The Single Bench has also held that the record which had been produced had not been contemporaneously maintained inasmuch as that the proceedings of the Board of Directors in the meeting held on 31.03.2010 was not made available and instead only an office note dated 31.03.2010 had been produced. This office note refers to the meeting of the Board of Directors held on 22.03.2010 wherein it was decided to compulsorily retire the officials. The proceedings of the meeting of the Board of Directors held on 22.03.2010 indicate that the decision had been arrived in view of the earlier meetings held on 24.02.2010 and 10.03.2010. However, in the proceedings of the meetings held on 24.02.2010 and 10.03.2010 there is no mention of any consideration of the matter as contemplated under Rule 14 and 15 of the Rules of 2006 regarding superannuation and retirement/ compulsory retirement of the officials.
It has also been held by the Single Bench that the record which had been produced included the attendance register of the meetings of the Board of Directors from 01.07.2009 onwards as well as the register containing details of the proceedings of the Board of Directors from 01.07.2009 to 27.04.2011 which were serially paginated. However, the office note dated 31.03.2010 and the report on the analysis of the service record of the employees alongwith annexures had been prepared in separate sheets. Even in the legal opinion which had been tendered by the legal Advisers, there was no mention of any reference number and date of any document in response to which the legal opinion had been furnished. It has been held that these documents along with the fact sheet reflecting consideration of the service record of the respondents by the committee of four senior and experienced staff and banking expert (on contract) which examined the individual records of the employees on 20th March appear to be documents which were subsequently generated to fill the lacuna. Therefore, the Single Bench has expressed serious doubts about the contemporaneity of the record. We find that there is no basis for us to take a different view in the matter.
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JAIPUR BENCH, JAIPUR
(1) D.B. Special Appeal (Writ) No.529/2015
Rajasthan Urban Co-operative Bank Ltd. vs. Ajay Kumar Katewa & Ors.
Date of Judgment : 12th January, 2016
HON'BLE THE ACTING CHIEF JUSTICE MR.AJIT SINGH
HON'BLE MR. JUSTICE ANUPINDER SINGH GREWAL
Reportable
As these intra court appeals arise out of the same impugned order dated 26.05.2015 passed by the Single Bench, they are being decided by this judgment. For the sake of convenience, the facts are being taken from D.B. Special Appeal (Writ) No.529/2015 which has been preferred by the appellant Bank assailing the judgment of the Single Bench setting aside the compulsorily retirement/retirement of respondents while the respondents have also filed Special Appeals No.547/2015, 648/2015, 649/2015, 650/2015, 651/2015 & 652/2015 against the order of the Single Bench to the extent of denying them back wages while setting aside the orders of compulsory retirement.
2. The writ petitioners/respondents herein were employees of the Rajasthan Urban Cooperative Bank Limited (hereinafter referred to as ‘the Bank’) which is a registered cooperative society under the provisions of Rajasthan Cooperative Societies Act, 2001 (hereinafter referred to as ‘the Act of 2001’). The Bank, which had come into operation in the year 1961, had been functioning until 30.08.2005 whereon the Reserve Bank of India imposed a ban on the Bank for carrying out business activities as it had been incurring losses. In the meantime, the respondents, who were working in the Bank, were called upon to exercise their option to go on deputation to serve other primary banks vide order dated 17.09.2008. The respondents, having exercised their option, were sent on deputation to various primary banks on 30.09.2008. However, the Reserve Bank of India permitted the appellant Bank to commence business operations vide order dated 12.10.2009. Consequently, vide order dated 26.03.2010, the Board of Directors of the Bank decided to terminate the deputation of the respondents with effect from 31.03.2010. The respondents namely, Ajay Kumar Katewa (Clerk), Shiv Dayal Sharma (Assistant Cashier), Shriram Jat (Clerk), Ramavtar Sharma (Chief Cashier), Bhagirath Ram (Clerk), Rajeshwar Lal (Clerk), Jogendra Mandal (Peon), Sanjay Dadhich (Clerk) were compulsorily retired under Rule 15 of the Rules of 2006, while Ram Lal (Peon) and Subhash Chand Saxena (Chief Cashier) were retired under Rule 14 of the Rules 2006, after paying 3 months’ salary in lieu of three months’ previous notice. An order of compulsory retirement/ retirement of the respondents/writ petitioners was passed. The respondents challenged the order of compulsory retirement by preferring an appeal before the Registrar, Cooperative Societies, Rajasthan which was dismissed vide order dated 26.04.2010 as it was not maintainable under Rule 17 which provides for appeal against disciplinary action for misconduct.
