Shri Chander Bhan Vs. Delhi State Co-operative Bank Limited - Court Judgment

Excerpt:
a) the case questioned whether the writ lied against the 'state' and it also questioned whether the 'state' was within the meaning of article 12 of the constitution of india - it was held that even if the society could not be characterized as a 'state' within the meaning of article 12 of the constitution, still a writ would lie against it for enforcement of public duty by an employee.b) in the instant case an employee was retired from his service on completion of his age of sperannutation - there were no proceedings drawn up against the employee before his retirement relating to any misconduct - it was held that the employee was not to be deprived from getting the retrial benefits particularly when no preceding was drawn up against him accordance with he law - the statutory public duty was on the employer to pay retrial benefits to the employee at the end of his service career benefits and to enforce the said statutory public duty, writ could be issued under article 226 of the constitution of india - it was also held that the denial of retrial benefits on the ground of loan sanctioned by the petitioner that could not be recovered, was improper. - - 4,70,408.80 which he is liable to get adjusted and despite repeated requests the petitioner failed to get the loan accounts adjusted. a society, which is a 'state',may have its private law rights just like a government.orderdr. mukundakam sharma, j. 1. this writ petition is filed by the petitioner claiming payment of his retiral benefits including gratuity, cash in lieu of earned leave, bonus etc. and the salary for the period july 1989 to january 1990 along with interest @ 18% per annum from the date it fell due to the date of its final payment.2. the petitioner was appointed as clerk in the respondent bank in the year 1959 and he retired from the post of administrative officer grade i on 21.1.2990. the petitioner served in different branches of the respondent bank on different posts and rendered his services in the bank till he was retired from service. it is stated that in spite of the fact that the petitioner retired from service he was not paid the retiral benefits including the gratuity, earned leave encashment, bonus and the salary for the period july 1989 to january 1990. it is contended that the aforesaid amount is not being paid by the respondents on the pretext that the loan amount sanctioned by the petitioner while working as manager of shahdara branch of the respondent bank to different loanees to the tune of rs. 4.70 lac could not be recovered by the bank from the loanees.3. the respondent in its counter affidavit has taken up a preliminary objection regarding maintainability of the writ petition on the ground that the delhi state cooperative bank ltd. is not a state within the meaning of article 12 of the constitution of india and thereforee, the said respondent is not amenable to writ jurisdiction. it is stated in the counter affidavit that the petitioner while working as manager at shahdara, delhi branch of the respondent bank had mis-utilised his powers and granted clean overdrafts to such persons some of whom could not be identified. it is stated that the clean over draft granted by the petitioner was strictly against the norms settled by the respondent bank, because of which the respondent has suffered huge loss. it was stated that the respondent bank found that the petitioner had granted clean over draft to the tune of rs. 4,70,408.80 which he is liable to get adjusted and despite repeated requests the petitioner failed to get the loan accounts adjusted. it is also stated that the case of the petitioner was considered at various levels and it was decided by the competent authority of the respondent bank not to release the terminal benefits of rs. 1,56,507.90 to the petitioner unless he gets adjusted the loans granted by him while working at shahdara, delhi branch of the respondent bank.4. in the context of the aforesaid pleadings of the parties it is established that the retiral benefits of the petitioner have not been released and paid. the said action is sought to be justified on the ground that so long the petitioner does not get adjusted the loans granted by him he could not be paid the terminal benefits of rs. 1,56,507.90. the petitioner has retired from service and he is no longer in the service of the bank. he was allowed to retire from the service without drawing up any proceedings against him for any alleged misconduct. the petitioner granted the said loan in question while he was serving as an officer of the bank and in case he had misconducted himself in discharge of his duties action could have been and should have been taken by the respondents to proceed against the petitioner in accordance with law. none of the procedure prescribed in accordance with law was followed by the respondents and they have arbitrarily recovered/appropriated/withheld the retiral benefits of the petitioner to which he is otherwise entitled to. such recovery or adjustment without drawing up a proceeding in accordance with law is against all settled legal principles and is also without jurisdiction.5. learned counsel appearing for the respondent during the course of his arguments could not meet the aforesaid position and improve upon the situation stated hereinabove. he however, took up the stand that the writ petition against the respondent bank is not maintainable as the respondent bank is not a state, and thereforee, the bank is not amenable to writ jurisdiction. the respondent is a society registered under the delhi cooperative societies act. during the course of arguments reliance was placed by the counsel for the petitioner on the decision of the full bench of the andhra pradesh high court in sri konaseema co-operative central bank ltd., amalapuram and another v. n. seetharama raju, air 1990 ap 171 and the decision of the supreme court in u.p. state coop. land development bank ltd. vs . chandra bhan dubey, . it was submitted by the counsel that the respondent bank was a society under the societies registration act and except for the fact that the registrar of the co-operative societies has some superintending powers over the functioning of the bank no state control was pervasive so far the functioning of the respondent no. 2 is concerned and thereforee, the aforesaid decision of the supreme court is not applicable.in konaseema co-operative central bank case (supra.) the full bench of the andhra pradesh high court laid down the following summary:(i) if a particular co-operative society can be characterised as a 'state within the meaning of article 12 of the constitution (applying the tests evolved by the supreme court in that behalf), it would also be an 'authority' within the meaning, and for the purpose, of article 226 of the constitution. in such a situation, an order passed by a society against its employee in