Tumkur District Central and anr. Vs State of Karnataka Department of Cooperation and anr. - Court Judgment

(Prayer: This writ petition is filed under Articles 226 and 227 of the constitution of India with a prayer to quash the notification dated 13.06.2011 and etc.)

1. In these writ petitions have prayed for a writ in the nature of certiorari to quash the government notification dated 13.06.2011 Annexure-F.

2. The petitioner in W.P. No. 45889/2011 is District Central Cooperative Bank at Tumkur and petitioner in W.P.No. 7398/2012 is the South Canara District Central Cooperative Bank, Mangalore. The petitioner - banks are registered under the Karnataka Cooperative Societies Act (for short the Act). The petitioners are engaged in banking business. The financial assistance to these petitioners are founded by the National Bank for Agricultural and Rural Development (for short NABARD) through the Apex Banks at the State level. The petitioners in-turn are extending financial assistance to Taluka Agricultural Societies and Primary Societies.

3. The first respondent Government of Karnataka by exercising power under Section 30-B of the Act issued the impugned notification dated 13.6.2011 imposing certain conditions on the co-operative societies in the matter of fixing the cadre strength and recruitment. The impugned notification specifies the method of conducting examinations, awarding marks, qualification to the posts, roster etc. Petitioners being aggrieved by the impugned notification are before this court.

4. Heard arguments on both the side and perused the entire writ papers.

5. On 5.8.2004 the Government of India appointed a task force under the Chairmanship of Professor A. Vaidhyanathan to suggest measures for revival of short-term cooperative credit structure in the country. This task force after extensive travel throughout the country and by interacting with the cooperative societies and cooperation made a critical study of the short-term credit cooperative structure in the country and submitted a report to the Government on 4.2.2005. Thereafter the Government of India held discussions with the representatives of the State Governments and formulated a revival package for revitalization of short-term credit cooperative structure. The Government of Karnataka has accepted the revival package and signed a tripartite memorandum of understanding with Government of India and NABARD on 25.3.2008. This tripartite memorandum of understanding envisages certain amendments to be brought to the Karnataka Cooperative Societies Act, 1959 giving more powers to cooperative societies. This obligation to bring amendments to the Act is a pre-condition under the tripartite memorandum of understanding for release of financial assistance by Government of India through NABARD.

6. Further the Government of Karnataka appointed three men committee on 27.5.2005 to suggest amendments to Karnataka Cooperative Societies Act, to remove restrictive provisions under the Act and to enable the cooperative societies to function in a transparent, accountable, vibrant and democratic manner. This committee submitted its report in the month of February 2006 recommending certain amendments to the Karnataka Cooperative Societies Act. The Government of Karnataka in the light of tripartite memorandum of understanding and also the report of three men committee brought certain amendments by Act No.6 of 2010 to the Karnataka Cooperative Societies Act by way of incorporating certain provisions.

7. For the purpose of this case, the relevant amended provisions in the Act are Section 2(b)(2), Section 98-A, Section 98-B and Section 98-E (iii) and they read as under:

Section 2(b)(2)- Co-operative Credit Structure means and includes Primary Agricultural Credit Cooperative Societies by whatever name called, Central Cooperative Banks, State Cooperative Bank, Agricultural and Rural Development Banks and State Agricultural and Rural Development Bank.

98-A. Application of this Chapter.- This chapter shall apply only to cooperative societies in cooperative credit structure.

98-B. Overriding effect of Chapter XI-A Notwithstanding anything contrary or inconsistent contained in any other chapter of this Act or rules framed thereunder or bye-laws of any co-operative society or orders issued thereunder, the provisions of this chapter shall have overriding effect in respect of societies in co-operative credit structure.