3. Learned counsel for the appellant-Bank, while assailing the order of the Single Bench contended that the appellant-Bank is not a State within the meaning of Article 12 of the Constitution of India, and therefore, the writ petition was not maintainable and the findings of the Single Bench are liable to be set aside on this ground alone. In support of his submission, he has placed reliance upon the judgments of the Supreme Court of India in the case of Federal Bank Limited vs. Sagar Thomas [(2003) 10 SCC 733/ AIR 2003 (SC) 4325] and S.S. Rana vs. Registrar, Co-operative Societies [(2006) 11 SCC 634]. He has further contended that the respondents had been retired/ compulsorily retired under Rule 14 & 15 of the Urban Cooperative Bank Employees Service Rules, 2006 (hereinafter referred to as ‘the Rules of 2006’) and paid outstanding dues towards gratuity and leave encashment. The orders for retirement/compulsory retirement have been passed by the Board of Directors after due deliberation in compliance with the Rules 14 & 15 of the Rules of 2006 as the respondents had lost their utility to the Bank. It is also submitted that the service record of each of the respondents/writ petitioners was carefully examined in consultation with the legal advisers as well as banking experts before arriving at the decision to retire/compulsorily retire the respondents while keeping in view the poor financial status of the Bank. It is further submitted that the judicial review in an order of compulsory retirement is extremely limited and the Single Bench has erred in interfering with the orders of compulsory retirement which had been passed in conformity with the Rules. It is also contended that the dispute between appellant bank and the respondents was referrable to Arbitration as stipulated in section 58 of the Rajasthan Cooperative Societies Act 2001.
4. On the contrary, learned counsel for the respondents has submitted that the Bank has been rightly held to be State within the meaning of Article 12 of the Constitution of India by the Single Bench as it is under the control of the State Government and in any case the writ petition would be maintainable against the Bank as the termination of the respondents has been in violation of the Rules. He has further contended that the order of compulsory retirement has been rightly set aside as it was passed without any application of mind by the Board of Directors while accepting the opinion of the Legal Advisers. He has further submitted that this function had to be carried out by the Board of Directors and could not have been outsourced to the Legal Advisers. He has also submitted that while compulsorily retiring the respondents, their juniors had been retained which amounted to discrimination rendering the orders illegal.
5. We have heard learned counsel for the parties and examined the record.
6. At the outset, we may refer to the Rules of 2006 which govern the service conditions of the respondents. These Rules have come in force from the date of issuance of orders by the Registrar. No change in the Rules is permissible without prior approval of the Registrar, Cooperative Societies, Rajasthan. In terms of the definition in the Rules of 2006, the term ‘Act’ means the Rajasthan Cooperative Societies Act, 2001. ‘Rules’ refer to the Rajasthan Cooperative Societies Rules, 2003. ‘Registrar’ is a person appointed to perform the functions of the Registrar of Cooperative Societies for the State under the Act of 2001. The general conditions relating to appointment of the employees are contained under Chapter-II of the Rules of 2006. Chapter-III of the Rules of 2006 deals with the methods and principles of recruitment. Chapter-IV of the Rules of 2006 deals with the maintenance of service record in a prescribed service book. Annual Performance Appraisal Reports (APARs) for the financial year in respect of each employee shall be drawn annually by the competent authority as prescribed in Annexure-C. Rule 11 provides for termination of employment. Rule 12 provides for conditions for resignation while Rule 13 spells out disqualification for employees. Rule 14 refers to the superannuation and retirement whereas Rule 15 provides for compulsory retirement. Chapter-V contemplates disciplinary action for misconduct. Rule 33 of the Rules of 2006 provides for interpretation and stipulates that wherever any doubt arises as to the interpretation of the Rules or where the Rules of 2006 are silent on any matter, the provisions of the Rajasthan Service Rules, Rajasthan Civil Service (Pension) Rules, 1996, and the Rajasthan Civil Services (Classification, Control and Appeal) Rules, 1958, shall apply mutatis mutandis.