violation of the bye-laws, can be corrected by way of a writ petition. this is not because the bye-law have the force of law, but on the ground that having framed the bye-law prescribing the service conditions of its employees, the society must follow them, in the interest of fairness. if it is left to the sweet will and pleasure of the society either to follow or not to follow the bye-laws, it would be inherently arbitrary, and may very likely give rise to discriminatory treatment. a society, which is a 'state', has to act in conformity with article 14 and, for the reason, it will be made to follow the bye-laws. (ii) even if a society cannot be characterised as a 'state' within the meaning of article 12, even so a writ would lie against it to enforce a statutory public duty which an employee is entitled to enforce against the society. in such a case, it is unnecessary to go into the question whether the society is being treated as a 'person' or an 'authority', within the meaning of article 226 of the constitution. what is material is the nature of the statutory duty placed upon it, and the court will placed upon it, and the court will enforce such statutory public duty. (iii) the bye-laws made by a co-operative society registered under the a.p. co-operative societies act do not have the force of law. they are in the nature of contract, terms of contract, between the society and its members, as the case may be. hence, where a society cannot be characterised as a 'state', the service conditions of its employees, governed by bye-laws, cannot be enforced through a writ petition. however, in the matter of termination of service of the employees of a co-operative society, section 47 of the a.p. shops and establishment act provides a certain protection, and since the said protection is based upon public policy, it will be enforced, in an appropriate case, by this court under article 226 of the constitution. ordinarily, of course, an employee has to follow the remedies provided by the a.p. shops and establishments act; but, in an appropriate case, this court will interfere under article 226, if the violation of a statutory public duty is established. it is immaterial which act or rule casts such a statutory public duty. (iv) mandamus, certiorari, and prohibition are public law remedies. they are not available to enforce private law rights. every act of a society which may be a 'state' within the meaning of article 12, does not necessarily belong to public law field. a society, which is a 'state', may have its private law rights just like a government. a contractual obligations, which is not statutory, cannot be enforced by way of a writ petition under article 226 of the constitution. prior to entering into contract, however, article 14 operates, as explained by the supreme court in e.e. & c.ltd. vs . state of west bengal, : [1975]2scr674 , and ramana dayaram shetty, : (1979)iillj217sc . 6. similar principles are also laid down in the decision of the supreme court in u.p. state coop. land development bank (supra). in the said decision the supreme court held that u.p. state cooperative land development bank limited though functioning as society under societies act was constituted under the banks act of 1964 and that since provisions of the bank act of 1964 and societies act of 1965 show that affairs of society are controlled by state government, the u.p. state cooperative land development bank ltd. is, thereforee, instrumentality of state and that the employees had statutory protection and the said bank is amenable to the writ jurisdiction.7. counsel for the respondent submitted that the said case is distinguishable from the facts of the present case as except for a superintending power of the registrar of cooperative societies the state has no control and jurisdiction over the functioning of the respondent bank. however, in the facts and circumstances of the present case it is not necessary to enter into the aforesaid controversy as to whether the respondent bank is a state or not within the meaning of article 12 of the constitution of india, for in the light of the summary as recorded by the full bench of the andhra pradesh high court even if a society cannot be characterised as a state within the meaning of article 12 still a writ would lie against it for enforcement of a public duty by an employee. it was held in the said decision that in such a case, it is unnecessary to go into the question whether the society is being treated as a 'person' or an 'authority' within the meaning of article 226 of the constitution of india and what is material is the nature of the statutory duty placed upon it, and the court will enforce such statutory public duty.8. in my considered opinion, in the facts and circumstances of the present case it is not necessary to consider the question as to whether the respondent no. 2 being a society could be characterised as a state within the meaning of article 12 of the constitution of india, for in the present case the petitioner has sought to enforce a statutory public duty and he is entitled to get the same enforced against the society. the petitioner has served the institution namely - the respondent no. 2 and has retired from the service on completion of his age of superannuation. no proceeding was drawn up against the petitioner before his retirement relating to any misconduct. it transpires from the record that there are certain allegations against the petitioner, but only because of the fact that there are certain allegations against him he could not be deprived from getting the retiral benefit particularly when no proceeding was drawn up against him in accordance with law. when a person is allowed to retire from service on reaching the age of superannuation without recording any blemish against him he is entitled to receive all his retiral benefits in accordance with law. a statutory public duty is cast on the respondent to pay the retiral benefits to the petitioner at the end of his service career and upon his superannuation and when the petitioner has sought to enforce the said statutory public duty as against the respondent bank a writ could be issued to the petitioner to enforce such a right of the petitioner.9. in that view of the matter the writ petition stands allowed. the respondent is directed to pay all the dues of the petitioner including retiral benefits to the petitioner within 8 weeks from the date of receipt of a copy of this order, for it is apparent that the retiral benefits of the petitioner are already determined by the respondent and a figure is quoted in the counter affidavit. if the amount is not paid within 8 weeks the same shall carry an interest @ 12% per annum from the date of its falling due till the date of its payment. no interest shall however, be payable on the amount found due and payable on the amount found due and payable to the petitioner provided the same is paid within the aforesaid period.

