Decided on June 16,1992

K.SUDHEERA Appellant


D.J.Jagannadha Raju, J. - (1.)This writ petition is filed by five ex-employees of the Kurnool Urban Development Credit Bank Ltd. They pray for a writ of mandamus or any other appropriate direction declaring the orders dated 27-4-1991 passed by the respondent terminating the services of the petitioners as null and void.
(2.)The facts inbrief are as follows: The five petitioners were appointed by the President of the respondent-society on the following dates: Petitioners 1,4 and 5 were appointed as attenders on 26-3-1987. The second petitioner wasappointed as L.D. Clerk on 27-3-1987. The third petitioner was appointed on 26-3-1979 as Bill-Collector, Along with the petitioners, one Butchanna was appointed as Attender and C.V.Raghavulu, S.Subrahmanyamand G.Hari Rao were appointed as Bill-Collectors and Abdul Khan was appointed as L.D.C, Bye-Law No.26 deals with the service conditions of employees. Special Bye-law No.1 contemplates that the appointments shall be madeby the President or the Board of Directors as the case may be in accordance with the subsidiary rules framed for the purpose. For this Society, the term of the Board of Directors expired on 9-7-1987. Elections could not be held before the term expired. The District Collector appointed Persons-in-Charge and they were continued from time to time. Under Section 32(7)(a) of the Co-operative Societies Act (hereinafter called 'the Act'), the aggregate period of the Persons-in-charge shall not exceed three years. As the Persons-in-Charge have taken charge on 23-4-1988, the maximum period up to which they can hold office extends to 23-4-1991. Their continuation inoffice after 23-4-1991 is illegal. The Government has notexempted the Society from the provisions of Section 31 and Section 32(7)(a) of the Act. In 1991 January, the permanent Secretary of the Society opted for reversion. Subsequently Sri B.Sreerami Reddy, Co-operativeSub-Registrar/Superintendent of the Office of the Divisional Go-operative Officer, Kurnool, was brought in as Secretary under Foreign Service terms at a huge cost of Rs.4,000/- towards his salary. Neither the District Co-operative Officer nor the then Additional Registrar had jurisdiction to make such an appointment. Such an appointment is against the interests of the Co-operative Society. The non-est committee passed stereotyped orders on 27-4-1991 terminating the services of the petitioners. Those orders were served on 3-5-1991. In those orders, the services of the petitioners were terminated with effect from 30th April, 1991. The petitioners were given compensation in lieu of notice. But they have not encashed the cheques. The orders terminating services are liable to be set aside for various reasons. the order is null and void as it is passed by a committee which has no legal existence from 22-4-1991, The reasonsgivenfor terminating the services of the petitioners are unsustainable. Para.l of the order mentions that petitioners were appointed in violation of the mandatory requirements of the bye-laws. But the order does not mention which of the bye-laws and which of the rules were violated. It also mentions that audit report and the inspection report of the Reserve Bank of India indicated that the staff is surplus and hence they are terminated. There is every need, for the existing staff and more staff for an effective collection drive. The total wage bill of the five petitioners comes to Rs.3,537-75 only. If the ground of economy and the ground that the establishment charges exceed 2% of the total working capital is correct,there is no necessity for appointing B.Sreerami Reddy as Secretary with a total salary of Rs.4,400/- per month when the earlier Secretary was being paid only Rs.2,000/- per month. The termination of the petitioners, services casts a stigma. It is more in the nature of a penal order. It is passed in violation of the principles of natural justice as no opportunity was given to the petitioners to show cause against it. The order violates Section 116-C of the Act. Any revision of the staffing pattern will have to be done only in accordance with that Section and it should be done with the previous approval of the Registrar of the Co-operative Societies. It would take effect only after it is approved by the general body. The orders of termination are liable to be set aside on the ground that the persons who were appointed along with the petitioner who are younger in age and who are juniors have been retained in service. The first petitioner is entitled to be continued in service by virtue of 30% of the posts being reserved for women. The petitioners have put in several years of service in the Bank and it is not open to the respondent to claim that the appointment is in violation of the rules and that they are over-aged. The orders of termination may be set aside.
(3.)The writ petition is resisted on several grounds. It is claimed that the appointment of the petitioners was highly irregular and in contravention of the staffing pattern envisaged under Section 116-C of the Act. Under the amended bye-laws, the appointing authority is the Staff Committee, the President of the Society hasno powers for appointing any persons in the Bank. The management has to take into consideration the financial position of the Bank and also the guidelines laid down by the District Co-operative Officer before making appointments. The appointments are not only illegal but they are against the interests of the Co-operative bank. The general rule is persons should be sponsored by the Employment Exchange and after interview and selection, they should be placed on probation for one year and only after completion of one year probation, they can be confirmed in the posts. G.Butchanna, Subrahmanyam, Hari Rao and Abdul Khan were originally appointed on daily wage basis and subsequently they were regularised after they have put in a lot of temporary service. The term of the elected Board of Directors expired on 9-7-1987, The Collector appointed persons-in-Charge for a period of six months from 9-7-1987. Then one of the elected members of the Board filed a writ petition-W.P.No.9154 of 1987 and the High Court directed continuance of the members of the Board, by order dated 8-7-1987. The High Court was pleased to vacate the interim direction and hence the Persons-in-charge assumed office on 24-4-1988. From time to time, the term of the persons-in-charge was extended. On 9-2-1991, the Collector appointed Project Director, D.R.D. A., and Divisional Co-operative Officer, Kurnool, as Persons-In-Charge for a period of six months from the date of assuming charge or till the elections are held to the Managing Committee of the Bank. The elections could not be held for the Kurnool Urban Co-operative Credit Bank in view of C.B.C.I.D. enquiry regarding certain misappropriations. By letter dated 11-1-1991, the District Co-operative Officer submitted proposals for relaxation of the three years limit and the matter was under consideration. Pending the orders of the Government, there was no alternative except to direct the Persons-in-Charge to manage the affairs of the committee. Hence, awaiting orders of the Government, the Persons-in-Charge continued in Office.

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