98-E. Freedom in all financial and internal administrative matters.- A Cooperative society under Cooperative Credit Structure shall have freedom to decide its financial and internal administrative matters, which include.-

i. xxx

ii. xxx

iii. the personnel policies including issues relating to recruitment, promotion, staffing, training, posting and compensation to staff as per business recruitments of the society.

iv. xxx

v. xxx

8. Having regard to the nature of activity carried on by the petitioners they come under the above definition under Section 2(b)(2). Further there is no dispute that petitioners are the cooperative banks covered under the definition of cooperative credit structure. Section 98-A specifies that the provisions contained in Chapter XI-A shall apply only to cooperative societies in cooperative credit structure. Section 98-E specifies freedom in all financial and internal administration matters of these societies under cooperative credit structure. Further Section 98-E(iii) specifies that the cooperative societies under the cooperative credit structure shall have the freedom to decide issues relating to recruitment, promotion, staffing, training, posting and pension to staff as per the business requirement of the society. Thus the petitioners coming under the cooperative credit structure enjoy the freedom and autonomy in the matter of recruitment of its employees. Section 98-B of the Act specifies that notwithstanding anything contrary or inconsistency contained in any other chapter of this Act or rules framed thereunder or bye-laws of any cooperative society or orders issued thereunder, the provisions of this chapter shall have overriding effect in respect of societies in cooperative credit structure. This overriding provision under Section 98-B of the Act protects the freedom and autonomy granted to these societies under cooperative credit structure. This statutory freedom and autonomy given to these societies cannot be taken away by the Government by way of administration order.

9. The Government of India by ninety-seventh amendment amended the Indian Constitution by way of incorporating Article 43B and Article 243ZH to 243ZT specifying that the State Government may endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies. Thus the freedom and autonomy given to the Cooperative Banks under cooperative credit structure is also protected under the Constitution. This constitutional guarantee given to the petitioners cooperative Banks can not be taken away by the Government by an executive order.

10. Learned Government Pleader contends that in order to bring transparency and professionalisation in the matter of recruitment process in these cooperative societies the Government of Karnataka by exercising power vested under Section 30-B of the Act have issued the impugned order specifying the guidelines to be followed in the matter of recruitment of employees. It is brought to my notice that the petitioners have adopted the Karnataka Government policy relating to reservation of certain posts to various categories. Further the petitioners have passed resolutions adopting Human Resources Policy for short term cooperative credit structure guidelines as specified by NABARD. Thus the petitioners are following the Rules relating to the recruitment and also following the reservation policy of the Karnataka Government. When the petitioners are following one set of Rules in the matter of recruitment then there is no need and necessity for the respondent Government to prescribe another set of guidelines in the matter of recruitment. It is not the case of respondent Government that the Rules adopted by the petitioners are arbitrary, lacks transparency and professionalism. It is also not the case of respondent Government that these petitioners are not following the reservation policy of the State. A perusal of the recruitment notification issued by the petitioners inviting applications from eligible candidates to fill certain vacancies specifies the number of posts reserved for various categories. Thereby the Rules adopted and the procedure followed can neither be said arbitrary nor opposed to transparency and professionalism and the concept of social justice.

11. A perusal of the conditions specified in the impugned Government notifications Annexure F makes it clear that it is nothing but interference with the freedom and autonomy guaranteed to the petitioners under Section 98-E of the Act. Therefore the impugned notification is contrary to Section 98-E of the Act.

12. Under the Karnataka Cooperative Societies Act there are cooperative societies other than the one specified under Section 2(b)(2) of the Act. The Government, by exercising power under Section 30-B may issue directions in public interest to the cooperative societies other than the cooperative societies referred to under Section 2(b)(2) of the Act. Therefore the impugned notification of the Government specifying the guidelines in the matter of recruitment are not applicable to the cooperative societies/banks defined under the cooperative credit structure under Section 2(b)(2) of the Act.

13. For the reasons stated above, the follows:

ORDER

i. Writ petition are partly allowed.

ii. It is declared that the impugned notification dated 13.06.2011 Annexure F is not applicable to the petitioners and similarly situated cooperative societies covered under cooperative credit structure as defined under Section 2 (b)(2) of the Act.

iii. The petitioners shall strictly follow the reservation policy of the Government of Karnataka and Human Resources Policy for short term cooperative credit structure guidelines as specified by NABARD. Ordered accordingly.