Judgment:
ORDER

Dr. Mukundakam Sharma, J.

1. This writ petition is filed by the petitioner claiming payment of his retiral benefits including gratuity, cash in lieu of earned leave, bonus etc. and the salary for the period July 1989 to January 1990 Along with interest @ 18% per annum from the date it fell due to the date of its final payment.

2. The petitioner was appointed as Clerk in the respondent bank in the year 1959 and he retired from the post of Administrative Officer Grade I on 21.1.2990. The petitioner served in different branches of the respondent bank on different posts and rendered his services in the bank till he was retired from service. It is stated that in spite of the fact that the petitioner retired from service he was not paid the retiral benefits including the gratuity, earned leave encashment, bonus and the salary for the period July 1989 to January 1990. It is contended that the aforesaid amount is not being paid by the respondents on the pretext that the loan amount sanctioned by the petitioner while working as Manager of Shahdara branch of the respondent bank to different loanees to the tune of Rs. 4.70 lac could not be recovered by the bank from the loanees.

3. The respondent in its counter affidavit has taken up a preliminary objection regarding maintainability of the writ petition on the ground that the Delhi State Cooperative Bank Ltd. is not a State within the meaning of Article 12 of the Constitution of India and thereforee, the said respondent is not amenable to writ jurisdiction. It is stated in the counter affidavit that the petitioner while working as Manager at Shahdara, Delhi branch of the respondent bank had mis-utilised his powers and granted clean overdrafts to such persons some of whom could not be identified. It is stated that the clean over draft granted by the petitioner was strictly against the norms settled by the respondent bank, because of which the respondent has suffered huge loss. It was stated that the respondent bank found that the petitioner had granted clean over draft to the tune of Rs. 4,70,408.80 which he is liable to get adjusted and despite repeated requests the petitioner failed to get the loan accounts adjusted. It is also stated that the case of the petitioner was considered at various levels and it was decided by the Competent Authority of the respondent bank not to release the terminal benefits of Rs. 1,56,507.90 to the petitioner unless he gets adjusted the loans granted by him while working at Shahdara, Delhi branch of the respondent bank.