7. The Bank is governed by the mandate of the Bank Regulations Act, 1949, as amended by the Banking Laws (Application to Cooperative Societies) Act, 1965. The banking activity is also subject to the provisions of the Reserve Bank of India Act, 1934. The Rules of 2006, which contemplate provisions for superannuation/retirement and compulsory retirement, including other service conditions of the employees of the Bank, have been made applicable by virtue of the order of the Registrar, Cooperative Societies. No change in the Rules of 2006 is permissible without prior approval of the Registrar, Cooperative Societies.
8. We deem it necessary to reproduce Rules 14 & 15 of the Rules of 2006, which have been invoked while superannuating/retiring and compulsorily retiring the respondents:
“14. SUPERANNUATION AND RETIREMENT:
The age of superannuation shall be 58 years but the age of superannuation for class IV shall be 60 years subject to the proviso that service of an employee who attain the age of 55 years shall be terminable at a notice of 3 months on either side. Where it appears, desirable in the interest of the Bank, the Board shall have the discretion to re-employ a person who retires under this Rule for such period but not beyond the age of 60 years and on such terms and conditions as the Board may determine in each case.
15. COMPULSORY RETIREMENT:
(i) At any time, after a Bank employee has completed 15 years qualifying service or has attained the age of 50 years, whichever is earlier, the Board of Directors, upon having been satisfied that the concerned employee has on account of his indolence or doubtful integrity or incompetence to discharge official duties or inefficiency in the performance of official duties, has lost his utility, may require the concerned employee to retire in Bank interest giving specific grounds to arrive at the decision. In case of such retirement, the employee shall be entitled to retiring benefits.
(ii) In such a case, the Bank shall give a notice in writing to the employees at least three months before the date on which he is required to retire in the bank interest or three months’ pay and allowances in lieu of such notice.”
A bare reading of Rules of 2006 reveals that the age of superannuation is 58 years while for Class IV employees it is 60 subject to the proviso that service of an employee who attains the age of 55 years shall be terminable at a notice of 3 months on either side. It is reiterated that Rule 14 has been invoked in case of Ram Lal and Subhash Chand Saxena, while in case of rest of the employees, Rule 15 has been invoked. In terms of Rule 15, an employee of the Bank who has completed 15 years qualifying service or attained the age of 50 years, whichever is earlier, may be retired in the interest of the Bank while giving specific grounds for arriving at the decision. It is also stated in the Rules that the Board of Directors have to be satisfied that the concerned employee due to indolence or doubtful integrity or incompetence to discharge official duties or inefficiency in performance of official duties, has lost his/her utility.
9. It is, thus, evident that the decision to compulsorily retire an employee could be taken only if the aforementioned conditions are fulfilled. In other words, the order of compulsory retirement cannot be passed at the whims and fancies of the Board of Directors.
10. In pursuance to the directions of the Single Bench, record pertaining to the retirement/compulsory retirement was produced by the counsel for the appellant bank wherein it was evident that the impugned orders had been passed by the Board of Directors on the advise of the Legal Advisers and the Banking Experts. In terms of Rule 15, it was incumbent upon the Board of Directors to have independently applied their mind and taken decision based on specific grounds. The specific grounds which have been spelt out in Rule 15 include doubtful integrity or incompetence to discharge official duties or inefficiency in due performance of official duties which would have the effect of the employees losing their utility.
11. It was, therefore, necessary for the Board of Directors to have independently considered the entire service record of the employees so as to form opinion with regard to their utility to the Bank. The requirement of recording specific grounds to arrive at the decision in the rules is intended to ensure that the Board of Directors does not act arbitrarily while compulsorily retiring the employees. There does not seem to be any independent and due application of mind on the part of the Board of Directors while arriving at the decision which has the effect of bringing the services of the employees to a premature end. The function which had been entrusted upon the Board of Directors by the rule could not have been outsourced to the legal advisers.
12. The Single Bench has also held that the record which had been produced had not been contemporaneously maintained inasmuch as that the proceedings of the Board of Directors in the meeting held on 31.03.2010 was not made available and instead only an office note dated 31.03.2010 had been produced. This office note refers to the meeting of the Board of Directors held on 22.03.2010 wherein it was decided to compulsorily retire the officials. The proceedings of the meeting of the Board of Directors held on 22.03.2010 indicate that the decision had been arrived in view of the earlier meetings held on 24.02.2010 and 10.03.2010. However, in the proceedings of the meetings held on 24.02.2010 and 10.03.2010 there is no mention of any consideration of the matter as contemplated under Rule 14 and 15 of the Rules of 2006 regarding superannuation and retirement/ compulsory retirement of the officials.
