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Is National Cooperative Society 'State' To Make Centre Liable For Salaries, Subsistence Allowances Of Employees?: Supreme Court To Consider
Mehal Jain
5 Dec 2020 6:24 AM GMT
The Supreme Court on Friday agreed to consider if a national cooperative society is 'State' for the purpose of Article 12 so as to attach the liability of payment of salaries and subsistence allowance of employees to the government.The bench of Justices U. U. Lalit and Vineet Saran were hearing a writ petition by the NCCF (National Co-operative Consumers' Federation of India Ltd.) Employees...
The Supreme Court on Friday agreed to consider if a national cooperative society is 'State' for the purpose of Article 12 so as to attach the liability of payment of salaries and subsistence allowance of employees to the government.
The bench of Justices U. U. Lalit and Vineet Saran were hearing a writ petition by the NCCF (National Co-operative Consumers' Federation of India Ltd.) Employees Union praying for a declaration that the national cooperative society, the respondent Federation, is "State", and for a direction to the Centre to pay the salaries and subsistence allowances of employees.
Two employees of the Federation were dismissed by the President of the organisation on the charge of defalcation of money. Subsequently, the Patna High Court had set aside the orders of dismissal, remitting the matter back to the disciplinary authority, that is, the Managing Director, to act in accordance with the law. The High Court had directed that the employees be paid subsistence allowance with all arrears till the final order is passed. The appeal before the Supreme Court by the Federation's President was dismissed as withdrawn.
"Please look at the prayers. They are seeking a declaration that the Federation is 'State' and a direction that the salaries and the subsistence allowances be paid by government! This is stretching the argument of 'State'...the entity is functioning autonomously", argued ASG Madhavi Diwan on Friday.
"What you are saying is that being 'State' for maintaining a writ petition is different, but being 'State' under Article 12 may not mean that it is a government entity for all these purposes of the employees", observed Justice Lalit.
"The Patna High Court has held NCCF as 'State'. The appeal challenging the High Court judgment was dismissed as withdrawn...The matter requires consideration by this court", observed the bench.
Both the petitioners before the Single Judge of the High Court were employees of National Co-operative Consumers' Federation of India Ltd and were at the time posted at Patna. Certain verification of stocks and accounts led the respondents to believe that the two petitioners, one being the Branch Incharge and the other L.D.C. acting as Store Keeper had swindled some money by not accounting for certain Disco pencils and Video games, ranging from about Rs.14, 000/- to Rs.25, 000/- became the reason why the disciplinary enquiry was initiated. Articles of charges were framed, served and enquiry held. Finding of guilt thereafter came to be recorded with regard to atleast some of the charges and vide order dated 24.2.1995 the President of the Organization while exercising power under Regulation 33 (d) of the Bye-laws of National Co- operative Consumers' Federation of India Ltd. decided to impose punishment of termination from service on both these petitioners. These orders of punishment are under challenge in both the writ applications.
At the outset an objection had been taken by the counsel appearing on behalf of the respondents that the writ applications are not maintainable primarily because the Federation in question is an apex body of a Co-operative Society and does not come within the definition of State under Article 12 of the Constitution of India and therefore not amenable to writ jurisdiction.
The senior counsel appearing on behalf of the petitioners submitted that the objection about the body not being the State within Article 12 of the Constitution of India is misplaced because the respondents are creation under section 44 of the multi State Co- operative Society Act 1984. Sub section (4) gave pre-dominant right and governing role in matters of regulating the affairs of Federation. Central Government not only holds more than 77 per cent of the shares but also appoints the Managing Director of the Federation who generally happens to be a senior IAS Officer. The affairs of the Federation is closely monitored by the Ministry of Civil Supplies Consumers' Affairs and Public Distribution, Government of India and the annual reports furnished by the Ministry always carries a separate chapter on the working and the status of the Federation.
The Single Judge had been of the view that a look at the constitutional provision would show that the authority of the Court under Article 226 and power can be exercised to issue to any person or authority including a society of the kind in appropriate cases. "A plain reading of the provisions of Constitution would further show that in the case of the Hon`ble Supreme Court it is only matters of violation of fundamental rights that the power under Article 32 can be exercised. But the constitutional framers have conferred upon the High Court a wider power to exercise over authority to cure illegalities where it is demonstrated that a legal or constitutional right is violated. In view of the legal position in this regard the Court has difficulty in accepting the preposition and objection raised by the respondents that the Court lacks authority, to exercise over the matter or the respondent, Federation", it was held.
Allowing the writ petition, the Single Judge had chosen to set aside the impugned order on the ground that the President has not given any cogent reason for exercising the authority under Regulation 33(d) of the Bye-laws which is extracted below. "The enthusiasm of the President in exercising such powers is not appreciated by this Court. An all India Organization having branches across the country will have some financial or disciplinary problems of this kind because of the misconduct of its employees but whether such action is an emergent situation of the kind where every other authority has to surrender its power to the President, cannot be appreciated or accepted as a cogent reason, for exercise of authority under regulation 33(d). The Court therefore does come to a considered opinion that two orders of punishment dated 24.2.1995 passed against the two petitioners namely, Bibhuti Bhusan Saha and Chitranajan Prasad Singh deserve to be interfered with and the two orders of punishment stand quashed. The consequential order passed in appeal also stands set aside", it was held.
Hearing the Letters Patent Appeal, a division bench of the High Court, in view of the fact that law laid down by the Apex Court in the case of Pradeep Kumar Biswas V. Indian Institute of Chemical Biology 2002(5) SCC 111, was of the opinion that appellant- Federation can be brought under Article 12 of the Constitution of India and the writ petition is maintainable.
"In the absence of such situation of emergency which has been arrived at by the President, we are of the opinion that the power under Regulation 33(d) of the Bye-laws the President cannot exercise in a routine manner. Under the above circumstances, the order of the learned single Judge need not be interfered with. It is observed that the President also has not issued any show cause before passing the order of dismissal which is a major punishment. Even on that ground the order of dismissal has to be set aside by this Court and , as such, we are remitting the matter back to the disciplinary authority, i.e., the Managing Director to act in accordance with law by issuing second show cause enclosing copy of the inquiry report...", it was directed.
Further, in view of the modification of the order of the Single Judge, the appellant-respondents were deemed to be continued under suspension and the division bench directed that they should be paid subsistence allowance as eligible with Rules and Regulations till the final order is passed and required that subsistence allowance with all arrears shall be paid.