4. In the context of the aforesaid pleadings of the parties it is established that the retiral benefits of the petitioner have not been released and paid. The said action is sought to be justified on the ground that so long the petitioner does not get adjusted the loans granted by him he could not be paid the terminal benefits of Rs. 1,56,507.90. The petitioner has retired from service and he is no longer in the service of the bank. He was allowed to retire from the service without drawing up any proceedings against him for any alleged misconduct. The petitioner granted the said loan in question while he was serving as an Officer of the Bank and in case he had misconducted himself in discharge of his duties action could have been and should have been taken by the respondents to proceed against the petitioner in accordance with law. None of the procedure prescribed in accordance with law was followed by the respondents and they have arbitrarily recovered/appropriated/withheld the retiral benefits of the petitioner to which he is otherwise entitled to. Such recovery or adjustment without drawing up a proceeding in accordance with law is against all settled legal principles and is also without jurisdiction.

5. Learned counsel appearing for the respondent during the course of his arguments could not meet the aforesaid position and improve upon the situation stated hereinabove. He however, took up the stand that the writ petition against the respondent bank is not maintainable as the respondent bank is not a State, and thereforee, the bank is not amenable to writ jurisdiction. The respondent is a Society registered under the Delhi Cooperative Societies Act. During the course of arguments reliance was placed by the counsel for the petitioner on the decision of the Full Bench of the Andhra Pradesh High Court in Sri Konaseema Co-operative Central Bank Ltd., Amalapuram and another v. N. Seetharama Raju, AIR 1990 AP 171 and the decision of the Supreme Court in U.P. State Coop. Land Development Bank Ltd. Vs . Chandra Bhan Dubey, . It was submitted by the counsel that the respondent bank was a Society under the Societies Registration Act and except for the fact that the Registrar of the Co-operative Societies has some superintending powers over the functioning of the bank no State control was pervasive so far the functioning of the respondent No. 2 is concerned and thereforee, the aforesaid decision of the Supreme Court is not applicable.

In Konaseema Co-operative Central Bank case (supra.) the Full Bench of the Andhra Pradesh High Court laid down the following summary:

(i) If a particular co-operative society can be characterised as a 'State within the meaning of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be an 'authority' within the meaning, and for the purpose, of Article 226 of the Constitution. In such a situation, an order passed by a Society against its employee in violation of the bye-laws, can be corrected by way of a writ petition. This is not because the bye-law have the force of law, but on the ground that having framed the bye-law prescribing the service conditions of its employees, the Society must follow them, in the interest of fairness. If it is left to the sweet will and pleasure of the Society either to follow or not to follow the bye-laws, it would be inherently arbitrary, and may very likely give rise to discriminatory treatment. A society, which is a 'State', has to act in conformity with Article 14 and, for the reason, it will be made to follow the bye-laws.

(ii) Even if a Society cannot be characterised as a 'State' within the meaning of Article 12, even so a writ would lie against it to enforce a statutory public duty which an employee is entitled to enforce against the Society. In such a case, it is unnecessary to go into the question whether the Society is being treated as a 'person' or an 'authority', within the meaning of Article 226 of the Constitution. What is material is the nature of the statutory duty placed upon it, and the Court will placed upon it, and the Court will enforce such statutory public duty.