13. It has also been held by the Single Bench that the record which had been produced included the attendance register of the meetings of the Board of Directors from 01.07.2009 onwards as well as the register containing details of the proceedings of the Board of Directors from 01.07.2009 to 27.04.2011 which were serially paginated. However, the office note dated 31.03.2010 and the report on the analysis of the service record of the employees alongwith annexures had been prepared in separate sheets. Even in the legal opinion which had been tendered by the legal Advisers, there was no mention of any reference number and date of any document in response to which the legal opinion had been furnished. It has been held that these documents along with the fact sheet reflecting consideration of the service record of the respondents by the committee of four senior and experienced staff and banking expert (on contract) which examined the individual records of the employees on 20th March appear to be documents which were subsequently generated to fill the lacuna. Therefore, the Single Bench has expressed serious doubts about the contemporaneity of the record. We find that there is no basis for us to take a different view in the matter.
14. It also deserves to be noticed that in the additional affidavit which had been filed on behalf of the bank before the Single Bench the action was sought to be justified on the ground that it was in the interest of the bank in view of its financial condition as well as unsatisfactory record of the officers. It is necessary to mention that the respondent bank had also vide communication dated 21.10.2009 addressed to Joint Registrar (Banking) Cooperative Societies, Rajasthan sought to employ professionally qualified “head of operation” and “managerial staff for the bank”. It was also specified that the proposed staff was not intended to replace the 14 staff members (12 clerical and 2 sub staff) already on deputation as per orders of the State Government. Therefore, there is obvious contradiction in the stand of the bank as on one hand it was seeking to employ fresh hands while on the other hand it had prematurely dispensed with the services of the employees on account of financial difficulty.
15. It is well settled that in matters pertaining to compulsory retirement, the scope for judicial review is limited to cases where the decision has been taken malafide or arbitrarily or it is based on no material or without application of mind. Reference can be made to the judgment of the Supreme Court in the case of Baikunth Nath Das vs. District Medical Officer [(1992) 2 SCC 299].
16. We may also refer to the judgment of the Supreme Court in M.P. State Cooperative Dairy Federation Ltd. Versus Rajnesh Kumar Jaminder [(2009) 15 SCC 221] wherein while affirming the decision of the High Court setting aside the order of compulsory retirement of the employees of M.P. State Cooperative Dairy Federation, it was held that “interest of the Federation” as contained in the regulations applicable therein would not mean that services of a large number of employees should be dispensed with only for the purpose of cutting administrative expenses.
17. In the instant case when the Board of Directors have not spelt out any reasons on the basis of which the decision to prematurely put an end to the services of the employees has been taken, the same would be liable to be set aside.
18. The rule 14 has been invoked in the case of two employees, namely Ram Lal and Subhash Chand Saxena while in the case of rest of the employees, Rule 15 has been invoked. Although there is no stipulation in Rule 14 to give specific ground yet the Board of Directors was expected to apply its mind before arriving at the decision to retire/ superannuate the employees. It is also evident that a joint exercise was conducted while considering the cases of these two respondents under Rule 14 as well as other respondents under Rule 15 and the entire matter had been out sourced for the opinion of the legal advisers. Therefore, the orders of retirement and superannuation of Ram Lal and Subhash Chand Saxena have also been rightly held to be unsustainable.
19. Furthermore we are of the considered view that the matter regarding retirement and compulsory retirement is not one which pertains to a dispute touching the constitution, management or the business of a cooperative society which would be referable to arbitration under Section 58 of the Rajasthan Cooperative Societies Act, 2001. It has been held by the Supreme Court in the case of Gujarat State Cooperative Land Development Bank Ltd. Versus P.R. Mankad & Anr. [(1979) 3 SCC 123] that the dispute between the Cooperative Bank and its employees relating to conditions of employment or termination of services cannot be regarded as a dispute touching the constitution, management or business of a cooperative society. We may also refer to the judgment of the Supreme Court in the case of Akalakunnam Village Service Cooperative Bank vs. Binu N. and others [(2014) 9 SCC 294] wherein it was held that the dispute between the petitioners therein and the bank with regard to appointments for various posts was held to be not a dispute which was referable to arbitration. It was also held that writ petition challenging the process of selection of subordinate staff as being violative of statutory rules was maintainable.
20. In any event, it is well settled that existence of an alternate remedy is not an absolute bar for the exercise of writ jurisdiction.
