure to be followed. (2) Any appointment made in contravention of the order of the State Government under sub-section (1) shall be void as if no such appointment ever existed and salary and other allowances paid if any, shall be recoverable under Section 40.” 9. From the aforesaid provisions, I find that the State Government has power to determine the number of posts and the mode of recruitment including the qualification, age, experience, pay-scale, conditions of service, disciplinary procedure etc. and the officer deputed by the State Government has power to appoint, promote, transfer, punish, suspend, remove or dismiss any employee in the registered society subject to powers vested in the Managing Committee. I am of the opinion that once the Management of the Bank has been superseded after 31.12.2006 and an Administrator has been appointed, the Administrator would have ample power to make appointments on various posts in the 9 Cooperative Bank. I find support from Rule 7 of the Service Rules framed under Section 66-B of the Bihar Cooperative Societies Act, 1935 which is extracted below:- 7. (a) “Every appointment has to be made by the Bank on the basis of the panel prepared by the Service Commission/Selection Authority set up by the State Government for this purpose. (b) No appointment in any Grade from outside the panel shall be valid. Any appointment made in contravention of sub-rule (a) above, shall be void as if no such appointment ever existed and salary and other allowance paid, if any to such persons shall be recoverable under Section 40 of the Bihar Co-operative Societies Act, 1935.” 10. Relying on the judgment in “A.P. Dairy Development Corpn. Federation Vs. B. Narasimha Reddy & Ors.” (supra), the learned counsel appearing for the petitioners has contended that, since extensive State-control of Cooperative Societies has become incompatible and inconsistent with cooperative principles which mandate ensuring democratic control and autonomy and independence in the manner of functioning of cooperatives therefore, the exercise of power of making appointment by issuing advertisement dated 23.09.2012 by the Registrar is excessive and without jurisdiction. I find that in “A.P. Dairy Development Corpn. Federation Vs. B. Narasimha Reddy & Ors.” (supra), the validity of the Amendment Act of 2006 was challenged on the ground that the impugned provisions were arbitrary and violative of Article 14 of the Constitution as the amendment obstructs and frustrates the object of development and growth of vibrant Cooperative Societies in the State. The Hon'ble Supreme Court has discussed the effect of the impugned amendment as under, 60. “Principles of cooperation as incorporated in Section 3 and given effect 10 to in the other provisions of the 1995 Act permit better democratic functioning of the society than under the 1964 Act. Whereas the 1955 Act provides for State regulation to the barest minimum, the 1964 Act provides for extensive State control and regulation of cooperative societies which is inconsistent with the national policy with regard to cooperative societies evolved in consultation and collaboration with the States which stands accepted by the State of A.P. and reflected in the scheme of the 1995 Act which is based on the model law recommended by the Planning Commission of India. Thus, reverting back to the cooperative societies under the 1964 Act is retrograding process by which the Government would enhance its control of these societies registered under the 1995 Act. They would be deprived not only of benefits under the said Act, but rights accrued under the 1995 Act would also be taken away with retrospective effect.” 11. The learned counsel for the petitioners has relied on the judgment of the Hon'ble Supreme Court in “Thalappalam Service Cooperative Bank Ltd. & Ors. Vs. State of Kerala & Ors.”, reported in 2013 (4) JLJR 362 and contended that the right of a citizen to form Cooperative Societies has been raised to a level of fundamental right and the State shall endeavour to promote autonomous functioning of the Cooperative Societies and therefore, under no circumstance the power to make appointment can be exercised by the State Government through the Registrar. I find that in the said case, the primary issue before the Hon'ble Supreme Court was, whether the information sought by a citizen relating to bank account of certain members of the Society would fall under the purview of Section 2(f) of the Right to Information Act, 2005. The observation made in the said judgment does not lend any help to 11 the case of the petitioner. 12. After adverting to the contention raised by the learned counsel for the petitioners, it would be useful to refer to the relevant clauses in the Memorandum of Understanding (MoU) dated 12.05.2008 signed between the Government of India, the Government of State of Jharkhand and the National Bank for Agriculture and Rural Development (NABARD). The relevant paragraphs of the MoU are extracted below:- 10. “The State shall immediately issue necessary Administrative Orders for the participation of all the entities of the CCS in the implementation of the Package including orders for making the books of account up-to-date and making them available to the implementing Agency or its representatives for the purpose of special audit under the Package. 11. Where the State holds share capital in any cooperative society including a cooperative bank in excess of 25% of the paid-up share capital of the society/bank, it shall convert its excess equity over and above 25% into a grant from the State to that cooperative society or cooperative bank as part of the Package. 12. The State shall abolish the System of Cadre secretaries to PACS from a date to be notified by the State. 13. The State shall also constitute, in consultation with NABARD, the SLIC and the DLICs and empower them to perform the tasks as assigned to them under the Package. 14. The State shall meet all the financial obligations, as brought out be the special audits and recommended by the DLICs and the SLIC, pertaining to 50% of the losses on account of the Public Distribution System (PDS) and input distribution, all dues pertaining to invoked and un-invoked guarantees (where defaults have already 12 taken place) and other receivables in the form of interest waivers, subsidies or any other such grants which have been announced but not paid, and a portion (in terms of para 4.57 of the Report of Vaidyanathan Committee) of losses out of non-agricultural business of the CCBs and the StCB. 15. The State shall take appropriate decision on closure or merger of such cooperatives as remain ineligible for assistance under the Package within six months from such decision being taken by the SLIC. --------------------------------------------------------------- --------------------------------------------------------------- 17. The State shall also take all other actions as may be necessary to fulfill the requirements as spelled out in the Package in its true spirit. 18. The entire funding by the Central Government shall be in phases as indicated in paragraph 16 of this MoU and will be based on the outcome of the special audits to be conducted for the purpose and shall be passed on through NABARD either directly or through special financial instruments to be designed for the purpose. 19. Implementing and The National Monitoring Committee (NIMC) constituted by the Government of India will be the policy making body and clearing house for any policy issues, taking decisions on issues referred to it which are unresolved at the state level, and guiding and monitoring the implementation of the Package on a all-India basis. All operational decisions will be taken by the SLIC and DLICs, which will be set up for the purpose. Decisions taken by the NIMC will be final.” 13. The memorandum of understanding dated 12.05.2008 discloses that the State Government is required to issue orders for preparing the books of account. In cases where the share capital of the State in any co-operative society including a 13 co-operative bank exceeds 25 % of the share capital of the society/bank, that would be converted into a grant by the State to the co-operative society/bank. The State Government is also required to meet the financial obligations pertaining to losses on account of the Public Distribution System, interest waivers, subsidies and other grants. The State Government is also empowered to take appropriate decision on closure or merger of co-operative. Thus, it is clear that the State Government has been assigned a wider role to play and since certain financial obligations have been imposed upon the State government and therefore, it cannot be contended that the State Government has no role at all in so far as, the administration of the co-operative banks in the State is concerned. In the present case, the Management of the Cooperative Bank has been superseded after 31.12.2006 and in view of the provisions noticed hereinabove, I am of the view that the Registrar acting on behalf of the State Government has power to issue the impugned advertisement. 14. I find no merit in the writ petition. Accordingly, it is dismissed. Manish/A.F.R. (Shree Chandrashekhar, J.)