(iii) The bye-laws made by a co-operative society registered under the A.P. Co-operative Societies Act do not have the force of law. They are in the nature of contract, terms of contract, between the Society and its members, as the case may be. Hence, where a Society cannot be characterised as a 'State', the service conditions of its employees, governed by bye-laws, cannot be enforced through a writ petition. However, in the matter of termination of service of the employees of a co-operative society, Section 47 of the A.P. Shops and Establishment Act provides a certain protection, and since the said protection is based upon public policy, it will be enforced, in an appropriate case, by this Court under Article 226 of the Constitution. Ordinarily, of course, an employee has to follow the remedies provided by the A.P. Shops and Establishments Act; but, in an appropriate case, this Court will interfere under Article 226, if the violation of a statutory public duty is established. It is immaterial which Act or Rule casts such a statutory public duty.

(iv) Mandamus, certiorari, and prohibition are public law remedies. They are not available to enforce private law rights. Every act of a society which may be a 'State' within the meaning of Article 12, does not necessarily belong to public law field. A society, which is a 'State', may have its private law rights just like a Government. A contractual obligations, which is not statutory, cannot be enforced by way of a writ petition under Article 226 of the Constitution. Prior to entering into contract, however, Article 14 operates, as explained by the Supreme Court in E.E. & C.Ltd. Vs . State of West Bengal, : [1975]2SCR674 , and Ramana Dayaram Shetty, : (1979)IILLJ217SC .

6. Similar principles are also laid down in the decision of the Supreme Court in U.P. State Coop. Land Development Bank (supra). In the said decision the Supreme Court held that U.P. State Cooperative Land Development Bank Limited though functioning as Society under Societies Act was constituted under the Banks Act of 1964 and that since provisions of the Bank Act of 1964 and Societies Act of 1965 show that affairs of Society are controlled by State Government, the U.P. State Cooperative Land Development Bank Ltd. is, thereforee, instrumentality of State and that the employees had statutory protection and the said bank is amenable to the writ jurisdiction.

7. Counsel for the respondent submitted that the said case is distinguishable from the facts of the present case as except for a superintending power of the Registrar of cooperative Societies the State has no control and jurisdiction over the functioning of the respondent bank. However, in the facts and circumstances of the present case it is not necessary to enter into the aforesaid controversy as to whether the respondent bank is a State or not within the meaning of Article 12 of the Constitution of India, for in the light of the summary as recorded by the Full Bench of the Andhra Pradesh High Court even if a Society cannot be characterised as a State within the meaning of Article 12 still a writ would lie against it for enforcement of a public duty by an employee. It was held in the said decision that in such a case, it is unnecessary to go into the question whether the Society is being treated as a 'person' or an 'authority' within the meaning of Article 226 of the Constitution of India and what is material is the nature of the statutory duty placed upon it, and the Court will enforce such statutory public duty.

8. In my considered opinion, in the facts and circumstances of the present case it is not necessary to consider the question as to whether the respondent No. 2 being a society could be characterised as a State within the meaning of Article 12 of the Constitution of India, for in the present case the petitioner has sought to enforce a statutory public duty and he is entitled to get the same enforced against the Society. The petitioner has served the institution namely - the respondent No. 2 and has retired from the service on completion of his age of superannuation. No proceeding was drawn up against the petitioner before his retirement relating to any misconduct. It transpires from the record that there are certain allegations against the petitioner, but only because of the fact that there are certain allegations against him he could not be deprived from getting the retiral benefit particularly when no proceeding was drawn up against him in accordance with law. When a person is allowed to retire from service on reaching the age of superannuation without recording any blemish against him he is entitled to receive all his retiral benefits in accordance with law. A statutory public duty is cast on the respondent to pay the retiral benefits to the petitioner at the end of his service career and upon his superannuation and when the petitioner has sought to enforce the said statutory public duty as against the respondent bank a writ could be issued to the petitioner to enforce such a right of the petitioner.

9. In that view of the matter the writ petition stands allowed. The respondent is directed to pay all the dues of the petitioner including retiral benefits to the petitioner within 8 weeks from the date of receipt of a copy of this order, for it is apparent that the retiral benefits of the petitioner are already determined by the respondent and a figure is quoted in the counter affidavit. If the amount is not paid within 8 weeks the same shall carry an interest @ 12% per annum from the date of its falling due till the date of its payment. No interest shall however, be payable on the amount found due and payable on the amount found due and payable to the petitioner provided the same is paid within the aforesaid period.