21. In so far as the contention of the appellant that the writ petition was not maintainable as the appellant bank is not a State falling under Article 12 of the Constitution of India is concerned, we find no merit in this submission as well. The Supreme Court in the case of Ajay Hasia Versus Khalid Mujib Sehravardi [(1981) 1 SCC 722] had propounded the following six tests for determining whether an authority would fall in the definition of State as an instrumentality or agency of the Government.
“(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.
(3) It may also be a relevant factor … whether the corporation enjoys monopoly status which is State-conferred or State-protected.
(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality.
(5) If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.
(6) ‘Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference’ of the corporation being an instrumentality or agency of Government.”
22. The Supreme Court in the case of Pradeep Kumar Biswas Versus Indian Institute of Chemical Biology [(2002) 5 SCC 111] has held that the tests formulated in Ajay Hasia's case (supra) were not to be applied rigidly so that if a body falls within any one of them it has to be considered a State within the meaning of Article 12 and the question which has to be considered in each case is to whether the body is financially, functionally and administratively under the control of the Government. This control must be particular to the body in question and must be pervasive. Mere regulatory control by the Government would not make the body a State.
23. The appellant had raised a preliminary objection before the Single Bench that it is a duly registered bank under the Rajasthan Cooperative Societies Act, 2001 and does not fall under the definition of “State” nor it is an instrumentality of State as defined under Article 12 of the Constitution of India. However, no further details had been put forth regarding the composition of the bank including the nature and mode of appointment of Board of Directors as well as its financial share holding. The appellant is stated to have infused a capital to the tune of Rs. 1.5 Crores consequent upon which the RBI permitted it to recommence its business operations vide order dated 12.10.2009. However, no details of the share holders who infused this capital have been furnished.
24. It is also borne out from the record that the respondent employees of the bank were sent on deputation by the Registrar Cooperative Societies on the directions of the State Government to the primarily cooperative land development banks vide orders dated 29.09.2008 and 30.09.2008. The period of their deputation had been extended vide orders of the State Government dated 21.10.2009 and 31.12.2009. The Registrar, Cooperative Societies vide order dated 26.03.2010 directed that the petitioners whose deputation was to end on 31.03.2010 be relieved with a direction to join the appellant bank on or before 01.04.2010.
25. Therefore, the State control over the appellant bank is apparent and in the absence of further particulars on the issue we are of the view that the Single Bench has rightly held it to fall under the definition of State under Article 12 of the Constitution of India and the writ petition to be maintainable.
26. Even otherwise in the instant case as already held in the foregoing paragraphs there is patent violation of Rules and hence in such an eventuality the writ petition would be maintainable.
27. The judgments relied upon by the learned counsel for the appellant is distinguishable on facts and not applicable to the instant case. The case of Federal Bank Versus Sagar Thomas (Supra) pertains to a private bank which had been carrying commercial activity of banking. There was no share capital of the State nor was there any State control over its day to day affairs. The Board of Directors was also elected by its share holders. In the case at hand, no such details are forthcoming while State control is evident as orders sending respondents on deputation were passed at the behest of the State Government.
28. In the case of S.S. Rana vs. Registrar, Co-operative Societies (Supra) the State did not have any direct or indirect control over the affairs of the Society which was deep and pervasive. It was also not a major share holder. It had the power of nominating only one out of the three members of the Board of Directors. It was further held that there was no violation of any mandatory provisions of the Act or the rules framed thereunder while terminating the services of the appellant therein. The Supreme Court had also noticed that some High Courts had held that writ petition would be maintainable against a Society if it is demonstrated that any mandatory provisions of the Act or the rules framed thereunder have been violated by it. It is reiterated that in the instant case the violation of the rules is apparent.
29. We also find that there is no illegality in the judgment of the Single Bench declining to grant back wages to the petitioners therein. The financial status of the bank had not been good and its business operation had to be closed earlier. The Single Bench has also given liberty to the appellant bank to invoke the power under Rule 14 and 15 of the Rules of 2006, in accordance with the procedure prescribed therein. Therefore, there is no merit in the appeals preferred by the writ petitioners seeking grant of back wages.
30. For these reasons, we are of the considered view that there is no manifest illegality in the judgment of the Single Bench warranting interference in special appeal. In the result the appeals are dismissed.
(ANUPINDER SINGH GREWAL),J. (AJIT SINGH),ACTING C.J
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